Syte for sore AI’s…..

Or rather Artificial Intelligence, as I am indulging in a little bit of ‘ Red Top’ headlining. For those of readers who are not from the U.K., and I think there maybe two, it relates to headlines created by the more ‘popular ‘ (a phrase I use with a certain amount of reservation) newspapers . But I digress. This is one technology, that I suspect, will have the biggest impact on retailing in the the both short and medium term future.

At the forefront, in terms of retailing, is a company called Syte. They are an organisation based in Israel that has created a product that I suggest is quite simply extraordinary. It is so very simple in its execution yet undoubtedly highly complex under the ‘hood’ . The basic principle is you take a pic of an item, you are then showed where it can be bought, are there any equivalents ?are there different versions ? Where’s the best price? And the list of possibilities goes on and on. The images below are examples of  articles of clothing ..

syte

They currently hold a data base of analysed images of over 112 million. This number is updated live on their web site. This is by no means exclusively clothing. This is reflected in the organisations that are currently working with Syte , ranging from Samsung through to Argos and Boohoo.

I am not a spokesperson for this company nor am I  qualified  to make judgements about the efficacy of Syte.ai. So I don’t want to go on about them too much.   But what I can see is that this is the immediate future of retail or at least a significant part of it.

There will be those who say that is ‘all well and dandy…but I can’t afford this form of technology….’ . Of course,  however  I think there are two important considerations …

  1. Being aware of what the big players are doing and how they are doing it.
  2. Today, high-end technology has a habit of trickling down the chain very quickly , and much more affordable versions are likely to come into play making it more accessible and useable.

There is a third factor concerning technology and that is some of it has a very short shelf life. In the absence of a ‘crystal ball’ we can only make judgements on what we have and know. As most major IT organisations are sinking vast sums of ‘dosh’ into AI, we must assume that it is at very least part of the short-term future of retailing.

For those who are not convinced that his holds any relevance for them, I will finish wth a qoute from Sun Tzu  (a Chinese military strategist from over 2.5 thousand years ago , who is strategies are still used today).

“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”

 

It ain’t half crap Mum….*

Empire pie was a product launched by Marks & Spencer’s, a couple of years ago. Much lambasted at the time not for its taste but its imperialist sounding title. It seems to have seen that one through. Both Julia have since had experience of this beast and seek to lambast it because of its taste or rather lack of it. Driving back home late one night on our venerable motorway system , we bought one (two actually, as they are singles) knowing there would be nothing in the fridge when we got home . What we did not know was that there was nothing in the pies either (in terms of taste rather than filling).

We had long been a follower of Marks & Spencer’s food , since they first developed the concept . Then it was innovative, tasty and a place to seek out when looking for something a little different to eat . But, in our opinion, no longer. Whilst Food still shows growth for the nation’s ‘favourite(?)’ multiple it is being chased rapidly by its competitors.

Their food offering has become just another player, whereby the competition has caught and in many cases overtaken them . There is no research (that I know of) it is subjective opinion. Yet I think their financial performance sort of supports the comment that products like empire pie are symptomatic of many of today’s multiples. They are just not trying hard enough. If you are going to succeed in the market place you have to be ahead of the game not catching up. I think M&S have lost their Mojo.

The recent tie up with Ocado, is not radical, it’s just catching up or at least trying to. It’s catch up, which in today’s climate is just not good enough. It’s probably good for Ocado(not that convinced about that either) but I can’t see it being that great for Marks. It’s well and good having super efficient fulfilment centre but you still ‘gotta’ have the product.

That’s enough of having a dig at M&S. The point is these very same issues exist in many of the U.K’s multiples. They will have to reinvent the wheel or rather the way they retail. It will not be an exercise for the faint hearted, but regrettably the faint hearted have, by definition, faint hearts and eventually pass away. I believe the tools are there to make change and most of them(but not all) are technologically driven . But Innovation implies creating your own tools.

So let me paint a picture. You are a CEO just appointed to a major national retailer, in order to ensure the company’s future. You are about to present to the Board your findings and recommendations….

