currys kettle range good

Retail Basics #1 – Ranging

There are a number of basic principles in retailing that evolved from the very beginnings of trade, I have something I do not need myself that someone else will want.

Long ago it might have been excess crop or an inherited tool. It was probably bartered for another item the originator thought worthy and then this evolved into money instead. The principle is still there, rule number one, you must have something someone else will value and want to buy. Obvious.

The fashion traders spend hours understanding what this is and how they can best present it to their customers, the food retailers similarly create vast amounts of information on customer trends, all trying to gauge what the customer is really looking for.

Yet on visits this last week I have seen the good, the bad and the ugly of ranging from retailers that really should know better. Nothing here is rocket science yet the absence of good range merely suggests poor connection with the target audience (customers might be too strong a word here), and potentially poor retail operations that challenges the veracity of new change activity.

The first example is our GOOD………well done to Curry’s on this part of the market. Curry’s presented a fantastic range in kettles, from high end at nearly £100 to cheap and cheerful for around £10, all laid out with clear “reasons to buy” and “how to buy” information. Frankly if I was buying a kettle I would pay a visit and buy one as it gives me not only a full range but clear spend thresholds.

currys kettle range good

Great if you have a lot of space yet I know that even if 30% of the range was taken away the movement from a cheap kettle, through to a decent offer to a high-end brag about in the pub type kettle would have still been retained. The buyer here clearly understands ranging.

Our next example is not so good. If most of your range is dominated by one type of product then it seems that either you are on the money with knowing what your customers want, you are in the pocket of a supplier who is leading you down the garden path, or you have lost touch. This example of toilet seats in B & Q could be good, but it just isn’t.

BandQ toilet seat range -  bad

Retail consultants often get accused of simplifying to remove cost. We have specialised in reducing the cost of selling items, yet not at the expense of a range that delivers a Good, Better, Best offer to customers. The range allows a little ambition in purchase and clearly explains the difference between the various products and their features.

Against all of these factors, B & Q fail. The display is very functional with stock held behind the toilet seat and able to be tested (in part of course!) by the customer. The problem is, if you want a higher end solid wooden seat with a nice soft close and traditional wood stain then you have lost out. The ranging is grouped around a similar white plastic product of similar price points, just not good enough for a retailer with this amount of experience facing an incoming challenge of a new more professional competitor (Bunnings).

The Ugly example is worse possibly because the store itself is named “The Range”. Again, we see a display dominated by lower end product that offers little in the way of ambition.

The Range toilet seat range - ugly

The fact that the display prohibits trial of the product and is destined to look scruffy as soon as the first customer physically browses, means the operational elements have just not been considered.

If you know that your customer is working to an extremely tight budget, you still should be offering a broader spectrum of choice in quality, look and feel. A more systematic approach to ranging is one of the key factors The Range must adopt for future development. Not doing so will limit the types of customers they attract. Even with a cap on price, there needs to be a way you can help people differentiate the product themselves.

Ranging is definitely rule number 1 in retail, before selling skills, service, pricing or margin, none of which matters if people do not get excited by what you offer. Retail consulting is a funny old game, 5 years ago in the Ukraine we were telling people to reduce the range on DIY products by c.40%. The reason was you just could not see the wood for the trees. Making range visible is an art in itself, but we’ll save that for next week’s visits!

The trials of retail and retail trials

Keeping the customer interested, keeping the offer relevant and keeping the bottom line growing are ongoing challenges that retailers face. Standing still is, quite simply, not an option.

Sainsburys checkout free trial

In the last week alone we are reading news of a checkout-less store trial in Sainsburys, a one hour delivery trial from M&S, and hearing about Microsoft store open on Oxford Street. Each initiative is driven by objectives specific to that retailer, with measures in place to determine its success. One thing we can guarantee is that in isolation each of those initiatives will be loss making.

M&S one hour delivery trial

Retail Trials vs the Big Picture

On the other hand, each new initiative forms part of the whole, and that is what matters for the bottom line. A shiny new store can encourage customers to visit and then make a purchase on line; a high-tech AR mirror in the changing room can help the customer reach a purchase decision quicker; a one hour delivery slot for a meal deal can encourage the customer to buy more in store (although we feel it is more likely the other way round, but we’ll see).

