Is the monster on the move …..?

It is very difficult to write about anything to do with Retail without constantly mentioning Amazon. I cannot think of any other phenomena in modern retailing history that has such an impact worldwide.

In my last last post I mentioned that an approach by Amazon had been rebuffed by Waitrose in the U.K. This weeks rumours suggest they maybe looking at Asos and Ocado. They have the resource and they have the motivation .

Whilst most of us are quick to condemn there are some positives attributable to its existence. For starters they have created thousands of wealthy independent entrepreneurs by dint of the marketplace . I can think of no other retailer (with the exception of the likes of eBay and quite possibly Alibaba) that has been a wealth creator for third parties.

It has shaken up the traditional mega retailers, in a way that none of them expected. They have put the consumer at the forefront of their model, offering convenience, breadth of range, access to much product that was only available to a few, highly competitive pricing and above all extraordinary levels of service . All of which has led to a level of consumer confidence that I believe is unprecedented with any other retailer. The opening of a world market to small traders who would not been able to previously, penetrate.

That’s the upside. Amongst its many vices(? What is a vice to one is a virtue to another) have been the enormous turmoil created within retail markets. The likelihood that it has created a net loss of jobs (almost certainly within the retail sector) . The enormous pressure it has put on margins. The enabling of dodgy dealings ( the ease of selling counterfeit product, or less poor quality product). Despite Amazon’s attempts at reducing ‘dodgy dealings’ it is not difficult such product on a daily basis.

As to the future , there will always(well for some time anyway) be an ‘Amazon ‘ or it’s like. We have to live with it and adapt. The difference is that as it was the small retailer being hit hardest it is now the biggies who are most concerned.

Ocado recent success in the USA with it its tie up with Kroger (the world’s third largest retailer) only makes an approach by Amazon more likely. It has the war chest, it has the motivation, and the wherewithal. It may not be Ocado, but I am quite certain their next acquisition will make the major retailers wonder that they have got to do next to defend their status quo , let alone grow and develop.

It is a strange beast that attracts our consumerist psyche yet strikes fear into our commercial psyche. I suppose we can look back at previous monsters …..dragons, King Kong, Frankenstein, orcs et al…..we tend to get the better of them eventually. Meanwhile it is on the move and there will be more casualties before someone in shining armour comes riding in cuts its head off and saves us all, or more likely just creates an alternative.

Shop a lot…or Shop not ?

There are big issues facing our retail High Street. Yet they are not as simple and as straightforward as our much beloved media would have us believe. Should the list of retailers facing closure include the likes of Next, Tesco, John Lewis, as opposed to the likes of Toys r Us and Maplins then there would be greater cause for concern. There is no doubt that even the former are facing tough challenges, loads of people still shop there, spend loads of dough and they make profits.

One of my customers who has outlets in Meadowhall, Sheffield, White Rose, Leeds and the Metro Centre, Gateshead, was recently told by Centre management that there had been a drop in flow of approximately 15%. This could, of course, mean either a drop in the number of visitors or a reduction in the frequency of repeat visits. The biggest fall has been the fall in the number visiting during the evenings. Something that is of much greater relevance to shopping centres as opposed to High Streets. I suspect that among the many possible causes for this drop , this suggests is that the idea of spending an evening wandering around a shopping centre is losing its allure.

I have long been under the impression, for such a small geographical country, that we have long been over represented by retail outlets . There are close to 290,000 retail outlets within the U.K, which equates to one retail outlet for every two hundred people, and there are approximately 2.8 million(nearly 10% of employment) employed within the sector. A crude measurement yet nevertheless gives some form of perspective . As does retail spending which is approximately £360 billion , or nearly twice the spend on healthcare. Even with the present retail closures retail spending since January 2017 has not actually dropped. This chart does include fuel but the only month where there was zero growth was October.

For too many years many of the multiples sought growth through store openings, as opposed to innovation, better offerings and improved experiences. Independents have suffered because of multiples, poor local planning, and lack of investment. Both are suffering from a drop in footfall and lower basket values increasing the cost to serve and reducing margin.

Without wanting to repeat previous posts and stating the blinding obvious, online has had a huge impact but it is not the whole story. Waterstones , the booksellers, one of the first retailer to feel the impact of the likes of Amazon , was on the verge of closure in 2011. Yet they have just posted healthy profits.

The latest twist is the planned merger of Sainsbury’s & Asda. Initially, This was a real surprise but after a bit of thought , it made a lot of sense. There has been some slightly daft comments from some parts of the media about taking on the likes of Tesco, as if they haven’t had their own travails. With Sainsbury’s Argos operations it is much more of an opportunity to expand this in Asda and compete in the future with the likes of Amazon , who are becoming increasingly interested in bricks and mortar stores and food. So much so that it now transpired that at the back end of 2017 that they (Amazon) approached the board of John Lewis with a view to buying Waitrose ! According to the JL board they flatly refused any talks. Whatever was said the signs are there.