Hi Guys and Gals(not a good start as there are probably no gals, but guys are ok as I am sure the boards of many Nationals are full of ‘hipster types’) these are my two possibilities to ensure the continued existence and of course ‘growth’ of this amazing organisation

1. We introduce currently available technology , which will enable the consumer to take a pic of the terrific jacket they have seen somebody wearing on the bus to work. The app will identify the brand, equivalent alternatives , plus ad ons then tell the consumer where to buy it. Of course there will web sites offered but it will also show stores where these items can be purchased. It will then tell the consumer how to get to the stores from where they get off the bus. As the consumer enters the store, which will know that the consumer is coming and what they are looking for and can then suggest other similar items in the store………….

2. We develop some new fairly bland tasting pies with slightly contentious names…..

Chairman’s(probably not a hipster)response…

Pies…it’s what we know best….

Perhaps a slight exaggeration but I think it’s a reasonably accurate illustration. And yes, this technology does exists. And I am not talking advanced pie making.

Time is running out for many of the more established national retailers. Part of their problem is their size . To make radical transformations will cost a huge wad of cash. For the newer innovative retail entrepreneurs, it is part of their organic growth. For those who think that new embryonic retailers will never threaten nationals, think on. Amazon started from scratch less than twenty five years ago. So those seeking a more immediate and less drastic fix, as you are not selling as much you would like, try looking at what you sell . Sell stuff people want, not what you think they want. If you don’t others will and are…..

* for those who don’t quite get the title, and think it is just the ramblings of an old fart. You are right. But if you are inquisitive, replace the word ‘mum’ with ‘hot’ and google…

Ten predictions for IT developments in retail, during 2019…..

Hands up ! These are all US based and originate from the Forbes Technology Council . However, their development will , for the most part, impact way beyond the shores of the ‘Good old US of A ‘.

1. Voice shopping in cars. This does not mean lowering your windows and some ‘geezer’ at a set of tragic lights trying to flog you a bottle of coke. Most new cars are now sold with installed apps allowing you to use functions such as Amazon’s Alexa. There is the likely suggestion that in America, billboards will start displaying ads prompting you to scream at your dashboard and the item of your dreams will be delivered by the time you get home .

2. The return on investment for AI investment can be clearly understood. Now I am not entirely sure I understand the statement let alone the concept. Probably the best way to explain it , is from a site called http://www.kidbox.com. They sell boxes of kids clothes. You complete a ‘quiz’ , select a price and they send you a box of kids clothes and you pay for what you keep. Now the key is the quiz. It is a series of questions that help them decide what you may like . The secret here is not a group of kid box employees sitting down and deciding the answers to the quiz that child in question would like to wear Harry Potter hats and pink trainers . The results are determined by artificial intelligence.

3. Computer vision may move to less exciting parts of retail. Computer vision is the ability of computers to see images in much the same way as humans. An unpleasant thought, if you took it literally, such as when you walk into the store cctv blares out …

Oy! you ugly git, you are wearing one lousy shirt go to aisle 4 and caste your eyes on these beauts’

But it is not that far removed. A confectionary store in the States called Lolli & Pops, uses facial recognition to recognise loyalty customers when they walk into the store. Amazon Go takes images of products put into the basket of consumers in store and avoids the need of a check out . Then there is the tracking of footfall in store , seeing the pathways and actions of their customers. There is a whole lot more involved, but I think it paints its ‘own picture’.

4. Direct to consumers growth maybe muted. This is something that most can relate to and that is a brand selling directly to the consumer. The brands are finding it increasingly costly to find and maintain the channel to the consumer. It is an area that I know most retailers of both types, online and high street and increasingly wary of. That is to say suppliers going directly to the consumer. So, maybe, there is a shaft of light here.

5. Instagram could challenge Amazon’s dominance on mobile shopping. In the States Amazon has 140 million followers whilst Instagram has 100 million and they are about to launch their own shopping app. I can understand the theory because of Instagram’s influence on the consumer but I can’t say I completely agree with the analysis. For starters, Instagram does not have the infrastructure. It does not have the database (twenty years of Amazon trading) and quite simply I don’t think it has the comparable knowledge. Maybe in five years but not in 2019.

6. Cross border commerce may no longer be a choice . I think this heading is slightly counter intuitive. It means that because so much trading is done cross border. It cites Amazon once again , where their revenues cross border have increased by over 50% in the last two years. The suggestion is that all online operators must consider their cross border activities. To be really frightened, just examine how much product via Amazon is sold into Europe directly from China (over 40%).

