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.

argos_sainsburys

Home Retail Group: two retailers, two profit trends

On the one hand Argos is delivering profit growth, mostly from cost management activities rather than a new digital strategy, and on the other hand Homebase are battling against a shrinking customer base coupled with tougher competition.

So does that mean that one retail strategy is working and the other isn’t? No not really. Neither retailer, both owned by the Home Retail Group, is shy of trying something new in the face of a shifting market.

Argos are going digital and opening as concessions in Sainsburys, as well as being a collection point for eBay customers. It’s move into digital formats still feels gimmicky and although feels right for the market doesn’t yet look right on paper. Digital sits on top of Argos’ strong distribution model comfortably and makes strategic sense but it’s no surprise that we are still lacking any evidence that the new digital format is delivering any material benefit.

The capital requirement for a rollout means it will take time to gain traction and gives the retailer a window of opportunity to refine the format and work out how to make it profitable. But when was a new format ever profitable in the first year? It takes time and tweaks and scale before profit can be realised, that’s if it is the right format at all. Some formats sink without trace, consumed by the next new idea.

We cannot knock the stream of innovation and modification that flows from HRG HQ, new ideas pave the way to capture customer’s imagination, and decisive plans to fix what is broken are played out. Homebase took the bold move last year to close about a quarter of its estate and reduce range in the remaining stores to make room for the concessions to build its lifestyle credentials.

When the market moves, the retailer must move with it, in fact ideally ahead of it which is what Homebase is attempting to do. How profitable the remaining store portfolio will be is yet to be seen, but whatever the result, it won’t just be as a result of the store closures and concessions, HRG will have a few more ideas to play out in the coming months.

The story this year was a tale of 2 different profit trends, but there is every possibility that the trends could both be reversed next year. Homebase can return to profit growth by cutting out the rot and reconnecting with what customers want and Argos could expand digitally, which if it follows the online grocery profit model, could take some years to deliver profit.


If you would like to chat about any aspect of your retail offer, formats, space productivity or estate, Retail Remedy’s team of consultants are more than happy to listen and then help you take the next step. Get in touch.

tesco trolleys

Is this as low as Tesco can go?

Dave Lewis will be reporting Tesco interims tomorrow, facing analysts, pundits and retail consultants, and he will certainly be planning on this being the last of the bad news. What’s the saying? The only way is up?

The share price may have a little further to fall when Tesco reveal anything up to a £5bn loss which will include property write-downs, a pension black hole, accounting errors and costs to restructuring, but with sales edging upwards and all the bad news dispensed with, there is reason for his optimism.

The business is being restructured to be more customer-facing, offering a level of service reminiscent of the good old days when Tesco was a trusted grocer on the High Street. The upside to the loss of jobs and is that the business should be more agile and efficient, and able to respond to customers in a way that builds that trust. A streamlined head-office conveys a feeling of agility and simplicity for suppliers and a lower cost structure which customers may feel will permeate through to shelf prices too.

Proof that the restructuring will have the desired effect is thin on the ground with only a couple of trading quarters under Lewis’ belt. However like for like sales are getting better and will be taken as a positive indication that the decisions taken so far are the right ones and that Lewis is the right man for the job.

The city could be further reassured should Tesco announce progress on a deal to dispose of Dunnhumby, or a partnership arrangement to make use of overspaced stores, although that may be wishful thinking and could be premature.

What we don’t really want to hear is another round of price cuts. Price could be a sensitive subject in the coming weeks as Which? pursue its super-complaint of price duping in supermarkets. The Big 4 have all been cutting back on promotional activity to reduce confusion for the customer including Tesco, and any investigation into misleading price activity will undermine the trust that Lewis is working so hard to recover.

Tesco will not be another discounter. It could however be creating a new simplified business model for supermarkets that others will want to emulate: more customer facing staff, simplified promotional activity and supplier terms and collaborative partnerships with other retailers.

Lewis has started his tenure well and although will be facing tough questions tomorrow, has a calm quality that conveys confidence.


Retail Remedy have worked with retailers large and small to deliver customer focussed retail strategies. If we can help you, get in touch.

sainsburys store

Sainsbury’s Walk Round April 2015

by Phil Dorrell, Partner, Retail Remedy

PR departments are peculiar. They are there as part of the marketing team and deal with the media face of the specific retailer. They promote good press relations and brand equity and occasionally have to deal with the odd bit of negative media attention.

They also arrange media facing walk-rounds, launches and retail results announcements. Populated by hard nosed people who exude both confidence and style. Sainsbury’s today was exactly this, a walk round for retail consultants and analysts, chaperoned by the PR, a brief 7 minute section review with some of the directorate before moving on to another section. Manifesto like in it’s delivery, it told us all the things we largely knew and wondered if they would really make the difference. I enjoyed it and the store looked superb in Wandsworth, run by an old GSM of mine, Ziggy, top chap.

