I took this photo at a random eyewear retailer in Melbourne Central.
The list of darling brands over expanding is long. And invariably it leads to the same place – over exposure, brand erosion and ultimate financial decline. And Tiffany & Co is about to enter the realm of it’s own undoing if the eyewear foray is any indication of future brand plans.
In publicly traded stocks as Tiffany & Co is – management are never satisfied with solid return on investment. They tend to have an unrealistic hope of something different – to outperform the market. Especially when they have done this for a number of years previously. (Tiffany & Co has been a share market darling through the 1990’s and early 2000’s) Management & investors alike soon develop a false sense of infallibility. And so when growth in the brands traditional categories and channels wanes – the brand extension tomfoolery begins.
Irresistible pressure to extend the equity of the brand is omnipresent for uber successful brands. This most often ends in the same result – diminished brand equity in the core part of the business, and eventually declining revenue.
The naysayers would now be getting ready to provide examples like Armani, D&G and Versace who are all selling eyewear. Truth be told, none of said brands have the allure and history of a Tiffany & Co. The Tiffany brand is clearly stepping down and over extending in the chase for growth as the share market investors demands.
This blog entry is more about success than start ups. It’s also about what happens when public pressure influences strategy, about the difference on decisions with multiple owners (shareholders & fund managers) versus being run by a single minded smart person or a handful of smart people. But when you start up starts to rock, or you hit the big time remember this parable.