Bank Shot

In late September, Washington Mutual Bank – the nation’s largest savings and loan – was seized by federal regulators and its assets sold to JPMorgan Chase & Co., making it the worst bank failure in history. In reporting on the sale, The New York Times said WaMu “symbolized the excesses of the mortgage boom.”

Just a few years ago, WaMu symbolized something entirely different. Earlier in this decade, Washington Mutual showed how a bank could creatively adopt retail design principles to meet its customers’ needs.

In early September, before regulators stepped in, WaMu’s ceo, Kerry Killinger, was forced to resign after 18 years. Killinger had been the poster boy for adventurous banking and smart retailing. If you recall Killinger and Brad Davis, the marketing genius who became the smiling face of WaMu, you recall a merry expansion across the country, right into the intimidating canyons of Manhattan. Exuberant ad campaigns and public events made banking seem fun and loose. There were mannequins in the bank windows. They went right after (ironically) Chase, the bank with the most retail locations in the city.

Davis, who came to WaMu from Target, appeared at many retail gatherings, including IRDC in 2003, touting the application of Target-style retail marketing to the banking business. Even the nickname – WaMu – was unbank-like. It was cool and informal. Other large national banks created retail divisions and hired designers from the traditional retail world.

But that was another time. It’s been said that WaMu was undone not by its investment in its retail spaces but by bad lending – too much subprime mortgage business and deferred adjustable-rate mortgage loans. It had a huge credit card portfolio. It was making credit too affordable to the very middle market that had fueled its nationwide growth.

On the same day of the WaMu sale, Neiman Marcus reported a steep fourth quarter loss. Worse, ceo Burt Tansky predicted more troubling times ahead. Few retailers understand their shoppers better than Neiman Marcus or do a better job of building stores and presenting merchandise with those shoppers in mind. But the very economy that caused WaMu’s fall is undermining Neiman Marcus.

There’s lots of sadness these days. But particularly sad, for our industry, is that Washington Mutual (and Neiman Marcus) represented the ideals of smart, strategic design. I don’t want to think those ideals might be tossed out the window. As I often preach, store design is not decorating. It’s targeted, strategic marketing. When done well, it can drive traffic, shopper loyalty and sales. But it can never overcome bad merchandise, bad management or severe outside conditions. Let’s not fool ourselves about that.