As Tesco, Asda, Sainsburys and Morrisons fight for customers this summer it seems that some of these leviathans are better placed than others to make the best use of their Format Development and expand in an increasingly contested market place. Tesco have all the options to open in any market and have reaped the reward of a well-developed Format Development strategy that has been much publicised.  Sainsburys have a similar if not as compelling offer and have small store experience in the ranks from their acquisitions.

Asda and Morrisons are both playing catch-up and have been forced to deliver quickly following the acquisition of Netto. As previously Blogged, Morrisons 3 week turn-around of the Netto store at Armthorpe is very impressive. The end result shows a format that works from a profitability point of view (if the counters generate consistent trade) and maintains a strong price message with the action alley portraying a strong price message, albeit highly promotional. Asda have executed a very similar format and now have to work on how they can make it profitable. They also have opted to have an action alley to allow for promotional strength yet have not the benefit of a higher price structure for small stores, nor have they the level of non-food range, propping profit up like it does in their larger formats. Asda have more to gain getting this right with the number of Netto stores they now have; interest in Iceland seems a brave move when they have not yet resolved the issues they have on small store availability and service. Our view would be that Morrisons are better placed to make more of any future acquisitions and that Asda could well end up being confronted by an operational legacy that drains resource and does not help the brand.

Clearly neither Asda nor Morrisons are able to close the gap on Tesco or Sainsuburys, yet Asda do have a very efficient and blossoming home-shopping option that gives them access where stores are difficult to place. Morrisons would argue that they have more stores and can improve headroom in them to deliver more, which is of course only partially true. They need an improved format expansion more than any of the other Retailers and seem to have made a great start with their small stores. The next 18 months will see the small stores come into the battle amongst the big 4 like never before.

Both Netto stores were in the homeland of Yorkshire and inhabited similar buildings with a very similar demographic profile. I could go on ad infinitum about the differences between these two organisations but in truth a morning spent at each of them would tell you most of what you need to know, they act as a microcosm for the businesses as a whole. Both store formats added enormously to the previous poor Netto provision and no doubt customers would recognise the improvements in fit, finish and range. They would also be surprised about the pricing and although there was nothing overt about contesting previous Netto prices there was strong promotional space in both stores. I liked both stores feel and layout and with the exception of the butchery counter at Morrisons they offered the same format. This is however where it all ends, as no matter what you like about the offer, the differences in the standards will mean that one shopping trip will end in some frustration, Asda simply had too many gaps, everywhere. I discussed the visits with one of my colleagues, a former Asda retailer, who leapt to Asda’s defence in suggesting that this was because of volume taken. I have to say that if this was the case then having that many on a Friday morning suggests they are not ready for the trade they get and the fact that Morrisons at Armthorpe seemed busier by some distance would suggest otherwise. If today’s visits give an indication of how things will progress then Asda have some catching up to do against a well formatted, well signed and well run Morrisons.

Two visits are not enough to make this leap of course but in large stores gaps are less apparent and Asda can get away with it, in small stores that luxury is not afforded you and at present Morrisons are best placed to make it pay.

Visit our Format Development page for more information.

Retail Advice

I tweeted some time ago that Retailers can be categorised into two types depending on how customers see them and use them, clearly I exaggerate to make a point however in essence the principle is true, if you are a Retailer you are either a chip shop or a hairdresser!

Most of will be familiar to moving to a new town and trying to work out where the best chip shop is located, usually this means that some of the early visits are not as good as you wanted and you quickly move on to the chip shop with the huge queue outside on a Friday tea time. You are persuaded by the improved quality and/or service and have made the decision to be loyal to that chip shop. You might talk about it to others and act as an advocate, sometimes to the detriment of the ones you tried previously.

The day will come however when you are very hungry and your chip shop of choice is closed for one reason or another, what do you do? You go to the next one down on your list as your stomach tells you that it was never really that bad and it’s on the way home anyway.  Your loyalty has been temporarily brushed aside.  Most people would treat their large grocers in exactly the same manner and the large retailers count on the promiscuity of the customers to a degree.  Internal departments however within the grocers can become something far more powerful from a loyalty perspective, they can become hairdressers!

If the scenario is the same and you move to a new town far enough away from your previous location then after casual investigation ofnew hairdressers/Barbers are sought.  The result is seldom the same however as the chip shop.  If after a few less than successful styles at different hair-dressers you settle on one you like, you will give absolute loyalty to that hairdresser.  It is not likely to be the most convenient location, it may not have the best prices nor have the most attractive assistants but this does not matter because when you come out of there you feel good and if ever the time came when you could not get the appointment you needed you would never go back to one of the previous stylist. Your loyalty is absolute; if you were persuaded to go elsewhere you would feel guilt and remorse.  In loyalty stakes as a Retailer you are either a chip shop or a hairdresser, which are you?

