Retail Remedy

Driving Sustainable Profit Growth

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.

July 14, 2010

UK promotional retail strategies and their use

The Grocer recently wrote on the continuing use of promotions by the big grocery retailers and suggested that execution varied greatly. Their article entitled “Waitrose shines amid promotional shambles” rated Waitrose as the most professional on implementation and Asda the worst of the top 5.  Our view at Retail-Remedy is somewhat different.  As customers are becoming increasingly promiscuous, no longer is the nearest supermarket the obvious choice with press and TV advertising enticing people into bargains and creating a nation of cherry pickers. Safeway’s demise was in part due to their insistence in a high low retail pricing strategy that meant busy action alley Wednesdays each week, with the rest of the store a museum.

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.

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?