These media days perhaps rely on an old marketing ploy called reciprocity, they look after us, we look after them in our reviews of their business and plans. The truth is somewhat more brutal however and any journo or retail commentator who is worth their salt has to report their view, although sometimes that view is not well studied, and for these reporters the exercise provides as story. It’s just not the whole story.

Sainsbury’s face a daunting 24 months, facing more Tesco stores than anybody else they have more to lose from a resurgent market leader, and they are / will be resurging. For all the lovely people (and JS people always do themselves proud in this ) there lacked the retail strategy and tactics required for such a fight. We heard of great services, really cool products, increasing online and click and collect, even the belief in pricing simplicity. I for one didn’t get the sense they had the pricing strategy clear across all areas, nor the marketing synergy in store that extolled the simple pricing philosophy. Being so far behind Tesco and Asda in clothing and non-food sales just means they have a greater reliance on food profit, almost treated as a traffic driver by the bigger two retailers. Asda specifically have such heritage in clothing and non-food that they are willing to sacrifice much of the profit from food and drive footfall and goodwill because of it.

Sainsbury’s have some great products, super people and well placed stores, but they need a lot more people going in them instead of competitors and they need to look to their pricing and promotions on foods to do this. The simple pricing would be a good start but too conceptual to comment yet. The next 24 months for Sainsbury’s will be very tough, nothing I heard today convinces me otherwise.

coop food store

Which retailers have a convenient advantage?

What does the ultimately convenient supermarket look like? Like a Co-op? Like an Aldi?

Co-op delivered 3.2% lfl sales in its core convenience estate last year. Its TV advertising is all about convenience, its opening schedule of 100 stores for this year is all about convenient locations. Smaller stores can be less efficient with lower margins however, and that is something Co-op is addressing in its turnaround programme.

Aldi’s enviable growth now has the grocer as the UK’s 5th largest, having just overtaken Waitrose. Aldi is not a typical convenience store but there are elements of its proposition that fit that format: a smaller range of brand alternatives and products making the selection process far more efficient, a self-packing checkout streamlines the process cutting queuing time, and locations more convenient than some of its competitors.

Then there are the Big 4. Sainsburys and Tesco have a strong convenience estate, Morrisons has slowed the roll out of what was already a slow foray into the format and Asda has avoided convenience stores altogether. Large supermarkets are being closed and development plans shelved, all pointing towards a smaller average supermarket for the future.

The reduced space in a convenience store inevitably means a reduced range which can be a hindrance for the retailer when the customer cannot find what they need and has to go to another store. If the convenience format were able to claw back some space though, more range could be offered resulting in fewer missed sales. One drain on space are the tills themselves. What could be more convenient than not queuing to pay at all? Amazon have applied for a US and UK patent for a system that identifies the customer as they enter a store, identifies the products they carry out with them and charge them accordingly; All quite feasible given the technology that is available today.

We aren’t quite at the point where the customer is the point of sales yet but the next battleground for food retailing is convenience in our opinion. Co-op has an advantage to other retailers if it can improve its margins and refine its offer. Aldi also has an opportunity as it pinpoints the locations to extend its estate into. Both have a convenient advantage.

M&S_Silverlink

Is Marks and Spencer’s retail strategy finally paying off?

Could the fashion tide finally be turning for Marks and Spencer who have suffered 15 consecutive quarters of declining sales or is the predicted improvement just a hopeful blip?

Marks and Spencer’s general merchandise performance has been dreadful over the last 4 years. A ferociously hyped new fashion team did little to stem the decline, a relaunched website weakened already poor fashion sales and fulfilment problems at the new DC made a bad situation worse during a mild Autumn. Its retail strategy looked to be failing.

So what has Marc Bolland done in the last quarter to change the seemingly determined path to failure? There hasn’t been any radical strategy shifts or store turnaround plans to be able to point to, but there is a steady hand on the wheel. Could it be that patience has paid out?

The investment and cost cutting plans could just be coming to fruition. After years of underinvestment and basic complacency, the business needed to be overhauled to catch up with its competitors and that is what Bolland has done. It may have taken longer than planned but he has generally been doing all the right things.

We can still point to dull stores once you get past the flagship locations and head to a typical High Street, and we can still see an over proliferation of sub-brands to confuse the customer and ranges that attract the wrong customer, but there are small signs that the business is moving forward.

It might look like M&S has been taking tentative steps, but M&S wouldn’t describe them that way. Changing the direction of a big ship is no easy task. It needs major effort and that effort can be rewarded with only a subtle effect, which is what we believe we are now seeing. But once it starts to move, it is easier to keep it moving.

