Yes, it’s true. Brand names and organizations continue to fall in this ever-growing chaotic economy, like a child’s dominoes on a windy day on the porch!
“24/7 Wall Street,” a Delaware corporation set up to run a financial news and opinion operation over the Internet, has created a new list of brands that will soon disappear in the near term. This most current list includes Readers Digest, Kia Motors, Dollar Thrifty, Zale, Blockbuster, T-Mobile, BP plc, and RadioShack. To qualify, it expects that brand to be gone by the end of 2011, or for its parent to be sold or go into Chapter 11.
Let’s take a look at some of those brands on the current list.
Reader’s Digest was once the most widely read magazine in the world. It still may be when its overseas editions are taken into account. Last August, the company took its U.S. operations into Chapter 11 to decrease debt. Widely circulated magazines like Newsweek, US News, and TV Guide have no future in America in their current form. Reader’s Digest may live on outside the U.S. and its parent company may survive. However, Reader’s Digest as it is known in the U.S. will be gone.
Dollar Thrifty Automotive Group, the car rental company, is for sale. Hertz is a potential buyer as is Avis Budget. Each of the larger car rental firms would use the Dollar Thrifty business to expand its market share. That does not mean that they would keep the brand. The number of vehicles that Dollar Thrifty operates at any one time is only 95,000 compared to 420,000 for Hertz. Dollar Thrifty will be the next casualty of the industry’s consolidation.
Blockbuster, Inc. was the national leader in the video rental business for nearly two decades. Now it is contemplating Chapter 11 to eliminate debt. Its revenue continues to fall rapidly as firms such as Redbox and NetFlix siphon off its revenue. Blockbuster has more than 6,000 stores, so it is hard to imagine that the company could disappear. Blockbuster rival Movie Gallery said in February that it would close all of its 2,400 U.S. stores. Blockbuster’s model of renting movies through physical locations has been destroyed by cable and satellite video on demand, DVDs via mail, and dispensing machines. Blockbuster may still be around as a company that has movie kiosks and a small mail and Internet-delivered content business. But its brick and-mortar business is dead.
T-Mobile, the U.S. wireless provider, is owned by telecom giant Deutsche Telekom. It is the #4 cellular company in an American market that only supports two really successful firms—AT&T Wireless and Verizon Wireless. Even the third largest company in the market—Sprint—has 50 million customers. T-Mobile had 34 million customers at the end of last year. As it now stands, T-Mobile has no future in the U.S.
The case against the BP p.l.c. brand is not so much that the company will enter bankruptcy. It is that BP may end up breaking into pieces for its own sake. This may be to put the liabilities for the Deepwater Horizon spill into a company that also holds escrow capital to cover the huge costs of clean-up and suits. BP may also want to separate its successful refining operations from its exploration business, or recreate an American-based company similar to BP America, which existed for two decades. A restructuring of BP would also allow the firm to take a badly crippled brand and give the oil operation a new name—much as it did when it changed its name from British Petroleum. The second time may be the charm.
RadioShack is one of the oldest retailers in the U.S. It was founded in 1921 and in the early 1960s was purchased by Tandy Corp. The Tandy name was used for some of Radio Shack’s retail stores. RadioShack is currently a takeover target. There have been rumors that the company may be taken private via a leveraged buyout or purchased by Best Buy, probably for its locations. Best Buy would certainly not keep the RadioShack brand because it is considered downscale and does not have the reputation for quality products and service that Best Buy enjoys.
Zale Corporation was founded in 1924 by the Zale brothers. It was one of the earliest retailers to offer the ability to buy items on credit. By 1980, Zale had revenue of more than $1 billion. In 1992, Zale filed for bankruptcy. Zale has been at death’s door for some time. The company is trying to turn itself around, but most experts are not convinced. Zale is also in a very crowded market that includes retailers as large as Wal-Mart.
Kia Motors Corporation is one of the two car brands of Hyundai of South Korea. It has always been a marginal brand. Its stable mate, Hyundai USA, has a reputation for high quality cars like the Sonata and Genesis. The parent company will take a page from several other global car companies and dump its weakest brand.