Retail Remedy

Driving Sustainable Profit Growth

May 24, 2011

Format Development: Small and Beautiful?

As availability for supermarket new build becomes limited and increasingly expensive it is no surprise that both Asda and Morrisons look toward small Format Development in order to continue footage growth. Asda, who are no stranger to Format Development for small stores, sold 16 of the original 195 Netto stores to it’s Yorkshire rival for £28.1M.  With only 47 of the 195 having to be sold on, Asda clearly need to get their format working as it has never done before and we looked today at how the two Companies have made progress.

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.

July 26, 2010

Striking the balance between Customer satisfaction and Employee Engagement….a priority for business?

People Management (http://www.peoplemanagement.co.uk/pm/articles/2010/07/sainsburys-appoints-gwyn-burr-to-top-hr-role.htm) recently reported on Sainsbury’s decision to merge the HR Director and Customer Director roles at Board level which has raised some eyebrows in both the retail and HR communities.  But should it?  As retail experts we understand completely that the customer is king but for customers to feel that way, employee skill sets should be developed to reflect this, enabling the enhancement of the dialogue and experience between retailer and customer.  Talent management, career planning and succession planning are all established processes in large companies but small businesses should also take note of the fact that striking this balance can absolutely provide a competitive advantage.  Any HR Tool Kit should have a customer service slant that shows the connection between engaged employees who have been well inducted, trained, coached and developed and the ROI demonstrated through excellent customer service and ultimately a positive effect on the bottom line through increased sales.

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.

June 6, 2010

Consumers and the Brand

After a retail strategy meeting, we sat Phil Dorrell down and asked him for his take on consumers’ focus on brand.

More and more, consumers look to the brand and its brand values for reassurance as to quality, security and value for money. Consumer spending will focus on ‘reason to buy’, not ‘impulse to buy’. The brand is the key element in the purchasing decision.

Brand awareness is desperately important but it’s not the whole story – in the States, everyone knows General Motors, trouble is no-one is buying their cars! Consumers are responding to brand differentiation – attaching meaning and value to the brand to increase its weight in the purchasing decision. Brands need to stand for something; they cannot afford to be vague in their offer. Developing brand differentiation is the key to improving long-term sales growth and customer advocacy.

So, Phil, how do we achieve brand differentiation?

The landscape for any brand tends to be misted over with a cloud of generic features claimed and owned by all players. To rise above this cloud means convincing the consumer that you are different from the crowd, that your offering is the one to meet their requirement or their hopes.

You can’t just add statements of value to your marketing – if you make any statement about your offering, they have to be believable and authentic. Consumers are becoming ever more sophisticated and see through insincere claims and inappropriate endorsements. Any retail strategy has to be built on recognising that consumer engagement only comes with authenticity – and engagement is the key to sales. Brand building is a precious endeavour and Companies need to ensure that nobody in the organisation delivers less than the brand values, consistent delivery is essential.

If that’s the case, how do we deliver ‘authenticity’?

Do you mean ‘we’ as in retailers or retail consultants? Be specific about what you deliver and make sure all the people in your organisation support this 100%. The amount of web-sites now offering no differentiation between one retailer and another suggest everybody is playing too safe and there is definitely space for some bolder claims.

New technology is now not only the product, it is the medium as well! The online experience is less and less under the control of retailers or corporations, the market now exists as a series of communities. Social networking, Ebay, business networks all present massive opportunities – especially if you can gain endorsement from the community itself, recommending the brand. Ignoring or misusing these markets and the way they operate cuts off the blood supply to the brand. Twitter users will spend more money on the internet than non-users. We (now I really mean retail consultants!) need to show retailers how to integrate this customer orientation into every aspect of brand building and customer care – then we can strengthen and lead brands into the future.

So, how should Retail Marketeers respond to these challenges?

Retailers need to deliver on three main areas in order to capitalise on the changes that the internet offers:

  • How clear is the brand differentiation and how consistent is this delivered? What is the brand promise?
  • What platform is most effective to your current and future customers?
  • How does the brand promise get delivered in the real world and what is the buy-in from the front line customer service staff?

I would urge retailers to be bold, get buy-in and build a brand that stands out to your customers!

September 13, 2009

India’s retail issues ….. An interview with the CEO of Costa Coffee India – published in this months RLI

India’s food and grocery retail infancy has not been without it’s teething problems. James McGregor, Director or Retail-Remedy interviews Santhosh Uni, CEO of Costa Coffee (INDIA), to find out more…

costa-interview3

May 20, 2009

Marks and Spencer – Times of opportunity or concern?

As Marks and Spencer announced a drop in UK like-for-like sales of 5.9%; with falls in GM and food at 6.9% and 5% respectively, how much time does  Ian Dyson really have to implement the ‘2020’ change program that he has been tasked with?    

Marks & Spencer’s UK sales have dropped by 1.7%, whilst its overall sales grew by 0.4%, thanks to the 25.9% increase in international sales.  Last year, the adjusted profit before tax was £1.09bn whilst this year’s results see a drop to £768.9m.

The Board has taken the last six months to review the business and layout its long term strategy.  Ian Dyson has been entrusted with the responsibility of leading the ‘2020-Doing the Right Thing’ change program, which is set to refocus the Company’s brand communication, accelerate change, focus on international expansion and multi-channel development.

As the Group’s final dividend for 2008/09 has been reduced to 9.5p, how long does Dyson and Sir Stuart Rose really have to deliver a positive step change that their customers will respond too?

May 18, 2009

Should we be resentful of value retailers or should we learn from their business models?

Retail-RemedyAs volume and value retailers continue to gain market share, is there really a future for retailers who are not able to compete on price or deliver a true point of difference to their customer?

Many articles have been written discrediting value retailers and the dominance they have within the market place, however, the simple fact is, love them or hate them customers are turning to them to deliver a better return on the money in their wallets. Is it therefore imperative to understand how they achieve such a dominate position within the market, and what are the lessons retailers can take when reviewing their business models?

My view, having worked with value retailers for +20 years is that they are not driven by costs; instead they drive a culture of excellence, quality and continual improvement. Cost elimination then becomes a derivative of this focus.  Value retailers never stand still long enough to accept complacency or their market position.  Whilst many companies are now working on tactical strategies to reduce costs, the very best value retailers see this as part of their business model, irrespective of the current trading conditions and economic/global climate.  Hence as trading becomes increasingly more difficult they have the ability to focus on existing and new customers rather than fighting the fire that has begun to consume most retailers engine rooms.  Whilst exec. teams of many retailers are in the war room discussing the best way to baton down the hatches, and determining how the business will operate with a 20% resource reduction, value retailers are able to focus on how to attract a greater customer base.

In summary,  the retailers that will come out of the recession strongest are those that review all that they do, respond quickly to the need for change, invest in their people, focus on quality and meeting the changing demands of customers, and do all they can to eliminate waste and provide value.  For those retailers that have joined this shift towards delivering customer value, don’t through your strategy away through this difficult period, instead, embrace it, communicate it, and empower your teams to work faster to deliver it.