7. Social media platforms could become e-commerce platforms. This is already happening, so I am not sure why this is such significant development. Yes, they have huge numbers (instagrams 1 billion active users) and yes they they may well take small slices from the likes of Amazon, but they don’t have the structures, as already but more significantly they don’t have the data and analytics that Amazon has accrued over the last twenty years.

8. Click and collect will come of age. This an economics issue. The cost of delivery is increasing and eats into margins particularly if the first delivery fails. Retailers will focus on increasing their ratio of clicking and collecting.

9. Independent subscription continue to lose subscribers. Well this comes as no surprise . Apparently the fall off rate is 40% within the first year. This is where you you give a load of dosh every month and you get a free razor and a bit of shaving gel. Or a ‘surprise box’ of organic veg , a good chunk of which gets chucked away . Personally, I have thought for some time , or ever since we were offered a fresh flower subscription of about £12 a week (£500 p.a.!) that this was an unsustainable model. Well it seems to be panning out that way .

10. The aisle could become more interactive. This comes as no surprise. It will enable retailers to become interactive and enhancing the ‘retail experience ‘. It will also involve the tightening of the online/offline experience.

Me thinks Forbes set their ‘technical council’ a brief of a list of ten and they started to struggle at nine and ten as they aren’t uniquely technological . Eight looks a bit like a combination of two and three. That said some might thing all these bear no relation to their own business. This is clearly not true , as they may be techniques that are not within your budget but they are all developments that will affect your business. If we don’t see them coming we won’t know what’s just smacked us in the face.

Where are the Leaders when we need ‘em ?

Churchill, Corbyn, Thatcher, Stalin, Napoleon, Philip Green, Beckham, Gandhi, Pol Pot, Che Guevara, Ernest Shackleton, all have something in common. In some form or other, or by someone or another,they have been seen as leaders.

I suggest that there are three types of ‘leaders’

1. Those that are appointed, anointed or elected eg heads of state, heads of organisations.

2. Those that inherit eg natural progression through an organisation.

3. Those that have carved their way through an organisation, such as by dint of personality ,and wisdom or other ‘personal combinations’ like personality and violence.

Anyone who goes on a course to learn leadership skills may in some quarters be defined as a leader. But, in my book, this does not qualify anyone as a leader anymore than someone who goes on a language course automatically becoming a linguist.

There are no doubt other types but I reckon that in general they are just subsections of the above.

If you ‘win’ a war but loose an election. If you are successful with one football club but not another. If you have been involved in a number of bankruptcies and then a successful venture does it make you any the less a leader?

Captains of industry, is a term often used to refer to the head honchos of major businesses. But I am not convinced this immediately makes them Leaders. I cannot consider that the likes of Philip Green is to be defined as a leader ( I will not apologise for not using his correct title, cos I don’t think it is his correct title). Some would argue he created a successful organisation employing thousands of people . I propose he created a vehicle to make as much dosh as possible. Nothing wrong with that. The acid test would be how many of his employees would follow him out of the trenches.

Politics is littered with the term ‘leader’. Leader of the opposition, leader of this group or that group, leader of the house, leader of a party, suggesting that most politicians are a leader of some sort. Whereas the truth lies nearer that very few of them are not, and those that have a variation of the title are there by a convoluted electoral process, including in some cases nobody actually wanting to do the job as it is toxic.

The media revels in headlines concerning weak or strong leaders without reference to the circumstances or the relative strength or weakness of the organisation they lead .

It’s unlikely that Alex Ferguson would have been a great leader of Southend United. Gandhi is unlikely to have created such a massive following if he had been brought up in Ireland. Bill Gates might never have created any empire if his parents had been farmers.

Some leaders are undoubtedly ‘born leaders’ . The likes of Genghis Khan, who was born to a family of leaders. Of course, he lead by fear, yet, according to historians, he was respected and those that who followed him, including the conquered, were well rewarded. The term ‘captains of industry’ was first used in the USA in the 19th century . It referred to commercial success but also philanthropy and attitude to the workforce . Latterly the term has been hijacked for those who only tick the commercial success box . For Captains of industry read more Bill Gates than Phillip Green (more robber baron, and that’s being very polite). I am not just picking on him, but he is very easy pickings.

