Brands rise and fall with trends and economic shifts around the world, but some big brands have been such a dominant feature of our day to day lives – bombarding us with advertising, present in every shopping mall – that it’s hard to imagine the world without them.
It’s these powerhouse brands that seem to unfailingly weather economic storms and cultural shifts, turning a strong profit even despite the discreditation of their businesses. By modifying prices, products and – most importantly – marketing strategies, big businesses just keep getting bigger against the odds.
Even some of the biggest brands, however, have been known to falter briefly. A misstep, a slight failure to predict the changing tide, can mean that a seemingly intractable brand we know (and possibly love) could face extinction. The fallout from the global economic crisis, combined with the increasing dominance of online commerce, has seen many big name stores close down, revamp their budgets, desperately try to diversify online, and search for ways to stay free of bankruptcy. Eventually, when their attempts to remain afloat prove futile, we see historic brands slowly circle the drain of financial ruin until eventually they disappear entirely.
Indeed, it might surprise you just how close these big brands are to complete extinction…
Can a century-old department store survive in an age of online retailers and fast-paced shoppers? Maybe not. JCPenney is just one of several large department stores that has been hit hard financially in the past few years. The company tried to turn its fate around by hiring Ron Johnson as CEO in 2011; the creator of the Apple Store, Johnson tried to market JCPenney to a younger and hipper audience.
He spent millions of dollars overhauling the store… But his attempt was a flop. The younger crowd never came and the previous, older audience was put off by the new design. After Johnson was ousted, former CEO Mike Ullman took charge again. To date, his main focus has been returning cash flow to the slowly dying store, but his work may not be enough to keep the store from entering bankruptcy or disappearing completely.
Before the iPhone, Blackberrys were so popular they earned the nickname “crackberry”. But since the rise of several smartphone competitors, Blackberry has failed to keep up with the kind of technology consumers are demanding.
In fact, there has been so little interest in Blackberry that the Canadian company took a hit of $4.4 billion in its 2013 third-quarter. Recently, Blackberry hired Gyro, a B-to-B agency, to head-up a rebranding campaign. The goal, according to Blackberry CEO, John Chen, is to “make Blackberry synonymous with work.” But even the new Blackberry strategy to regain its reputation as the businessman’s phone looks doomed to fail, since Apple has recently begun developing a slew of business- and productivity-based apps.
As the originator of the toasted sandwich, Quiznos was once in close running with Subway for the most popular sandwich chain. But, with few sandwich options and a weak menu, Quiznos has lost traction among sandwich eaters -so much so that the company is considering filing for Chapter 11 bankruptcy.
Over the past few years, Quiznos has tried to close the leaks in profit by closing thousands of franchise locations. Left with only 2,100 locations in comparison to Subway’s 41,391 locations, Quiznos is quickly fading. And, with $570 million in debt, the sandwich chain may soon be obsolete.
10. Barnes & Noble
In the early 2000s, Barnes & Noble was a wild success with in-store coffee and an incredibly diverse supply of books. It represented the ‘big business’ putting local bookstores out of business, ‘You’ve Got Mail’ style.
But as hard copies of books were surpassed by their digital equivalents, Barnes & Noble – along with most other bricks and mortar bookstores – saw dramatically declining sales. Instead of going with the changing tide, the retailer dragged its feet for two years before it joined the digital wave. A little too late, Barnes & Noble tried to get into the ebook store game by developing the NOOK – the Barnes & Noble equivalent of Amazon’s Kindle e-reader.
But the book retailer just couldn’t keep up with Amazon’s sales, despite the large amount of money they invested in advertising. In addition to the obvious decline of print book sales, Barnes & Noble’s signs of decline were apparent in founder and chairman Leonard Riggio’s sale of almost one-quarter of his stake in the company. Liberty Media Corporation also recently sold nearly 90% of its investment in Barnes & Noble.
For the second time in just three years, Sbarro has filed and gone through Chapter 11 Bankruptcy reorganization. The reason for the company’s financial downfall: less foot-traffic at malls, where the chain houses the majority of its franchises.
After closing 182 U.S. locations in February of 2014, Sbarro was approved for bankruptcy reorganization in May of 2014. During their reorganization, Sbarro moved their company headquarters from Melville, New York to Columbus, Ohio. They also took the first step in re-branding themselves by opening their first set of Pizza Cucinova, which allow customers to build their own pizzas.
Sears was once known for its massive catalog sales and availability of anything from clothes to tools. Kmart was famous for its huge discounts in big-box items. So the two seemed a good pair, which must have been what Sears Holding Corporation assumed when it merged the two stores in 2005.
