Writing

Reinventing Retail

Yesterday I hit the ripe old age of 50 (thanks for the many good wishes) and today I have an announcement to make.

My abiding interest is in how retail and hospitality brands can cope with the new multi-channel, always-on world of the consumer. I’ve seen what happens when they don’t and I’ve also seen the reward that follows from getting your response to the new economy right.

The regular flow of big brands now getting into trouble and disappearing is a tragedy. I want to do what I can to help brands succeed rather than be undone by evolving consumer needs.

As part of that, I’ve done something I never thought I would – written a book.

In Reinventing Retail I try to capture some of the challenges that brands face today and also distil out from a long career (and more than a decade at the Board table) some of the pragmatic things leadership teams can do to ensure their businesses don’t just survive, but thrive.

I’m thrilled to be published by the excellent folks at Pearson and even more thrilled to have received some terrific endorsements for the book from both business leaders and leading thinkers.

Reinventing Retail comes out in June – I’ll follow up with some pre-order links and even some extracts from the book over the next few weeks – watch this space!

Let’s talk about distractions

If I can lay claim to being world class at anything, it is procrastination. There is always another tweet to read, or cup of tea to be made.

Human nature, of course. But retail news this week has gotten me thinking about how getting distracted and taking our “eye off the ball” can be not just a personal challenge but a corporate one too.

In the week when the UK CMA finally shut down any idea of a merger between Sainsbury’s and Asda, a lot of the commentary has focused on the extent to which this merger approval process, coupled with the challenge of digesting the earlier acquisition of Argos, might have led to a period where the core Sainsbury’s business has gone “off the boil”. Twitter is full of pictures of half-stocked shelves and other supermarket faux-pas.

I have no idea whether Sainsbury’s under-performance of the wider market for groceries in recent quarters is actually related to leadership team distraction, but I certainly recognise the danger. I’ve seen several otherwise successful businesses go into ‘sale mode’ where they are either looking to change from one PE owner to another or perhaps float on the stock market and immediate start showing all the symptoms of having lost sight of the key drivers of business performance.

At the other end of the spectrum, distraction is also a huge challenge for businesses which are under-performing already. A leadership team spending all day in meetings with banks and advisers about refinancings or a CVA is not spending time on turning the core operation around.

On the face of it, it seems odd that these corporate events can so distract a big retail or hospitality business from its core mission. After all, these businesses employ thousands of people and the corporate restructuring or M&A stuff probably only involves a few dozen in the centre.

It is easy to throw rocks at businesses showing the symptoms of “distraction disease” – if you’ve built a team where the absence of close attention from a few senior people causes the wheels to come off, you obviously haven’t built a very good team, have you?

But I’m not sure it is as simple as that – even the strongest and best-led businesses still seem to be vulnerable to distraction. I think that is often because the “big secret project” the senior team are working on is, in the real world, not secret at all – and distracts not just them but hundreds of other leaders around the business who inevitably begin to wonder what change will mean for them and their friends.

I wonder if the best response to the dangers of business distraction is to call it out directly. Be as open as possible about the “big secret project” but also engage the wider leadership of the business in an explicit conversation about the dangers of distraction and the need for everyone to help each other stay focused. As with many cultural negatives, distraction thrives in the dark. The self-aware leadership team that shines a light on the topic will probably do just fine.

How much should a retailer’s website cost?

There is a secret club in retailing. Its membership is made up of CEOs, chairs and other senior leaders who have been responsible at some point for signing a huge cheque for a new website build. Millions of pounds have been spent, months or even years have passed, and in the end the new site looks pretty much like the old one, and seems to generate the same headaches and have the same limitations too.

Unfortunately, it isn’t a very exclusive club. There are a long list of retailers who have been down the same path, and as I wrote here, the club includes a lot of members from the public sector and other walks of life too.

So why are so many retail web development projects so expensive? Let’s consider 3 worked examples:

  1. You want to open a small e-commerce site with a few hundred products, integrated blog and social media content and you want it to work on both desktop sites and mobiles.
  2. You are bigger than that, a small to medium sized retailer with 50 stores and you need a website to sell through too. You have similar requirements to the example above but might need a few more bells and whistles like returns management or integration with your CRM platform.
  3. You are a large retailer and you want to re-platform your existing website. You have all the same requirements as above but you also need more extensive integration into your other systems (especially warehousing and financial systems) and you want to offer omnichannel services like collect and return in store, so you need integration into your store systems too.

So what do you do in these 3 scenarios, and how much does it cost?

