Focus or diversify?

I was checking out the January sales yesterday and ventured into one of the shops of a renowned Australian clothing brand. They are at the top end of the high street franchise brands, with prices and quality above the average.

They’ve done well with ’related diversification’ in the past. Such as with bags, accessories and jewellery – all of which a fitting extension of their core product, the clothing line. However, shoes were added recently. In line with the brand’s image, they are classy, trendy, and top quality; but no sooner had I put a pair on than I realised that they are simply not wearable. And I’m not even talking about whether they are comfortable or not. When it’s a challenge to stand up straight in a pair of shoes, something has gone seriously wrong with that product. And as I was scanning through the boycotted shoes’ boxes, piled 2 metres high, I couldn’t help but notice that others must have been on the same opinion.

Diversification when done properly has many benefits – it can spread the risk across the business, can create an opportunity to grow, just to name a few. But when done for the sake of it, or without sufficient planning, things can go horribly wrong.
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