Yet, since the merger, the company’s sales have dwindled, leading to what most are saying is the end of Sears Holding Corporation. This year the company will close 46 Kmart stores, 30 Sears stores, and 31 Sears Auto Centers. The move to cut costs is not a surprise considering the company had a $1 billion loss in the first half this year. Sears Holding Corporation will be able to find $625 million through loans, most of which will come from CEO Eddie Lampert’s hedge fund, though the loans may not be enough to keep the company from completely disappearing in the not-so-distant future.
7. Toys R’ Us
As one of the largest toy store chains in North America, Toys R Us used to be the place to go for holiday shopping. In fact, the majority of Toys R Us’ revenue came from fourth quarter sales. But for the past three years, Toys R Us has seen a major decrease in profit. Antonio Urcelay, Toys R Us’ CEO, says the company has two years to stabilize before debts are due. So far the plan to keep Toys R Us afloat is to update their mobile app and give their stores a much-needed overhaul.
If you were a fan of FarmVille, you may be surprised to know that the social networking game’s creator, Zynga, may soon disappear. According to the Huffington Post, since the brand’s rise in 2007, Zynga has had a tough time remaining relevant with Facebook fans and has slowly been beat out by other social-networking games like Candy Crush.
Zynga took a major hit with its acquisition of OMGPOP, the gaming company responsible for Draw Something. The purchase of OMGPOP seemed like a good idea, but just one month after the purchase, fans of Draw Something went from 15 million down to 10 million and have continued to dwindle.
5. Abercrombie & Fitch
During the 1990’s, Abercrombie & Fitch made millions by becoming the ‘coolest’ brand for teens to wear, popular with teens who wanted to look exactly like the rest of the kids in class. But it seems today’s teens are less interested in fashion conformity, seeking out unique fashion that represents their individuality. Add to the shift in fashion trends, Abercrombie & Fitch’s ridiculously high prices and a huge PR disaster when A&F defended the fact that they don’t cater to larger sizes… And you have a recipe for a failing company.
Abercombie & Fitch CEO Michael Jeffries knows his company is in trouble and is trying to turn around the decrease in sales, even introducing larger sizes. But with brands like H&M and Forever 21 cornering the high street fashion market, Abercrombie & Fitch is floundering.
4. Radio Shack
Long gone are the days when Radio Shack had a store in every major city across the U.S. and a continuous stream of revenue coming in. Since the rise of online electronic retailers, Radio Shack has been sucked into the abyss of bankruptcy and possible extinction. The company reported a net loss of $119.4 million in the second quarter of 2014.
In order to compensate for their financial losses, Radio Shack planned to close over 1,000 stores, but its lenders declined the company’s plan for fear that using so much money to buy out leases was financially irresponsible when it would not guarantee Radio Shack stability. Lenders allowed for only 200 store closings, leaving Radio Shack scrambling to find cash flow from additional lenders. If no one is willing to finance the sinking company, bankruptcy or total liquidation may be the company’s only alternative.
The digital camera market has fallen with the rise of smartphones. Only a few brands – largely used for professional photography – such as Canon, Sony, and Nikon are still turning a profit. Olympus has failed to remain a lucrative company in the face of iphone dominance – their worldwide sales have dropped by millions and are not turning around. Olympus plan to focus on their high-end SLR cameras and cut their compact camera sales to regain a hold on the market.
Since its founding in 1919 by Jack Cohen, Tesco has seen an almost continuous growth in sales. In the 2000s, Tesco grew to be the almost unrivalled king of the high street, as the United Kingdom’s leading grocery shopping service both in-store and online.
However, less than competitive prices saw Tesco losing customers to popular German discount stores like Aldi and Lidl which began to spring up all over Britain. Even worse for the grocery service, The Serious Fraud Office began a criminal investigation into Tesco’s accounting and possible irregularities, as the retailer may have overstated profits by hundreds of millions. Since the news on this scandal broke this year, the company’s value has dropped by over 50%.
1. Lululemon Athletica
Take a recall of see-through yoga pants and add a few very profitable competitors and you’ve got the beginning of Lululemon’s decline. In 2013, Lululemon recalled 17% of its bottoms because the material was incredibly sheer. Instead of quietly fixing the low quality material, Lululemon’s founder Chris Wilson publicly suggested that the see-through nature of the pants was not a material issue, but rather an issue of customer’s purchasing the wrong size.
Wilson was ousted, but the damage was done and customers looked to other brands like Gap’s Athleta and Under Armour for their athletic apparel.