Club Libby Lu & The Five Pillars of Retailing

Saks, Inc. announced that they were closing the Club Libby Lu chain. At an earlier point in my career, I worked on a team with Mary Drolet, founder of Club Libby Lu.



Why did Club Libby Lu fail?
What are the five pillars of retail success?

Sure the economic headwinds of 2008 were very difficult. The company didn't close due to a recent drop in the U.S. stock market.

Club Libby Lu closed because there was no buyer for the business, the brand didn't create a strong value for their core users and Saks obviously didn't think it was a viable business model.



I work off a premise that there are FIVE PILLARS OF RETAIL SUCCESS. Truly strong brands that create EBITDA for shareholders and passion with their fan base understand that by dominating one of the five pillars they are able to deliver extra-ordinary value. Those five pillars are:

1. Customer Service


2. Price


3. Convenience


4. Product Innovation


5. Overall Experience

Typically, a strong brand can enjoy success against one pillar. By dominating one pillar, the brand will mitigate the opportunity for a competitor to flank them using the same pillar as their core strategy. Let's think about successful brand examples for each of the five pillars above:

1. Customer Service -- Men's Wearhouse, Enterprise Rent-A-Car


2. Price - Wal-Mart, Costco


3. Convenience - Quiktrip, Amazon.com, Walgreens


4. Product Innovation --Three Dog Bakery, Apple & NIKE retail stores


5. Overall Experience --Build-A-Bear Workshop, Disney

The challenge for a brand like Club Libby Lu is multi-faceted:

1. Club Libby Lu operates two store concepts (one is an 1100 square foot store and the other is a store within a Department store)


2. Club Libby Lu is owned by a corporate parent Saks, Inc. (symbol is SKS) that is publicly owned and needed to focus on driving sales and EBITDA in the core business not this small chain they acquired years ago


3. Club Libby Lu tried to offer both Product Innovation & Overall Experience but didn't have the retail footprint to deliver on the Overall Experience value proposition. Trying to deliver on more than one pillar is challenging.


4. Club Libby Lu enjoyed some success in 2007 when I worked on the business but they were largely riding the success of a partnership and the strength of those brands -- Hannah Montana and Disney. Unfortunately, Club Libby Lu didn't own either of these properties and didn't control the partnership relationship.


5. The innovation that created Club Libby Lu initially was not something that was consistently repeatable or scalable. There was a Big Bang wonderful idea created by the founder, Mary Drolet, but not the necessary follow up innovation that would deliver enough value to cause a guest to return and recommend the brand to their friends.

Ultimately, the market place has spoken.

Feel free to comment.

Jeff Fromm

jfromm@adamson-usa.com