The downfall of Napoleon Perdis: What happens when your experience doesn’t match your brand
With the news of Australian beauty behemoth Napoleon Perdis entering voluntary administration, speculation has been rife as to where it all went wrong. A number of theories have been pitched and a number of reasons have been provided by the man himself; it’s right sizing the business, deals were done and undone, the downfall of Myer, sales moved online, big name players came into the market, greedy landlords and rising costs for businesses and consumers. There’s nothing to say that these aren’t legitimate reasons, or that they individually or collectively didn’t play a part. But what happened to their customers?
Except to say that there has been a loyal group of Napoleon Perdis purchasers that have been left shocked and stocking up at discounted prices, little has been said about the formerly lucrative customers that were fans and advocates of the brand. Where have they gone? Well firstly, was it even understood as to who those most valuable customers were?
I will put up my hand to say that from the time I was a young(er) woman, I have always purchased at least one of Napoleon’s products on average four to five times a year. There came a time when I was asked for my details in store whenever I purchased, but I was never told why, nor did I ever receive any benefit from doing so. I just knew that I had “an account” with them. While I didn’t purchase from the brand directly often, I would have had there been an incentive to. Instead I purchased from other suppliers where I did receive a benefit, such as Adore Beauty and Mecca where my loyalty was rewarded and my experience was personalised with recommendations and offers. So while they had what I assume to be some basic data about me linking my name, phone number and email address to my transactions, little was done further to understand my purchasing behaviour, personalise or incentivise me to continue to have a direct relationship with the brand. And as we women all know, beauty products are a very personal purchase.
As a consultancy, Arkade has made the decision to partner only with brands who are interested in having a direct relationship with their customers. That means gathering the information needed to form a strong understanding of the customer and their behaviour and preferences as part of the transaction process of supplying a product or service to a customer. But that doesn’t discount other interactions the customer has with the brand either. It just serves to enhance them through a series of behavioural and preferential trends that can be used to form the experiences they want before they know they want them themselves. The benefit is that you will always have the information available to understand what it is your best customers want. You can design your product, service and experience offering with what your customers want and needs at the forefront of every decision. Take for example two of the aforementioned reasons provided for Napoleon’s downfall; shoppers moving to online purchasing causing lower footfall to physical locations, and customers moving to other big name suppliers like Mecca and Sephora.
If a greater direct relationship was in place between the brand and the customer, more could have been done to predict and shift customers’ shopping behaviours. If the most valuable Napoleon shoppers (customers who shop with higher ATVs, and more often) had been identified as shifting their behaviour toward online, then incentives for them to continue shopping in this manner directly with the brand could have been implemented before they instead shifted into becoming at risk or inactive. Online purchasing behaviour could have been rewarded with free returns, free shipping, subscription purchasing or exclusive samples to provide customers the convenience of online shopping alongside a range of other benefits. Similarly, if greedy landlords were really the problem and foot traffic needed to be increased to justify rent, then makeovers, colour matching, sampling, and try and save the product to your profile could all have been offered in store making the experience worthwhile for the customers to move back to face to face purchasing. Instead, savvy beauty marketplaces such as Mecca and Sephora, who sell many brands but have a direct relationship with their consumers, were able to capitalise on the convenience, personalisation and benefits that the market were seeking and attract customers across to their offering.
So it seems that Napoleon lost sight of their customers while others were able to focus on them by using more customer centric business models. But what else did they fail to see? Well, they failed to see where their brand experience was disjointed from their customers’ expectations. Customer experience is often confused with customer service, and customer service is often seen as separate from the ‘brand’ leading to silos operating independently of each other and creating a confusing experience for the customer. A customer sees all your touchpoints as one brand experience, from their first exposure via a marketing channel, through to their first transaction, post purchase and (hopefully) repurchasing experience. Businesses that don’t understand this and operate cohesively, see this journey as marketing, supply chain, retail ops, distribution, customer service and back to marketing as separate steps and responsibilities. At Napoleon, the promise of a high end brand was not matched by a low end distribution model.
In Napoleon’s case, customers paid a premium price point for what was seen as a luxury, discretionary purchase. They were choosing a premium product, that was distributed through glitzy black and gold boutiques and high end department stores like Myer and David Jones, surrounded by brands such as Chanel, Armani and M.A.C.. They expected that in exchange for ongoing, higher value purchases, they would receive a premium shopping experience for a high quality product. With luxury comes exclusivity. But the brand didn’t deliver. Instead it popped up in more and more distributors such as pharmacies and retailers such as Priceline. As a result, consumers could no longer equate the brand as being premium. The price point seemed more and more unjustified as it became more readily available through lower end suppliers and pulled from more large department stores. It essentially became a ‘drug store’ brand at luxury prices and the disconnect starting forming in the minds of consumers. Instead, they were able to source premium beauty brands at the price point they were willing to spend through suppliers that were seen as both high end and providing greater convenience and personalisation.
So if that’s where it all went wrong, how can they now turn it around if or when a buyer comes along? Start with the customers and do the research. These two basics of doing business sit at the heart of Napoleon’s collapse. They failed to understand their customers, and they didn’t have the data and analysis to pivot their business in the way they expected. As they say, trying to be something for everyone, everywhere will eventually make you no one to anyone anywhere. Napoleon needs to see this as an opportunity to “right size” their business not only through their staff and stores footprint, but also refocus on who their best customers are, why they buy from them, how often, what they buy and how they choose to purchase. By understanding these fundamentals, they can rebuild with a premium offering that not only services their best customers, but one that matches the product and brand positioning for a cohesive, personalised, efficient and valuable customer experience.