Visit our home page to see more on Retail Advice

James Mcgregor

http://www.retail-remedy.com

0161 408 3021

When a customer interacts with your business face to face, phone, website or e mail are they merely satisfied or delighted by the service they receive?  Every interaction with a customer is an opportunity to make a difference and surprise the customer by not just meeting their needs but exceed their expectations.  Investing in Retail Training of staff has been proved to give better financial results.

Companies that invest in the development of their staff get good results, returning customers, motivated staff and a boost in new business due to word of mouth.  Retailers that recognise that good customer service increases profits take an advantage above their competitors who give poor service.

Shopping is one of the nation’s favourite pastimes however, when approached by a pushy Sales Person, being ignored or just being given the wrong information can become frustrating.  Many people do not complain because they feel that their voice will not be heard, they can’t be bothered with the hassle and the result being that they will not use that company again and tell everyone they know about the service they received hence losing more customers.  Businesses need to recognise that a complaint is the best form of feedback, giving an opportunity to turn a dissatisfied customer into a satisfied customer who will return due to the service they have received.

Many companies outsource their Training or Evaluations of their service to companies that have experienced Retail Consultants with a wealth of knowledge of working within the Retail sector.

James McGregor Managing Director of Retail Remedy Ltd explained the difference of in house training and outsourcing “In house training can be quite costly, many of the training staff have been promoted from within, not had the right training and have biased opinions of what is right and wrong with customer service” he went on to say “Working with a good Retail Consultancy; you are getting specialists who have many years of experience of working within Retail, they will be honest and forthright about how you can improve on your service to your customers, you will also cut costs whilst improving profits”

Customer Service is much more than just courtesy; it is about going that extra mile for your customer helping them find the right products, services that exceed their need and helping them to enjoy the experience of their purchase.

Undoubtedly the Economic Climate has been tough for all and yet the difference between those who have floundered and those who have flourished is about their operation, more than global financial meltdown. The Christmas reports are littered with CEO’s suggesting the weather has cost them dear and gearing up for that New Year profits warning. There are also traders who have done themselves proud and despite increasing online competition, customers who are controlling a budget and inclement weather they have delivered growth.

Our Retail Reviews are always an interesting time, where the real issues are often clouded by the Retailers long held beliefs’ and lack of customer engagement. This clouding can create a challenging time and we always come back to the customer as the main weapon in our armoury in convincing retailers of the need to change where required.

Our “Mary Queen of Shops” reviews can deliver really ground breaking changes in the way that the retailer engages with his customers and how they understand the direction they need to take. Some of the concepts are best exampled and role modelled in store whilst others need a Retail Workshop environment to get beneath the skin and make the changes needed.

We are really proud that following requests we have now just completed our Retail Workshop structure and placed our updated workshop brochure on the website. It contains all those lessons learnt over many years of Retailing and in the last year that we have applied to some of our smaller to medium sized customers. We strongly believe that planning the journey is the start and our Strategy and Planning workshops create challenge, stimulation and tools to build an effective strategy that delivers. It takes Leadership to execute strategy so that was our next logical step in workshop development; we take this seriously but having had our fill of corporate Leadership Training Courses, we cut to the chase.

Branding and Marketing is something we are often engaged to assist with and again we cut the BS out of the  Branding and Marketing workshop and tell it straight for all levels.

Good Retailing is nothing if Buying and Merchandising is not right and our workshop on this reflects the online position as well as the traditional retailing aspects, run by Retail Experts you will learn! The same Retail Experts who run our Buying course are also our best negotiators and having worked for some of the hardest negotiators in the business they will create that win / win on our Negotiation Workshop. Our Visual Merchandising Training Course reflects the experience we have within clothing, food and non-food. The most important workshop is last, where would we would be without customers? Our customer Service workshops are more than the traditional smile and say nice things stuff but a way to create true advocacy within your current and future customers, in short it is brilliant!

In a recent magazine article for Furniture News (Retail Strategy) we articulated the need to have Strategy agreed, with the key stakeholders taking responsibility to ensure that the picture painted of the goal is exactly the same for all concerned. Too often the goal is one persons dream and another person’s half dream or nightmare. For small businesses, without Non-Executive Directorship, this requires an objectivity that comes from a business consultant or trusted advisor. We suggest that this is an important choice as the person selected must be able to be objective, challenging and fearless. If they feel that gainsaying the perceived wisdom in the room will jeopardise their position, key arguments will be lost and the Strategy will evolve weaker.