‘Great’ leaders, such as Gandhi, Mandela, Napoleon, Churchill and Lincoln, were also seriously flawed. But often it is the flaw or flaws that make them ‘great’ in their time. Whether stubborn, vain, or just very focused, whatever their belief they were able to convince large numbers with similar beliefs that their path was the one to follow, and were the ones to follow .

I would suggest that the world’s current turmoil is aligned with a lack of leadership in many fields, industry, arts and media, spiritual guidance, and sport. Of course there are highly successful individuals in all walks of life but there are very few(currently I can’t think of any ) that large chunks of society would see as a true ‘leader ‘. So I can’t even begin to define something that currently does not exist in its true form. However, I feel that is, also, very disingenuous. I think there are many out there who are true leaders but operate in micro scenarios whether it is the coach of some local kids football team, or the manager of a small department in a large organisation, the leader of a local church, temple or mosque. These, and many others, are leaders who inspire and nurture those they lead. But they all keep their heads below the parapet. Society needs leaders that can be seen, in order to be inspired and nurtured, but I can’t see any…..

“Where have all the ‘leaders’ gone ?

(For anyone who might be interested the song was ‘where have all the flowers gone by Peter, Paul and Mary).

Undaunted by the big beast….

James Daunt , formerly one of societies ‘ pariahs’ (investment banker) decided in 1990(aged twenty seven, I think) to open a book shop in central London. He opened not one but five. He loved books and he loved bookshops even more.

In 2011, the ailing High Street book shop chain Waterstones , on the verge of bankruptcy, was bought out by an investor who asked Daunt to be come MD. He took the chain from the verge of bankruptcy to a vibrant and highly profitable portfolio of over two hundred and ninety stores. Furthermore his methods are, I believe, worth considering by many multiple and independent retailers.

‘It was a strong culture, born of the [former owners] HMV and WH Smith mindset, and to my mind it was utterly bonkers,’ he says. ‘You were trying to run the same bookshop up and down the land; it was centralised. Coming in as an outsider, I thought, “How do you change that, and then change it without breaking it?”

These two former owners tell their own story ie one has gone bust and the other whilst profitable, it is with little thanks to their High Street stores . However that was part of the problem and he needed to change that.

‘I came from an independent bookseller in a world of chains, and I loathed chain retailing. I needed to survive as an independent in a Waterstones world. And you rely on quality and creating shops customers want to be in.’

Being a bit on the lazy I shall continue to quote Daunt himself . In this case it is not only easier but his words tell the story better than I can .

‘Staff are now in control of their own shops. Hopefully they’re enjoying their work more. They’re creating something very different in each store. We have a lot of different markets.’ In what way? ‘Much as Asda sells different things to Waitrose. If you pile up the latest celebrity thing in Hampstead for 1p, it ain’t going to sell. And if you pile up an esoteric history in Gateshead, it isn’t going to shift. We have different books on display in Harrogate than we do in Kensington, for blindingly obvious reasons. There’s a different economy outside London. In Middlesbrough half the high street is vacant and there isn’t a lot of money. It’s a town that’s in big trouble, but our shop has reinvented itself there; it’s got rocking horses and pretty much all day long pre-school kids are sploshing about with paint. It’s not the most profitable shop, but it’s got spirit.’

In the Kensington branch they sell a lot of Scrabble and Monopoly. In St Pancras it’s novellas that you might finish on your journey: ‘Those sell in huge quantities.’ In Trafalgar Square it’s Union Jacks; in Walthamstow, they shift ‘a ton’ of camera-lens mugs (left). Huh? ‘It’s a mug with a lens on it. We sell billions.’

 

He got rid of centralised buying and created regional buying which immediately reduced returns(unsold books are returned to publishers) from 25% to 4%. This lead to a huge reduction in shelf space not being taken up by product that was not selling .

A particular favourite of mine is that he stopped stores having tables at the front with ‘bestsellers’. An especially brave move as they accounted for the best part of £27 million in revenue. However, their bottom line contribution was minimal and ‘best sellers’ in any product category (apart, maybe, from food) is often a very artificial construct.

His view of Amazon is of interest and once again I shall use his own words …..he is talking specifically about Jeff Bezos…..