High Street retailing is undergoing a massive transformation there are undoubtedly going to be winners and losers. Those at the top rarely loose, those at the bottom ie employees, invariably do. As to what happens will depend upon two components . The entrepreneurial retailer and the consumer. There are retailers,who are creating new and exciting retail outlets , but the U.K. total will continue to decline . That is a given. The other component is the consumer. If the consumer wants to continue to ‘go shopping’ as opposed to ‘surfing for their shopping’, they will have to keep shopping a lot….and stop bemoaning the closure of their local retailer which they like being on there on their High Street , but never go in. Retailers have to attract and consumers be attracted.

No skin in the game…

Warren Buffet popularised the phrase ‘to have skin in the game ‘ when referring to high ranking executives within an organisation who used their own money to invest in that very same organisation.To have ‘no skin in the game’ is a book written by an American (former investment banker)called Nassim Nicholas Taleb, about the complete opposite . I haven’t actually read the book as it is above my intellectual pay grade. However, the outline got me thinking..

He widens the scope of those having ‘skin in the game’ to Surgeons , nurses, teachers, bus drivers, police on the streets, soldiers on the front line , farmers ploughing the field, brick layers. In other words any job or activity where there is a stake in the outcome (positive or negative).

Having ‘no skin in the game’ relates to the likes of politicians, journalists, academics, bankers, religious leaders(of all faiths) et al…. in other words whatever their musings, pontifications, espousing, directives it is others who experience the consequences.

Both descriptions are generalisations, yet the more I think about it, the more , I think, it makes sense. In every day commercial life it occurs on a regular basis. From the newly appointed buyer of a large retail organisation who decides to change the supply chain because they can and then moves on six months later oblivious to any consequences through to the mendacious consumer who can ruin a local business from a spiteful social media campaign.

Politicians, in most democracies, are subject to party policy and their own ambitions . Of course they answer to the voter, but many career politician are too canny to know that staying in power is not always the same as representing The electorate. This is often illustrated by senior ministers, who, when retiring or are retired from main stream politics speak a completely language to when they were in power.

Ambitious journalists will pursue stories at whatever cost. Even the biggest and most noble stories have unintended consequences. Even the guilty protagonist of a crime investigation will have innocent family or acquittances who will have been pursued relentlessly for the sake of the story.

Who knew that the bankers (this is not about banking bashing ) involved in the banking crisis of 2008, were not using their own money ?

Why do so many religious leaders of all faiths pursue dogma often at the expense of the individuals who make up their followings?

How many company chairman and CEO’s spend real time talking to those at the ‘coal face’ and really understand the consequences of their decision making within their own organisation ?

Within recent years , certainly within the U.K , failure at the highest levels both in private and public life, have often ended with rewards. There is an endless list of CEOs, both of private and public organisations who failed yet sailed off into the sunset with a fat cheque. Contractual, we are told. Quite possibly but this form of contract only distances them further from the ‘coal face’, in that they do not suffer the consequences of their decisions. They have ‘no skin in the game’.

Academics are amongst the worst offenders, as often, they really do live in ‘ivory towers’. Yet politicians, bankers, educationalists, industrialists , health specialists, to name but a few, rely heavily on their thinking processes . Their experience of the ‘front line’ is at worst non existent, at best limited. More often than not the consequences of their thought processes are far reaching , yet they seem to have little or no realisation (nor I suspect ‘real concern’) of the end result. If their theories (which is often all they are) prove to be incorrect they just move on.

Despite all this, in every aspect of our lives we expect to be advised and to a point led, by what we consider as those in the ‘know’. Perhaps that is part of the political turmoil that most democratic nations are experiencing. The individual is questioning whether those who lead really know what they are doing and are they aware of the consequences of their actions. Recent voting history in many nations would suggest not.

But should we be bothered? Bloody right we should . As the retailer opens up their store every morning struggling with crippling business rates, an inept local authority with a punitive town centre parking policy and no real town centre planning policy. The salesman who bought his diesel car a couple of years ago, thinking they were doing the right thing , now find they , apparently, drive a chemical weapon. The distributor who has committed to a certain product only to be told by his major customer that they no longer require it because they feel it has too much plastic. Supermarkets (Iceland)not stocking anything with palm oil(Explosion in palm oil demand has led to deforestation) potentially leaving many small farmers in areas such as South East Asia, with shrinking markets. Or as in the U.K. the public servant who has been limited to a 1% annual wage increase for a number of years whilst their political masters , ensuring they were subject to an ‘independent’ pay review in 2014 and voted themselves nigh on a 10% increase. In 2018, they are getting a further increase of 1.8% above the 1%.

