For some time it has been apparent that Dave Lewis has been determined to address the ‘bloat’ in Tesco and cut back on all sorts of things. In the big picture out have gone most of the diversifications of the previous regime, replaced by a focus on the core business. The store portfolio has been hacked at the edges, though there remain concerns over the estate. Within the stores, the excessive range has been chopped back, with more to come. The result, and it seems to be working, is a sharper, leaner business providing more offer/value to the consumer.
It was announced a little while ago that in some stores the next target was to be the counter service offers. So the recent announcement in our local Stirling store (see photo) was not a total surprise. The closures and limited hours means a chunk of real estate in the store is not going to be used, but more importantly some consumers are going to be dissuaded from visiting. So, at what point does copying the competition and efficiency gains at all costs become a spiral of consumer dissatisfaction and behaviour change? Where is the tipping point for some consumers?
Stirling is not a hot-bed of quality butchers nor does it have a fishmonger, so the alternatives are a little limited (though Bridge of Allan and Dunblane are well served), but perhaps others, hopefully an independent, will fill the gaps. It is noticeable that at the Stirling Farmer’s Market the fishmonger does very well.
Efficiency was also the theme of the second story that caught my eye this week. At a time of national discussions of climate emergency and a fervour among many citizens and consumers about environmental matters large and small, Boots rolled out plastic bags for some prescriptions. This, at this of all times, is genuinely jaw dropping.
The explanation, such as it was, for such a change was that of handling and distribution efficiency. Plastic is better handled in central sites and lasts longer (yeah!). This may be true, but is utterly irrelevant when your consumer base is going in completely the opposite direction. How many people across the business were asleep at the wheel? This smacks of a business out of touch, with itself and the country.
And finally, talking of out of touch, it was proposed this week that a penny tax on all self-checkout transactions should be levied to ‘heal the generational divide caused by Brexit’. Where to begin? This is barking mad at so many levels. It fails tests of practicality, reasonableness, awareness, effectiveness amongst so many more. What are these people thinking and why are people so out of touch so close to “power”
There is little point in repeating here what others have said so eloquently. He transformed Irish grocery retailing and was ahead of his time in many retail respects. It was a privilege to have met him and his family and our sympathies are extended to them at this time.
Feargal was an honorary graduate of the University of Stirling and in November 2012, Steve Burt, Professor of Retail Marketing and then Senior Deputy Principal of the University presented the laureation at our winter graduation ceremony. I re-produce it below.
“Chancellor, Principal, Members of the University, Graduands, Ladies and Gentlemen, Senator Feargal Quinn will receive the award of Doctor of the University in recognition of his outstanding contribution to entrepreneurship, business and management.
Senator Feargal Quinn is an Irish businessman and an independent member of the Seanad Eireann, the Senate component of the Irish National Parliament. Born in Dublin in 1936, he was educated in Newbridge College, County Kildare, and graduated from University College Dublin with a degree in Commerce. He is married to Denise Quinn, and they have five children and 14 grandchildren. There is already a strong family connection with the University of Stirling because his son, Eamonn Quinn, is a successful Stirling MBA graduate.
As a child, Feargal received an excellent education in business and hospitality management from his entrepreneurial father, who set up the Red Island Holiday Camp at Skerries, County Dublin. Feargal spent his school breaks at this holiday camp, working as a waiter, a bingo caller and all manner of other miscellaneous jobs. With hindsight, he was experiencing an invaluably broad range of work-based learning opportunities which would later inform his successful adult business enterprises.
The most well-known of these is his establishment of the Superquinn supermarket chain, which began over 50 years ago when he opened his first store, aged 23. He went on to become the executive chairman of a chain of over 20 supermarkets with around 6000 employees. He is currently non-executive president after his family sold out their interest in August 2005.
Superquinn built a reputation for innovation. In 1973, for instance, it pioneered the idea of in-store bakeries, now a common place feature, but a novel concept 40 years ago. In fact, Superquinn piloted numerous world-leading retail technologies, including self-scan shopping, multifunction kiosks, digital shelf labels, and mobile checkout technology. Of equal value were the less hi-tech developments; the introduction of the Superquinn playhouse scheme, for instance, equipped stores with professionally staffed playhouses, allowing parents to leave their young children in a safe, enjoyable environment during shopping trips.
