Let me start this week’s article by asking
the world what has happened to Billabong? Some difficult questions need to be brought
to the table when a CEO declares its own brand worthless. In the space of 12
years the Australian darling has gone from hot property to on the verge of financial
wipeout.
A 400% loss in brand value over the course
of a year doesn’t just happen by chance. If a company has a clear, long-term
vision for where it wants to be and where it is going then brand value should
look after itself in most cases. Billabong are absolute sire straights and of
course the uncertainty surrounding the brand has ultimately led to closed
stores and job losses.
I wish I could try and find a positive to
balance this story with but the harder you dig the more dirt you find. Maybe
the higher echelons of the Billabong crew should have accepted a buy-out when
the company shares were valued at A$3.50 a share (now worth A$0.80).
There are two main reasons which some
believe led to Billabong’s downfall. The first is the success Abercrombie have
had at chipping away at the brand share of the Aussie brand as Billabong
expanded into different markets. The second is the difficulty Billabong has had
in maintaining its counter-culture brand image as the brand has spread across
International markets. So was expansion right for a company who built its value
on a small, niche audience? Maybe sometimes it is best to be a big player in a
small pond. Or maybe sustainable growth is achievable as long as you have a
clear, well thought out brand plan.
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