When the Strategy word is used and you see your colleagues eyes roll to the back of their head and a flop sweat develop on the business leader, then look around the room and determine who will be the brave person who says the emperor has no clothes. If you cannot see that person and are willing to challenge why he is not there, then look no further he has been found, it is you !

Dragons’ Den makes compelling TV as you see people’s hopes and dreams put up against the stark light of commercial feasibility. Often these hopes and dreams are washed away because entrepreneurs fail to seek an objective viewpoint of their product, its market and how to launch it.
Having recently engaged with another Dragons’ Den survivor we recognise the publicity that appearance on the programme can give, unfortunately the programme editor can make this either very good or very bad publicity. Making sure that you have already been exposed to the rigours of a broad spectrum of detailed questioning will ensure that even if the money is not offered ,the entrepreneur comes away with their head held high and a boatload of potential investors having seen a great performance.

We believe that we provide perfect armour from any Dragon, whether they are on the telly or in a retailers buying office, possibly as we have worked in times past with so many Dragons ourselves!

The appointment, confirmed that a significant part of Emma’s role would be to ensure the continued development of Retail-Remedy’s service portfolio across all geographies. Emma Reed said: “I am delighted to be joining Retail-Remedy”…. “It is exciting to be with a company that is focused on supporting retailers deliver sustainable profit growth and enhanced consumer shopping experiences”.
James McGregor, of Retail-Remedy, said: “I am pleased to welcome Emma on board. Her extensive experience, in Buying and Merchandising, is exactly suited to our current client requirements and will help us deliver, at pace, even greater profit returns for our clients going forward”.

About Emma Reed

Emma has a wealth of buying and merchandising experience, with some of the most prestigious UK fashion retailers. Emma joined Asos.com in 2005 as part of the original buying team, taking the business from £10M per year to being the biggest UK independent online fashion retailer at over £250M. Instrumental in building their branded offer, Emma was also responsible for launching their own label fashion brand and became a member of the ASOS.com executive board. Emma brings a wealth of buying and online experience and takes pride in helping others develop their skills in buying, brand selection, product development, merchandising and negotiation.

No other major retailer has an equivalent role to that created by Sainsbury’s.  Innovation in business is the way to success and as Business Consultants feel that more businesses should take note.  However, that doesn’t mean ‘bolting’ on the HR piece to a role that focuses on the customer.  For real business benefit this focus needs to be truly integrated into the responsibilities and, more importantly, accountabilities of the role.  It might be as simple as developing a programme of Helping Managers to Manage or looking at the culture of the company – listening to what employees have to say through climate surveys can have an incredible impact on employee engagement and motivation.  If employees truly feel valued, listened to and part of the business then their resultant relationship with customers will be optimised and enhanced.

But, at Retail Remedy we wonder whether companies should think about the cost of not thinking about “people” in the rounded context of business.  In the current climate many businesses who have an excellent blueprint are failing.  The product and price may be excellent, location a plus but without the people element being effectively addressed it can mean the difference between survival, coupled with potential future growth and shutting up shop.

Whilst it may be about viewing figures for the mainstream channels, Mary Queen of Shops and Ramsey’s Kitchen Nightmares have both shown that without the right people with the right knowledge, skills and attitude, failure isn’t too far away.

So whichever viewpoint you favor, companies ignore the value of managing and developing people and employee engagement at their peril.

Getting off the drug of promotions should be led by those with a sincere EDLP (Every Day Low Price) retail strategy, but the truth is the likes of Asda (and to a lesser degree Tesco) have abandoned their EDLP stance to stop Morrisons and JS becoming the exciting places to shop.  Reducing cost and easing operation through EDLP retail strategies may make great sense but it is not sexy to suppliers or customers.  Asda’s price perception is ahead of the pack and looking at its action alley it communicates value the clearest, although it does suffer at times from inconsistent retail standards and end displays that are mixed in their individual sku value and with inevitable trading floor changes this position is likely to continue.

When Retail-Remedy reviewed the promotional execution of the big 4, our observations were that if Morrisons could communicate their deals as powerfully as Asda, both on ends and down the aisles they would improve sales and price perception. They might have execution right, but it is executing mixed messages on price and deals that can be confusing to customers. Our instinct is that Richard Hodgson will bring improved promotional communication to Morrisons. We believe that the improved communication methods we expect to be implemented at Morrisons will reward those suppliers who can deliver a full end offer that hangs together on product relationship and deal type.

It looks like the promotional battle will intensify rather than recede. Where does this leave EDLP retail strategies?  On the back-burner until a brave retailer can break the cycle of promotional promiscuity, the Asda Price Challenge was such an attempt but their promotional strategy has not abated suggesting a half hearted effort.