And as everybody toddles off Home after their daily grind they have to consider whether this weeks academic masterpiece suggests that four glasses of red wine with your dinner will shorten or lengthen your life. Followed by a litre and a half of coffee with either keep you awake all week or prevent heart disease.

Possibly right decisions in essence but made and executed for the wrong reasons by the wrong people, at the wrong time, and who are unaffected by the consequences .

Perhaps, this is what Gandalf meant. We expect to be protected and advised by the elected leadership and guided morally and physically by our intellectual superiors . Yet we are frequently let down or confused . The problem is that the ordinary folk all have the ‘skin in the game’ but they have to let others who don’t , do all leading and advising because they got bugger all else to do and it doesn’t really affect them if they get it wrong.

Pineapples vs Avocados…the new Brexit?

Not Trump and a porn star. Not assassinated Russian spies . Not China’s President for life.

No, that esteemed purveyor of the UK’s news and information “The Times” lead with a discussion concerning the growth in demand for pineapples against that of avocados. Apparently, recently there has been a dramatic increase in demand of the former, challenging that of the latter(though there is a long way to catch up).

I just declare I am an avocado eater. It is probably over a year since I last bought a fresh pineapple, whilst buying a couple of avocados a week. Several reasons have been proffered for this phenomenon(not my eating habits). Amongst the reasons are the resurgence of the ‘Hawaiian’ pizza and another is the nostalgic pursuit of that seventies Party favourite..a chunk of pineapple, a chunk of tasteless cheese with a cocktail stick stuck through the middle. Piffle!

Others quote the alternative health benefits

1) Eating pineapple can help enhance your digestion, as bromelain aids in the breakdown of proteins.

2) Pineapple is a fantastic source of vitamin C, which is needed for a healthy functioning immune system.

3) Studies have shown that consumption of pineapple regularly helps fight against arthritis and indigestion.

4) Pineapple contains small amounts of vitamin A and beta-carotene levels which have antioxidant properties. Studies indicate that consumption of natural fruits rich in flavonoids helps the body to protect from lung and oral cancers.

5) Pineapple is rich in B-complex group of vitamins like folates, thiamin, pyridoxine, riboflavin and minerals like copper, manganese and potassium. In fact, raw pineapple is an excellent source of manganese giving over 75 per cent of our daily recommended allowance in a one cup serving.

Body and soul -Australian health web site

Now here are the big guns

  • Avocado can help lower your cholesterol

  • Avocado can help you lose weight

  • Avocado is packed with carotenoids

  • Avocado can help stabilize blood sugar

  • Avocado can protect your unborn baby-and your heart

Readers Digest -Best Health web site

No contest.

There is, however,an impact upon hospital A&E departments. Apparently over the last couple of years there has been a preponderance of ‘Avocado knife’. This occurs when trying to de-stone the fruit (yes it is a fruit) various idiots manage to stick the knife into their hands. Can’t understand why. In the last three years of cutting avocados, I have never had the knife anywhere my precious and delicate skin. Whereas, if memory serves me well, the last time I tried cutting a pineapple, I had to hunt out a machete . If demand(for pineapples )continues on its present trajectory then I can see the A&E being swamped with patients carrying wrapped up fingers.

But here’s the rub….

So what’s this got to do with Brexit. Fortunately not a lot. Yet if you are an avocado enthusiast, you would be prepared to give up what you know , with the positives and negatives (like bad avocados, overripe and mushy) and go for the potential of pineapple, with all its connotations of sunshine, warmth, and happiness, but you might loose your fingers ?

I can see a parallel. They are both as rational. Yet, whichever is your personal incumbent preference, you will never discover whether you would benefit from the alternative. Not unless you gave up one, eat the other for ten years and then see if you are healthier and happier……..do you care? Have you got the time? Will pineapples eventually become avocados? Me , personally? Can’t see much fun in a pineapple, chicken and mayo sandwich ….

Stock..love it..hate it …gotta ‘av it !

Most commercial operations need stock, whether manufacturers, importers, distributors, retailers and even many service providers. It is a simple equation. If you don’t have it , you got nothing to sell. You got nothing to sell , you can’t make any money .

There are some principles relating to stock…What? How many? How much? & When? Dead straightforward, except for the answers, which are rather more complex.

I am the last person to make any suggestions as to how anyone should approach this problem. Forecasting has to be part of the equation, but the days are long gone when you could look at this month last year and see that you sold umpteen thousand ‘whatmewidget’ and make an informed estimate as to what you will sell this month. It no longer works like that. Yet you still have to plan . Trust me when I say that even the most sophisticated retailers with the most complex of logistical programs often get it wrong. In today’s market thereare now more and more imponderables.

But that is not what I want to talk about, it is the absolute need to get the right stock. Having declared my ignorance on inventory control mechanisms, I have to base my experience on being a consumer and having daily conversations with clients about the dark arts of stock .

