If you grew up during the eighties or even the early nineties, there is a strong chance you were a user, or had at least heard of the Sony Walkman, the iconic portable cassette player which was a must-have for any teenager. If you asked any American gadget-geek in the eighties about his favorite place to purchase electronic items, his answer was sure to have been RadioShack – the storied consumer-electronic goods retailer.
RadioShack and Sony Walkman are among a host of famous brands that dominated their respective markets but failed to sustain the momentum and dropped down from the dominant position which they once occupied in the minds of consumers. There are many reasons why some signature brands eventually fade away, the leading one being poor management as companies fail to innovate, thus preventing their brand from keeping up with evolving customer needs. Mergers and acquisitions are also at times responsible for the demise of a brand as many companies fail to sustain the hold they had on consumers under new leadership.
Below, we take a look at five iconic brands which were once highly regarded but have now virtually vanished from the market. The brands were chosen based on the immense popularity that they garnered during their heydays. A range of brands from various sectors have been selected in a bid to understand the dynamics which are at play in particular industries that brought down these brand kingpins.
We begin our list with a brand that was the result of a joint venture between Japanese corporation Sony Corp. (SNE) and Swedish telecom giant Ericsson (ERIC). In 2001, immediately after the venture was finalized, Sony-Ericson gathered tremendous momentum and was ranked the thirty-sixth-best brand on Interbrand’s list of hundred top brands in the world; ahead of established names such as Heinz and Louis Vuitton.
Consumers fell in love with the range of mobile phones churned out by Sony Ericsson; among the most popular ones was the T68i, one of the first mobile phones which came in a spectacular range of colors.
Over time however, Sony Ericsson lost its footing in a market increasingly dominated by Apple (AAPL) and Samsung (SSNLF). Apple clearly demonstrated unique vision which revolutionized the mobile phone industry when it came up with the iPhone, and Samsung successfully caught on to the trend. Sony Ericsson, on the other hand, lost touch with its consumer base and failed to innovate its designs. This turned out to be one of the major factors behind the brand losing the leading position it once held among consumers.
At the turn of 21st century, Compaq accounted for almost one-fifth of PC sales in the US. It was ranked the 24th most valuable brand in the world by Interbrand, and most American households boasted a PC made by Compaq. Compaq was purchased by Hewlett-Packard (HPQ) in 2001 in an attempt to boost its own sales, and compete with computing industry giant, IBM (IBM).
In hindsight, it was perhaps a wrong move at the wrong time as both HP and Compaq suffered in the aftermath of the merger. With smartphones and tablets transforming the computing needs of consumers, PC sales were dealt a severe blow. HP’s management was not too generous in the way it phased the brand out of their portfolio and today, barring a few Wal-Mart stores which may still sell the brand, no other retailer, not even HP’s own website, sells Compaq PCs, barring a few low-end systems.
Yet another brand that went down due to corporate mismanagement – and a bit of bad luck - is Pan American World Airways, more commonly known as Pan Am. From the time it began operations in 1927, till its unfortunate demise in 1991, the airline was considered United States’ leading international air carrier. Pan Am is responsible for coming up with several innovations that shaped the airline industry and is often regarded as the cultural icon of the twentieth century. During its peak in the late 1960s to the early 1970s, the airline had cash reserves of over $1 billion and proudly advertised itself as “America’s Most Experienced Airline.”
All of that did not last long as Pan Am started to become a victim of its own success in the 1980s. The brand’s iconic image made it a prime target for terrorists. In 1988, the unfortunate bombing of a Pan Am flight over Lockerbie resulted in 270 deaths and further cemented its dangerous reputation among travelers, who began avoiding it for safety reasons. Another factor that resulted in the brand’s downturn was the 1970s oil crisis which increased the airline’s operational costs, cutting into its profit margins. It is said that no one could truly follow the foresight of the legendary Juan Trippe, who founded the airline. Particularly during its downfall, the airline genuinely lacked a good leader who could have saved the once iconic brand from meeting its demise.
Founded in 1879, Woolworth also follows a path similar to other brands which vanished due to poor management and a failure to keep up with changing consumer needs. In the 1970s, Woolworth was the largest departmental store in the world and pioneered the concept of five and dime discount stores as well as variety or department stores in order to reduce overhead costs and increase profit margins.
The rapid expansion, which was a result of the retail chain’s popularity, soon became the leading reason for its downfall. The retailer moved away from the concept which it had pioneered, towards specialty stores. It failed to compete with the likes of Wal-Mart, which began to increase its footprint in a market that was once heavily dominated by Woolworth. During the late 1990s, Woolworth closed all its stores and changed its corporate name to Venator Group Inc., which was again changed to Foot Locker Inc. (FL) in 2001.
The final brand on our list is the once famous American bookstore chain, Borders, which was founded in 1971. Over time, it expanded internationally and opened 650 stores in local as well as foreign markets. It employed nearly 20,000 people across its stores. The brand was known to be more than just a book store; it had a contract with Starbuck’s subsidiary, Seattle’s Best Coffee, which operated cafes inside book stores to create a novel ambience for customers.
However, with the rise of e-books and falling demand for hardcopies, sales for the bookstore began to decline. Though the chain launched an online store, it faced a hard time competing with Amazon in the e-books category. Amidst declining sales, Borders filed for Chapter 11 bankruptcy. Its website was bought by rival Barnes and Noble (BKS), while its online store was taken over by Kobo Inc.
Lessons for Today’s Popular Brands
The bottom line from the above scenario is obvious. Brands cannot afford to rest on past laurels and must strive to keep up with changing industry dynamics and evolving consumer demands. Particularly in today’s world, where consumers can access a plethora of information online, brands cannot afford to charge a heightened premium unless they are delivering a crackerjack of a product. Furthermore, tech and fashion brands need to keep a strict eye on their rivals, particularly on upstarts that can gain instant popularity following a positive review on social media. In this scenario – with the percentage of brand loyal consumers falling (according to an Ernst & Young study) – the one thing brands can NOT do is take their consumers for granted.