Feargal gained recognition for his effort to make shopping a pleasant customer experience. Long before it became common practice in retail management, he would get up early, six days a week, to meet and greet customers on the shop floor, listen to their comments and act on any points that were raised.
Once Superquinn had been established, he was head-hunted to run what became An Post, one of Ireland’s largest companies, for ten years.
Feargal’s experience and knowledge of retail and business have earned him tremendous respect among aspiring entrepreneurs, and positioned him as one of Ireland’s most popular business trouble-shooters. His bestselling book Crowning the Customer, is used by multi-national companies as the essential guide to customer care. Additionally, his popular television series “Feargal Quinn’s Retail Therapy” has allowed him to use his huge talents to help smaller, fledgling businesses find success in recessionary times.
Feargal has often repeated his famous retail mantra: “I listened, I learned, I discovered”. This humble and compassionate approach to the customer experience is, for him, the simple secret to his success.
Feargal’s personal success has kindled his genuine interest in young people’s education and employment opportunities. In the mid-nineties, he played a pivotal role in one of the most important reforms in the Irish education system, when he chaired the steering committee overseeing the development of the Leaving Certificate Applied. This self-contained two-year learning programme prepares students for adult and working life.
He is a former President of EuroCommerce, the Brussels-based organisation representing retail, wholesale and international trade across Europe. He also held the position of Chairman in Ireland’s National St Patrick’s Day Festival. Currently, he serves on the board of directors of CIES – the Food Business Forum based in Paris as well as the American-based Food Marketing Institute.
Feargal’s political career is no less illustrious than his business one. In 1993, he was elected as a Senator from the National University of Ireland constituency, becoming an independent member of the Seanad Eireann – in the Irish Parliament – and has been re-elected successfully in all succeeding elections. He has served as a member of the Joint Oireachtas Committee on European Affairs, the Joint Committee on Finance and Public Service and a member of the National Economic and Social Forum. Currently, he is a member of the Joint Committee on Jobs, Enterprise and Innovation.
He has received three honorary doctorates, was the winner of a “People of the Year” Award in 1984, and is the recipient of the French Ordre National du Mérite and a Papal Knighthood.
Senator Feargal Quinn has played a fundamental and pioneering role in retail, international trade and entrepreneurship for over half a century. This, coupled with his substantial contribution to culture and politics within Ireland, makes him a worthy recipient of the degree of Doctor of the University. ·
Chancellor, in the name and by the authority of the Academic Council, I present to you for the Honorary Degree of Doctor of the University, Feargal Quinn.”
If this was a boxing match, then the result was a clear knockout, perhaps to the surprise of some onlookers. As one of my followers on Twitter noted, it is nice to see a regulator regulating. In this case, it was a straight NO – there is no case for the merger and it would cause multiple substantial lessenings of competition – in supermarkets, convenience stores, petrol and on-line.
To quote the regualtor the merger was blocked as it would lead to “expected price rises, reductions in the quality and range of products available, or a poorer overall shopping experience”. The customer would be worse off. This is a devastating multi-punch combination snatching (nay, bludgeoning) the prize money from Mike Coupe’s grasp. The full report is available from the CMA here.
I was not sure what I expected really, but it was nothing as brutal as this. I thought the CMA, especially after the knock-down of the provisional findings earlier in the year, would probably ask for a very high number of store sell-offs; so high as to be impossible for Asda and Sainsbury to contemplate complying with. That way the ‘failure’ would be on the companies. But no, they went all-in; we just say no.
Asda and Sainsbury must have thought at the outset that they had a chance. A year ago I wrote on this (“we’re in the money”) and was far from sure the merger would be allowed; but as I noted then, I could not believe Tesco/Booker was allowed. Given the market changes at the convenience store level, the c12% share of Aldi and Lidl and the shift to online sales (say 6% of groceries), then I suspect Asda and Sainsbury felt they had some hope. But they did not, and the CMA have really shied away from an effective duopoly, despite these wider market developments. The surprise for me in this is the strength of the CMA arguments on online retailing – they saw the state of the market as a negative for the merger, and not as a market undergoing change (at some pace) and thus likely to develop in interesting ways.
