Entrepreneurs can be divided into those who choose to create a company from new and those who prefer to revive old assets. It reminds me of homebuyers who like to build their own houses, as opposed to those who decide to renovate period properties. In business, doing it all from scratch is, in many ways, a harder and riskier journey — but it allows the founder to design an enterprise exactly the way they want it.
Yet too often, investors and entrepreneurs ignore old brands that are capable of being rediscovered and reborn. The excitement of the new blinds them to the possibilities of reinventing tired classics. By contrast, the existing owners of outdated products often ignore the potential in their own back catalogues; it takes an outsider to see how to reposition a heritage name.
Sometimes external management must take the tough decisions needed to reignite struggling family operations. Both Clarks shoes and Dr Martens boots needed to outsource production to low-cost manufacturing locations in Asia to revitalise the businesses; in each case, it took outside executives to take the painful but necessary steps. The new leaders realised that what mattered was ownership of the intellectual property, accompanied by the right design and marketing skills.
BMW bought the British car maker Rover in 1994, and the acquisition was viewed by many as a disaster. From the wreckage, however, it salvaged the Mini and has given the iconic 1960s vehicle an astonishing new life. It is now selling almost 400,000 of them a year, nearly 20% of the entire BMW group’s vehicle sales, thanks to heavy investment in its Oxford plant.
Restaurateurs are always throwing away old names and spending large sums on new ones, partly because of vanity — but goodwill and recognition are valuable attributes; heritage can be attractive if deployed wisely.
I was chairman of the group that relaunched J Sheekey, one of London’s oldest eating establishments. I saw how the restaurateurs Chris Corbin and Jeremy King ingeniously revamped the premises and turned it from a half-forgotten backwater into London’s favourite fish restaurant.
Brands such as SodaStream have exploited the huge historic spend on marketing and global distribution of the home carbonated drink maker. This residual memory means the product has instant recollection among millions of customers. The original business was started in Britain in 1903 by Guy Gilbey of the gin distiller. It was bought from Cadbury Schweppes for a modest sum by some savvy Israelis in 1998 and taken public in the US in 2010. It is currently capitalised at almost $1.8bn (£1.3bn).
There are other vintage British products that have been forgotten here but prosper abroad, such as Royal Enfield motorbikes, going strong in India, and Peek Freans biscuits, popular in Pakistan and Canada. I suspect some of the food and drink conglomerates have many brands that are now languishing but, if pivoted, could take advantage of the fact that many of us grew up watching their TV adverts.
In truth, consumers have limited interest in brand histories. Companies such as Polaroid can go bankrupt twice — it did so in 2001 and 2008 — and yet still enjoy a remarkable renaissance as new generations discover instant cameras, even in the digital era. Converse sneakers also went bust in 2001, but Nike bought the brand for $305m two years later and has grown its revenue to more than $2bn, thanks to astute investment and Nike’s distribution clout.
An obsession with innovation and being trendy can blind entrepreneurs to the power of business history. Consumer affiliations forged in childhood and the teenage years can last a lifetime. Owning Brighton Palace Pier, I understand the importance of nostalgia. Restoring “Palace” to the name and keeping the entertainments and hospitality classic — rather than cutting edge — has been vital in retaining the public’s support.
Making a faded brand work in the 21st century means respecting the past, but making the offer relevant to a modern clientele. LVMH is a master at this in luxury fashion; among the brands it has rebuilt and successfully extended are Céline and Dior. Bernard Arnault has exploited the cache of esteemed but waning haute couture names and made them appealing to new generations.
I suppose thoughtful investors should — to use a metaphor — plant new trees but also tend to ancient forests in order to maintain diverse woodlands.