……..driving the most enormous beast of a company that is getting bigger and dominating the world. In that crude sense, it is extraordinarily impressive. Just unbelievable. The drive, the quest for perfection, the sheer audacity of it, the chutzpah.

He goes on to explain that whilst Amazon accounts for 30% of book sales in the U.K. they are not booksellers. They are, essentially, a platform for selling books to people who know what they want .

But, and there is a biggish ‘but’ ,can this be done with other retailers ? I think it can and what’s more , I think if High Street multiples are to survive they have got to embrace localisation. Or at very least create innovative and interesting environments that actually make the act of shopping pleasurable, informative ,interesting and above all profitable.Product areas such as food are more difficult, yet I have already posted about a small convenience store chain that started in the financial crisis and has developed into a highly successful chain by focusing on an extreme form of localisation.

James Daunt has succeeded in an era which is very hostile to the very existence of a ‘shop’. He has rejuvenated an ailing retailer in a period of financial instability and in-spite of the world’s newest and most potent online behemoth. I think the model is worth looking at , albeit will need adapting for different product areas.

He may not physically (there again he may for all I know) climb rocks however in terms of retailing, what he has achieved makes climbing Everest seem like a walk in the park.

Clicks opening bricks…..

Well known online brands are opening shops! Well at least they are in the USA. Most of us will be aware of Amazon’s grocery stores and their newly launched Book stores, and will not know of the likes of Fabletics, Bonobos and Warby & Parker, as they are American online retailers who have started opening stores within shopping malls as a way of developing their brands in a more cost effective way in the face of the extremely high costs that are associated with web site marketing.

Will it cross the Pond? I can’t see why not. I go further and say it is inevitable. Despite politicians constantly rabbiting on about Online operators not paying any taxes and having unfair advantages over High Street retailers, apart from a handful of giant operators, they are oblivious to extraordinarily high costs involved in getting to ‘market’ and worse still staying there.

What this illustrates is that consumers like going to shops . For the online retailer it gives them brand exposure at a lower cost , and ‘real’ contact with their customers. Whilst I suggest it is not scientific yet in their analysis, initial findings by the US retailers that have pursued this route are very positive. Those selling clothing have reduced their returns, increased their exposure and found unexpected benefits, such as customers coming into store ordering more that than would have done through the web site , because they have seen, touched and tried on product in addition to being delighted as they don’t have to cart the stuff home (apparently particularly true of men).

Recent news over the Christmas period of the failure of the likes of HMV,and the relative success of Next only go to reinforce this potential trend . Both retailers have ( or had as with HMV) stores and both have online operations . With HMV both were poor , as opposed to Next , who with long experience of ‘Distance Selling’ with their catalogue understand who their customer is, what they wanted and the way  they would buy it , sadly HMV didn’t. I digress slightly, but only slightly. I believe the Next is or about to change their free returns policy. If you want to return FOC, you have to take it back to a store. This not only reduces a cost but gets the consumer back into a store where they are more likely to make a further purchase.

Amazon(it’s that name again) have also announced that they are planning to open more food stores in the US. And this indirectly, is another reason why Etailers are having to look a different routes to market. Because the constantly increasing influence of Amazon, and many sellers who use Amazon as their main route to market are aware that they must be looking for additional solutions. And here is another frightening statistic 40% of new sellers on Amazon Europe are based in China (and Hong Kong) . source:ECommerce news Europe.

The image below is not great but the picture is clear (the blue portion is the Chinese share)

china_share_amazon_europe-740x207

What is also striking is the similarity in percentages.

So are clicks and bricks becoming one ? Not entirely but of all the Online operators I know there is not one that is not looking at different routes to market .They are all looking at improving and developing their own web sites but they are all aware of the huge costs involved and know that this is cannot be the only alternative.

Hackneyed a phrase it maybe, but all forms of retail are undergoing change at a rapid rate. Change is not new , in the 14th century there were nearly one hundred and forty shops on the original London Bridge and eight hundred years later not even the bridge exists. Which goes to show absolutely nothing, but I just like the fact ! I am not sure even the most knowledgeable of retail analysts or retailers themselves know how retail will develop in the next eight years let alone eight hundred. Yet , I am absolutely sure there will be ‘shops’ but perhaps not quite as we know them .

