Summary: I believe that if a company uses the term lifestyle brand, it is more likely they are pretentious, out of touch, and relying on a meaningless slogan rather than thoughtful messaging and branding, and secondly, they will make or sell products outside of their core competency.
I recently walked past a SoulCycle. SoulCycle filed an S-1 for its IPO in 2015 (as of January 2017 has not gone public), and while it showed strong growth in locations/rides, it is saddled with debt, and to me has two major flaws in its business strategy. SoulCycle is a workout that has little differentiation or intellectual protection so other gyms and exercise equipment companies, like Peloton, can copy it, driving down margins. Also, exercise and diet trends, are fickle and begin in big trendy cities, eventually reach middle America, and flame out. The list of workouts and equipment that has come and gone/will go includes pilates, kickboxing, Nordic tracks, bow flex, p90x, Tae Bo, Bar/Barre, Ninja Warrior gyms, cross-fit, power walking, rollerblading, the Gazelle, and others I can’t remember. When I heard SoulCycle describe themselves as a lifestyle brand, my thoughts on the flaws of the business were amplified as well as my scrutiny of SoulCycle as a brand.
Per Wikipedia, “A lifestyle brand is a company that markets its products or services to embody the interests, attitudes, and opinions of a group or a culture. Lifestyle brands seek to inspire, guide, and motivate people, with the goal of their products contributing to the definition of the consumer’s way of life.” I then read the article below describing how to transition for a lifestyle brand.
The two quotes I found most interesting from the blog were the following:
“Thanks to clever marketing, consumers idealize these individuals as lifestyle perfection and these brands offer consumers a way to purchase a slice of it.”
“Just as we expect our friends to enrich our lives with their personalities and experiences, we have the same expectations of brands and especially the ones that purport to represent aspirational lifestyles.”
Consumers idealizing your product can set them up for disappointment similarly to the let down when following a brand does not fulfill what is missing and needed to reach one’s “aspirational lifestyle.”
I HATE when companies describe themselves as lifestyle brands. You see it regularly, particularly with consumer-focused companies. Consumer companies are not typically an area of great focus for me and CCM’s investments as the sector can often have unrealistic growth expectations and valuations that exceed my comfort level. If you watch Sharktank or other shows on CNBC, read consumer-focused companies websites or investor materials, you will see this term thrown around. Making flip-flops for surfers, running a gymnasium for busy professional women, and offering juices for the health conscious is not a lifestyle.
You know what company creates a lifestyle, NONE. Income, personal preferences, attitude — that is a what defines a lifestyle. Living in a RitzCarlton residence, flying a NetJet, and eating at Nobu is a lifestyle. Living in a campus apartment with four fraternity brothers with big screen TVs in every room, working in a hipster coffee shop, and adopting an attitude of too-cool is a lifestyle. Living close to the beach, surfing every morning, and meditating to focus your inner energy is a lifestyle. But your lifestyle is individualistic, though it is tempting to categorize it like a high school cafeteria. None of this has to do with what furniture you buy, where you workout, or what sandals you wear. Maybe this is striking a nerve with me that hopes that we as people can retain some individualism and independent thought. If the life you want to lead is derived from models in a Ralph Lauren ad lounging on a sailboat in Nantucket, you should consider the reality of two things. First, buying their hooded sweatshirt/tweed skirt won’t get you that boat next to someone who looks that good — it is not reality. And second, these products and supposed aspirational brands create facades.
My friends and family know how much I love Costco. Does Costco position themselves as a lifestyle brand? Of course not. And compared to a women’s gymnasium or men’s grooming line, Costco is the only one that could provide almost every material thing you need in your life — clothes, food, vacations, a car, electronics and gadgets, and social experiences (check out the coupon display next time you go). At Costco, you can see millionaires and hard working immigrants just establishing themselves in this country shopping side-by-side. Some marketing gurus might look at Costco and say it lacks branding. I look at Costco and see a business that is unpretentious, exceptional in their execution, treats its customers well (while maintaining its cost structure), and focused on a real mission. To my knowledge, Costco does not have a formal and published mission statement, but I imagine it would be something along the lines of “To deliver a broad and high-quality selection of quality goods and services to our members. To create an environment of opportunity and satisfaction for our team members.”
So why do companies even use this term I have been so critical of? I see two reasons; first, it is a marketing buzzword that people have convinced themselves that it legitimizes the company, amplifies their brand to seem larger and more powerful, and they have fallen into the trap of group think and “conventional” MBA wisdom. Secondly, when you are a lifestyle brand you are empowered to make and sell things that are related to what you do, but not your core competency. When a company defines itself as a lifestyle brand, I think, they have transitioned from doing one core product category well and are now going to take on more execution risk by trying to become more than what they should be. It can dilute the value of the product. Lastly, when I see the term, I think the brand is choosing to rely on a buzzword instead of putting in the work to earn the reputation and embody its values and create the awareness it wants. Show me you stand for being ecologically conscious or catering to a high-end market segment, don’t use a buzzword and tell me about how you represent your customers’ personalities and priorities. To which, I see the term used by smaller and younger companies more often. A company that last year was selling flip-flops out of a garage is now a southern California lifestyle and apparel manufacturer. It is terrific that company is experiencing growth, but if they are going to take the easy way in marketing themselves at least grow it the right way and focus on the real value you bring your customers, not veneer. Completing this point, I think it can also slow down and cheapen the brand creation process. To me, it comes across as premature, inarticulate, and unimaginative.
Marketing and brand awareness are important. Companies want to be known for positive things — low cost, exceptional service, high quality, speedy, charitable, treating employees well, hip/modern, luxury, for tough guys, for sophisticated women. But catering to a demographic or having a value proposition or building a product and business that is synonymous with positive attributes does not equate to a “lifestyle.” A brand does not need to encapsulate every aspect of its customer’s lives.
There are of course good companies that use the term lifestyle brand. However, I think effective marketing does not have to say “we are a lifestyle brand for…”. As the saying goes ‘if you have to tell people you are smart, they will often doubt you.’ The outerwear company, Patagonia, is often cited as being one of the best examples of a B-Corporation, a blend of a for-profit with a social mission, in their case the environment. Patagonia’s customers know the company represents making high-quality clothing fit for outdoor and athletic use and their ideals of protecting the environment. A strong brand can focus on core positive attributes can stay true to their product and mission without relying on a meaningless marketing term. Lifestyle brand and its overuse will eventually fade out, like the Nordic track and overpriced spin classes. In the meantime, strong marketing departments and brand experts will shy away, while investors should be increasingly wary of businesses using the term.