Why Do Big Brands Use Trojan Horse Techniques?

Waterstones has recently become an unlikely success story. The book retailer has recently reported a pre-tax profit of £9.8m in the year to 30 April 2016. This is ‘unlikely’ because the general trend for book retailers in the face of the Amazon behemoth and the rise of downloadable texts has been very much a downward one. However, this positive news has been somewhat tainted by a few small pockets of local consumer wrath in the quaint towns of Southwold, Rye  & Harpenden where Waterstones has opened unbranded branches in the last few years.

It’s an interesting situation, and opinions are divided, but essentially it seems that many locals in each of the respective towns are unhappy at the perceived ‘Trojan horse’ approach Waterstones has taken in opening the unbranded stores without fully disclosing who the parent company of each of Southwold Books, Harpenden Books and The Rye Bookshop, is.

I don’t think (from what I’ve read) that the locals are particularly unhappy with the actual shops themselves. They’re each aesthetically in fitting with the rest of the independent retailers on each of the pretty high streets, they’re providing access to books which many of our more homogenised high streets are sadly lacking, and one assumes that they’re providing the local consumers with a well stocked, reasonably priced, literary treasure chest. So why did Waterstones feel the need to ‘hide’ their brand?

Ironically, the recent renaissance in fortunes for Waterstones has come since their Managing Director James Daunt took the helm. Daunt is the founder of the small chain of bookshops which bear his name, which was acquired by Waterstones in 2011. Their flagship store on Marylebone high street has become an iconic destination and has a cult-like following of loyal hipster bibliophiles.

So is this just a case of people slightly irrationally disliking ‘big business’? Would they rather that instead of the branch manager of Southwold books taking a salary and Waterstones making the profits , that the manager was in fact an independent owner in the James Daunt mould who took dividends her or himself?  Is it that the marketplace for any other local independent book retailers is effectively closed in those towns because they wouldn’t be able to compete on price due to Waterstones economies of scale?

I don’t have the answers, although it’s interesting that this isn’t the first such example of its type that we’ve seen.

Harris & Hoole was launched as an ‘independent’ coffee shop in 2012 with a 49% investment from Tesco. Their rapid expansion from 1 store to 43 (and counting) in 5 years raised eyebrows and disgruntled anti-Tesco coffee fans complained of being duped into thinking that they were drinking authentic hipster coffee, rather than mass-produced corporate coffee. One can’t work out whether they’re more or less happy now that Tesco have sold the chain to Caffe Nero – a coffee specialist, but one with questionable offshore tax arrangements.

AB Inbev is the largest brewing company in the world, producing 352million hectolitres of beer a year. I’ve no idea how much a hectolitre is, but that figure does represent almost 1/5th of all beer consumed worldwide. AB Inbev were, in my opinion, complicit with the other big breweries in creating the recent ‘craft beer’ movement through their insistence for decades in producing weak, tasteless drain water, which they packaged as ‘Budweiser’. Small artisan breweries saw that if they produced beer that actually tastes nice, that it would be popular and would sell very well. Which it has. Unfortunately AB Inbev  has decided that the best way to jump on this bandwagon was not to start producing nice tasting beer, but to quietly and gradually buy up the most successful small independent craft breweries. The Camden Brewing Company was one of the first large acquisitions of this type in the UK (leading the other large UK craft beer success story - Brewdog to stop stocking their beer in their bars), but there have been other similar stories - The Meantime Brewery also sold in 2015 to SAB Miller. Amongst beer connoisseurs this is terrible news. In the same way that literature fans appreciate the care and love which goes into selecting the best books to showcase, the artisan culture behind brewing small volumes of ‘better’ beer is a strong pull factor in their patronage decision.

So what do ‘big’ brands need to learn from their small artisan neighbours?

Faking authenticity is bad (if you get found out) – In many cases, it’s not the actual ownership which annoys people – it’s the Trojan horse tactic.

Misleading people will damage your brand. Beer ‘club’ The Beerhawk is established as a craft beer ‘centre of excellence’ where they source the world’s best beers and cherry pick them for your mail order club delivery every month. The Beerhawk is owned by............. you guessed it – AB Inbev, so you may find that your handpicked bundle isn’t as independent as they might like you to believe and may be heavily weighted by AB Inbev brewery brands.

Play nice on the high street. I’m actually a big fan of the Waterstones  approach. One of the reasons I love France is that their towns and cities are overflowing with independent shops. I’d far rather see a unique looking ‘Southwold Poulet et Frites Restaurant’ on a high street than another Nando’s – even if it’s owned by Nando’s.

Play the artisans at their own game. If people are abandoning the big brands in favour of higher quality, made with love products, then why not use your substantial resources to create nice products as well? It’s not rocket science this marketing lark. Don’t forget that Product is one of the 4 P’s...

Pay your taxes.  Just because.


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