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Brands bashed by the recession embark on their rebuilding jobs
07 February 2010
All is in turmoil , and brands that have be en held up as stalwarts of Ireland’s Celtic tiger success are either no more, require serious makeovers or are having their bones picked over in the many liquidations and examinerships of the last 18 months.
During the boom years, mergers and acquisitions kept many of our top law firms busy, as businesses sought to consolidate, grow market share and build superbrands that could dominate their sectors. Acquiring other companies and absorbing them into one strong brand was the quickest way to grow a business.
Much of this activity was driven by private equity houses and financiers who didn’t always have an interest in the businesses they owned. Often, they knew little about how the brands they bought had built their reputations, and concentrated on the short-term objective of making profit.
Much of this activity involved huge amounts of debt being transferred to the balance sheets of these companies. A good example of this was the Newcourt Group, which grew its business rapidly through the acquisition of companies in such diverse industries as recruitment, security, student accommodation, call centres and so on.
Newcourt went into receivership last year, and the brands that it owned (Sigmar, Interaction, Ely Property) are now under new ownership.
One of the first major considerations for the new owners of these companies will be to measure the damage (if any), done to their brand reputations, which can often happen when a business fails. What to do? Revitalise them, absorb their operations into another brand or rebrand them?
All sectors, from retail to banking, have been affected.
The brands of our major banks, in particular, have taken a hammering. In some cases, trust has been seriously eroded.
The difficult task for many of our banks will be to reposition themselves credibly and, somehow, come out the other side with a believable proposition.
Anglo Irish Bank, for example, is endeavouring to reposition itself as a business bank, beginning the process of distancing itself from its past failures and association with speculative development. This won’t happen overnight, but at least it seems to be taking the right steps in distancing itself from recent mistakes by changing many of the bank’s senior personnel. Anglo isn’t the only bank that needs to restructure.
It is possible that our two main banks, Bank of Ireland and AIB, may end up nationalised or under some form of state control.
Probably the most visible changes to the Irish brand landscape have been in the retail sector. O’Briens Sandwich Bars, Budget Travel, EP Mooney, Sasha, Chartbusters and others have all gone through some form of liquidation, receivership or examinership.
While many Irish people were travelling the world buying real estate, O’Briens was hailed as a good example of the globe-trotting Irish company invading foreign markets and introducing a new Irish brand to the world. O’Briens is under new ownership and the brand is still likely to feature prominently on Irish streets, but others, such as Sasha, may never be seen again.
Brands that have gone under were a very visible part of our landscape. They were familiar and will be missed.
Those brands that do survive will, in all likelihood, need to re-evaluate their relationship with customers. Consumers are forcing brands to change their product offering, pricing and messaging. A recent McKinsey quarterly report talked about US consumers having switched to cheaper brands and products in the recession.
Many may never move back to the more expensive brands, as they have found that the cheaper alternative is at least as good as the more expensive branded product. When the recession ends, will it be business as usual?
In the Republic, many FMCG(fast moving consumer goods) brands have not passed on the sterling/euro currency devaluation (35 per cent in three years) to the local consumer. Irish consumers are aware of this.
What damage this is likely to do to FMCG brands and trust in brand owners, even blue-chip brand owners, has yet to be fully seen.
If, for example, you shop in Aldi or Lidl and buy cornflakes or other staple-diet items, you will see a differential of up to 35 per cent against the traditional branded products Irish consumers have been used to. How FMCG brands will go about winning back their lost market share will be interesting to watch in 2010.
Through all this carnage, opportunities will undoubtedly come for others either to acquire brands through receivership or liquidation and revitalise and reinvigorate them, or to step into the gap presented by the downfall of others, with a new and stronger brand proposition.
Already, a new brand that has become familiar to Irish people overnight, yet which doesn’t even have a visual identity, is Nama.
These new brands will airbrush the past, create new futures, change our landscape and start the process of building loyalties with the Irish public.
The O2 and Aviva Stadium have replaced the Point and Lansdowne Road, and these will surely not be the last to replace the old world order.
We’ve ratified Lisbon, created Nama and taken our medicine with the budget, so perhaps it’s now time to be cautiously optimistic about the future.
Irish brands (new and old) will play an important role in helping build confidence in the business community. Like the IDA, they have a job to do in selling Ireland Inc abroad. As Warren Buffett once said:
‘‘It takes 20 years to build a reputation, and only five minutes to ruin it." If you think about that, you will do things differently.
Niall Corcoran is brand director with design and brand consultancy Creative Inc. These opinions are expressed in a personal capacity
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