Bon-Ton’s demise reminds us that difference does matter

by Nigel Hollis | February 20, 2019

Bon-Ton may not be a familiar name to you, but it was a group of department stores in the U.S. that was finally liquidated in 2018. Right now Sears is in the news as it emerges from bankruptcy but if the new Sears is to succeed it could learn a lot from Bon-Ton’s failure.

Early in my presentation How Disruption Can Fuel Brand Growth I joke about the scale on one of my charts. The chart compares brands that grew across a three-year time frame with those that declined. The only metric that distinguishes the two types ay in youof brand is how different the brand was seen to be at the beginning of the three-year period. The scale seems far too large for the data being reported and I suggest that maybe the chart would be more impressive if I used a smaller scale. But then I build the slide to add in “disruptive” brands and dead or dying brands and we see why the scale on the chart is so wide. But now I guess the joke is on me because adding Bon-Ton to that chart would require me to widen that scale even further.

When I read about Bon-Ton last year I noted this quote from Phil Emma, a retail analyst with Debtwire, on Retail Drive,

"The risk [for] a store like Bon-Ton is the brands they stock are the same brands everybody else stocks and the brands you can buy direct. What's differentiated with them compared to any other retailer selling soft goods?"

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My suspicion was that the answer to that rhetorical question was “nothing”. And, indeed, that is what I found when I looked at the BrandZ database. Even for a small, regional department store, Bon-Ton was not perceived as different. Relative to what we would expect given their size and the strength of their competition dead and dying brands average -14 on differentiation (compared to +52 for disruptive brands). In 2015, Bon-Ton scored -37.

While it might have been possible for Bon-Ton to find a way to differentiate itself given time and resource, neither was available by 2015. In the past the company had taken on debt to buy out regional competitors, rather than invest in the brand’s own offering. As suggested in Emma’s quote, the other stores suffered the same problem that Bon-Ton did, and the increased debt load left the parent company struggling to finance day-to-day operations.

As Ben Unglesbee states in his Retail Drive article,

“department stores are being outflanked by even more competitors who can beat them on price, convenience, style and nearly every other area important to consumers.”

The challenge, of course, is to find something important to consumers on which a department store can deliver if it is not to follow in Bon-Ton’s footsteps. Something that the store can deliver on effectively that its low price, online competition cannot. Best Buy may have found that advantage when it comes to electrical retailing but can Sears do the same when it comes to reinventing the department store? What do you think? Please share your thoughts.  

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  1. Adhil Patel, February 21, 2019

    Personal customer experience tends to be labour intensive though and therefore quite expensive.

    I think that companies need to find ways to deliver the experience that's not easy to copy, but to do it in a way that is affordable. Maybe that leverages some in store multi media and AI? But humans will continue to be a big part of that, meaning that service excellence training needs to be even more central.

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