Post Covid Retail – Customer first buying, nimble supply base

As part of a series of interviews, we have been asking ‘what lessons retail should have learnt or should be learning as we deal with the ongoing pandemic’. This interview is with Retail Remedy Consultant Emma Reed whose years in fashion buying for bricks and clicks has timely advice for those facing the current pandemic challenges.

So Emma, what is your biggest criticism of retail at the moment?

Any business that is not completely and utterly focused on their customer right now, will be feeling the pain.  Boards spend too much time worrying about their shareholders and manipulating their financial reporting to appease them.  They don’t spend enough time anticipating what their customer will want next, in terms of product and experience.  I would challenge leaders to get to know their actual customer, not the one they think they have, and to make it their absolute priority to focus their product, their marketing and their brand experience directly at their actual customer.  In doing so they will look after their shareholders.

How does a focus on the customer translate into business structure?

In answer to this I would like to add to points already made about the importance of simplification:  The more isolated, separate teams there are, the less understanding of the business as a whole, within the culture.  Eliminating “them and us” and facilitating “we” is essential.  It’s a small business approach that needs to be applied to larger businesses in order to truly focus on the customer.  Too many retail businesses are like huge oil tankers:  The course is set way in advance and deviating from this course is to admit a certain amount of failure.  They are too overly complex to change direction effectively.  They often have many disempowered employees, who do not feel responsible for their actions because decisions are made by committee.  Speed, autonomy, agility, flexibility and a one team approach have to be a priority to cope with the pace of change and the fluidity of job roles in retail.

What would you say is important for multi-channel retail?

A flexible structure facilitating the buying of stock for each and every channel is the way forward.  It’s amazing how many retailers run their website, stores and international business as completely separate entities.  I’d go as far as saying that they are competitive in some cases.  Stock shouldn’t be owned by one channel or another and should be directed to where it is most needed, according to demand.  The same messages should be reflected in stores and on the website.  The stores are the physical experience of the brand and the website is the virtual experience.  Both need stock.  Both have a role to play in the brand’s success and to neglect one channel at the expense of the other will lead to diminished sales overall in a multi-channel business.

How does the supply base have to change?

I have been a buyer and I understand that buying the vast majority of stock up front is neat and tidy and easier for stores to manage.  But it is so much more likely to lead to crippling stock levels and high mark-down, if sales do not go to plan.  I’m not advocating fast-fashion or ultra-fast-fashion models either!  A flexible supply base, willing to make smaller quantities, so that businesses can maximise trading opportunities, is more important than extra margin points.  I would be looking for suppliers, who work together with retailers, to switch production according to demand.  A supply base offering smaller minimum quantities, closer to home, which can operate at speed.  I would be looking closely at how the supermarkets work operationally to maximise sales without creating huge excesses of stock and to apply some of those ways of working to other retail categories.

What about the role of physical retail?

Great product is still the most important requirement for building customer loyalty and repeat sales, but experience is increasingly important, especially in physical stores.  The lesson learnt for me before lockdown and confirmed during lockdown is that the role of stores is changing and those lacking in customer experience will ultimately suffer.  Retailers need to be seriously asking themselves what they are offering their customer by way of a unique in-store experience.

Where would you focus attention?

Safe is inevitably boring and boring does not lead to great sales.  Give the creative teams freedom (and the budget) to inject personality and uniqueness into brands.  The race to have the right product, at the right price, at the right time, no longer cuts it.  Too much focus on the competition has led to a diminishing U.S.P.  The customer wants to understand what a brand stands for and why its product is right for them.  He/she wants to see this reflected in the product itself, not just in the marketing.  Average, diluted, without character, like everyone else’s won’t work, except in the very cheapest of cases.

Anything else to add?

Invite an alternative opinion.  Don’t dismiss a challenge.  Explore all the alternatives up front and then make decisive moves.  Empower your employees and let them take full responsibility for the decisions they make.   

Post Covid Retail – Strong decisions need great execution

As part of a series of interviews, we have been asking ‘what lessons retail should have learnt or should be learning as we deal with the ongoing pandemic’. This interview is with Retail Remedy Partner Phil Dorrell who is known for his operational insights as well as a rather uncompromising way of expressing them!

Phil are shops dwindling and likely to become museums?