The Asda/Sainsbury merger was born out of problems for both retailers and none of those have gone away. The market continues to alter. Tesco has rebounded more quickly than expected and remains secure defending a 27% market share. Morrisons and the Coops are having fun whilst Waitrose and M&S try to figure their problems out. The discounters march on.
In April 2017 the columnist John Richards mused about the cost of all the adventures Sainsbury have had over the years (see my post and links) and whether the cost outweighed the benefits and whether the management time and effort could have been more profitability spent focusing on the core of the company. He described their approach as Sainsbury’s “death wish” and cited SavaCentre, Homebase, Shaw’s, Netto and now Argos as illustrations. That may be a tad strong, but you perhaps get where he is coming from. He also missed out Egypt and some other lesser roads entered. And then they went and added Asda to the list of “distractions”.
But back in the Uk, what are Sainsbury stores like and how are consumers reacting? Sainsbury has trod water for far too long and is likely to need fresh blood at the top and a real and sustained focus on operations. This has been missing for quite some time. Asda are stuck where they were with an unclear growth strategy. The parent Walmart has failed to change the UK market as it hoped when it lobbied the Labour Government ahead of its takeover almost 20 years ago (see the linked papers here). If they want out, then who is the buyer? Reading the CMA report, It would have to be a new player, but to what end and what could they do with the business? An interesting conundrum but how desperate to sell at any price are they?
Basically, a year wasted for both Asda and Sainsbury and at some cost. The problems for both remain the same. Not so much “we’re in the money” as “we’re in the s**t”.
It is necessary to start this blog post by reflecting that underneath the news stories and headlines are real personal stories in which individuals are losing their jobs. Too often it is easy to focus on the store closure and ignore the human cost. We need to remember this, as it underpins both the retail stories discussed below.
It is hard to know what to say about the saga of Debenhams and the antipathy there seems to be between the various parties. At one level, given previous stories, it is hard to like Mike Ashley, but at least he is trying to put some money where his mouth is. Whether this is because he sees a retail or a property play is another matter. But in the case of Debenhams this is now moot, as he has been finally rebuffed. Though as I write seems determined to try to sue someone involved.
So, for now, Debenhams is in the hands of the lenders. Looking at the business it is hard to be positive. Buffeted by the changing consumer interests and behaviours, in large spaces hit by the excessive town centre rates charges, the business is in real difficulty. But considering the stores (and experiencing them) it is difficult to see their point of differentiation and the reasons for consumers to visit. Stories of in-store confusion and poor service abound. They have been losing their way for a while.
The current proposition seems to be to try to close some stores and rationalise the portfolio. There may be some benefit to be had on rents as well. But none of this really addresses the fundamental problem of the attractiveness to consumers. A smaller chain still faces the same problem. What are the plans to sort out the offer to customers? And can they be made affordable?
This week Tesco produced their latest figures and seem to be on track to come back fully from their problems. Dave Lewis has altered what the business does and refocused operations. Some of this has involved closing stores (and cutting plans for openings), reducing staff, planning to cut some counter services and simplifying operations. There is more to it than this of course, but the point to make is that slash and burn and simply cutting stores is not the answer on its own. Tesco still have a long way to go, and some of their initiatives will not work in all probability, but there is far more of a sense of trying to satisfy customers than is yet in evidence from Debenhams. It is a simple reminder that the business must run for the benefit of customers or they will go elsewhere.
Over the last few years, vacancies and store closures have not been out of the news. Whilst vacancy levels may have dropped off from their peak a few years ago, there is a continuation of stories about the closure rates of stores across the UK.
