Two long-established brands recently took the tack of dropping the nouns from their names: Pizza Hut and RadioShack – which are now known as The Hut and The Shack. Here’s why one find success through the name change and derivative market opportunities, and one won’t.
By morphing from Pizza Hut to The Hut, the new brand is given room to move, to expand its product offerings outside of pizza. While consumers may still expect pizza to be the main fare, The Hut is no longer limited in what it could place on its menu – barring price and category sensitivity. This will actually lead to per visit sales increases, same store sales increases and enhance the brand and company’s position in the market – exactly what a renaming event should accomplish.
RadioShack, on the other hand, has not helped itself at all with its new “The Shack” identity. RadioShack will tell you that 94% of Americans live or work within 5 minutes of one of their stores. However, RadioShack has suffered for years under the weight of Best Buy and to a lesser extent, the now defunct Circuit City. Mobile signups have kept the stores active, but there is little in the way of regular return traffic, nor is there the robust and diverse product offering found in a one-stop such as Best Buy. I would agree that including “Radio” in the company name is no longer relevant and dates the image. But I don’t believe it negatively tarnishes the brand… yet I’m sure the focus groups led the company executives to believe it did. Renaming the chain as “The Shack” doesn’t actually put a positive spin on the brand. And I would argue that the negative implications of the new brand outweigh any negative implications of sticking with Radio in the brand name. The Shack does nothing in the way of informing me of their product offering – it only adds haze to my perception and steers me toward the nearest Best Buy store.
So what would you call the new RadioShack. Maybe they should have looked at BatteriesRUs, as the long held perception is that RadioShack stores has a wide and available assortment of batteries. But then so do any number of other home building supply stores, department stores, pharmacies etc. However, people buying batteries also buy new products that require batteries, items not necessarily found at the other outlets. When the company reorganized its Canadian division several years ago, all RadioShack stores were renamed “The Source”. I’ll defer to the marketing team that came up with The Shack, but The Source at least makes me think I will find what I’m looking for at their stores. And the few times I’ve looked for electronic items, I’ve always found them at The Source stores.
Rebranding is an expensive proposition and requires the appropriate caution. To be successful, a new brand name needs to shore up core attributes of the company, and allow either product definition to solidify a target market, or product expansion – to broaden the consumer base for the brand. I think The Hut will thrive under their new brand, yet The Shack will see this as another signpost in their deteriorating business.
