There’s an old saying: The Stone Age didn’t end because we ran out of stones.
No, the Stone Age was ended by the Bronze Age. And then the Iron Age, and then all the other ages that followed. But stones are as abundant as ever.
Ditto, a hundred years ago the automobile put the horse industry out of business. Except that it didn’t. Today, in the US, horses are a $3billion industry.
Horses are a thriving industry because they’re not trying to compete with Ford or Volkswagen. Instead, they went upstream, they catered to a niche- equestrian enthusiasts, ranchers, etc.
Similarly, if you’re opening up an ice cream shop, it’s really hard to compete with Blue Bell or Baskin Robbins. So what you do is go upstream, and offer magical, unique, premium expensive stuff that people are willing to line around the block for.
The alternative is bankruptcy. Of course, it is.
So here’s another story about a traditional industry caught in a similar bind.
Savile Row (a collection of small, independent tailoring firms clustered around Savile Row in London’s West End) is the home of bespoke, hand-made English suits. $4K a pop. Super niche.
But a lot of the small firms that make up the Row are in dire straits, thanks to the Covid pandemic.
People aren’t wearing business formal, for one thing. Most people are wearing Patagonia these days. They don’t need four or five suits, and a vast matching wardrobe or fancy shirts, shoes, and ties. They need one or two suits for special occasions at the most, with maybe a blazer. Which is fine.
Another thing: 75% of their business comes from the USA and abroad, but those people aren’t traveling to London anymore, because of the virus. Nor can Savile Row do their traveling trunk shows to places like New York, Atlanta, San Francisco, or Dubai, another big earner for them. So that side of the business has dried up.
What to do?
The smart move is to go upstream. Keep making the best suits in the world for a tiny but very elite client base, keep your overheads to a minimum, and be happy with your niche. Figure out innovative ways to cater to your foreign trade via Zoom or whatever. Digital handycams are far from ideal, but it’ll do until the vaccine arrives.
Where the firms are getting in trouble is by going down the road that put Brooks Brothers out of business. Getting themselves caught in the middle, with huge shopping mall overheads, without any of the scale of Ralph Lauren, diluting their offering by offering cheaper, “mass” products.
Cheaper products that nobody wants. People aren’t wearing “business formal” anymore, remember?
And they’re all tiny mom n’ pop businesses. They can’t afford the flagship stores that Louis Vuitton can. They can’t afford to have hundreds of people on the payroll, for a customer base that isn’t there.
It’s all Lose-Lose.
Watching them from a distance trying to weather the pandemic, yes, it sucks to be them right now, like it is for so many of us.
But what this pandemic is doing, is clearing away all the baggage they don’t need. The pandemic is forcing them upstream, whether they like it or not.
So in spite of everything, for those who understand what business they’re ACTUALLY in, we remain optimistic. And there you have it.
“Culture” is having its moment, and it couldn’t come sooner.
People are asking; “How do we maintain culture at distance?”, “What do we do about Diversity and Inclusion post-George Floyd?” and it continues on with concerns about layoffs, safety, politics, and health. There are answers. What we all need are relevant and sustainable strategies and tools to implement and grow our cultures.
We are looking to bring together CEOs and leaders of organizations that are focused on culture and engagement.
If you’re a senior leader interested in joining a new group we are organizing to share insights, practices, and leadership culture hacks, please email us. CLICK HERE.
I fully agree with your interpretation and contextualization of the time in which we live.
Your message is adapted to reality and can inspire the most lonely entrepreneurs.
PS – my text was written in Portuguese and translated by Google