In scenario 1 you will hire a local web developer who will build that for you on one of dozens of available templates, and it will cost you no more than £10k to get it up and running.

In scenario 2 you will step up to one of the cloud based platforms like Shopify or Magento for the added security and established code base and end up spending a few hundred thousand to get up and running.

But in scenario 3 you have arrived in the world of the Enterprise vendors. You’ll set up a big internal project team, use external consultants to help you write your requirements up and then implement a solution from one of the technology giants – a Salesforce, SAP, IBM or Oracle. And the bill will be millions. I’ve signed a £10m cheque for a web project, and so have many other members of the club.

The big question for me is why that third scenario suddenly costs potentially 1000 times more than just getting an e-commerce site up and running?

There are, inevitably, good reasons and bad.

The good reasons are things like scale, speed, security and that all-important integration with other key systems in the business. A modern retail brand will stand or fall by its ability to deliver a seamless service across all channels and so  an out-of-the-box e-commerce site will not do the trick.

But I suspect there are a bad reasons too. The most familiar to many who have lived through these projects will be the huge desire that an established business has to customise technology ‘to fit how we do things’ rather than changing business processes to fit with new technology choices. I’ve seen the requirements-gathering process alone in a major retailer take nearly a year, with all the associated consulting costs, and result in hundreds of pages of customisations each of which will then add to the cost and risk of the project. I’ve even seen a finance team in one business virtually grind a project to a halt because they didn’t want to change the timing of daily reporting.

All of those requirements will sound vitally important to the business teams demanding them. Each one of them, however, is contributing to the business having a higher cost base than their pureplay competitor who simply built their business around what their technology could do.

I also observe that often the final decision about a web project is made by a boardroom full of people with very little understanding of what technology should cost. Even the technology team themselves might have grown up building point-of-sale and warehousing systems and might not be as comfortable with web technology choices. It is a dangerous scenario when the person around the table with the best instinctive understanding of costs and choices is the vendor.

The solution to all of this? There are things all of us can do to avoid being trapped into the £10m (or even £100m) website development project. Technical teams need to be clear about the options available, and particularly alert for those smaller solutions which might grow to be able to fulfil omnichannel requirements. It should not be a knee-jerk reaction to reach for Gartner and a list Enterprise vendors.

And at the same time business teams, and particularly leadership teams need to be ready to approach the development of new digital capabilities with an eye on flexibility, and on how to get the desired outcome for the customer in the fastest and most nimble way.

And finally, it is incumbent on the Boards of retail businesses to ensure that they have around the table enough understanding of technology at least to interrogate the various options in front of them. I’ve seen Boards forensically interrogate a single store opening, largely because the process and the analysis was familiar to them, but then nod through a huge technology project with far less scrutiny.

A great website and integrated omni-channel capabilities should be a powerful asset for retailers today, not a headache.

The retail growth delusion


Amidst so much discussion of retail and hospitality businesses desperately looking to shrink (through store closures, CVAs or even administration) it is worth reflecting for a while on how they got too big in the first place. There is a cautionary lesson here for those brands which are currently small and fast-growing but which might be the ‘troubled retailer’ stories of 2025.

The psychology of over-growth is pretty easy to understand. You started a retail business with family or friends and found an audience. Your business grew and you built a management team around that growth. Now you have 50 or 60 outlets around the UK, you turn over nearly £100m and you are generating a decent positive cashflow from the business. What next?

There are plenty of people around with ideas about what that next step might be. Corporate finance advisors, dealmaking lawyers, industry analysts and potential investors are all telling you that you have a winning model and that you should double down. If 50 stores is a good business, what would 100 be like? Or 200?

It’s fashionable these days to blame Private Equity investors for a lot of the over-extension we’ve seen from retail businesses, and it is true that the PE investor naturally looks for step-change growth opportunities and will be much less interested in a ‘steady as she goes’ business. But I’ve seen plenty of IPOs in recent years where businesses sell their equity onto the public stock markets which are based on the same tantalising glimpses of step-change growth.

And before we comfort ourselves by blaming investors of any variety, how much press and analyst coverage of retailers begins with how many stores they have and how many new ones they have opened this year? It’s no wonder that growth becomes a beguiling topic for founders and business leaders.

And at some level, that might be a good thing – investing capital in a strong brand in order to make it bigger and take it into new markets can be very profitable, create many new jobs and bring the brand to lots of new audiences. I see brands in the retail and hospitality sectors which are absolutely ripe for that kind of expansion, even in today’s challenging markets.

