The Press, May 2009
For a company whose clothing products reached the top of the world, Lane Walker Rudkin’s receivership last week is a low point in the company’s history. While hope remains that all or part of the company can be salvaged by receivers, has their lack of strong brands left the company ‘naked’ in a recession?
By any analysis LWR has been an outstanding New Zealand company. It provided employment for around 100,000 people, mainly Kiwis, over its 105 year history. Many of our sporting heroes have triumphed wearing their gear - the 1924 Invincible All Blacks Rugby Team, Sir Peter Blake and Grant Dalton in Round the World yachting, running gold medallists Peter Snell and John Walker. LWR even kept Sir Edmund Hillary’s feet warm when he stood atop the world in 1953.
I don’t profess to be an expert on the current state of LWR’s business, and I’m sure the source of its problems is complex. But a lack of brands that are more likely to command a price premium and protect market share in tough times must have contributed to their vulnerability.
It is your brand i.e. the sum of a customer’s experiences (through using it, seeing advertisements, talking to friends etc), with your product, that helps them choose your product over another. The stronger this feeling, the larger premium you can command. In other words, the reason Billabong can charge $70 for a t-shirt made of the same cotton and made as well as a plain one sold in The Warehouse for $15.
Of course LWR’s owners, the Christchurch-based Anderson family, understood the importance of brands. In a 2006 interview in the Unlimited business magazine, LWR Brands Chief Executive Paul Spicer said “... the Andersons are focussing very much on creating brands that the company owns rather than creating brands for other people that can come and go. You have to look at the longevity of the company and say, ‘how are you going to keep it if you don’t have your own brands?’”
That’s because brands protect. In a recession you have more to compete with. The Warehouse can easily go to hundreds of other suppliers for a plain t-shirt that is cheaper, supplied faster, has more choice in colours etc. If you’re Billabong and customers want your product, you have a lot more power.
LWR has worked hard to build new brands. For example Union, a sportswear label worn by the rugby teams (including Canterbury’s NPC team) and eight other sports according to their website. On another front they have invested in building Everest, a merino clothing marquee.
Trying to build these brands is bit like Hillary and Tenzing’s task of climbing Mt Everest. In their respective niches, Union and Everest face an intense challenge competing against giant multinationals on one side and smart Kiwi companies on the other.
They’re also trying to build these brands while keeping a general textile business humming. LWR is known for its knitting plant, fabric dying, embroidery and panels for sporting and corporate apparel. Mainly Kiwi garment companies, including the likes of Icebreaker, have got their start by making use of LWR’s considerable manufacturing capability.
LWR have climbed this mountain before with their development of the ‘Canterbury of New Zealand’ sportswear label from the 1950s. Their super tough jerseys with the rubber buttons replace the uncomfortable and weak woollen garments used in rugby.
By the 1980s Canterbury led the world. The famous triple Kiwis clothed the All Blacks for many years before our national team switched to Adidas in 1999. Canterbury built a reputation around being the ‘world’s toughest active wear,’ and according to Wikipedia were able to boast a record of having never had a ripped jersey in international rugby between 1967 and 2007.
As well leading the rugby world, Canterbury also developed a strong following in the leisure market, selling well in a number of export markets, especially the USA. But the brand slipped from LWR’s grasp when as a Brierley-owned company it was sold off. It is now owned by the Kuwaiti Finance House.
So what should LWR have done, or maybe what could they do? It is not necessarily self-evident that the manufacturing should have been closed and sent to lower cost markets. After all, successful local companies like Ground Effect have proven New Zealand-based production can work with quick production cycles and a strong brand.
One weakness in LWR’s brand building strategy may have been its diversity. Building a strong brand is tough, especially when your competitors are the likes of Nike and Adidas. But LWR have tried to do it across a lot of sports with Union, and in multiple geographies with Everest.
Focussing on a single sport with a single brand and trying to dominate around a unique proposition would have been far more effective. That’s what LWR did with Canterbury in the past, starting as a rugby brand in New Zealand around the promise of ultimate toughness.
I hope LWR can return to its glory days, or at least continue in some form. Building another iconic brand would be a way of protecting themselves no matter how tough it gets.