Aaron’s seeks brand boost after winter woes

After a dramatic half-year of slowing customer foot traffic, an unsolicited takeover bid and a contentious March meeting with operators, Aaron’s executives hope for no surprises at today’s annual shareholder meeting at Capital City Country Club.

But experts on the economy and retailing say the company’s real problems are not in the boardroom but in the marketplace.

They argue the Atlanta-based rent-to-own giant needs to be more aggressive in giving consumers a reason to pick it over competitors such as Rent-A-Center and Buddy’s. Offering reviews on its website, for instance, could allow satisfied customers to boast about their experiences and in turn attract new patrons.

That is especially pertinent now because Aaron’s core customers — Americans who don’t have access to traditional credit — continue to struggle, even with improvements in the economy and unemployment falling.

Their earnings aren’t rising much and that should make Aaron’s low monthly payment cost structure more attractive, not less as the falling foot traffic seems to suggest, the experts said.

“I think they have a brand issue,” said Kevin Paul Scott, a branding and management consultant. “They have to find compelling reasons to get people into their stores.”

Gary Lee, chief executive officer of Atlanta-based InReality, a customer experience and design firm, agreed. He said with Wal-Mart showing signs of struggle in its most recent earnings, Aaron’s has an opportunity to pick up customers who are stretched too thin even for the world’s largest retail chain.

“They have to figure out, ‘How are we unique for those customers?’” he said. “‘How does the customer view us’ and ‘How does the customer interact with us?”

Aaron’s is taking steps to bolster its marketing. The company is reviewing of its website to make it more robust. In addition, it’s in the middle of a promotional contest with TVs “The Wendy Williams Show” in which a winner will be chosen each week in June to receive new furniture, electronics and appliances for a living room, dining/kitchen/laundry room or “mom cave.”

The company also in May donated $1 million to the Boys & Girls Club of America in a partnership to support Keystone, the organization’s national teen leadership and character program. The company chose Boys & Girls because it touches Aaron’s customers in their communities.

But economist Tim Mescon said leadership also is crucial to guiding the company’s direction.

Revenue at company-operated stores open at least one year dropped 2.1 percent in the first quarter of 2014 compared with the same period last year. Customer traffic dipped 1.4 percent. The company blamed much of the problems on the lingering cold this past winter and early spring.

“What has to happen in this quarter and the next is they have to get some traction,” Mescon said. “If they don’t the questions about leadership changes become more prominent.”

Aaron’s franchisees seem to be willing to give the company time to get back on its feet. After Aaron’s Chief Executive Officer Ron Allen met with franchisees in Orlando in March, the company eliminated a mandate to renovate stores and said franchisees would no longer have to contribute $800 per store per month for advertising.

Aaron’s shares also are up 14 percent since April.

In a letter to franchisees, Greg Ponte, who has operated stores for the company for 15 years and was skeptical the company could be put back on track, said he supports the company after a recent meeting with Allen, the former Delta Air Lines CEO who took over in February 2012.

“This Aaron’s management team is all about making it work and we need to work side by side with them,” he said.

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