“…Target faces the task of replacing a major revenue generator for its clothing business: designer Isaac Mizrahi, who is becoming creative director for the Liz Claiborne brand. Mizrahi’s line did about $300 million at Target and analysts estimate the retailer will have to replace $400 million to $500 million of lost revenue upon his departure, given that shoppers buying Mizrahi clothes also bought other products while there.”
You’ll want to weight this uncertainty with the benefits, both to the company and to its customers. Certainly Target customers benefited. And Target enjoyed at least three.
1) They reinforced their major differentiator, design, by teaming with Mizrahi.
2) They did enjoy considerable revenues.
3) They strengthened their brand by fulfilling their brand promise of selling moderately-prices, celebrity designer merchandise.
In co-branding and celebrity branding, things can change rapidly and drastically. Martha Stewart goes to prison. O.J.Simpson reeks havoc. Enron collapses. Obviously you want to pick your partners carefully. Do due diligence. But even then, you may wish to ask the “what’s the worst that can happen” question in your risk analysis.
When they work they can be powerful. When they don’t, well more than money can be lost if your reputation and brand integrity are damaged.