Friday, September 16, 2011
Clothing chain Esprit has given a novel excuse for poor financial performance. The chain says that "it lost its soul." In other words, it expanded too fast and started to neglect customers. Now it is retrenching and trying to become trendy again. Good luck. It is hard for a clothing retailer to recover its customers once they have departed. There are too many competitors and new ones constantly. At least Esprit understands what happened to it. It concentrated on short-term growth rather than long-term gain. However, knowing what happened and doing something about it are different. The company has a long road back, and its positioning may not be clear in getting there.
Researching Espirit's drastic drop in revenue in the past years leaves me cringing in embarrassment for them. For a company to lose 98% of its revenue in a key market like Hong Kong makes me wonder if pumping additional money into the company by setting up design teams in Paris and China is even worthwhile at this point. In addition, by making a public statement and saying that Espirt has "lost its soul" does not encourage customers to purchase their products. While it is always good public relations to own up to one's mistakes and admit when you're wrong, I do not think in this case that Espirit should have taken the tone of whining about how poorly their brand is doing. It would have been more beneficial for them to plan their comeback in a silent way and have allowed it to slowly seep back into the market as a fashionable and cool brand versus making it known how downhill they have gone in previous years.