The High Street is inevitably going to change, with fewer shops and brands in existence as we navigate through the next 18 months.  Whilst retailers cope with an endless barrage of tactical issues, one factor that they must consider is how they breathe life back into their ‘recut’ retail estate and what their customer will now expect from them.  My concern is that retailers will focus on the tactical stuff without an overarching plan.

What’s the difference now and what is there to learn from this?

The tactical issues facing retailers are ‘new’; what will separate success and failure is those retailers who have a plan and execute it well, versus those who let the tactical issues become the plan. Retail operations before, during and hopefully post Covid are all different challenges.  

We have built our business on supporting retailers in turn-around and our approach always starts with visioning what the goal and direction of travel is.  We look to simplify execution, reduce unnecessary activity and ensure clear channels of communication are established throughout the organisation. These steps not only save £m’s but also ensure the business is far more agile, focused and the whole organisation is able to adapt to any change much quicker. 

What tips would you offer a retail CEO now?

  1. War-game the scenarios of your own operation and the make-up of your estate and consider a best, mid and worst case on portfolio / channel incomes for next 3 months, next 12 months and next 3 years. Have an actionable plan for each eventuality. Know where you are heading.
  2. If you look around the board room and the nodding heads of friends greets your every word, then you must be a genius or are likely to fail. Broaden your teams experience or import (perhaps temporarily) a diverse skill set from outside. Cognitive Diversity is king in the land of confusion.
  3. Benchmarking against your traditional competitors is no longer.
  4. Communicate, clearly, concisely but consistently what’s happening, let people know what good looks like and celebrate like mad teams who deliver it, make them role models.
  5. Supply chain and inventory management can make or undo you, have very clear and accurate metrics on where the cost and timelines are, you may be making very bold decisions on this. Keep stock of your stock.
  6. Be consistent without being inflexible, people (team and customers) want to know you will not flip flop around on decisions, but they also want to have some recourse to decision making, make those channels clear and transparent. Incorporate broad team views before seasoned judgement.

Finally Phil, are you hopeful about the future?

Some retailers will go to the wall as they will not learn, yet the opportunity is huge for those who get this right, they can gain market share and customer loyalty like no time before.  Now is not the time to tackle everything ‘in-house’.  Businesses will reap the benefits of using the right partner to support them with activities that are not part of the day job or require complete objectivity. In our experience this speeds the journey up and saves £m’s if not the business!

Post Covid Retail – Simplicity is key

Business Simplification

As part of a series of interviews, we have been asking “what lessons retail should have learnt or should be learning as we deal with the ongoing pandemic?” This interview is with Retail Remedy Partner James McGregor and looks at operational simplification.

Before you discuss business simplification what are your thoughts on ‘the new normal’?

Those retailers fortunate enough to have emerged out of lockdown find themselves in a very different trading environment and have an endless list of tactical issues facing them.  My watch out for business leaders is that the whole leadership team don’t absorb themselves in the ‘here and now’ thinking they have done a great job at the end of each week because they’ve extinguished some fires.

What advice would you give?

Take one of your most detailed transactional leaders (normally the retail director) out of the day job to lead a cross functional working party who are solely responsible for resolving or escalating the tactical issues the business is facing on a daily basis.  Keeping the lights on whilst allowing the rest of the business to recalibrate itself.

What are the key questions you are asking retailers when you talk about business simplification?

“Are you just kicking the can further down the road?” or “Are you really committed to reshaping and simplifying how your business operates?”

 It sounds harsh, but, we have seen so many retailers go through the pain of CVAs, debt write-downs or pre-packs with the intent of making radical changes to how they operate only to be in the same position again a few years later, because they have simply not been bold enough in reshaping the operation.

I am still amazed at the level of complexity and bureaucracy that exists within so many organisations.  Retailers need to become far more agile and simplify how they operate if they are going to compete in the medium/long term.  New entrants who are dominating the market do not have the structural baggage that legacy retailers are shackled to.  Leaders need to be thinking differently, operating differently and challenging their operations differently.

What do you mean by businesses need to simplify their operation?

We have spoken with a number of retailers who have trimmed a little organisational fat, halted rent payments and reduced their immediate cost lines, in truth, this is about staying afloat, not simplification.

What advice would you give?

Of course I would cut all immediately obvious inefficiencies from the business, it’s about staying afloat after all.  Beyond that the focus needs to be on shaping the operation for the future, not simply applying a plaster to a bleeding artery.

