A look back at the last decade: 10 lessons from 10 defunct brands
Every brand strives to hit a point of relevance that drives a steady flow of sales. But with technological advances changing the business landscape so rapidly, brand relevance is harder to achieve – and even more difficult to retain. The last decade has taught us a lot about creating that relevance, and what can happen when it is lost. Let’s take a look back at some of the big brands that went defunct in the 2010s and the lessons they can teach us about doing business in the decade ahead.
Hummer (RIP 2010)
Lesson: Consumer preferences are fickle and sometimes hard to predict, but staying five steps ahead of them is key to survival.
Its audacious off-roaders captured the fin de siècle, faux-rugged ethos of the early 2000s. But Hummer sales tanked during the 2008 oil-price spike, and Hummers ended up on the wrong side of the “new frugality” that followed the Great Recession. The end came after parent firm General Motors declared bankruptcy in 2009, and thinned its divisions from eight to four as part of its restructuring. For a while it looked as if a Chinese company would buy Hummer from GM, but when that deal fell through, Hummer was put out to pasture.
Borders (RIP 2011)
Lesson: Always. Be. Adapting.
Founded in Ann Arbor in 1971, by brothers Tom and Louis Borders, the bookstore grew to 21 locations. Then in 1992, the Borders brothers sold the chain to Kmart for about $125 million. Three years later, Kmart spun off the brand along with another of their book brands, Waldenbooks, and the company went public, expanding throughout the 1990s. Ultimately, though, the store was unable to compete with the rise of the Internet, technological advances in e-readers and digital music, and online retailers. After 40 years in business, the company’s original Ann Arbor store closed up shop in 2011, and the company declared bankruptcy. Rival bookseller Barnes & Noble (BKS) acquired Borders’s trademarks and customer list.
Palm (RIP 2011)
Lesson: Being a first mover can sometimes be a curse, fast track you to irrelevancy.
Palm, Inc was a company that focussed on the production of personal digital assistants (PDAs) and other electronic devices. The brand is known for the development of the first PDA and the first versions of webOS multitasking operating system for smartphones. In 2010, Palm was purchased by HP for $1.2 billion. HP would continue to create a line of WebOS products but without the Palm name. After poor sales, HP ended production of Palm products and the brand as a whole in 2011, putting an end to the 19-year history.
Kodak (RIP 2012)
Lesson: Embrace the pace of change.
Eastman Kodak Co., more commonly referred to as Kodak was founded in 1888 and was the dominant force in photographic film for decades. Kodak filed for bankruptcy in 2012, blaming in part the overwhelming shift to digital photography. At its peak in 1996, the company was the fifth most valuable company in the world with revenue reaching nearly $16 billion, compared to $16 million in 2016.
Blockbuster (RIP 2014)
Lesson: You have to plan for disruption that doesn’t yet exist.
Blockbuster was an American-based company that offered home movie and video game rental services through brick-and-mortar stores. It became known worldwide in the 1990s but later suffered at the hands of competition from Netflix and other video-on-demand services. Blockbuster turned down a sale offer from Netflix for $50 million in the year 2000, but was forced to file for bankruptcy in 2010 after declining sales in the years that followed.
Gawker (RIP 2016)
Lesson: Pushing boundaries is tempting but it can’t come at the expense of reputation.
Gawker Media’s path to bankruptcy began with a decision by Gawker.com editors to publish a racy video of Hulk Hogan — without the permission of either Hogan or his partner. Hogan sued, arguing that this was a violation of his privacy. A Florida jury agreed, awarding Hogan $140 million in damages earlier this year. Gawker Media didn’t have $140 million, so the company was forced to declare bankruptcy. The company was put up for auction, with the proceeds used to pay part of Hogan’s judgment.
RadioShack (RIP 2017)
Lesson: Evolve the look and feel of your brand to suit the times.
RadioShack isn’t completely dead, but the brand has taken a major hit for various reasons – in addition to bad business, the brand name and imagery didn’t evolve fast enough to be relevant in the electronics age.
Founded in 1921 and bankrupted for a second time this decade in 2017. At its peak in 1999, RadioShack operated stores in the United States, Mexico, United Kingdom, Australia, and Canada. But after a disappointing co-branded partnership with Sprint, which was launched to help RadioShack better compete and Sprint to scale its own business, the company declared bankruptcy for the second time in March 2017 (after previously doing so in 2015).
Toys “R” Us (RIP 2018)
Lesson: Customer experience is your brand.
For Toys “R” Us, excessive spending in the wrong areas led to debt that prevented investments in the customer experience; this created the third largest bankruptcy in the US (after Kmart in 2002 and Federated Department Stores, now Macy’s, in 1990). Mounting debt, due to a leveraged buyout by a few private equity firms in 2005, along with competition from Amazon and other online merchants, caused Toys “R” Us’ ongoing crisis, which culminated in a Chapter 11 filing in September 2017. Despite hopes of a turnaround amidst its Chapter 11 filing, in March 2018, the company ultimately decided to close all of its stores, after a disappointing holiday sales period.
Theranos (RIP 2018)
Lesson: There is so much power in great story-telling, but your story has to be true.
Elizabeth Holmes had a great idea – and she sold it well. The problem was, she was lying to investors about the sophistication of the technologies her company had developed.
Theranos raised more than $700 million from venture capitalists and private investors by claiming its technology was revolutionary and that its tests required only about 1/100 to 1/1,000 of the amount of blood that would ordinarily be needed and cost far less than existing tests. This led to a $10 billion valuation at its peak in 2014. But the house of cards came crashing down starting in 2015, when investigative reporter John Carreyrou of The Wall Street Journal questioned the validity of Theranos’ technology. From that point forward, the company couldn’t regain investor or consumer trust (for good reason) and finally folded in 2018.
Payless (RIP 2019)
Lesson: Don’t put all your eggs in one basket.
The decline of physical retail is well documented. Direct-to-consumer brands with a hyper-focus on specific products have taken the lead.
After emerging from its first bankruptcy in late 2017, Payless filed for bankruptcy once more on February 18, 2019. Struggling with the challenging retail environment and significant debt from its first foray into Chapter 11 (while managing a massive footprint of about 3,400 stores in 40 countries), Payless announced it would be closing all 2,100 of its remaining stores in the US and Puerto Rico. Payless represents one of the largest retailer liquidations to date, according to the Wall Street Journal.
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Wishing everyone a happy holiday season and New Year!