Online grocery delivery is absolutely the right channel for the customer who is increasingly time poor and convenience driven. Yet the industry has yet to find a way to make this profitable. Subsequently grocery margins have fallen. Does the grocer then engineer the delivery process to make it work commercially? Yes of course they scrutinise the operation to make it as low cost as possible while maintaining customer service levels. But they also examine the rest of their operation using productivity modelling for example, to help offset any loss. In short, the whole business model must keep evolving.

Microsoft store coming to London

Getting the customer through the store door is one way of off-setting a loss from online delivery. Store layout, fixtures and ranging all play a role and one that we are very familiar with from working with clients in many sectors within retail. From shelf level availability to store environment and visual merchandising, each plays a role in growing sales. Some make headlines and create a PR perfect store while other initiatives quietly contribute to basket size.

Innovate to Differentiate

When we have worked with retailers on their proposition initiatives, we are intrinsically conscious of commercial objectives but always seek to leverage the strengths of the organisation to deliver a differentiated offer. Differentiation is not often a priority however. More often we find the motivator is the unfounded belief in needing to catch up with the competition, rather than being driven to give the customer something they need or want that they can’t get elsewhere.

We are excited to see more retail trials happening, and realistic in what we expect the results to be. It is easy to be quick to point out the shortfalls of trials but instead we continue to work with retailers to move their businesses forward, and work with them to build their futures.

Morrisons steering it’s own path to growth

What is interesting about Morrisons is that it gets on with the job. While its competitors watch each other, and try to out manoeuvre, our impression of Morrisons is one of steering its own path and using its own strengths to grow the business rather than its competitor’s weaknesses.

The first half of 2017 has given Morrisons a solid set of financial results which are well earned. The short-term future looks to continue the same path with all the key indicators of a healthy business pointing the right way. For the longer term we also hold similar optimism.

David Potts - leading Morrisons to growth

The supply agreements that Morrisons has secured in the last year with Amazon, Ocado, and McColls has given the retailer a revenue stream that they intend to grow to more than £1bn. We see no reason why that won’t happen. McColls will be supplied with Safeway branded fresh, frozen and ambient produce from Morrisons for a period of exclusivity of one year. After that year Safeway could start to appear further afield.

Neither Morrisons nor McColls have written off the idea of Safeway standalone stores reappearing on our High Streets at some time in the future although this does seem a stretch. What seems more likely is supply agreements extending beyond McColls and the Safeway range being extended.

Morrisons have form for range development, picking up awards for Own-label Range of the Year at the Grocer Gold Awards, winning golds for Ready Meals and Frozen Desserts, wine and cheeses. To extend the Safeway own-label range is certainly to come.

Operationally, Morrisons are improving claiming 30% fewer gaps on shelf resulting from its automated ordering system. Fewer gaps, bigger baskets? Actually no, basket size is down. Morrisons are reporting more transactions though, the convenience, smaller shop more frequent visits shopper is apparent. To support this shopping mission Morrisons are installing more self-serve tills so that the core supermarket format still works.

To quote David Potts, “we are beginning to realise some of the opportunities that our unique team of food makers and shopkeepers can bring us,”. We think that is the key. Morrisons is focusing on its strengths, not the weaknesses of others. Strategically this is always the most successful way forward, particularly if coupled with strong leadership skills. Morrisons has a strong CEO but beyond that, the leadership mentality is permeating through the organisation and is delivering results.

retail leadership

Where has great Leadership gone?

By Phil Dorrell

I often get asked what makes great leadership go wrong, why do so many lauded individuals turn out to be poor leaders in the long term?

The Jim Collins book “Good to Great” goes a long way to explain the selfless approach needed to be a long-term leader. Parking the ego and allowing questioning and debate of the strategy rather than a “I know best” approach, is one massive step that, frankly, evades most.

Leadership is a wonderful thing that can make you feel powerful and loved, cherished and listened to. For many it is a warm duvet feeling which they take comfort from, giving a purpose that validates them and embolden their decisions. On the flip side it can also be a lonely and cold place when it appears that the decisions made have not delivered, the belief is drifting and the once eager audience seem to be doubting future strategy.

