Hamburgers and crossing borders: branding Maastricht

A view of Maastricht from the St John's church tower. Image: Kleon 3/Wikimedia Commons.

Which city can claim to be the birthplace of both the European Union and the world’s first synthetic hamburger? Where else but the Dutch city of Maastricht?

The city’s name probably rings vaguely familiar to many Europeans. During the early 1990s, people will remember hearing the city’s name frequently bandied about on the news, in the run-up to and aftermath of the 1992 Maastricht Treaty, which brought the European Union into existence.

Maastricht’s hamburger developments came much later, when the culinary wonder emerged from the laboratory in the summer of 2013. Unfortunately, McDonalds are unlikely to adopt the recipe any time soon, since producing the synthetic hamburger cost over $300,000.

A hamburger and a treaty are both excellent things – but latterly Maastricht has decided to carve out a new identity for itself, one that could help garner worldwide respect. Hopefully, achieving this goal would eventually result in increased tourism, inward investment, influx of foreign talent, and overall better recognition for the city on the increasingly crowded and competitive global stage.

City brand strategists working on Maastricht didn’t take long to conclude that the city’s main asset was its distinctive cross-border nature. Maastricht is capital of the province of Limburg, situated snugly between diminutive Belgium and mighty Germany. The province has absorbed characteristics from both countries, and many locals say they feel greater loyalty to Liège, Aachen or Düsseldorf than to the more distant heavyweights The Hague or Amsterdam.

“Historically this [loyalty] makes a lot of sense,” says Robert Govers, the scholar and place-branding expert leading the Limburg brand strategy. “There are many links with Belgium and Germany because of the Hapsburg Empire, and this region has been part of all kinds of weird constellations in the past. In culture, identity and behaviour, [the people of Maastricht and Limburg] are much more similar to Belgians and southern Germans than to the Dutch.”

Aside from its potent historical connections, modern Maastricht also displays a strong trend for innovation that the city leaders hope to capitalise upon. The Brightlands Campus, home to the famous hamburger-growing lab, is the source of numerous groundbreaking scientific projects in materials, nutrition and healthcare.

Brightlands is actually comprised of three separate campuses, all based in Limburg, and one in Maastricht itself, which attract large quantities of international researchers, students and entrepreneurs. As well as being a boon for the local economy, this kind of initiative stays true to the desired cross-border identity and helps reinforce the brand. In genuine city branding – not the logo and slogan variety – it is reality that creates perception.

“Knowledge crossing borders is something that Brightlands is constantly practicing in many senses – industries, disciplines, countries and so on,” says Bert Kip, CEO of Brightlands’ Chemelot Campus. “We have a specific niche and there are few like us in the world.”

Maastricht and its environs. Image: Google Maps.

As well as defining a clear strategy and getting major stakeholders on board, successful city branding also requires belief, commitment and active involvement from the residents of the city themselves. The people of the place should be “living the brand”.

Fortunately for Maastricht, the government seems to understand this, and its residents’ unusually international outlook is visible in the every day life of the city. As its mayor, Onno Hoes, says: “At our Friday Market, people from Belgium are doing their groceries side by side with international students and local people from Maastricht. It’s part of everyday life here. People are what make a city tick!”

That sounds wonderful in theory – but real life isn’t quite so easy. It may seem pretty straightforward for Maastricht to brand itself as a cross-border provincial capital city that specialises in innovation. But, as with every city brand journey, there are certain challenges that crop up along the way, again and again.

Bridging the gap in stakeholder understanding is one of them. According to Govers: “Private sector players often find it hard to understand how place branding helps improve their business performance. For example, in Limburg, some of them think that borders are irrelevant.

“We always have to explain that this branding stuff is primarily about building reputation and awareness, which creates an opening in people’s minds. Then you can start talking about your products and services. It’s a very difficult story to explain to people.”

Despite these predictable bumps in the road, the brand strategy is moving forward nicely. In 2014, a ten-year plan was established for the branding of Maastricht and Limburg as a whole. This has now been absorbed into local policymaking, and paying attention to the brand is becoming business as usual.

Hopefully, as Govers commented, ten years should be enough to shift the needle for the Maastricht brand. Hamburgers and treaties may soon be a distant memory.

