retail strategy

Does your Retail Strategy need revisiting?

Does your Retail Strategy need revisiting?

When was the last time you revisited your retail strategy? When will you next be reviewing it? One thing is certain, your business and the factors that affect it will have changed in the interim and your strategy will need to change, it’s just a matter of how much.

When you are working in the same space day after day, with the same stock, in the same environment you can become blind to what is in front of you. Your customers, walking past the same displays day after day will also become blind to them. You start to make assumptions, your memory fills in the gaps that you are no longer seeing and what was once effective is no longer.

All too many retailers have been caught out in the past by being complacent. Sainsburys might be one. It was on a roll and seemed unaffected by the discounters that stole a march on other grocers. However, looking at its current trading, it is easy to see that it became complacent, lazy and assumed what was working would continue to work even when the market was changing around it. Marks and Spencer was the same. It had its heyday and suffered years of backward sales only now starting to see light on the horizon. It assumed that the strategy it had aligned with was right and did not need to be reassessed.

Lack of vision, of foresight, of strategic thinking, is dangerous and we can all see what can happen no matter how big you are or how many pairs of eyes should be looking.

Retail strategy isn’t a one off exercise. A strategic plan isn’t written in stone. It is a working document, informed by customers, competitors, the economic environment, resources available and a large dose of creativity. It is an invention test. You take the resources you have available, your strengths and understanding of your weaknesses and put them all together to determine the most productive output. The input factors though are fluid, none more so than your customers, and as they move, so should your strategic plan. The only constant in the whole exercise is your brand and the values it stands for.

Asda is licking its wounds after a weak trading period, its retail strategy looking weak in the light of evolving customer behaviour and stronger competition. The way it is putting its resources to work is no longer as productive as it could be and a strategic review is now pressing in our opinion. However, if Asda had reviewed its strategic plan earlier it may have seen a better outcome, key performance indicators around customer behaviour may have flagged up concerns, a competitor review could have alerted the C-suite to potential threats.

To perform a retail strategic review a fresh pair of eyes is needed. That’s not to say you need to bring in a retail consultant, although we are always happy to oblige, it just means that you need to look at your offer through fresh eyes, as a customer sees it. Walk through the store and leave any emotional baggage at the door; be the customer, shop like the customer, actually ask the customers you meet, and take on board what you see and learn. Be brutally honest with yourself.

If that makes you question your offer, or raises any doubts in your strategy, it is time to review and conduct thorough research to inform your direction. Every single retailer conducts strategic reviews, some more often than others, and it is not a sign of a failing business, it is the sign of a business that doesn’t want to fail.


 

If you would like to have a fresh pair of eyes caste over your retail operation we are always available. Get in touch.

 

george clothing

Asda – The People Have Voted

By Phil Dorrell, Partner, Retail Remedy

If you have a strategy that depends on you being one distinct thing as a USP and you have built your marketing and brand around that, what happens when someone else comes along and does it better?

You could say this is the way that most businesses crash. The High Street is peppered with them, or rather was. Asda are facing that reality now, although there is no way they will crash or even give up, they just need a rethink. More than Tesco and Sainsbury and even Morrisons , Asda hung their hat on being the cheapest, redefined as best value when the discounters first came a calling. Now they have had 3 quarters of declining sales they might want to relook at their USP and start to bring some more unique elements in to the fray, rather than banging on about price all the time.

They were always brilliant at George Clothing and yet it is now gone down-market to Fuddy-Duddy and is not as cool as Primark (shock!) nor as aspirational as F & F (real shock !). In food they retain this aspiration merchandised within each category, in clothing they have separated it to be the place old M & S fashions go to die. Still great value, but not a street crosser.

They used to try and category kill on events too, making them the only place to go for really big events like Easter and Halloween. Now so many retailers have caught up and Asda have just de-costed, taking the feathers off the Golden Goose.