I, firmly, believe if you walk into a store selling the type of item you are looking to buy and they do not have it in stock , it is a lost sale. This may seem blindingly obvious, but has not always been the the case. Prior to the days of online selling. You may have purchased an alternative or waited for it to be back in stock. That is no longer the case , you whizz off home, or even whip your phone out and order it immediately. Web shop 1, High Street retailer 0.

You may (very loyal consumer) amble down to your specialist high street stockist of the latest cutting edge brand of beach sandals for help and advice, plus the intention of making a purchase. On arrival after hours of discourse with the well informed, highly trained sandal expert, to find that they only stock twenty variations of this cutting edge brand, out of the one hundred and thirty offered by the manufacturer and available through cuttingedgesandals.com or Amazon. Web shop 2, High Street retailer 0.

Old or even dead stock is like a virus. It slowly eats into a business and can often lead to its own death . Online operators, potentially, have the ability to purge themselves a lot quicker because of their vast reach. Not only that it does visually clog up their store . It is a lot more difficult for the high street. But get rid of it you must . Old stock make shops look ill. Web shop 3, High Street retailer 0.

The rational behind the scoring analogy is to illustrate that the problem shops have with web sites is not all about price. Stock is, if not more , as important as price. Yet it is not all ‘happy days’ for online traders. Their issues can be bigger. Whilst they have greater opportunities to clear stock, invariably their stock levels are a lot higher and their cost to clear are a lot higher .

From a ‘professional’ view point, I deal with a lot of wholesalers , who, in turn, generally deal with a lot of small independents. They will, frequently, say that their customers will not carry stock and are not interested in anything new !! Unfortunately, I have a similar experience with some independents. There is an attitude of staying with what they know and being safe. I contend there is no ‘safe’. I would contend that ‘safe’ stock = ‘dangerous’ stock.

I cannot begin to recount the number of meetings with customers, where they have looked at the products being offered , and said something like

That’s great. Super product, yes I really like that. There are some really good products in this range

Only for them not to select anything because they stick with what they have got… if it happens to me it sure as will happen to other suppliers, no matter what the industry.

There are many challengers facing all types of retailer. However, without ‘good’ stock the rest are pretty well irrelevant.

if you ain’t got it, you can’t sell it ….

Nostalgia…retail’s false friend or worse?

As two more High Street ‘favouritesthreaten to disappear, much of the media shed crocodile tears over their likely demise. The real tears will be shed by their employees and creditors , particularly the smaller ones, who in turn may also loose jobs as a consequence.

Senior management , in addition to some journalists, said it was down to Brexit and online competition. How so ?

Toy R Us appeared from the States in the 1980’s. This retail invasion created its own havoc. Many long established independent toy retailers closed unable to compete with these huge toy warehouses. At the time as a potential customer (father with small child) I found them soulless, unhelpful and clinical. So they remain. They changed little as the travails of their US parent company, already in Chapter 11 , prevented any real investment. If it was the Brexit and online , why have competitors such as the Entertainer , a private company with nearly 150 stores in the U.K. and various stores overseas in such diverse nations as Azerbaijan and Pakistan, and Smyth Toys, with over 110 stores in Eire and the U.K. flourished as Toys R us have faltered .

Maplins is a very different ‘kettle of fish’. It is a British chain, being started by husband and wife in Essex in the 1970’s . However, they have too, been strapped for cash over the last few years and were taken over four years ago by private equity. Personally, I felt their offering was very niche, even ‘nerdy niche’. My experience within store has always been excellent. I say my experience, I mean annual visit to spend £7.98p on something I needed but didn’t really know what it was. And I think therein, lay the problem. The core of the product range being very nerdy, consequently many of their potential regulars knew what they were buying and could get it off the internet. Finally, the stores did not attract the female consumer reducing their potential target audience

As with the demise of C&A, Woolworths, BHS et al, the media shrieks ‘crisis on the High St’ seeks out consumers for quotes, which are more than often phrased in some similar way to the following….

…we will miss X from our local High Street……we have such fond memories when we were 6 years old (for 6 replace with any number as long as it 5 years from your current age!)

What you don’t hear is we spend fifty quid in there every month…in other words the consumer stopped going there. The retail environment is not sustainable on nostalgia alone. Nostalgia to be successful has to be ‘created ‘ in a twenty first century environment. It has never been any different . In the late sixties and early seventies , nostalgia was crushed by the advent of the modern supermarket. Over a period of less than twenty years , quite literally tens of thousands of corner shops closed. The press, once again, headlined the loss. But it was not all bad. For many employed in small independents, were re-employed by the nationals and found a structured retail career that would not have otherwise been open to them working for local corner shop.

