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3 Market Share Lessons From Crumbs Bake Shop's Demise

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What do cupcakes and ASCs have in common? Not much, unless you consider the problem of market share capture; then there is plenty to discuss. Here are three things Crumbs Bake Shop's untimely "death" teaches ASCs about staking out a market share — and keeping it.

On Tuesday, Crumbs Bake Shop, a bakery chain of out New York City, closed its doors for good. Crumbs was the largest cupcake chain store in the U.S., with 79 locations and 50 cupcake varieties under its brand. Considering the cupcake craze that gripped the country in the early 2010s, it seemed unthinkable that Crumbs would have closed the way it did — with only a single day's notice to its employees before storefronts across the nation went suddenly dark.

While businesses close constantly, the Crumbs closure is notable as a high-profile example of how not to respond to a steady and potentially predictable loss of market share. According to an analysis of the company's demise by Forbes contributor Adam Hartung, Crumbs' failure is a perfect illustration of the necessary traits for business success. Here are three lessons on retaining market share, adapted from Mr. Hartung:

1. Passion isn't enough to guarantee market share. While Crumbs invested heavily in its storefronts and its passion for creating cakey treats, its cupcake competitors were on the move designing innovative ways to distribute and market their products, none of which Crumbs had pursued with much diligence, if at all.

2. Keep an eye on market trends. Businesses don't — and can't — operate in a vacuum. In Crumbs' case, it was riding the wave of a cupcake fad that was bound to crash on a beach of consumer indifference sooner or later. When cupcakes alone were no longer enough to draw customers, Crumbs tried to diversify its business model with partnerships for coffee, sandwiches and grocery store products, but ultimately it was too little, too late. Profit and revenue problems were ongoing after the company's sales peak in 2011, but leadership battled the problem through an internal approach, rather than adapting external engagement strategies and investing in other business ventures or identifying the next big trend in sweet treats.

3. Balance planful realism and boundary-pushing innovation for longevity. Innovating only once is not sufficient, as Crumbs' initial — and ultimately final —cupcake product shows. While investing in larks isn't the answer, neither is a completely risk-averse business strategy. Data-driven strategies need a little extra panache to be marketable. Likewise, creativity needs market information to keep it relevant. By keeping informed in the market, understanding consumer demand and planning unique ways to meet and exceed that demand, business can have a better shot at remaining abreast of their competitors and avoiding failure.

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