In sport, the trials and tribulations of Leadership are played out in the full glare of the media, it allows a glimpse into a world with heady nights and dreary lows. The fact that poor leaders are engaged again and again in sporting positions, having failed in exactly the same position previously, is staggering. Yet in truth the same is true in business and in retail. It’s almost as if a process for delivering leaders who can grow within a business and be mentored towards the upper echelons does not exist. Yet we know in most large retailers it does.

So how is it that a dearth of Leadership talent is apparent? Role models are not in abundance and when that are it is often outside of the normal channels of career development one could be expected to replicate (Sir Richard Branson).

Short term changes in strategy and direction can drive an improvement in results for two to three years as the workforce has renewed belief in freshly communicated objectives, and start to see themselves as part of the solution. Meanwhile, the longer term grounding of the business in great process, people planning and development towards meritocratic measurement can be left behind. They simply don’t give the immediate return that shareholders and perhaps fellow board members demand.

All sounds pretty grim, and depressing, well it is for those who suffer in the ranks seeing all this happen. It does not have to be though. Leadership can be learnt, it is not genetic, it is not about one MBTI type over another. It is about people being developed correctly by those who understand the individual and their needs.

On some of our leadership away sessions we have seen profound changes in the way people feel about themselves and the interactions they have with their team. In itself, this is a start, nothing more than something to build on. It is learning about yourself and your leadership style, with honest feedback and challenges. It’s a great pleasure delivering these courses, seeing people grow, and something that I, as a leader, recognise is vital to any business.

Picture: Graham Barclay/Bloomberg via Getty Images)

Morrisons winning ticket: Safeway

Morrison deal to supply McColls has come from left field but it really shouldn’t have.

Morrisons have quietly been getting on with business while all the focus has been on Sainsburys and their acquisition trail and the Tesco Booker deal. The scale of the Morrisons deal might be smaller, but Morrisons are racking up a string of relationships that will see their wholesale revenue stream take a big step towards the £1bn mark.

So why have Morrisons done this? The revenue from additional wholesale relationships is obviously attractive and adds to the top line but it is the ability for Morrisons to maximise volume through their vertical integration that makes the relationship so attractive and one that shouldn’t have surprised us.

The quality guarantee that comes from owning the farms and fisheries is one that Morrisons have been eager to leverage in their own supermarkets and it was cited as a key factor by Miller, CEO of McColls in moving to Morrisons for its supply. Morrisons own the Safeway brand and with it, it’s quality perception built from many years of Safeway supermarkets. Coupled together, McColls see how they can offer their customers a better quality offer on fresh produce than they have been able to do to date and with it, better ranges and higher sales.

For Morrisons, more volume through the operation equals reduced cost and that is where the Morrison’s customer stands to benefit. Morrisons would have the ability to cut prices for the customer inevitably putting pressure on their grocery rivals.

We have another possibility to float: the revival of standalone Safeway stores. In a conversation with Luke Tugby of Retail Week, we discussed how the Safeway brand would be enhanced though McColls to the point that, in time, it would give Morrisons the opportunity to consider building its presence in the South of the UK where in the past, Morrisons has struggled. It would give Morrisons a premium fascia that would appeal to another demographic, one that would not consider shopping at Morrisons.

It is, of course, speculation, but we do know this: Morrisons are on the front foot and are proactively exploring all avenues of growth. We’d love to know what you think so please do leave a comment.

The Retail Remedy Way – Hands on and foot down to retail growth

the retail remedy way case study

Retail Remedy is a hands-on retail consultancy, bringing our combined experience to the retailer, diagnosing the problems and then guiding the business through change to deliver results.

We work with all kinds of retailers all over the world with turnover upwards of £1m. This case study follows the path of one such retailer; a small business that had grown organically, picking up skills as they went but with very limited retail knowledge. However, sales had been in a slight decline for the previous three years.

This is the story of how we grew their turnover by 40% and increased margin by 3 percentage points.