There are good reasons to be wary of online operations. Currency fluctuations are a constant concern for all retail organisations, throughout the world. The aberration that is called business rates, is a major bugbear. Yet many retailers continue to thrive. The reasons for failure are sometimes complex, but invariably there are common issues, over leveraged, lack of investment and the belief that because the consumer used to like coming through the front doors, they will continue to do so. The U.K. High street still has many chains that are hanging in there by their fingertips. They are often recognisable by the drab and dated interiors, inadequate stock, poor ranging , and the obvious lack of custom. Invariably if you walk into one and it feels like a 1970’s , it probably is. That’s not nostalgia.

A bizarre consequence of nostalgia is the resurgence of the ‘LP’. It is believed that nearly fifty per cent of purchases are made by people without a record player. New record shops have consequently sprung up. Which is great but is it sustainable? Most of those who have opened these shops are eager enthusiasts, not retailers. I am a child of the sixties and apart from the album covers, I never thought much of the product then. When cds arrived , most couldn’t wait to get rid of them ( the LP that is).

Nostalgia should not be confused with tradition (recent post). Tradition is doing something in the way in which it has been done for many years . Nostalgia is harking back to something in the past and having warm cosy feeling about that ‘something ‘ . The commercial danger lies in not defining as to whether there are any real benefits from either to the business and more importantly are either hampering the business.

As is often the case, the media is often to blame. Only today in the Sunday Times , a journalist (fortunately not a financial journalist) states the failure of Toys R us is due to kids not having toys anymore. What utter tosh. The market in 2017 was approximately £3.5 billion and is estimated to grow to £5 billion by 2022. That’s a load of toys, what is relevant is where they are bought.

Guns…Killing machines..or..defensive essentials?

No I am not going to write about guns. ‘Cheap shot’ maybe ! Just a quick way of getting your attention. Or at least I hope it is. What I do want to talk about is perception. However, guns are what got me thinking after the recent shootings in yet another school in the USA. How is it that virtually the entire world thinks the Americans attitude towards firearms is completely bonkers ? Yet (most)Americans think the rest of the world’s attitude is bonkers. And what is this to do with retailing, High Street, consumers, Internet and the machinations of running a commercial enterprise?

Perception is the answer. Or at least in part. So I remembered an article I wrote for a trade magazine about three years ago. I don’t think I am an idle git, but others may have a different perception of me ! If they only read this one post there maybe a reasonable rationale behind such thinking, as I have reproduced it for the rest of this blog(with some minor changes)

Sir Dave Brailsford (Team GB & Team Sky cycling Head Coach) examined the effect of perception on the performance of world class cyclists. Gary Zukav (American spiritual teacher, former Vietnam special ops vet and advisor to the American security services) says

‘….what we believe is based upon our perceptions….what we perceive depends upon what we look for….what we believe determines what we take to be true…what we take to be true be our reality….

Ah well! That’s great stuff. So what has it got to do with every day life on the High Street? Back in ‘lala’ land, and talking about a bloke who probably assassinated more people than Attila the Hun and another who is responsible for a dubious explosion in lycra wearing , at this stage, probably not a lot, but hopefully, all will become clear or at least clearer . The initial relevance is that both of them need to have a very good understanding of the human psyche.

Pre 2000 , the only interesting comment about the car, Skoda, was the joke that the way to double its value was to fill the petrol tank. In 2000 it was taken over by VW. VW invested money, engineering ’know how’, tough quality control measures, and set about the enormous task of changing perceptions. Part of the strategy was the simple technique of model names eg Superb, Rapid and other seemingly daft names. A little like calling a garden shed ‘boutique’ or ‘deluxe’, it is still a garden shed. However, combined with a VW reputation, perceptions did start to change. Now, the cars regularly win ‘What Car of the Year’…’Best Car of the year’….’Motor Mechanic Nerd Award 2014..’(no it doesn’t exist). Sales are strong, there have even been waiting lists at times, yet our roads are not flooded with them. There are still perceptions. This time some of it relates to the way in which the potential buyer believes they will be perceived by other road users. Tough nut to crack.

Poundland do a very good job in telling everybody that everything is £1(actually it is no longer just a £1). They don’t claim to be the cheapest, sometimes they are, and sometimes they are not. However, Aldi and Lidl try and create the perception that they are the cheapest. December 2014 , Waitrose sold a Gressingham duck breast for £5. Lidl sent out flyers shouting about an offer for one day only that the very same piece of duck was £5.99.

Apple could be considered the masters of ‘perception ‘. They not only create a product that the consumer perceives as being the ‘best’. They create a metaphorical club to which the consumer, wittingly or unwittingly, wants to belong. Though they occasionally get it wrong. a couple of years they said that they believed the consumer did not want a large screen phone. Samsung did and introduced a model, which sold well. Apple now sells load of large screen phones.

The inevitable question is what has this to do with any of us, unfortunately everything. Everything is perhaps a slight over exaggeration, but it is critical to any retailer, in whatever format to try and have an understanding of how the consumer perceives the product and the outlet from which it is bought. Unfortunately, because our industry does not have the resources of Apple, nor for that matter does it have any spare resources least of all financial, it is a tough ask.

