Retail: “Project Fear” Needs a Reality Check

2016-02-13 11.31.31Alongside the Brexit debate, the Retail sector launched its own version of “Project Fear” this week . British Retail Consortium (BRC) chairman  Sir Charlie Mayfield warned that  the sector is facing the loss of up to 900,000 jobs and the closure of thousands of shops in the next decade, exacerbated by rising costs due to the National Living Wage and the new apprenticeship levy.

To be frank, I’m very disappointed that Sir Charlie, who is also chairman of the John Lewis Partnership, should make such a statement, which I believe reflects very badly on the aspirations of our great Retail industry and one which employs almost three million people. I accept that Sir Charlie is bound to promote a report by the BRC; however I’d argue that the report forms part of a wider “Project Fear” surrounding the government’s policies of promoting fair pay and better careers.

I stress that I’m not making a political point here. I simply believe that the Retail sector (and, to a certain extent, the Hospitality and Tourism sectors) are reacting in completely the wrong way: Canute-like, they (or at least, their representatives) are trying to argue that business should not put the welfare of people first. That, in my view, is simply not a tenable position.

Look at the evidence: the digital age has transformed the context for Customer-facing businesses. Consumers are in the process of taking back the power to choose where, how, when and with whom they do business. Employees – especially those with the skills businesses need – are also in a stronger position than they have ever been, to choose employers whose values and cultures they share.

The travails of the “Big Four” supermarkets are a case in point:

  • Asda, locked in a price war with the likes of Aldi and Lidl, is trying to squeeze yet more margin out of its hard-pressed suppliers
  • Tesco lurches from crisis to crisis, trying to work out why nobody loves it any more
  • Sainsbury’s is focused on trying to fill its redundant space with similarly enthralling offerings, such as Argos
  • Morrisons has just signed a deal with Amazon which will see the online retail giant probably destroy Morrison’s existing tie-in with Ocado and gain a significant foothold in the UK grocery market

None of this activity suggests even a whiff of long-term thinking – worrying when one considers the array of expensive, senior talent those store groups have at their disposal.

So, back to “Project Fear”. A BBC News item on the BRC report contained the suggestion that, faced with rising costs, Retailers would “seek to increase productivity by reducing staffing levels”.

That’s not productivity, that’s profit!!! And short-term profit at that.

Productivity is about more being produced. In the case of Retail, it’s about more being sold. And who does the selling? People! (And don’t let’s think that all retailing will be online in the future. Over 80% of UK retailing is still done in-store.) And who does the buying? I think we’ll let that lie as a rhetorical question!

My point?

Retail – and other service sectors – must recognise that the future winners will be those businesses that differentiate on Customer Experience, not on product or price.  And who creates the Customer Experience…?!

In other words, the future winners will focus on their Customers as people, and on their people as Customers.

There’s much more to say on this. For now, here’s a short list of links that have made me think, and I hope will make you think too:

  • The image at the top of this post was taken on the shop floor, last month, in one of the UK’s largest retail chains;
  • In my post “Customer Experience: Send in the Robots” I reflect on the current state of Customer Service – for which read Customer Experience, for which read sales acumen, for which read productivity – in many of the UK’s major Retail chains today;
  • Meanwhile, furniture retailer Sharps’ new, Customer Experience-led store design is generating a 30% sales uplift;
  • In a recent interview, Hotel Chocolat co-founder Angus Thirlwell explains how the company’s development from online into physical stores “has given the business a certain advantage over competitors – as the traditional retailing model, comprising vast store estates, has become increasingly difficult to generate margins from”;
  • Technology company Samsung has just opened what it calls its “flagship of the future” in Manhattan: a 55,000 sq ft, “digital playground” where Consumers can try products and personally experience the Samsung brand – but not buy anything. Why?
  • Finally, social think-tank the Resolution Foundation warns that there are “huge uncertainties” over how businesses can achieve the need to boost productivity in order to offset the cost of the Living Wage.

There’s currently an argument going on as to whether “Project Fear” won the Scottish Referendum campaign, or nearly lost it. I’d argue that, in Retail, Tourism and Hospitality, “Project Fear” will distract businesses from the real issues, and from the opportunity that every business has: to energise the Customer Experience, in order to unlock latent Team and profit potential.

If you’d like to discuss anything in this post, please get in touch.

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