If Julian Dunkerton is to succeed in his second stint at clothing retailer Superdry he will have to focus on diversifying product ranges to make up for the company failing to adopt strategy change earlier
To revitalize the company Dunkerton needs to carry on belated efforts towards diversification of the core product offering.
Superdry stock value had fallen by 77% at the end of 2018 trading compared to a year previous, and the situation has hardly improved at all since. In early 2019 an excessive reliance on winter fashion combined with prolonged warm weather periods were cited by the board as reasons for the drop in stock value.
The retailer has been seeking to restore revenues through product diversification, but the task has been toughened by now former CEO Sutherland failing to acknowledge the risks of focusing the brand on just a few apparel items.
The much-publicized troubles of the UK high-street also means Superdry is playing catch-up at a time when even pure online retailers are experiencing slower growth, heightening the business risks of altering the brand image and products.
In not adopting diversification strategy earlier, Superdry faces higher risks
Having recognized belatedly the need to diversify the product offering, change will take time to complete.
To date brand image has been predicated on winter clothing, meaning diversification could easily dilute brand perception but sticking with winter jackets, t-shirts and hoodies would be a higher business risk than diversifying to take better account of weather variations impacting consumer behavior.
However persuading consumers to associate the Superdry brand with new product ranges will not be easy. Numerous retailers have struck trouble when attempting similar strategies, such as Marks & Spencer.
Consequences of failure are now more severe compared to those of an earlier adoption
The parlous condition of many UK leading retailers increases the potential for failure of the diversification strategy.
Big brands are increasingly shoring-up finances by concentrating on core products and demographics. Widening the Superdry offering means competing against such firms, making the move risky.
Gaining a greater market reach will therefore likely take more time and resources than would otherwise have been true had Superdry broadened outlook years earlier. The company must act precisely to avoid wasting precious money and time during a period in which many leading brands are struggling.