As to how important it is to the independent retailer, perhaps we can consider two major retailers that have the resources but may have got it wrong in the past. For years, Marks & Spencer’s dominated their market sector. They did not perceive they needed to accept credit cards, they did not perceive they needed to advertise. They were wrong on both counts and paid the price. They lost market share and they lost shareholder confidence. Consequently, they started with their own credit cards, then they accepted all the major cards. They are now one of the highest ad spending retailers on the High Street. The second retailer up for the award of not understanding their customer, could be Tesco. Dominated the grocery market for so long, thought they knew and understood their customer base, and then pop it all goes south.

Once again, if there are no resources to investigate and react to perceptions, what is the point in writing about it?

With no financial resources, perhaps a little time and thought could be expended. The First thought would be accepting that maybe the retailer’s perception of itself is different to that of the consumer. Discovering any difference, could be a pleasant surprise, equally it could be unpleasant. Either way, it is perhaps worth investing a little time to find out if your concerns are unwarranted or are some changes needed.

A suggestion would be to try and step outside of your business, whether it is retailer or internet , and try and look it at from your customers point of view. It maybe even worth a shot at asking a few friends or relatives , who have no connection to, or knowledge of, the business, to visit your store or site and make purchases(you may have to fund this !)ask questions, seek advice and generally be a purposeful yet needy customer.

Whatever the results, it would be a useful exercise, as it will confirm you are, either,on the right track, or you are way off beam. The likelihood is that you will find opportunities for change and be somewhere in the middle. No matter what industry we work in, we all work in a slightly cosseted environment. The majority of independents are always looking to improve their business, but not always sure of how to do that. The areas that first come to mind, are store refits, staff training, new product, product display, and pricing policies. For online operators change store refit to redesign of web site. Yet how many can really say they know what their customer expects when they come in store and what they feel like when they walk out. Even with the regular customer, who you assume is happy with everything because they keep coming back. Are they buying some stuff elsewhere as well because you don’t stock it? Or maybe they perceive you to be expensive in some areas? This being a perfect example of perception.

Simplistic, perhaps, but because of the word limitation of these articles, simplistic it has to be. So back to the King of Lycra and the Trained Killer. What do they know that is of interest the retail market? Well, with the King of Lycra, he is evaluating how his team can best understand and alter their perceptions, when necessary, in order to beat their rivals and create the best performance. Which surely is what most retailers aim for in one way or another. The Trained Killer makes for a more exciting start to this article.

If you don’t like the results of any research you may conduct with your customers, you can always shoot them…..

Do I think the American President ‘s view of having pistol packing teachers is just a different way, of looking at things ? Do I ‘eck!

I think that the short piece below, taken from a web site about English language and its usage , sums up perception in everyday lingo..

When I used to work as a florist, by the end of a busy holiday there would be only mismatched dregs to make arrangements out of. So, we had a little game: Someone would make the ugliest flower arrangement possible, and we’d put a giant mismatched bow in the middle of it, and we’d watch to see who bought it. Invariably, a customer would pick it up, deem it “exquisite”, and buy it. And, invariably, an older woman we worked with would say,“There’s a seat for every ass.”

Why the dive…..to the bottom?

Image result for cartoon images diving to the bottom

No matter what the market, no matter what the product , no matter what part of the chain , and for the most part it does not matter where in the world, eventually organisations follow the same self imposed self -destruct mechanism of the pursuit margin reduction.

In a climate of overinflated high end salaries, and obscene wealth, profit, in itself has become a ‘dirty word’. Yet no matter how philanthropic an organisation a clear margin of profit is essential even if it is only   ‘to philonthrangate’ (I’ll save you the time-it doesn’t..).

Image result for graphs showing reducing profits

Yet we are all guilty of, at some point, chasing the ace to the bottom of the pack. The image above shows profit reducing as the demand declines.However, my issue is with declining margins before demand hits maturity. In many market places we have the strange habit that the higher the volume, the market chases the price down, even at times when the supply is not great. History constantly repeats itself with playground crazes . As the demand starts to fly, the price starts to plummet. Then supply starts to exceed demand and most players end up with stock and no profit . The trick here is always to get out just before the top (like any commodity) the general principle is do not place that last order ! Or as one (sanctimonious) customer said back in the days of the millennium

I had a great year for the millennium celebrations…

How so? When everyone else had such a terrible time….all being left with unsold stock

I replied…

I didn’t buy anything!

Was the rapid retort ….

Crazes ,are unique in their behaviour patterns and perhaps not the best example. so put them to one side, I will also avoid cliches involving the words ‘profit and sanity’. Invariably those who most quote it are the biggest offenders. And we can comfortably ignore the mega brands such as Apple, as they tend to be the exception to every rule.