 

 

Choice…is too much?..too much of a problem?

choice

It is very difficult to talk about ‘choice’ without considering that there are large chunks of the world where people have little choice and  for the most part those people would welcome the problems that would come with ‘Choice’.

In the seventies the Band ‘Earth, Wind & Fire’ wrote the lyrics..

You got the freedom of choice
You got to hold on and speak with your voice
You got the freedom of choice
You got to hold on and speak with your voice

At that point in time we had three tv stations, various newspapers( actually loads of them) and the radio as our prime source of information (not forgetting the old geezer in the pub). Now we have less newspapers but countless tv outlets, vast numbers of digital and internet radio stations, web sites, apps and social media, email , text, Whatsapp , the geezer in the pub (invariably its a man)and many other variations too numerous to mention.

In the UK if we wanted eat in or out, there were Indian and chinese restaurants and takeaways , burger chains (Macdonald’s opened their first in 1974 and Pizza Hut in 1973) from there on the eating revolution exploded. In 2018 you can be faced with multi page menu’s containing a world cuisine starting with Chinese, through India to Italy, Britain, Turkey, Mexico and beyond (on one menu).

When it comes to shopping for anything, the choice is literally or as near as dammit endless. Type ‘Shirt’ into Ebay and you will get 25 million results. Anything can be bought from anywhere. In 1970 virtually nobody travelled to Asia( for a holiday). There was still a war in Vietnam and China was ruled by Mao Zedong. Now nearly seven million visit Vietnam every year and in China the figure is found about sixty million.

Yet does inexhaustible choice make life any better ? Choice is, without doubt good, but we are reaching the level of choice that starts to create problems. Today’s retailers or service providers face huge choice issues and they ain’t all good.

Pre-internet they were all faced with similar problems, but now they know their online competitors can offer a vastly greater choice and without necessarily carrying the stock. I am as guilty as the next person. If I was buying a shirt and went into a store and saw maybe a dozen different styles, I may have gone to one other store and seen another dozen, but now I won’t waste my time . I’ll go online and look at, maybe, several hundred….

Herein, lies another anathema. I have done this and then thought there is too much to look at, so delaying the purchase, completely. I am convinced that there are now many consumer purchases that are delayed or even nullified by being overwhelmed by choice. A recent conversation with someone who had returned from living in a somewhat less ‘sophisticated’ retail society , walked out of her local supermarket not buying anything as she was overwhelmed by too much choice.

How many of us go beyond the second or third page on Amazon or EBay? Yet many product searches will display twenty plus pages. How many of us go into a multi paged menu restaurant and just gaze at the pages ?Why do Apple launch three new phones that all do exactly the same thing except the basic expensive new one doesn’t quite take as good a photo as the next two even more expensive phones ? How many have walked into a coffee shop and left with their head spinning having been presented with thirty five variations of …Coffee ?

But it’s not about just buying stuff. It’s how we live . What job we choose, what we eat every day, how we communicate with each other, what faith (if any) we follow. How many kids we have . What school they go to. Where we live . Where we get our information from. Where do we go on holiday. How we travel . What we look like. What diet to follow. What exercise regime to follow. Which piece of latest medical research is correct. Even within our own society such choices are not available to many. Overall, I am not convinced that the explosion of choice is doing us any favours .

To paraphrase a Times journalist discussing his in ability to work out the number remotes he has to operate his tv, skybox, and internet..

The tyranny of choice, is just that ….when we had a limited choice of tv stations we all accepted what there was to watch….now there are thousands of options, we just complain there’s nothing to watch …

Ironically, the one area of choice that appears to be reducing is that of politics. In most democracies it would appear the choices are funnelled into a decreasing number of directions . Many are being left with little or no choice, as political offerings are generally pretty binary and offer little in the way of any sort of choice. Currently, in the U.K., it could be said there is no choice as nobody knows what any of them actually stands for.

It is easy for those of us with loads of choice to sit back and pontificate on how negative a plethora of choice is, whilst those , not so fortunate, would love to have the associated problems. However, it is as it is. And we need to take care with how we ‘choose our choices’ . ‘cos as with anything, too much is not always a good thing. Rather, it usually isn’t …a good thing.

The French have a saying

Trop de choix tue le choix”

Translating to Too much choice kills the choice

A man has free choice to the extent that he is rational.