Under the bonnet - case study

Getting under the bonnet

When we arrived, we found a very passionate team with enthusiasm that far outweighed their retail skillset.  The team were long-standing with management that were highly involved in the day to day running of the business. Their combined dedication and hard work had helped them firefight their way through to create a credible presence, albeit very inefficiently to that point.

Fortunately, they had the foresight to implement software systems for stock and inventory but without core retail practices in place, it was far from optimised. The tools helped the team find a way through the day to day problems they encountered but like with most systems data does not add value without the skill to convert it to information and knowledge.

When we start a project with a client we have a pre-determined set of areas to review, governed only in part by the objectives of the brief. We often find that the retailer only knows a small part of what they need. No-one knows what they don’t yet know. We will always expand our review to cover areas of the business that the owner may think is irrelevant but where we can identify a seam of opportunity to support the business to grow.

In this case, we reviewed all areas of the instore retail operational practices, all aspects of stock handling including management processes, ordering and stock holding levels, product merchandising and pricing, buying, category management including OTB and range review disciplines, staffing, pay and benefits, incentive programmes and e-commerce processes.

answer the why - case study

Answer the Why

With the information that we gathered we devised a phased programme of change that started with buy in from the top down. Like in any business, change does not happen because you say it must, change happens because people can see the benefit to them of doing so. We answered the why.

A three-day visioning workshop helped the team establish “What the brand is” and importantly “what the brand is not”. From this any questions that were raised were held up against the brand values and if they supported it, great, if they did not, then they were challenged. The foundations must be solid and defendable, not by us, but by the teams.

This groundwork can feel over done, but from our experience and what we have delivered for other retailers, we know that it is a valuable use of resource, that in the long term, saves time and helps to facilitate a smooth transition. It gives the business the “Big Plan” to work to and helps to measure progress particularly when you are in the thick of change and results still feel a long way off.

Right decisions - case study

Right decisions, right time, right place

The retail and buying teams were restructured to give the right level of decision making to the right people at the right point in the process. A dedicated buying team was created founded on best practice principles, retaining the existing team’s knowledge and passion for the business and product, but also recruiting the skill and experience that was previously lacking.

We put in place and re-platformed a new ERP system and together with the new resource, we enabled the business to implement and embed core buying processes such as OTB, continuity ranges, range reviews, category management and aged stock processes.

Basic retail practices and processes were reviewed and improved to current lead practice, to deliver a better customer journey and experience.

Immediate and sustainable results

The results of this overhaul were immediate and sustainable. Turnover of products increased; cash flow improved leading to an increased buy; aged stock moved out of the business further improving cash flow and the website made transactional.

With the systems in place, the skills to interpret the data presented, and the processes established, the business could work more efficiently and effectively to grow sales from £1m to £1.4m over 12 months. Not only that, gross margin improved by 3 percentage points too from better buying decisions and less aged stock in the business.

The business is now in a much stronger position to further support its own growth as it adds space in new locations in the coming year. The ability to scale from the practices and processes that have now been embedded into the culture of the business, mean it has the potential to further grow sales and improve margin and the legacy that we have left will benefit the business for more years to come.

This case study is not unusual, in fact it is quite typical of the sort of results we are able to bring to a small or medium sized retailer. It might be that you have reached a tipping point in your growth and need to build stronger foundations to continue to grow. So if you find

  • Your sales have flat lined, or are in decline
  • Your margin or profit are in decline
  • The customer experience that you want is not being delivered
  • Your retail processes and procedures are not as good as you experience elsewhere

Please get in touch with one of our experienced team.

So, if you need support re-focussing to navigate a new path and kick start your business growth get in touch. With our knowledge and experience we can work with you to build a more profitable future, so what are you waiting for?

new retail formula

The New Retail Formula

new retail formula

Fewer stores and less staff hours equals more profit? Is this the new retail formula that all retailers are aspiring to?

We have lost track of the number of retailers that are culling under-performing stores and cutting staff hours in the pursuit of profit in a difficult period of High Street retailing. Luxury purchases have been reined in as inflation starts to rise and political uncertainty makes mortgage and credit card rates look less certain than they once did.