  • Build the burning platform, set the direction and over communicate it – Trust me every retailer has a burning platform right now, but I guarantee the majority of leaders will keep it in the boardroom. Major organisational and mind set change cannot be delivered in silo [or through a small group of leaders], once the direction of travel has been agreed everyone within the business needs to be brought in on the journey and play their part in its delivery.
  • Remove Structural complexity – Have you ever sat in a meeting and really questioned what value the other +10 functions are adding? Guaranteed if a leadership team has been in play for more than 12 months they will find it very difficult to challenge their own operating model and cost lines.  If you are unable to see how your business can operate more effectively with 40% less central resource you are probably asking the wrong people the wrong questions. 
  • Challenge all of your cost and margin blocks – This is not simply a justification exercise, it’s about objectively challenging all major cost and margin blocks, start by looking at the end and make sure you scenario some radical propositions;

I would start with some very simple questions;

  • What is the tangible  ROI these functions/cost bring to the business?
  • What measured impact would they have on the bottom line if we removed them?
  • Can it be completed more effectively by a 3rd party partner, therefore reducing fixed cost?
  • If the function is business critical how do we simplify and streamline activities?
  • Will investment into the function achieve any of the above quicker?

Any final comments?

The next 24 months are going to be filled with uncertainty, distraction and major fallout within the industry.  Seek external support on things that are not part of the business’ day job recognising that shared learning and support from your wider partners will be paramount if you are going to mitigate risk and drive opportunity in the future.

Post Covid Retail – The Route Back ?

The Route Back

The retail industry is transitioning through a re-adjustment period and this will continue for the foreseeable future.  As a team we have reflected on the 3 questions that most CEO’s will have been discussing within the boardroom.

  • How do we survive?
  • How do we reposition?
  • How do we stabilise and grow?

Survival

  • Are you being brave, innovative and strategic in your planning?  This is not a time for mediocracy.
  • Protecting cashflow is critical; Turning the tap off to all debtors is the last resort, prioritising who remains critical to the operation and who you need to continue to partner with is paramount.
  • Do you have a trusted brand? Trust is key, do your customers trust you?  Are you keeping customers in mind at every decision point, it’s about their safety now, not just a sale.  Are you getting positive reinforcement through customer insight?
  • Safety first, protecting your people, your customers and the broader public is a mark of our professionalism and builds trust or erodes it.
  • Consistency in execution is vital, no second chances for safety, only if the protocols are fully understood can our people engage with relaxed customers.
  • Over communication – Do we keep talking to the team and are they fully engaged? Good swimmers leave the vessel first, are yours looking to stay or go!
  • Where do we want to be – Have we built a working vision of shops, office requirements, online channels and modelled the outputs?

Repositioning

  • Timing is everything, can you evolve your business model to retain loyal customers and win new ones?
  • Your operation has had an opportunity to improve or deteriorate against competitors, customers are seeing this and re-calibrating who they trust and where they want to spend, this opens up opportunities in market share and potential M & A.
  • Managing availability is critical at this stage; system algorithms will be corrupt and customer geographic shopping preferences will have shifted.
  • As the business world has mostly suffered, opportunities exist for left field collaborations to reduce cost, increase presence and diversify offers, a senior team member should be investigating this for problem resolution and opportunities. Think Aldi and McDonalds would have been together had it not been for Covid?
  • Operating structures need simplifying to make decision making less bureaucratic and swifter, the simpler the structure the less likely to stall. Ensure the cognitive diversity is retained throughout, don’t just keep the yes people.
  • Supply chains will be experiencing significant distraction for years, make sure yours is diverse enough not to stall growth when the inevitable occurs. A focus on shorter lead times and an ability to react fast to spikes and dips is a priority.

Stabilising and Growing

Agility will be key; the only constant over the next 12-18 months is uncertainty, those businesses who are able to adapt quickly are most likely to survive and prosper. Over the coming weeks, we will be releasing a series of 5 minute ‘quick read’ interviews conducted with the team that consider what retailers will need to address to stabilise and grow.  They will focus on;

  • Business simplification – Removing the complexity, bureaucracy and legacy constraints within the business
  • Delivering great execution – How do we drive personality, trust and compassion through our execution
  • Making a fixed cost impact
  • Cognitive Diversity – Making sure you have the right people, not just the yes people
  • Rightsizing the channel mix – Channel growth and retraction
  • Streamlining the supply chain
  • Retendering – tendering with pace
  • Creating a seamless transition between channels