by Beth Vanni – Vice President
How many women do you know that can build an international conglomerate of products and services reaching over $1b in annual retail sales and do so with relatively limited distribution channels? (and, in part, while serving time in a minimum security prison – but that’s another BLOG)
Martha Stewart Omnimedia has built a brand now synonymous with home style, elegance and efficiency. What started as a line of cooking utensils and bowls branching out from her personal catering business is now a massive product portfolio including artificial Christmas trees, bathroom fixtures, pet food and accessories, furniture and now destination wedding events.
It’s a classic story of how choosing the right channels can make or break a strong brand.
Martha Stewart products were initially sold mostly directly on-line, then quickly branched out in 2000 to her first big exclusive retail deal with Kmart Stores. Kmart was instrumental in helping the “average” woman get access to the type of beautiful linens, well made cookware and home décor items they had only seen in the Martha Stewart Living magazine. Product distribution grew from there to include Home Depot for paint, wallpaper and finishes to half a dozen other retailers (Macy’s), PetSmart (dog food and accessories), Michaels and Joanne Fabrics and most recently Staples for the company’s new line of office furniture and supplies.
Most attribute Martha as being a shrewd businesswoman, negotiating her national retail channels very selectively and acting like the ultimate mother-hen in policing the marketing and merchandising of her brand at all levels. She chose only one national retailer, Kmart, to carry her home goods line for nearly 10 years. With that chains’ declaration of bankruptcy in 2003 and subsequent store closings, royalty payments suffered and Martha had to diversify. But, now at $1b in retail sales, many criticize the queen of crafts and cooking to have taken the product lines and their distribution channels too far. Does dog food and pastel-blue dog bowls really advance the lifestyle mogul’s brand statement and differentiation? Do they need to be creating premium priced rubber bands and sticky notes to take advantage of Staples 1500+ retail stores’ reach?
Martha’s product diversification reminds me of the power of that age-old marketing strategy of creating unique product configurations and packaging for different customer targets – then, aligning those products with the appropriate channels to reach target customers. Meaning, it seems she hasn’t done much of this. Is there really that much difference in the 22 – 45 year old female consumer who shops at Target vs. Kmart vs. JCPenneys? Does Martha need to have the same lifestyle products in all three? The JCPenneys deal is supposed to start in 2013 and include mini-retail storefronts within 600 of the department store’s locations. This deal feels more to me like good old fashioned real estate leverage than reaching new customers or launching new products. Doesn’t’ the level of retail exclusivity not only drive higher royalties back to Martha Stewart Omnimedia but also sustain that image of an elegant, cleanly designed, and high quality product? I mean, you don’t see mini storefronts for Martha’s goods in Walmart, right? My guess is that’s more likely because the notoriously penny-pinching retailing giant won’t negotiate on the royalty payments Martha demands.
My personal opinion, Martha has built a strong mystique around her domestic standards and has fought hard to build quality, stylish products that still bring her target customer lasting enjoyment and value. The issue isn’t so much how far afield she’s gotten on slapping her brand on a broad product set. It’s that women want that brand to be special, different. They want their house to look a bit better than their neighbors. With home goods that not just everyone can or will buy. And, the way to achieve that is to make the channels Martha Stewart uses to get to market equally bought into their own uniqueness and reach, actively marketing that premium image and elegant brand. If there comes a time when every store in the strip mall carries Martha Stewart products, that mystique fades just like the fluff on your egg whites when you don’t whip them long enough.
Does the channel analogy resonate with you? Share your thoughts…..