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.