Take some of the U.K’s High st giants : M&S and Tesco.

In the early part of the 21st century M&S started to suffer from more agressive competition. one of their initial responses was to introduce lower priced and poorer quality product . This failed dismally, rapidly and just as importantly, continues to fail, shown in poor sales figures and lower profits. Of course there are other factors involved , but in essence they got involved in a game they could not play and still cannot. Don’t get me wrong they still make healthy profits but not to the level they had been in the past. It may seem rather arrogant, but I firmly believe they did not really understand their own brand or at very least they misunderstood and misread consumers perception. Against this backdrop competitors such as Uniglo and Zara have blossomed. Yes, agressive pricing but very acceptable margins and constant product development.

Tesco, when suddenly faced with the likes of Lidl and Aldi tried to fight back on price alone (as with other major supermarket chains) and failed to capitilise on their own USP. Only now are they all starting to reaffirm their positions but they have lost a lot of time and margin in doing so. Now I have just read that they are starting their own discount chain!

Carillion (aka Tarmac – didn’t know that !) is one that baffles me. Once again a monster that could not have known what it was doing . Pitching for government contracts at presumably very low margins in order to grow their turnover. Yet, they knew their debt levels, they knew their costs, they knew  what their immediate commitments were (the contracts they had won) and they knew virtually to the penny their cash flow situation ….and they still screwed up….commercial madness.

For small independent organisations, whose resources are far smaller , the rationale is far more understandable. Yet, unfortunately, the consequences are similar if not quicker and more final. I come across businesses in our market place who are sinking under the weight of decreasing margins plus decreasing turnover. They are relying on trying to stem the fall with price alone. They tend not to look for alternative and new product, new routes to market and additional service levels .

Major airlines such as British Airways decided to pursue the budget operators on a price to price basis. The result are lower margins and a damaged reputation , consequence of cost cutting .

And then of course there are the online traders, the ‘divers’ extraordinaire ‘. They can do that standing on their head – (diving is easier that way). Well at least those selling on the Amazon market place as the system drives the price down to lowest acceptable price by any particular seller. This is an over simplification, but as Amazon is the world’s second biggest (Walmart is still king) retailer, this has a huge impact on prices.

Within our own industry we have examples of the perfect response to the ‘dive to the bottom ‘. About seven years ago,every independent retailer (entirely uncoordinated) decided they could compete with discount operators and supermarkets at Halloween . They decided to select, stock and sell product that the consumer would not find in the multiples at margins , both cash and percentage, which provided healthy returns. Yet there appears to be a reluctance to repeat this with everyday operations. Some may say, justifiably, it ain’t that easy….no it’s not, but it has to be better than diving to the bottom.

To enjoy being in the sea you don’t have to dive under it . And if you do, you have to know what you are doing ……

Online operators….all that is glitter is not gold…

Anybody who thinks that putting their unwanted Christmas pressies online and making a fortune , need think again. Well not quite true ‘cos if they cost you nothing , you will make something. That’s if you sell them. You, then, have to think if you don’t want them, why would anyone else? Ten years ago it may have been different . You still wouldn’t have made a fortune, but you would have probably made something.

The pattern is similar for online retailers. Five years ago they would have made good, relatively, easy money. It is a very different story today. There are few bricks and mortar retailers, in any market that would not say when asked ….I am being affected by online traders…In the U.K. online accounts for nearly 19% of all retail expenditure (world’s highest percentage). This means that for every £100 that used to be spent in shops ,£20 is now spent online. What is more , now £11 out every £100 is spent via a mobile device.

Retail life is very different. Online retail is even more different. There are a number of major issues, now facing online operators, that have arisen within the last five ‘plus’ years.

Stand alone web sites that were successful in the early days are now struggling against much bigger competitors who have much deeper pockets. A reality that is little different for any retailer.

The costs to market have dramatically increased. To keep yourself in front of your consumer has become a very expensive exercise. Furthermore, it is constant. The investment for back office structures and technology is high and constant as the technology changes , virtually daily, and becomes increasingly costly.

The costs of service have risen dramatically as have the consumer expectation. Today, the consumer expects next day delivery, 24 hour customer service and more often than not free or very low delivery charges.

The World Wide Web is exactly that. Your online competitors maybe based in Bristol or Beijing.

And of course, the elephant in the room , Amazon (and to a lesser extent eBay ). Let’s not forget that the elephant has been an extraordinary enabler for many successful online businesses. Starting over twenty one years ago, growing exponentially year by year, but in reality not really coming onto the radar in a more general sense until ten to twelve years ago, Amazon has become a retailing ‘behemoth’. Through the next six/seven years they developed their market place putting the consumer, very much at the forefront of their focus. Amazon suddenly became a huge cash generating machine and big players ignored them at their peril. Now few can afford to ignore the beast. Quite literally, there are few parts of our everyday life that their tentacles do not reach.