But there are a couple of pitfalls that founders and early investors should watch out for:

1) Your growth plan might make complete sense to you, but if you are one part of an industry sector where everyone is chasing the same growth, you can’t all win. The Casual Dining sector is a salutary warning about what happens when everyone has the same ‘open 100 restaurants’ plan.

2) There is, obviously, a significant executional challenge in growing a business, and most particularly when that growth is into new territories overseas. Even though your business has grown already to what it is today, you may need different skills, resources, advisors and networks to take the next step.

3) Finally, there is the reality of your brand – can it actually stretch to the bigger scale you are considering. Brands based on design, or with particularly niche target markets or with strong regional roots just might not stretch to a bigger scale. Some of the high street CVA and restructuring stories emerging in 2019 look awfully like businesses which should have stopped at 50 to 100 outlets and have simply expanded beyond their market.

So is growth a bad thing? Not at all. But as a founder or shareholder in a business which is considering an IPO or a sale to a PE investor based on the allure of doubling your store-count, you are choosing to forgo the cash the business generates today and instead to invest some of that in the growth plan. Just like any other investment, it is worth considering that choice carefully.

Army jobs website delivered 52 months late

There is an incredibly important point in this article for anyone running a consumer facing business. I’ve seen a good deal of schadenfreude online about the Army being duped into spending £113m on a website – but let’s focus on the fact that the article states it was “three times budget – meaning it was budgeted at £38m in the first place. 5 minutes on the website tells you that it is basically a big wordpress site, which should have cost a few hundred thousand at best and taken a month or 2. Consider how that procurement decision is made, and it is obvious that part of the problem is that no-one making it understood what they were buying or what it should cost. Sadly, I see the same thing happening in retail and hospitality businesses all the time – a whole chain of executives from IT project lead to CEO who simply don’t know what they are buying, and an aggressive vendor who therefore has the information edge. There is a big club of high street brands that have made the same mistake the Army has, and we need to reflect on how to get enough digital knowledge into our businesses to stop it from happening. 

(Originally published on LinkedIn)

How the deep state is damaging your business

OK, it was early in the morning and I hadn’t had any coffee yet, but I confess to being particularly irritated by yet another reference in some political tweet or other to the ‘Deep State’ and its nefarious plans.

Concepts like the Deep State ruffle my feathers not because I believe there is some shadowy conspiracy at the heart of government, but for exactly the opposite reason. Let’s look at how a phrase like this comes into being. Continue reading “How the deep state is damaging your business”

On performance vs the market

There’s an important distinction between the performance of a business ‘relative to its market’ and the performance of that market itself. I recall a time in a challenging industry when I felt pretty good about delivering -6% growth because the wider industry was at -10%. We’d over-delivered the wider market and taken share from our competitors. Of course, regardless of the thrill of winning share, -6% will kill you in the end. Conversely, I found myself analysing a business the other day which is delivering +2% growth, but in a market which is growing at more than 10%. That business will be fine, I guess, but represents a missed opportunity too. There is one of those consultancy 2 x 2 matrices in here, isn’t there?  If you are under-performing in a bad market, you are certainly in trouble. If you are over-performing but also in a bad market, you might feel like you are doing all you can but the structural trend in the market can still undo you. Can you redefine your market? If you are under-performing a strong market, shareholders might be happy for a while but in the end strong competitors will come for you. Over-performing a strong market – beers are on you!
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Does technology always help?

The tiny coffee shop at the railway station I use has installed what looks like a proper kitchen management system to facilitate communication between the till and the barista – in other words, between two people who are standing 3 feet apart.  As an inevitable result, confusion reigns, it now takes longer to get your coffee and more incorrect orders are made and wasted. I like computers as much as the next person, but are we too quick to try to eliminate all human to human interaction? After all, the lovely folks in the coffee shop are still more sophisticated information processors than the system that someone has put in to stop them talking to each other.

Machine Learning

Finally finished (and passed!) the Machine Learning course from Stanford on Coursera. Being plural makes it easier to find time to invest in personal development of that kind. Even as someone who has been on the client end of data science for a long time, there was plenty to learn from the course and nerding out doing the programming assignments was great fun. A technical course like that isn’t for everyone, but I can’t help thinking that there needs to be some kind of ‘what business leaders need to know about machine learning’ introduction – too many decisions about data and data science are being made right now by boardrooms full of people who don’t really understand what’s being discussed.  It wouldn’t be acceptable for a senior leader to confess that he or she couldn’t do maths or read. I suspect in a very few years it will be equally unacceptable to confess that you don’t understand data science or digital technology.  There’s a great training opportunity for someone there, I think. Does anyone offer that already?