In 10 years’ time fewer shops will have fewer staff working in them and yet we will probably all be spending more on our shopping. The trend is pointing that way. There are certainly more shops being closed than are being occupied by etailers debuting on the High Street. The rise of technology, the ability to shop without getting your wallet out or scanning an item at the till that Amazon is bringing us, would indicate the retail workforce should be worried.

Are town councils worried? Are landlords?

It is going to get harder to squeeze the same rent from the same players so in our opinion, if they aren’t ready to evolve, they should be worried. The need for flexibility and thinking about retail in a fresh way will be paramount. Norms will be challenged. This required evolution is tricky however, if your community shops online how do you protect your Town Centre? Our view has remained solid, if you are not building footfall driving activities (schools, colleges, cinemas, libraries, restaurants etc.) then you are vulnerable. Yet maybe the salvation is in etailing ?

How is it we have the rising trend of etailers opening stores, are they mad? No, they consider themselves opportunists opening showrooms to drive more sales online. Made.com, Loaf.com and other furniture etailers get that the consumer wants to sit on a sofa before they buy it. How that rationale works for books, or fashion is debateable, but Joe Browns is buying it. The online fashion retailer wants to connect with its customer in a physical environment in Meadowhall to be precise.

The customer connects with brands not channels

Total retail sales are all but flat with fluctuations only happening between channels.  We must remember that the customer connects with brands, not channels, and they want a seamless experience whether they are in Sheffield or Portsmouth. To achieve that, staff knowledge and retail experiences need to marry up. When a customer has more information about a product on their phone than the person selling it in a shop, there is a problem.

The physical shop is an opportunity for the retailer to inspire the customer and give them a memorable delightful experience. When the retail experience has barely changed in the last 20 years it’s easy to see where the problem lies.

Etailers taking up positions on the High Street have that in mind; they were conceived in a time of change and are drowning in data that tells them more about their customer than a lifetime of standing at a till will ever do.

So the etailers have the advantage?

No, they just have a mindset that embraces a constantly changing environment. We expect they will face their own difficulties. It’s easy to drag and drop a product onto the home page, less easy to physically move it around a shop to fill gaps in range availability.

Anyone citing the “death” of retail and the UK’s High Streets must be coupled with the inflexible landlord and the retailer navel gazing. What we are seeing is the evolution of retail, natural selection, survival of the fittest. A new retail model is rising that will find more innovative ways to generate profits. The number of what we call retail stores today will decrease, but we will see an increasing number of sites that involve a form of purchase behaviour. Those sites will be served by by people, what we call shop assistants today.

A new retail formula is emerging, be in no doubt, and it will be more productive, with different touch points for the customer but ultimately serving that customer. Online, in store, till-free or with a full customer service, the customer will decide.

amazon-go-store

Amazon just passed Go

Amazon is a retail disrupter. Many retailers still hold a fear of what the world’s largest retailer will do to their established business models. On the other hand, many other retailers, rather than let fear paralyse them, use Amazon as a sharp stick to remind them to keep adapting, to never be satisfied, to move with the customer.

What Amazon are good at, above all else, is their relentless observation of the customer. This enables them to spot trends and opportunities and make the experience better, and they are never satisfied that they have ticked all the boxes. Amazon Go is a perfect illustration of that, adapting to smaller basket sizes and time poor customers with technology.

amazon-go-store

Tesco, of all the UK grocers has taken this on board; the phrase “customer-centric” litters every Tesco press release and it’s not just lip service, sales are growing again. Sainsburys has acquired Argos and is now sniffing around Nisa, citing customer synergies and improved shopping missions and prices for more customers.

And then there is Morrisons. There isn’t that much to suggest Morrisons are moving with the customer at the same pace as its competitors and yet they have a relationship with Amazon and it could be argued are the more forward thinking of all the Big 4.

When the deal was first announced we thought, yes, that’s a good deal for Morrisons who at the time were faltering with little excitement on the agenda to entice customers into store. In hindsight, and with the new knowledge that Amazon have acquired Whole Foods, there is a more unnerving scenario forming in our minds.