Thomas Aquinas

Too much choice makes us irrational

Me

When you give people too many choices it makes them hesitate and not buy stuff.~ Guy Kawasaki-who was one  of the original senior marketing executives at Apple.

The freedom of choice is to be cherished. Yet with too much choice we have ensure it does not become less a freedom more a restriction .

Where’s Woolly ?

Print

Or rather where are the old  Woolworth stores now ? I try to avoid plagiarism (or at least most of the time) but I noticed a short article on the BBC web site that I felt was of interest and by copying pasting told a story without any unneccesary embellishments.

wooloworthsblog

It is sort of good news , in that we readily assume that when a chain such as Woolworths folds, it leaves big holes in the High Street. However , with the likes of BHS and the same will be true with the House of Fraser, there will be larger holes that will not be filled or unlikely to be filled with retailers. It does make you smile, when so-called retail analysts refer to the likes of Woolworths as being much ‘loved’. It’s because they weren’t much-loved that they failed.

I think that what it does illustrate is that Retail environments will continue to evolve. What we see today is very different to ten years ago, as it is was ten years before that and so on. My own little shopping parade of about twenty retail outlets (suburban London) , has gone from losing an original Sainsbury’s to now having a Sainburys local with a thirty-five year gap. The loss of a small department store over thirty years ago , eventually replaced with an electrical store, a beauty salon and a bank (the only bank after having had three).  The last five years having had a lean period where there have been failed restaurants, a closed post office , an iffy wine shop, to now having a very smart deli, two very succesful turkish restaurants, and quite possibly a M&S foodhall.

It’s a bit like the extreme electrical storms that hit the African bush and create huge wild fires. It burns off the old scrub and allows for new growth. Regrettably, our storms, whilst not electric, are rather longer lasting , and do not have the benefit of new growth created by nature. Nonetheless, change happens and there will always be casualties. It is the ability to foresee those changes, adapt and work with the opportunities those changes create. Easier said than done? Sure, but I don’t think you’ll find any successful retailers, in the entire history of ‘shops’ that would say it had been easy .

Brexit Update….(perhaps most overused title in the U.K. media )

Firstly, let me repeat that I am a remainer, who voted remain, accepted the result and just wants to move on.

Secondly, I have said before that there is really no such thing as a Brexit update as it meaningless and still nobody has a clue . I would go further and say, that with every day that passes everyone has even less of a clue.

Thirdly, it’s my version of an ‘update’ relating to a particular situation that is determinable (as determined by me).

Over the last twelve months various customers have said that Brexit had effected spending within their stores. For a while I doubted this , feeling that there were other factor’s in play. However, recent discussions with various retailers , there has been a common thread, paraphrased as follows …

Many of my customers that come into my store,have said that due to their concerns about Brexit, they are not going to spend as much…

So there you go, it’s not scientific, but is being repeated too often to be ignored . My Brexit update is that it is effecting consumer spending, or at very least , with my customers.

That’s it , short, concise and to the point. Factors that do not apply to anything else connected to ‘Brexit ‘. Gotta to be a first.

Sorry , one last thing, an itch I have wanted to scratch for the last twenty four hours. Perhaps the most brilliant and innovative political thought that has occurred since the Greeks came up the idea of Democracy . Bozzo’s idea of a Minister of ‘a no deal Brexit ‘.

When someone is appointed as a Minister, they may have an interest but little knowledge about the area over which they preside. The Minister is able to function (?) because they are supported by a group of civil servants , who have some experience and a level of knowledge . So ‘Mop Head’ is proposing a Ministry , where not only will the Minister have no idea is happening, nor will the civil servants. Then, they can issue daily updates on how nobody knows anything about anything to people who already know they don’t know, so everybody can be as unprepared as everyone else. Brilliant and flawless!

Tears for Sears !

sears21

Whenever major commercial organisations collapse, those that suffer the most are, invariably, those that can least afford it, the majority of its employees. In 2005, through a merger with Kmart, there were 3500 stores. When it filed for bankruptcy several days ago it was down to under 900. Another retailer collapses only to illustrate that the problem is not confined to the U.K. High Street.