The detail is not what particularly interests me here (some of my reasons for this can be found in my blog and the coverage when the data were released this time last year). Instead it is some of the interpretation around it that puzzles me. The BBC Scotland news was not untypical; the story focused on what could be done to reverse the decline. I emphasise reverse as this is the tenor of so much of the coverage, and of individual views. There is of course an irony in this coverage, as PwC report that
“11 of the 12 parts of Great Britain the research covers had the worst year in terms of net store declines since 2013. (store openings – store closures = net figure). The only place where net declines were not the worst in five years was Scotland. Here the closure rate at the lowest it’s been over that period, the 5th consecutive year store closures have fallen.”
So Scotland is an outlier in terms of a better performance, something recognized by the BBC online
There are so many problems in seeing the issue as simply as reversing something. Now I know pining for the second world war is a current national (English?) phenomenon and nostalgia (mainly for things mis-remembered or in case of many MPs never experienced) is a current single solution to everything. But, really, we need to have a good look at ourselves and the issue and realise we have it the wrong way round.
We can not reverse the decline except in very particular circumstances. But more fundamentally we should not be trying to – that was the Portas approach. Instead we have to realise the world has changed and imagine what retail (and town centres – NOT high streets) are going to be like.
There are a number of fundamental reasons for saying this. First, we have spent 50+ years building retail all over the place. This has not been accompanied by space reduction. Closures are a function of over-capacity derived in part from our own actions. Secondly we have privileged these new spaces (out-of-town and internet) in financial terms and until we do something about it we will not see any real change in trends. Thirdly we have forgotten what towns are for. Towns are not solely retail (or commercial) spaces but spaces for all forms of exchange and life. Our economic system has altered our conception of spaces for the worst.
In our rush to development and with our mis-aligned financial system we have also forgotten about the consumer and what they want. This has, is and will change and our spaces need to keep up with this. Those with nostalgic leanings are often those first to the very formats that destroyed the previous stores. We have also forgotten that individual actions end up being collective ones.
This all sounds rather gloomy and as though nothing can be done. That is not my point as anyone aware of our work in Scotland can see (and no, I am not taking credit for the better performance in Scotland, especially given the data in the report is on only eight Scottish places). I will though reiterate that this is a place/town problem and not a retail one. We need to focus on assets, homes, digital, workspaces, greenspaces and so on in towns; the retail will follow the people. We need to tackle the taxation and other legislation issues that tie the hands of town centres. And finally, we have to imagine the town space and the ‘high street’ ten or twenty years hence and not constantly try to ‘reverse’ or return the situation to what went before.
The store closures we see today (and lets not forget the human cost under that statement) are an inevitable consequence of our store building, decentralisation and tax polices of the past. The point should not to agonise over the closures, but do something about changing the playing field and improving the future. I would like to think we are starting that in Scotland.
As this post is published (3 April) I am presenting at an event held to formally launch Scotland’s Town Centre Boost Fund of £50m. The Town Centre Fund has been set up by Scottish Government and COSLA and aims “to support councils to ensure their high streets are more diverse, sustainable and successful in the face of changing and evolving retail patterns”.
£50m sounds a lot, but once it is divvied up amongst the 32 local authorities, it is not really (though it might be leveraged or be followed by more in future years). It is thus doubly important to spend it wisely, both as public money and scarce resource.
But over the last decade the towns landscape has been transformed. 2009 was a time of CSPP’s Towns Group, the emergence of BIDs and the onset of austerity. It was followed quite quickly in Scotland by the National Review of Town Centres and the establishment of Scotland’s Towns Partnership to agitate, collate and amplify the towns work going on and to help deliver the Town Centre Action Plan.
All this has been done in the teeth of an austerity programme, financial issues including for local authorities, continued and accelerating retail restructuring and wider sectoral, social and economic changes. Yet, at this point I am probably the most cheered about the situation in a decade. I feel strongly that across Scotland we are seeing a focus on locality and local assets (people and physical), a recognition of the complexity of places and thus the desire for and need to work in partnership (including public and private as well as social). There is a sense from the ground up that we can deliver change and we are demonstrating this place by place.
We seem to have learned the lessons that we need data and discussion to drive understanding about towns/places (and not prejudices), that various models (public, private, social, entrepreneurial) can be used to drive fundamental change (i.e. no one size, top down, fits all), that multi-functional places need to be built around assets, people and events and that we need all to be working and pulling together. A local focus and energy is critical.
