By now all of you have heard about our 85-year-old, third-generation, well-loved national confectionary brand Darrell Lea going into administration two weeks ago. A tragedy many will cry, and I concur that it may be very sad for the employees of the company, pending what the commercial outcomes of administration bring.
There are two take-home messages for all business owners and marketers in the Darrell Lea administration… nostalgia doesn’t make you open your wallet, and bigger is not always better.
1. Nostalgia doesn’t make you open your wallet
We don’t buy Darrell Lea purely because of the nostalgia we have for the brand anymore. Those times are gone. Instead, the Australian premium confectionery market has been swept up by large-promoting international brands and the market positioning of Darrell Lea pushed into competition with supermarket labels who have clearly had deeper pockets or more current branding and positioning drive. Sales at Darrell Lea have fallen 20% over the last five years and all the while, the company has continued to expand their costs and number of physical retail outlets.
2. Bigger is not always better
Your business does not always improve profitability, brand penetration or success with size and scale. For some businesses, more stores means more sales, greater profit and a wider network to share your costs over. For others, more stores means greater cost of distribution, management, production and advertising to have the reach you need to produce volume sales to satisfy independent owners’ demands of ROI.
There is no doubt about it, Darrell Lea was once a powerhouse of Australian retailing, with reports in the Sydney Morning Herald of there being 2000 small independent outlets and 70 stores owned by the company in its heyday. It also began exporting its products internationally in the year 2000, reportedly selling it in 10,000 outlets by 2007 and no doubt more now.
The Darrell Lea brand was built on nostalgia. All the packaging is traditional, and steeped in decades of tradition. I know from my own experience that their Rocklea Road easter egg has tasted and looked the same for many years (and will be sorely missed in our house if it goes away).
But getting away from chocolate for a minute, it is the same with a services business… I am not going to buy your services simply because they have been around for 10, 30 or 40 or 85 years, or because they are branded the same way they were 50 years ago, steeped in the past.
Instead, I am going to buy it for the following reasons:
- Because the team you offer me is the most skilled, experienced and capable for the job I need done (right now not 10 years ago),
- because my network of trust told me I should or could rely on you to do a good job (you are trusted by someone I trust), or
- because I have bought from you before and you continue to communicate with me showing me you care, keeping your business front of mind and demonstrating you can still provide a good service (or because you can be bothered maintaining your existing client relationships).
Whether the Darrell Lea we know today survives or changes forever, don’t forget the take home message… that you cannot market your business on nostalgia alone.