Galeria Kaufhof, is a German chain of mid market department stores. There were over one hundred stores in the chain . In 2015 it was purchased by the Canadian organisation ‘The Hudson Bay Co ‘. In September of 2018 , it merged with Karstadt another German mid market department store. Immediately, five thousand employees lost their jobs. Why has this happened? For very similar reasons to that of Sears in the USA and House of Fraser in the U.K.

What are these reasons ? Senior management of all of these organisations lays the blame fair and squarely on the changing habits of the consumer and the increasing level of purchasing from online operators.

I believe that hides an underlying laziness and negligence on behalf of these organisation’s senior executives. I am quietly confident that they were well rewarded through the good and not so good years and the consequences of their actions (or inaction) is rather less than those on the shop floor.

Whilst online competition, increasing costs, and a changing consumer, undoubtedly, has an impact , the question has to be asked ‘what is the purpose of a department store ?’.

The simple answer would probably be they offer a variety of product and brands all under one roof. Yes they do. However,  the variety and the extent of each brand’s range is very generally very limited. And what does today’s consumer want ‘ Choice ‘ .

Could the executives of these organisations have done anything about it?

Sears

It beggars the question as to what the Directors of both Kmart and Sears were thinking back in 2005. The former was a chain of discount stores and Sears a mid market department store. It’s a bit like merging John Lewis and Lidl. It just didn’t make sense. The merger meant an immediate loss of jobs and the consequences are even more job losses.

Kaufhof & Karstadt

This all makes a little more sense , they are similar operations and a lot of synergies, but the question has to be asked , if Department store Shopping is falling out of fashion in Germany, why do two mid-sized chain think they will be anymore successful as a giant chain? Karstadt was bought out of insolvency in 2009 and Kaufhof were saved by HBC (Hudson Bay-who in turn are owned by Metro AG).

House of Fraser et al

By ‘et al’ I mean the likes of Debenhams, John Lewis is a little different even though it has not had a good financial start to the year. Debenhams has just announced nearly half a billion in losses and plans to close fifty stores over the next three to five years. The question facing both the House of Fraser and Debenhams, is are they wanted by the consumer and what have the boards of both companies been planning over the last ten years. Initially, it seemed that opening more stores was the option of choice. But I wonder whether these were project vanity or project growth . Many of the stores of both chains looked like they had not had a lick of paint since the millennium. In my opinion they sought growth above investment within their existing estate. Perhaps, what is more to the point is that over recent years they have both undergone various management changes , ensuring lack of continuity or long-term planning , but no lack of senior executives with ever-growing bank accounts.

The over arching question is there a future for this type of store ? I think the reality is with the exception of a few speciality aspirational stores like Harrods and Selfridge in the UK and maybe Neiman Marcus and Macy’s in the US, not really. They try to sell lots of product, but with not with any range or any level of service and invariably not especially competitive. Could the management have done anything to change this , in my opinion ‘yes’ . But it should have been done ages ago. Instead of constantly look for growth through more stores, they could have invested in a far smaller number of existing  stores making them special places to shop, a truly destination store, a place to spend time and money and have an ‘experience’ , not just a big place selling the  same as everyone else. They should have invested in staff and staff training and finally invested heavily in their  online offering, which is generally poor and too late.

Apart from the loss of jobs by employees and creditors , the biggest effect of these type of store closures is the impact they have on local independents. Despite the drop in footfall in the likes of House of Fraser they still bring shoppers into that High Street or shopping centre.  When they are gone it frequently leaves a gaping hole and the remaining independents are made to struggle even more . There are, also, quite literally structural problems as ween a Department closes down the property stays idle for a long time. They are large, usually over more than one floor and because of the layout cost an arm and a leg to reconstruct so that it can be re-let.

Retailing ain’t easy, never has been, never will be . The old cliché is that if it was that easy everyone would be doing. I, sort, of think that is what happened in the early 2000’s . Loads of big retailers thought they could make money just by opening new stores. They were wrong but those who made those decisions generally did not pay the price…..

any amount of political meddling, central or local,whatever form of taxation , no matter how well intended will not have had any impact upon these retailers past present our future. Much of what has happened has been down to poor and short-sighted management . I repeat a figure I posted a few weeks ago…Amazon’s budget for R&D for 2019 is well over £20 billion. I am not sure whether any of the above have had a R&D budget of any amount in any year !