Andy Clarke is right about one thing, the next few years are going to be tough as the market recalibrates. UK Grocery retailing has long had it’s own way, creating industry leading revenues and profits, dominating smaller suppliers, attempting to remove the power of the larger ones and largely fooling the media into the fact that there is some sort of “Price War”. I chuckle every time I hear the words price war, it’s at best been a fist fight; yet now the discounters have arrived they appear at least to be armed and dangerous. Read to take cost out of every part of the operation, thinking cost way before they think of sales, they have a model that works on generating less net profit. The future for the rest of the Grocers is simple, do similar or be prepared to lose even more of the market share. Revenues and profits are likely to be very hard to grow over the next two years for the Big 4, the people have voted and it’s not looking good for them!


If you would like to talk to us about how we can help you re-startegise your business in an increasing market sector, do get in touch.

morrison ilkeston

No shortcuts for Potts at Morrisons

Morrisons is undoubtedly in a better place with David Potts leading the old guard grocer than it has been in years. But like an old dog, teaching it some new tricks will be a long slow process.

Potts took Morrisons to task and in the first few weeks in his post he has made a significant impact even if on the face of it the stores are still old, slow and costly. Sales will take time to recover but it will take longer still before profits catch up so we shouldn’t be surprised by a profit line lagging behind the sales line.

Potts isn’t an evangelical character however, more a studious retailer who just understands customers and shops. That alone isn’t going to help him take any shortcuts in breathing new life into some of the tired formats that litter the estate like museums to a retailing past. But getting the principles right will go a long way in wooing customers back even if the store looks dated.

Customer service is at the forefront of all the Big 4’s decisions at the moment and Morrisons is no exception, adding hours and manpower to customer facing roles and thinning out the top heavy management structure. While this was uncomfortable for the business it was completely necessary and Potts has gained respect as a result.

Growth will come not surprisingly, from online and convenience formats but to gain ground on it’s main competitors will take a heavy foot on the accelerator, and cash. Cash will be in short supply while top line growth is heavily dependent on price cuts, so a steady expansion plan will be the best we can hope for.

Where steady progress won’t be acceptable is in the marketing strategy and how that translate into the core estate. Big bold marketing messages are what’s needed to convert the public and get them to take notice again, and for those messages to be consistently delivered in store.

Simple to say, harder to do. Morrison’s Q1 trading update comes as no surprise, sales decline, and lots of deep cutting plans to come over the coming months and years. It’s a long game with no shortcuts, so we’d better get comfortable.

retail planning

I love it when a plan comes together

by Phil Dorrell, Partner, Retail Remedy

It’s a cheesy line borrowed from a cheesy character (The A team) but it does sum up my view on the way retail should largely be run. Big retailers employ huge teams of interesting and creative people who are all motivated to deliver their slice of retail heaven to a perceived or real customer need. The fact that central teams are now so enormous just means that they come out with ever more interesting and creative ideas on what should happen in store. And you see that’s the problem, the more activity that the head office puts in the more likely it is that some / most of it will fail.

I have worked with and consulted with numerous, very large retailers across the world and the common theme in most is that they try and do too much, they pack activity thinking this is what customers want, when really it is usually what competing suppliers want. Most of the big boys have a filtering mechanism, a central operations function that helps put a lid on activity and build it in a way that stores can handle. Some of these teams however are simply not effective enough in saying,

“No”,

“Not then, but then”,

“Maybe, but not like that” or

“Brilliant idea, let’s help you build it”.

Few are good enough at measuring activity hitting stores and reflecting back to the originator to see if it was all worthwhile, creating a future desire to put in more activity.

The hope that Tesco’s move towards more front margin, relying less on over-riders and volume incentives, will quell the desire to see supplier activity bombarding stores. I have seen a similar move down in Australia and it may not be the most compelling message for the suppliers but it does deliver a consistency that customers welcome.

Making the transition from a tame filtering of activity to professional central operations can be transformational for a business. Leading to renewed belief from the retail teams, improved supplier relationships as execution in store is consistently great and of course the customer wow of having store change delivered without disruption and with impact. Retail Remedy has delivered this in a number of different retailers across the globe and recognise the pitfalls in only half doing it. Look around the estate, if it all looks different (and you don’t want it to), if change lands in fits and starts, if the customer message in-store does not link to the one in the media, ask yourself one question? Do we need to improve retail execution? You know where we are and a call costs nothing. Let’s talk retail.