The recent closure of the Virgin Megastore in Barcelona was widely covered in the local press. Some observers attributed its failure to an insensitivity to local tastes in a market already well served by established favourites.
Although this is an over-simplification, the news comes at a time when Europe’s marketers are concentrating their minds on the often complex relationship that exists between local and international brands.
The case is particularly interesting given that research shows a resurgence of pride in local brands across of Europe. In one study, The Henley Centre, challenged the conventional, if naive, position that today’s marketing is overwhelmingly global.
At the peak of its venture into Spain, Virgin operated ten outlets. Since the beginning of 1997 closures have occurred in Seville, Madrid, La Coruna, Barakaldo, Camargo, L’Hospitalet, Malaga and Vigo, as well as at Virgin’s 12 franchised airport outlets in Spain and Portugal.
Writing in El Pais, Ramon de Espana argued that Virgin’s problems in Barcelona were compounded by its failure to address local market peculiarities. Had Virgin really under stood the Barcelona market, smaller indigenous operations such as Discos CastellÃÂ¯, Gong and Planet Music would have suffered.These operations continued to thrive. De Espana concluded that for the serious music buyer, Virgin was conceptually closer to the department store El Corte Ingles than to the dynamic Megastores that exist on Oxford Street or in Times Square.
Virgin’s experience in Barcelona cannot be attributed purely to a misreading of local consumer mores. A number of factors, including expensive rents and local restrictions on opening hours, played their part. Yet, at a time when global expansion is a goal of ever more companies, this episode provides a timely reminder of the pitfalls associated with building brands internationally.
It is easy to forget what an important part local insight and knowledge plays in adapting global concepts locally.
Commenting on the findings of the Henley Centre report, Alexandra McKie, associate director in charge of the Frontiers European research programme said: “People say it’s all about global branding – but the fact is local brands are also doing well. We’ll be living in a zigzag future for a while.”
It is certainly true that local brands attract loyal customers and will undoubtedly continue to do so. In parts of Eastern Europe consumers seem particularly attached to national brands that they came to know and like during 40 years of living under communism. But there is no reason why global and local brands should not continue to co-exist side by side. Both can succeed when, and only when, they exactly meet the practical and emotional needs of their target markets.
Consumers enjoy close emotional relationships with their long-established local brands. By studying these relationships, multicountry marketers will be better equipped to introduce their global brands with sensitivity and effectiveness.