Being a huge cash generator does not necessarily equate to profit. Far from it. As a legitimate operator it is extremely difficult to create a working margin, especially with low priced items. As many will tell you, if your product costs you ‘zilch’ you would be hard pressed to earn any money on any item retailing for £2-2.50 . After commission, VAT, postage and operating costs there is nothing left . Yet items still appear for less, which is why I used the word ‘legitimate’ traders.

Therein, lies a further obstacle..non legitimate traders. I would rather not use the term illegitimate, as many are on the ‘edges’. Much of what they do may not be strictly illegal but is highly questionable. Because of the ‘world widelyness ‘ of the web it makes it very easy for these traders to dip in and out of whatever market they like, virtually with impunity, with little chance of any authority having the resources or inclination to investigate.

Amazon, itself, whilst panned for paying minuscule amounts of tax, for many years made no profit at all, it was all ploughed back into the business. Closer to home, Ocado, the UK’s leading online grocery site, established over seventeen years, took over ten years before making an operating profit.

What to do? There is no doubt that online will continue to harvest an increasing share of the retail market. But what is also true is that within the next two-three years that market place will be very different to that of January 2018. The technology will continue to develop, logistical challenges will increase , the consumer perception and expectation will change, costs are likely to increase and margins will be squeezed further. The latter is quite simply the continuing cycle of any retail development.

I am not expecting bricks and mortar retailers to shed any tears. However, there are many who think that all online operators are ‘thieving gits!’ or as one customer very recently said in a rather more restrained manner ‘the authorities should stop Amazon and anyone who sells on them…as they are ruining everyone’s business ….’

I have no doubt that within ten years ‘traditional online retailers’ will be bemoaning the fact that their business is being desecrated by ‘dronetailers’ who are sending ordered product down to a device around your wrist(no it won’t be a watch because that will be imbedded into your other wrist) which will 3D print your order within ten minutes….and then replace it every 12 months with an updated version…or, maybe someone will get a building, fill it full of stuff and get people to come along and buy the stuff….don’t bet against, Amazon aren’t.

The problem with glitter is that most of it gets blown away or hoovered up….

Traditions….what are they? …and are they of any use?

Over the last 18 months many have expressed their dismay at the demise of many of the UK’s traditions. Apparently many of these have been lost to outside influences and there is a desire to reclaim them.

What exactly are these traditions? And more to the point why are they being missed ? It maybe a lazy technique but I feel the burning urge to list some of those that have gone..

  • Bear baiting
  • Cock fighting
  • Persecution of catholics
  • Persecution of Protestants
  • Colonialism
  • Serfdom
  • Slavery
  • Lousy pub food
  • In many cases, lousy beer, as well
  • Criminalisation of homosexuality
  • Bastards (in this case-illegitimate children)
  • Duelling
  • Child chimney sweeps
  • Unchecked child abuse
  • Kids working in coal mines
  • Corporal punishment within schools

I am in no position to judge what is good or bad, yet all of the above would have been active for extended periods of time during the last six centuries, some , obviously, would have been more recent than others. I am in no doubt that there would be some who wished a number of the items in the list were more prevalent today.

The type of traditions that I prefer to reflect upon are

  • Bog snorkelling
  • Queuing
  • Humour
  • Tolerance
  • Cream teas
  • Believing a ‘cuppa’ is best first response to any problem(despite now being a nation of coffee drinkers)
  • Politeness
  • Innovation
  • Irony
  • Creativity
  • Honesty
  • Independent
  • Democracy
  • Supporting the underdog

Some of these maybe over egging the point , but many have a dewy eyed view that Britannia was one big pool of milk and honey , from which everyone drunk. It was never so, far from it.

“Whatever!” Referring to a more recent verbal tradition …”what has this to with the price of bread?”. A lot as it turns out.

Very recently, within our local shopping parade , a bakery has just closed . This Baker was part of a small chain that was first established about 65 years ago. For many years it was the ‘go to’ bakery and even made and supplied Winston Churchill’s 80th birthday cake (perhaps more to do with him being the local MP) . However, during the last ten to fifteen years it failed to adapt. It relied upon the wrong traditions (thinking customers wanted more of the same), failed to invest, innovate and create. The product was just not good enough, the staff were poorly paid and poorly trained . It allowed its customer base (it is the perfect customer base for high end, high margin artisan style baking) to go elsewhere.

On the flip side, Julia and I have just spent a weekend in 14 century house(hotel), where the owners have managed to develop a modern successful business, by combining over six centuries of tradition, with 21st century techniques, through investment, creativity and innovation.

All organisations, big or small gain, from looking at traditions, and learning from them . What traditions should be discarded and what traditions help shape and develop their future . The usefulness of a tradition can be defined as to whether its continuation, or reintroduction is to the future development of an organisation or that of society.