Joining the ranks of high street failures such as Zavvi and Woolworths, high-profile retail casualty of the recession MFI is being resurrected as an online brand. But can failed or struggling brands successfully put their tattered reputations behind them and regain trust
In the autumn of its life, kitchens and bathrooms retailer MFI had become synonymous with poor service and missing parts.
Its reputation was in tatters, plagued by stories of missed deliveries and disgruntled customers, and when it collapsed in November 2008, few in the industry were surprised.
So eyebrows were raised when last week Retail Week revealed that the MFI brand is poised for a relaunch. On the back of the story the Guardian’s website polled its readers asking if anyone cared that MFI was relaunching.
Some 66.9% said they did not. One reader and potential customer said: “I think it is never a good idea to bring a retail name back from the dead and MFI has a bad reputation.”
While that opinion poll may not offer conclusive proof of the nation’s attitude, marketeers agree that a comeback for the MFI brand may not be particularly welcome.
Family run plumbing business Walker Group acquired the MFI brand earlier this month for £250,000.
Details about the planned resurrection of the brand are scant - the company declined to comment - but it intends to offer a more “innovative and design-led product range and shopping experience”, according to the website Mfi.co.uk. The site states: “The MFI brand relaunch promises to be one of the most eagerly anticipated events in the UK retail calendar.”
That remains to be seen. But the MFI acquisition prompts two questions: what is the secret of a strong brand and can failed retail brands be successfully resurrected?
Mark Newton-Jones, chief executive of Shop Direct, which bought the Woolworths brand out of administration last year (see box), says a good brand must “resonate with its customers” and be relevant in terms of its product offer as well as having an “intangible emotional attachment”. He adds: “Brands work when they inspire loyalty.”
Arguably failed brands did not do any of these things, or they would have survived. So is it worth trying to breathe new life into them?
Bringing back the dead
Martin Butler, marketing expert and author of soon-to-be-published retail book The Art of Being Chosen, cannot think of any examples of a failed retail brand that has been successfully relaunched.
He says that any retailers considering buying the rights to failed brands need to ask themselves what the brand is famous for. “Sentimentality is not good enough,” says Butler. “We saw this with Woolworths - the brand stopped standing for any relevance in our lives.” He is baffled by the MFI relaunch plans: “Why would you want to acquire the brand when it reminds people what a poor experience it was to shop there?”
MFI’s new owners will need to address the issue of trust, according to Butler, who points out that few retail failures leave punters out of pocket the way big-ticket specialists’ collapses can.
Some MFI customers lost their deposits when it went down, and stories of consumers’ problems were widely reported in the press. Even before its demise the retailer’s poor reputation was evident in jokes that its initials stood for Made For Idiots or Must Find the Instructions.
But while any new owner of a dead brand faces challenges, some are more manageable than others. In March last year online retailer The Hut bought the rights to the Zavvi brand, which had collapsed at Christmas 2008. In that case, few customers lost much money although some were unable to redeem vouchers.
The Hut chief executive Matthew Moulding believes there was still sufficient strength in the brand to warrant its relaunch. At the time he called Zavvi a “well recognised high street brand” and a “major player in entertainment retail, both in the UK and Ireland”.
It was reborn as an online-only entertainment retailer, selling music, games and books, as well as electricals, clothing and gifts.
The Hut was not available for comment, and it is not known how well the website is trading, but Moulding has said he wants to buy more struggling brands to turn into pure-play sites as it guns to become a serious competitor to Amazon.
“There are a number of businesses struggling on the high street that are good brands and often have a good online business,” he said last year. The Hut, for example, attempted to acquire Woolworths but was pipped to the post by Shop Direct.
But surely in some ways it may be better to launch a business from scratch, rather than fighting preconceptions about a tarnished brand from disgruntled shoppers who had their fingers burnt the first time around?
Butler says that one advantage for Walker Group is the volume of publicity it is receiving since buying the brand. A launch of a new kitchens and bathrooms business by the little-known firm would probably have fallen under the radar, but with the well-known MFI name people are taking an interest.
He adds that the firm may live off that publicity for a while to launch the business, before considering converting it to Walker. “I can understand the superficial attraction to fame, so they may lean on the brand name at first for the fame it brings,” he says.