So then, in the light of this uncharacteristic optimism, why am I a little nervous about the Town Centre Boost Fund? I just hope that these lessons have really been learned and that this £50m gets spent wisely. We need councils to use this money to stimulate wider investment in the selected towns .As Phil Prentice, CEO of Scotland’s Towns has said, we do not need more hanging baskets, pavement repairs and street furniture. £50m can never solve the situation our towns and places face, but it can spark change, by focusing on projects that are:
Linked to a long term strategy or vision based on local distinctiveness
Maximising sustainability, impact and leverage by working with partners and repurposing spaces
Based on low carbon and sustainable interventions and strategic digital infrastructure
Acquiring assets to create new uses
That consider human and environmental infrastructure as well as hard investments.
So a plea; can we please look to the wider and longer term with this £50m and not to prettification or trying to save retailing? If it looks as though it is working other funds may be generated from a variety of sources so this is really vital, place by place.
Visiting Helsinki for a couple of days (see blog here) allowed me also to experience a guided visit to the S-Group’s Herkku Food Market Delicatessen in the basement of theStockmann Department Store. Stockmann is an institution in Finland, being a grand, historical, store. Visiting a country for a couple of days can be a recipe for completely misunderstanding the retail scene, but the chance to visit the new Herkku concept was a great opportunity.
At around 5k sq.m and c20k lines, this is not a small store, but it did feel quite intimate, if a little unclear as you descend the escalator. The store entry sees a large bakery (bake-off) on the right hand side and fruit and vegetables on the left. Both have high impact and an impressive range. The potato cellar was interesting and seemed to be well used.
Following round the back (?) wall after the bakery are a series of serve-over counters including a pizza area with pizza oven and a fresh and juice bar. All operate a queuing system, which can be entered and checked by mobile phone. The displays and range are first class with a particularly impressive display of fish (the store has its own smoker). A small bistro offers a range of light meals and is complimented by a rather small café and coffee shop.
The core of the store has the normal displays of ambient product. Some Tesco products (Finest) were notable and I did spend some time in the beer section, with its brewery like piping design.
All in all it was a really interesting and attractive store. I suspect is has a price premium and it is focused on a certain demographic. We visited on a Friday lunchtime and it was busy, though the customers were on the older side. Baskets and small trolleys dominated. I could see myself shopping there – especially for bread and fish – but it would not be a main shop.
A few things struck me as curious. The queuing system was interesting but the ability for mobile phone checking and the placement of some chairs to sit on near the fish display (see the prepared meals photo above) hint at some issues at certain times. Some of the fruit and vegetable displays seemed a little unclear with displays on pallets rather than better quality “shelving” – on asking I was told they were ‘best sellers’ so had been put in a separate display. I guess you know this if you are regular customers, but it puzzled me.
I was also taken by the small size of the ‘restaurant’ (Bistro – great fish soup and prawns by the way) and the coffee shop. Both seemed busy and at peak times I could see them being well under-sized. When you look at UK stores with such concepts, they would be much larger in scale.
It was also noticeable that a lot of in-store merchandising and display building was taking place. Doing this at a peak customer day and time seemed strange. Apparently the Stockmann ‘Crazy Days’ sales was about to happen. This is a huge event and another institution and thus explained the trolleys, people and boxes in the aisles. It still felt odd though!
Finally, given probable developments in Scotland (and perhaps the UK as a whole) I did notice the Deposit Return/Reverse Vending Machines near the entrance. The fresh juice bottles (returnable) show the deposit and the return. Whilst I didn’t linger long, I did see a few people bringing bottles etc. back for return.
A really interesting couple of hours in a very attractive central urban store. I hope it does well, though I suspect it is an expensive place to operate.
Below is a summary of what I said, prepared for translation into Finnish, and at the end of the blog you can find the overheads I used if you are so minded. Comments welcome via the usual channels.
“There is a crisis in obesity, diet and health amongst western and developed economies. Our food consumption has switched to a diet focused on unhealthy processed products. Our response to this has been to emphasise personal responsibility and choice and to focus attention on education and advice and then medical interventions when these fail.
