How to find your company’s perfect size

Questioning brand size

Is flexibility replacing footprint as the new black for global brands? That’s the inevitable question as Walmart announces a major redraft of its stores policy.

For years, big box had a simple-to-articulate strategy. Grow. Spread. Increase capacity and use that to literally make your presence felt. It’s a mantra that many still subscribe to – grow the brand and success will follow. But as e-commerce re-orients how and where consumers buy and the very role of the physical store, the likes of Walmart are realising that expansion is at risk of killing experience. The company is literally spread too thin – with up to one-third of its stores not meeting Walmart’s own standards. The same is true in fast-food too. And in many other sectors where models like franchising have encouraged scale-thinking, sometimes at the expense of quality thinking.

Biggest vs best

By the way I have nothing against franchising. I think it can be a hugely powerful and successful strategy. As long as replication for its own sake does not become the brand’s biggest priority. Because when the size of your reach is disproportionate to the needs of consumers or it hinders your reaction times, then you literally have a growing problem.

Walmart CEO Doug McMillon is quoted in the article as saying, “Being the biggest and being the best are not the same thing.” And whilst that in itself is a significant statement for the world’s biggest retailer, it’s one that many of the world’s largest brands need to be paying attention to. Are you the size of brand you are because that’s where you draw comfort, or are you that size because it’s where you are at your prime in terms of resources, influence, profitability and market share?

The increasing importance of flexibility

The reason flexibility is becoming a stronger priority is because the ability to respond is more important than the ability to just keep growing. Especially as more and more factors come into play. Big brands increasingly need to balance momentum with dexterity. They need, as I like to say, to juggle the juggernaut. The threats to what they do are no longer confined to shifts in competitor behaviour. Increasingly they are unforeseen changes in expectation, concern, emphasis or morality.

The killer app in big-box of course has been shipping. Presence is no response to the likes of Amazon’s finely honed delivery services. Amazon’s strategy has worked so successfully because it has turned the very premise of its biggest physical competitors – visits – against itself. The reason why Amazon’s competitors were motivated to expand in the first place has become the reason they now need to rethink. And while there is much talk of the progress being made in integrating physical and digital spaces, the real issue for me is not how do big-box brands get the systems to work seamlessly, it’s how do they define the value in every type of visit at any time. When one-third of your stores are not up to scratch, the incentives against physical visits, for example, are simply too high.

Size still matters but it’s not everything

Proctor & Gamble caused ripples some time back when it reviewed and significantly streamlined its product portfolio to include only its most profitable lines. I think we’re going to see more brands across many more sectors emulating that intensification of their portfolios in the years ahead. Size still matters, especially when your brand seeks to be seen across the world, but the sweet spot that the world’s biggest players will be looking for is one that balances a more selective portfolio of deeply profitable brands with a scope of operation and distribution that represents the very best in responsive mass.

Note: A version of this post has been published elsewhere under the title Brand Growth: Think Flexibility Over Size.


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