Current challenges of the Retail Sector
The need for companies to respond now – the faster the better
What is happening in retail currently?
Retailing, and our High Street as we know it, is in the middle of a huge transformation, with unclear repercussions as of yet. Much press space has featured the demise and rescue of the House of Fraser by Sports Direct CEO Mike Ashley, who is working hard to stabilise the company and potentially to create ‘Harrods on the High Street’ which could retain 80% of the stores in contrast to the previous plan to close 31 stores affecting 6000 jobs.
Other retailers impacted recently include Marks and Spencer, Homebase, New Look, and Poundworld. Outside the UK, it is a similar story in the US and Europe. Certainly, working in retail anywhere means embracing change.
Yet there are retailers with success stories to tell, including the likes of ASOS, Super Dry, Wedding Gallery, Urban Retreat, and Shopping Malls such as Leeds and Liverpool. For these, their adroit use of a presence based on ‘clicks, bricks and mortar’ trading is bringing results.
So, what makes the difference?
Step 1. Taking action quickly
In retail, good or bad results are immediate and visible – whether that be hourly, monthly or annually. Both call for immediate action to understand the results and action quickly to stabilise the business, stemming losses, refinancing or to capitalise on the success by extending trends before any competitor.
Step 2. Build the right capabilities
The Board should agree how the business is performing and the next steps. Decisions are needed on the robustness of the strategy and operating model. Retailing often means splitting into two approaches for success: the low cost, high volume business or the high margin, sophisticated bespoke customer service models. Both need tailored efficient slick processes to boost profits.
Irrespective of the business model or results, the Board and Executives have to ask the question whether they have the right skills and resources. Understanding the organisational requirements demanded by the strategy and plan are key. For example:
Who will lead the following?
- Stabilise the business and bring about the turnaround
- Develop and deliver an exciting vision for the future with shared values
- Shape/execute a robust operating model for efficiency and margin
- Leading the change capability, consulting, agreeing and deliver – running fast
- Quality of leadership – where are the ideas, plans, tools and support to develop our leaders
Recognising the essential gaps and filling quickly with role models are prerequisites for positive outcomes.
Step 3. Developing the culture and customer experience
A good beginning usually stems from an objective analysis of the current culture mapped to the preferred culture to meet the business objectives. This will offer the opportunity to place the customer at the heart of what you do. There should be sound data which measures both the customer and employee experience to evidence the interdependence of the two. Improving the latter will aid the former.
It is important for the Board to agree on what they would like the business to be known for, with clear objectives targeted at stakeholders. For example, mutuality of benefits, dividend growth, or price match philosophies. This will aid decision making by all staff impacting the culture positively.
Encourage taking responsibility, freedom to make a mistake or two, take the learning and push on quickly. How able is the organisation to work as a team across functions and departments when needed?
Harnessing ideas from inside the organisation with identified routes to do this, e.g. a CEO hotline, innovation scheme, encourages employee to feel they can innovate as well. Indicate and reward how to take this forward via CEO hot line, HR or line managers.
Take the time to rebuild or refresh stakeholder relationships to build goodwill.
Step 4. Lead quantum change quickly, clear roles and responsibilities, create the pace the business needs
It is important for the Board and Executives to be visible via blogs, webcasts, regular email updates, and visits to sites and stakeholders. Clear roles and responsibilities with measurable objectives, in the right environment enable successful organisations. The framework of organisations as in the annual report should be visible internally.
Line manager should know the roles that they and each member of the team must play with a supportive dialogue to reinforce each role. The pace of any change is important, too fast destabilises with too much chaos, too slow and the opportunity is missed. Know the teams and people and judge the fastest pace at which they can work. Hire role models in leadership position as signposts for behaviour change and for colleagues to emulate.
Step 5 Agree, embed, measure, communicate and reinforce the behaviour change which counts
The training and development of staff to deliver the service is a high priority so that they know what is required from them. Managers’ first priority is the staff – to lead, train and develop them so they will understand and put the customers first. All managers should act as role models in this regard.
Recognition plans for teams and individuals with publication of the results and rationale provide reinforcement of what counts in terms of behaviours especially when the managers, employees and teams can nominate as well.
The reinforcement of the messages sustained over one – three years is so important to embed any required change of behaviour especially when any major change is essential for the business results. Clear lines of communication from the CEO to stores keeps the organisation well informed, united, and boosts efficiency.
Any of the following or even better a combination will contribute to a retailer’s success:
- Understand the performance of the business in the internal and external context
- Vision a robust strategy for the future with customers and employees at the heart
- Be aware of the massive transformation worldwide in the retail
- Harness the impact of technology and the on-line/digital transformation
- Embrace the need for change, develop and action a plan
- Set a fast, sustainable pace of change to unite the business
Jane Williams People Innovation executive director, NED and advisor specialising in business growth, cultural transformation and remuneration policy.