What we eat however is much more complex than personal choice, being the outcome of varying personal, societal, cultural, government and business influences. It is a highly valid question as to whether personal choice can be exercised in what is an unfair environment. In retail stores this is seen clearly in the promotional, positioning, pricing and product mix that privileges unhealthy over healthy products. The outcome is both societal and locational health inequalities.
Government responses to date have tended to focus on better information, labelling, education, advice and promotion of the benefits of eating healthily and having a good diet. This has sought to rebalance the environment, by emphasising the benefits of a good diet, but has had limited success. It is now the time to consider if a more restrictive and interventionist approach to the environment, including retailing, is required. Rebalancing needs not just to involve enhanced spending by government on positive messages, but reduced spending by industry on the negative messages.
The diet in Scotland is poor and has not been improving. As a consequence the Scottish Government has begun to lead on intervening in the retail environment, as seen with restrictions on tobacco (displays and packaging) and alcohol (including promotional and sales time restrictions and most recently Minimum Unit Pricing) and positive support for healthy eating displays and information in smaller stores. In hospital settings, the Healthcare Retail Standard has restricted the amount and promotion of unhealthy products. At the same time UK government interventions, such as the Soft Drinks Industry Levy (the “sugar tax”) have also been introduced and seen product reformulation.
In 2017, we published our review for Food Standards Scotland on policies that could be developed to intervene in the in-store retail environment. The approach suggested was to focus on disrupting and altering the context and choice architecture faced by consumers in retail stores. By better understanding how retailers construct the in-store environment (“what consumers see”), the possible steps to intervene to improve the choice architecture and situational context can be understood. There are a range of possible interventions that can be developed, but real issues in the scope, scale and practicalities of possible policy, as well as its acceptance.
It is clear that the current situation is unsustainable and that emphasising personal responsibility in such an unfair context will not work. The environment need to be rebalanced and it is clear that this will not happen voluntarily.
Thus, between October 2018 and January 2019 the Scottish Government consulted on possible restrictions on promotion and marketing in retailing (and other out of home consumption sites) of foods that have next to nil nutritional value. This would constitute a ground-breaking set of interventionist policies on retail (and other sector) operations and if taken forward into policy would rebalance the retail environment. It would restrict the ability to promote (in the widest possible sense, and including price, place, position and visual merchandising) many unhealthy discretionary food and drink products.
There will be resistance to this approach, both from consumers (“the nanny state”) and the various industry sectors involved in the supply chains. Policy has to be drafted carefully to minimise unintended consequences e.g. on small stores, sectors and the internet. It is also clear that such policy alone is not the answer; food consumption is a multi-faceted construct and needs to be addressed accordingly. However it is clear that the current state is unsustainable and has to be challenged and that a reconstruction of the in-store environment would be a major step forward.
Scotland is not unique in having these issues, though it has distinctive problems. The steps that have been taken and are potentially in the pipeline are strong responses to these problems. But, they are necessary to address our health crisis. There are potential lessons for other countries, though they will undoubtedly have to be tailored for specific situations.”
The overheads can be found here:
Policy Interventions for Healthier Diets: insights from Scotland? – pdf here
In December 2018 I decided that to try to help Towns better understand the challenges they face; there should be something that could be an easy reference document. This came about from completing day one of a #CreatingBetterTowns Masterclass for the Local Government Association with 24 councils and from thinking back to my military days where as a young platoon commander I had a Tactical Aide-Memoire (TAM) that provided all the key information and considerations to do my job. Without it you would have been lost on many occasions especially when situations called for quick responses. From these two encounters the #CreatingBetterTowns aide-memoire was born! I see it as a document that will evolve and change, based on how it is used and how towns change over time.
The aide-memoire aims to address key areas that people involved in towns should understand, think about or consider. There are 13 core sections.
The definition of what a town is and what the National Planning Policy Framework says about Town Centre First and what the sequential and impact tests actually are.
Decision-making is critical and many towns and businesses do not understand where data lies or what data is versus information and evidence. From these one is able to derive knowledge as an individual and wisdom as an organisation. The former three will increasingly be machine driven and the latter two human – combining the two is called Augmented Intelligence.