Back from the brink
Outside retail there are some good examples of brands being resuscitated. Skoda, the car manufacturer, was for years the butt of many jokes, but the firm worked hard on turning around perceptions of the brand. Butler says Skoda achieved a “phenomenal marketing exercise” and that thanks to its creative advertising Skoda is “now evaluated on parity with other brands”.
The Mini has become a superbrand, according to Butler, despite its former parent British Leyland’s history of financial woes.
And in retailing, there have been great successes in bringing brands back from the brink. Asda’s turnaround by Archie Norman in the 1990s has become the stuff of legend.
The grocer was in such dire straits that Norman was the only applicant for the job of chief executive in 1991. After an incredible turnaround, Asda was eventually sold to Walmart for £6.7bn in 1999.
Norman has recently taken up the chairman’s job at struggling broadcaster ITV, where shareholders hope he can work the same magic onto its business.
Butler says: “Asda was taken to the edge, able to look over the edge then got itself together. If you have a brand brought to the brink like Asda, you bring someone like Archie Norman in and turn it around. It’s not about the detail, it’s about the bigger picture - what makes you different?”
Next is the product of a rebranding exercise conducted by fashion guru George Davies in the early 1980s.
He was hired by tailor Hepworth to refocus the company in 1982 and went onto redesign the business and call it Next - turning it into one of the most successful high street fashion chains in the country.
But repositioning a damaged or extinct brand is easier said than done. It all boils down to trust, and if that has gone then it is an uphill struggle to reclaim it. As Butler says: “You can’t trade in retail without trust.”
Rarely has a collapse of a company sparked such an outpouring of emotion as Woolworths’ administration and subsequent closure of stores in January 2009. Well-known business people were keen to buy the retailer from administrators, including Ryman owner Theo Paphitis and Iceland boss Malcolm Walker.
But it was Shop Direct that eventually purchased the Woolworths brand along with the retailer’s well-regarded kidswear label, Ladybird. Shop Direct subsequently launched them online last year.
Shop Direct chief executive Mark Newton-Jones says that the retailer did the deal because of the “huge affection” the British public has for the Woolworths name. He says: “We had the scale and pace to be able to reinvent Woolworths.
We talked to millions of families to find out what they loved about Woolies and what they’d like to see brought back. What we are doing with Woolworths is therefore different from the past. It is presently online only, which is where people are spending more and more time shopping.”
Although many would argue that Woolworths had lost its way, and that those people feeling sentimental about its loss had not been in a store for years, Newton-Jones says it was not hard to stoke interest in the Woolworths brand on relaunch.
“People never fell out of love with Woolies,” he says. “Woolworths is an iconic British brand and people hold a great deal of affection for it. More than 1 million people registered to follow us on social media in the run-up to the launch.” He maintains that the “strong brand loyalty” for Woolworths still exists.
Shop Direct has tried to re-energise the brand, focusing on “making Woolworths a source of fun, playful ideas and products for the family”, says Newton-Jones.
He points out that being an online retailer allows it to offer a wider range of products across categories such as toys, gifts, children’s clothes, entertainment, electricals and the iconic pick ‘n’ mix.
In the first week of Woolworths.co.uk’s trading, 1 tonne of pick ‘n’ mix was sold.
Newton-Jones would not give figures for the website, but says the relaunch “generated a lot of interest”. Since launching in June last year, Woolworths has received “well over 25 million visitors” and has “delivered on targets” according to Newton-Jones.
Ladybird is “performing well” and continues to expand into more areas including toys, nursery and toiletries. Ladybird is also licensed internationally, in countries including the United Arab Emirates, Australia, China and India.
Shop Direct has not ruled out returning Woolworths to the high street.
Books etc: A New chapter
Books etc was formerly owned by Borders UK and collapsed into administration as its parent did, in November.
It was later bought by Capital Organisation for £62,000 and relaunched as an online-only operation in February. Books etc ecommerce director Tom Chalmers says it was not hard to relaunch as the brand was largely unscathed by association with Borders.
“Books etc is an untainted brand in a way,” he says. “Our research showed that the Books etc brand remained undiminished despite Borders’ administration - it was seen as a victim of it if anything.”
He says that there is an “affinity” with Books etc, and “huge loyalty” within the book industry, which enabled Capital to launch the website - a “modern version of Books etc”, according to Chalmers.
He says that the site is “going really well”, having increased the number of titles it carries by 50% to 1 million books.