The Wall Street Journal featured two interesting articles last week which provide evidence of a continuing lack of skills in basic business management.
One piece concerned Zale jeweler's self-inflicted wounds over the two years. The chart at right (click on it for a full size version), from Yahoo, depicts the company's performance, relative to the S&P, for the past 5 years. Sure enough, the stock price has slid recently. What's interesting is that it was merely mediocre prior to that. It hadn't really fallen steeply since 2003.
According to the WSJ article, CEO Mary Forte assumed command and unilaterally took Zale from its low-end positioning as a purveyor of inexpensive diamonds, and frog-marched it upscale. Evidently on the basis of personal hunch and her affinity for upscale retail goods, Forte radically changed product mix and marketing plans. While the article paints a confused picture in which a board member, now interim CEO, alleges that Forte did not disclose the radical nature of her plans, a senior marketing officer claimed that she was refused a meeting with the board to explain the extent of the changes.
I find it amazing that, in this day and age, a major, albeit low-end, retailer like Zale could experience such seat-of-the-pants strategy and marketing shifts, amidst poor communications. As I have written regarding Wal-Mart's attempts to move upmarket, this kind of change is always fraught with risk. It's rare in retailing that a major company has successfully moved upmarket without taking a very, very long time to reposition itself.
A few days earlier, the WSJ ran a book review of a new tome from two BCG consultants. It is entitled, "Treasure Hunt," and provides the shocking news that consumers sometimes buy on price, and sometimes pay up for premium merchandise.
Stop the presses! Revamp the Wharton and Kellogg marketing curricula!
Really, are these guys serious? This has been a staple marketing truism since well before I went to undergraduate school in the late-1970s. That two consulting executives feel a need to illuminate the rest of us probably says more about their lack of knowledge of the past, and basic marketing, than about the novelty of their insights.
Truthfully, if these two guys, Michael J. Silverstein and John Butman, are surprised by these findings, would you want to pay them to learn more about business on your company's tab? The WSJ review by Laura Landro, for whom I have a good deal of respect, suggests that its unspecified citing of "BCG client work" for data, and its use of fairly generic insights on consumer buying behavior, makes it just the latest of a long series of popular rewrites of basic marketing knowledge and theory going back well over thirty years.
Once again, I wonder what it means that these authors thought they found something new, and someone thought this material of sufficient value to publish it. Probably that the average level of business acumen in US companies is far less than you really want to believe.
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