Base knowledge of a town is key as it is the starting point and by this one needs to have a very good understanding of how residents, visitors and workers use it today and how they might use it in 5, 10, 15 years and beyond.
How one approaches many things in life can often determine how successful you will be and as such considering one’s approach is key. The two key approaches that I think should be considered is ‘Seek to understand before being understood’ (Stephen Covey’s 7 Habits of Highly Effective People) and always looking at why you SHOULD do something rather than why you SHOULD NOT.
Next up is being clear on what you are trying to achieve which is broken down into the What?, the Why?, Who is required to do this? And How will you go about it and measure that change?
Tied into both of the above is The Place Principle developed by the Scottish Government and COSLA which is a succinct summary of why collaboration is critical to success.
Like any business or organisation a Town should have a Vision which engages the heart and spirit which is executed through a strategy which covers the People, Execution and Structure required to deliver which then creates a plan with a number of objectives, each with its own set of milestones.
Clear and achievable objectives are critical to success and the aide-memoire covers a process for how to identify an objective, factors that influence the objective and ultimately how to select the best course of action to achieve that objective (the execution). It also covers the reality of what happens when things don’t go to plan – do you continue, challenge or cease? Throughout the process data underpins the execution through tracking change.
The final two related areas are on understanding what Place Marketing is and being clear about your unique proposition is and making sure it is aligned with the community. Reinforcing this is the increasingly important digital profile and footprint required to put you on and keep your light burning bright on the’ map’.
The physical space of a town determines its character is another key consideration. From how buildings are used and the increasing need for more diverse building uses to the public realm that people value, engage with and maintain.
Given we are less than 10 weeks away from Brexit and the possible end of the grocery world as we know, writing a post about retailing a decade ahead seems foolhardy (spoiler alert; it is). But bear with me.
So let’s forget Brexit and assume grocery retailing as normal is to continue. The Asda-Sainsbury merger decision is due in late Spring now, but otherwise let’s assume things are as they are now. Which is not a good thing! Food retailers are in quite a lot of difficulty; not across the board but in many cases. There is a sense that the “legacy” retailers need reviving. The question is how?
McKinsey note that the mainstream grocery retailers have been in an era of value destruction brought on by changing consumer habits and preferences, the emergence of aggressive competitors and of ecosystems (Amazon, Alibaba) and the onslaught of new technologies. They recognise such trends are often present but point to the sheer pace and intensity of their interactions at this current time.
For McKinsey there are six areas where legacy mainstream retailers can fight back:
Define a distinctive value proposition; convenience, inspiration, value for money
Shape your ecosystem – and either go big or get out
Put technology to work in every part of the value chain
Win back lunch and dinner
Rethink all of your real estate
Innovate ten time faster.
Again, to a degree, there is nothing that new here, but instead it is the combination of these that is critical. These six areas are really responses to the three drivers mentioned earlier. And it would seem that for long-standing retailers it is much harder to adjust than for new and more focused retailers.
So what we seem locked into in the UK is a downward spiral of cost-cutting. Where Tesco and its delicatessens and fish/meat counters being cut back and indeed the whole rationale for the Asda/Sainsbury merger. We have endured this cutting over quite a number of years now. Yet after all of this can we really say that any of our ‘leading’ food retailers has yet made real inroads to the competition or to these six imperatives? To some extent they are still in the denial game and playing the tunes of the new competition.
Are any of them inspiring, truly convenient for consumers and with innovation for the customer at their heart (and innovation which actually helps the customer rather than being for technology or cost cutting sake)? I struggle to see where? Even on real estate and the store portfolio where there has perhaps been the the most movement, has this been clear or focused enough yet? Or simply rather serendipitous?
There is a long way to go, both in terms of the actions needed by the leading players and in the freedom of action currently allowed to the discounters and others. That’s why ten years ahead is foolhardy – we might just be at the tipping point for radical reinvention. But only if we have the retailers able to grasp the existential threat they are under.
Now we just have to get out from under the other existential threat of Brexit and the harm it potentially can do.