Has Morrisons been astute enough to recognise that Amazon will not stall in their desire to penetrate further into the grocery market and that by entering into a relationship with them in the early stages of their market penetration gives them an advantage? Or has Morrisons positioned itself ready to be consumed by Amazon in one big bite?

Amazon Go, the grocery format with few staff and no checkouts, is a disrupter if it moves into scale. The benefit to the bottom line from reduced staff, where margins are recovered and inflation managed in a struggling economy, is a very attractive model. It is likely that Amazon have acquired Whole Foods as a vehicle to accelerate Amazon Go.  There are trademark applications for Amazon Go in the UK already so it is only a matter of time. And Morrisons already have a relationship with Amazon, the biggest retailer on the planet. Smart or foolhardy?

fashion retail productivity

Fashion Retail Urgently Needs Better Productivity

Fashion retail is in a tough place, and it’s becoming tougher. Sales are more difficult to achieve, margins are under pressure from rising costs, and the weather is being no more predictable with every season.

Just like most retail business, the largest cost for fashion retail is the labour line so we are very surprised when we review a retailer’s wage and productivity model to see how much we can help them save.

Typically, the science behind the allocation of hours to stores is not based on fair and balanced decisions, or in fact, any science at all. The flag ship store is given an easier ride to help it stand out under the gaze of customers and stakeholders. All this does, however, is create an unbalanced and unfair wage model. Addressing this unbalance and getting all stores to work equally hard is a valuable place to start saving cost.

It is not just about redressing the balance; many retailers are carrying out non-value adding tasks too. It is amazing when sales are slowing, retailers can busy themselves with tasks rather than serving their customers. There are only so many times you can count the change float.

By helping retailers review these tasks, changing or improving the processes and therefore the efficiency, we have helped retailers save millions of pounds a year.

One of the most common places to find ‘tasks for tasks sake’ is in the store room, often labelled the engine room of the store. Unfortunately, this engine room is saddled with complexity, confusing and time-consuming processes that are expensive and ineffective.

Fashion retailing is not rocket science. When we are given the opportunity to help a fashion retail business cut through the task-treacle and get back to a simple retailing formula, we not remove unproductive processes, we also leave a fitter fashion retailer with lower costs and more to invest in its future.

Asda – Some Quality Decisions Needed

By Phil Dorrell

The woes of Asda have been well documented by countless newspaper columns and down beat interviews. After 11 consecutive quarters of sales decline the time has come for a response that moves away from what it has always done; after all the definition of madness is doing what you’ve always done and expecting a different result.

featured-asda-pay-rise

Chasing the drifting spend by reducing prices further and continuing to reduce costs is frankly silly, yet the paymasters at Wal-Mart will want costs decreasing ahead of sales. With margin and operating profit apparently declining too, it all adds up to a bit of a pickle. The price perception brought about by the discounters is only going to lead Asda further down the wrong path.

As a store manager, competing against Asda in the 90’s was hard as they had a great non-food range, a burgeoning George range and an increased presence of aspirational food, something that Safeway prided themselves on. Now most of this has been washed away.

Asda’s food range is frankly cheap. It might be cheerful but it lacks excitement and is definitely unable to satisfy Sainsbury or Tesco customers. The George range that started off with Next type quality has been cost engineered down to the sort of product nobody is going to be proud to wear, and certainly not show the label. The non-food range is choker with cheap product and the seasonal aisle smacks of lazy buying trips to China. Where is the ambition? Where is the product to recapture the customers who migrated to Aldi for price and stayed because their quality was better?

I am an ex Asda colleague and want them to be better, but this just makes me, and countless others, frustrated that their myopic focus on price and cost will ultimately turn them into a poor man’s Wal-Mart. Asda need a comprehensive range review in every major category to identify where the quality at a great price product comes in. Opening price points should not be sacrificed but aspirational product needs sourcing to win back a consumer who is feeling a little, but only a little, better off than they did 5 years ago.

The other factor in all of this is regional ranging, and I don’t mean the local lamb or the farm cheese but a more discerning look at the product ranges aligned to the demographic mosaic of the area. If in a wealthy area of Wakefield I cannot buy a real French stick on a Friday then Sainsbury here I come.