With an improvement in fashion sales could come the confidence the business lacks to up the pace and start to gain traction with John Lewis and Next which have lured the M&S customer away. The strategy to build margins rather than sales looks to have born the buds of what will become fruit, but it is still Spring and that fruit isn’t ready for picking yet. In the meantime, Bolland and the team can be reassured that they are on steering the ship the right way, they just need to crank up the speed before the market moves too far ahead.


Retail Remedy retail consultants can help you formulate a bespoke, results-focused retail strategy with achievable objectives. Don’t leave it too late. Get in touch today.

 

How can retailers commoditise the customer experience?

A positive customer experience doesn’t always lead to a sale but is much more likely to get the till ringing than a negative customer experience. But what does that experience consist of and how can a retailer consistently deliver the same experience across its estate?

Much of what constitutes a customer experience is not tangible and is subjective. The customer will visit a store with preconceived ideas informed by the brand and influenced by friends and it is the retailer task to at least match those expectations to ensure a positive customer experience. Of course, in an ideal world the retailer will exceed those expectations.

Customer experience can be online as well as in store and naturally the online experience is consistent for all customers, whereas the in store experience will be subject to many variables like which member of staff was working, product availability and in store standards.

This is the challenge for retailers, commoditising the experience such that it is replicable across any number of stores and the customer’s experience in that store is the same regardless of which day a customer visits or which branch.

To make the retail experience replicable it needs to be tangible, objective and clear so that interpretation is not necessary or possible.

Staff training, for instance, provides a consistent standard that employees must deliver against, at junior and senior levels. This can include everything from staff dress code to how a customer is greeted, and at senior levels how these standards are maintained on a daily basis.

Processes enable the customer experience to be commoditised, both those that are customer facing and back office. How a store is laid out, use of POS, how returns are managed are all a reflection of the brand and come together to inform an overall impression of the store. Behind the scenes, how stock is managed, when breaks are taken, or simply how staff are motivated all have an impact on the customer’s experience and can all be documented and integrated into the culture of the brand.

These aspects of retailing aren’t sexy, they are not as exciting as touch screens and virtual changing rooms, but they are the backbone of a positive customer experience. Without them, all the bells and whistles are simply wasted.


Retail Remedy provides bespoke, results-focused consultancy for retailers globally, from established brands to high-growth start-ups. Get in touch.

Morrisons – emerging through the mist

The to-do list at Morrisons goes way beyond turning off the misting machines and will take fresh thinking and a propensity for radical decision making to make an impact. Newly appointed David Potts has decades of retail experience to guide him but that experience was before the radical changes seen in the industry over the last 5 years. Add to that the slow pace at which Morrisons has moved and the to-do list becomes increasingly daunting.

Online shopping, convenience shopping, in store execution, marketing, loyalty cards are just some of the strategic challenges he will face.

Online shopping. Morrisons are now tied into a deal with Ocado which delivers groceries from Ocado warehouses. It is an expensive route to customer and misses out the Morrison’s stores themselves where click and collect could be added to the retailers’ hand. To-do: renegotiate the deal to use Morrisons stores with Ocado’s software and build a click and collect offer.

Convenience stores. M local was a knee jerk reaction in slow motion. Sites were chosen based on quick fixes which have since proven to be in the wrong locations. A site by site review will result in closures but will also provide data to build a better wish list of locations. To-do: use good sites to fine tune the format and deliver the best convenience format from the big 4.

In store execution. Dave Lewis added store hours to ensure disciplines were adhered to and customer service was prioritised. To-do: do the same focussing on availability which has been criticised and service which is a strong barometer of performance and can do the most to rebuild loyalty.

Marketing. Dated is the only word that comes to mind when we think of Morrison’s marketing and as much as the Ant and Dec partnership is a good demographic match, it is boring and does little to engage the customer. The customer’s level of sophistication has been underestimated and must be reassessed to rethink how Morrisons can re-engage with a lost audience. To-do: invite fresh ideas based on the customer they need and not just the one they have.

Loyalty cards. Watching twitter and seeing the number of tweets about lost, missing vouchers and the parody advertising of Lidl last year when Match&More was launched must leave Morrisons in no doubt that it isn’t right. To-do: ditch it. Start again from a simple platform that rewards the customer in an innovative way for changing their shopping behaviour.

The Morrison’s to-do list would be enough to put off a lesser man, but David Potts knows what he has to look forward to, and has a business that is ripe for change. But just in case he needs a little help along the way, Retail Remedy is always ready to take his call.


Retail Remedy provides bespoke, results-focused consultancy for retailers globally, from established brands to high-growth start-ups. Get in touch.