 
 
 
 

High streets and shopping malls face a ‘domino effect’ from major store closures

Another one bites the dust: House of Fraser plans to close the majority of its stores. Image: Getty.

Traditional retail is in the centre of a storm – and British department store chain House of Fraser is the latest to succumb to the tempest. The company plans to close 31 of its 59 shops – including its flagship store in Oxford Street, London – by the beginning of 2019. The closures come as part of a company voluntary arrangement, which is an insolvency deal designed to keep the chain running while it renegotiates terms with landlords. The deal will be voted on by creditors within the month.

Meanwhile in the US, the world’s largest retail market, Sears has just announced that it will be closing more than 70 of its stores in the near future.

This trend of major retailers closing multiple outlets exists in several Western countries – and its magnitude seems to be unrelated to the fundamentals of the economy. The US, for example, has recently experienced a clear decoupling of store closures from overall economic growth. While the US economy grew a healthy 2.3 per cent in 2017, the year ended with a record number of store closings, nearly 9,000 while 50 major chains filed for bankruptcy.

Most analysts and industry experts agree that this is largely due to the growth of e-commerce – and this is not expected to diminish anytime soon. A further 12,000 stores are expected to close in the US before the end of 2018. Similar trends are being seen in markets such as the UK and Canada.

Pushing down profits

Perhaps the most obvious impact of store closures is on the revenues and profitability of established brick-and-mortar retailers, with bankruptcies in the US up by nearly a third in 2017. The cost to investors in the retail sector has been severe – stocks of firms such as Sears have lost upwards of 90 per cent of their market value in the last ten years. By contrast, Amazon’s stock price is up over 2,000 per cent in the same period – more than 49,000 per cent when considering the last 20 years. This is a trend that the market does not expect to change, as the ratio of price to earnings for Amazon stands at ten times that of the best brick-and-mortar retailers.

Although unemployment levels reached a 17-year low in 2017, the retail sector in the US shed a net 66,500 jobs. Landlords are losing longstanding tenants. The expectation is that roughly 25 per cent of shopping malls in the US are at high risk of closing one of their anchor tenants such as a Macy’s, which could set off a series of store closures and challenge the very viability of the mall. One out of every five malls is expected to close by 2022 – a prospect which has put downward pressure on retail real estate prices and on the finances of the firms that own and manage these venues.

In the UK, high streets are struggling through similar issues. And given that high streets have historically been the heart of any UK town or city, there appears to be a fundamental need for businesses and local councils to adapt to the radical changes affecting the retail sector to preserve their high streets’ vitality and financial viability.


The costs to society

While attention is focused on the direct impacts on company finances, employment and landlord rents, store closures can set off a “domino effect” on local governments and businesses, which come at a significant cost to society. For instance, closures can have a knock-on effect for nearby businesses – when large stores close, the foot traffic to neighbouring establishments is also reduced, which endangers the viability of other local businesses. For instance, Starbucks has recently announced plans to close all its 379 Teavana stores. Primarily located inside shopping malls, they have harshly suffered from declining mall traffic in recent years.

Store closures can also spell trouble for local authorities. When retailers and neighbouring businesses close, they reduce the taxable revenue base that many municipalities depend on in order to fund local services. Add to this the reduction in property taxes stemming from bankrupt landlords and the effect on municipal funding can be substantial. Unfortunately, until e-commerce tax laws are adapted, municipalities will continue to face financial challenges as more and more stores close.

It’s not just local councils, but local development which suffers when stores close. For decades, many cities in the US and the UK, for exmaple Detroit and Liverpool, have heavily invested in efforts to rejuvenate their urban cores after years of decay in the 1970s and 1980s. Bringing shops, bars and other businesses back to once derelict areas has been key to this redevelopment. But today, with businesses closing, cities could once again face the prospect of seeing their efforts unravel as their key urban areas become less attractive and populations move elsewhere.

Commercial ecosystems featuring everything from large chain stores to small independent businesses are fragile and sensitive to change. When a store closes it doesn’t just affect employees or shareholders – it can have widespread and lasting impacts on the local community, and beyond. Controlling this “domino effect” is going to be a major challenge for local governments and businesses for years to come.

Omar Toulan, Professor in Strategy and International Management, IMD Business School and Niccolò Pisani, Assistant Professor of International Management, University of Amsterdam.

This article was originally published on The Conversation. Read the original article.