The distance between Vere and Portman streets in central London is 528 yards; an easy walking distance encompassing the two solitudes of retail today: stores that behave as product sheds and those that behave like retail theater. Taking center stage in the dichotomy are three stalwarts of the British department store industry: Debenhams at the start; Selfridges in the middle; and Marks & Spencer at the end. The headlines on these companies say it all:
“Debenhams shares dive…the biggest obstacle to profits comes from a higher level of discounting as the retailer struggles to attract shoppers…”
“Marks & Spencer’s recent figures show the retailer losing market share faster than any of its rivals…”
“Selfridges turnover for the year is ahead 9% while pre-tax profits rose 40%…”
But the headline I find most illuminating of all is this:
“The latest problems at Debenhams will pile pressure on its finance director, Simon Herrick, who was already seen as likely to exit the company…”
If businesses are to prosper they need customers who are engaged and willing to spend, and I can assure you the lack of interest on the part of shoppers for Debenhams isn’t because of Mr. Herrick’s finance competency. While this headline comes from an analyst, it’s indicative of a common corporate failing: too often finance departments are asked to make right in a business what it takes an entire executive team to figure out, namely how to be more meaningful to a buying public who has the freedom to spend their time and money wherever they want.
Success and Failure in Retail Neither Begins Nor Ends at the CFO’s Door
Where these stores are located is the area of Oxford and Regent streets in central London, home to one of the world’s premier retail districts. Every year 150 million shoppers put the lie to the notion that ‘stores are dead’ and many pass the windows of Debenhams, Selfridges, and Marks & Spencer. There are clearly plenty of prospective customers, but they show a declining desire to make two of those stores a destination. A simple visit to these fading retail icons and you’ll immediately understand why: bad lighting, inelegant visual merchandising, and disinterested staff in the fading stores, whereas Selfridges is famed for its excitement and dynamism. The two in trouble feature environments where dreams of fashion and style go to die; in the stand-out you’ll find experiences that draw people in record numbers who are willing to pay more, and seem to do so gladly based on the numbers. And remarkably, executives of all three can walk the floors of their competitors in five minutes and experience what makes the difference.
So it makes you wonder: can retail executives even see the experience through the eyes of a shopper? Each of these three companies has the size, financial clout, and reputation to attract the best and brightest talent. I’m sure none of them lack for MBAs and finance people, yet it would seem that common sense and instinct – the soft skills that humanize the business of retail – have been subverted by higher education when their executives can’t seem to see the solution for better performance when it’s staring them in the face.
Quality Retail Experiences Rely on Store Executives to Make Them That Way
Too often, retail leaders describe the measure of their personal success based on their vertical roles in the business: the ability to deliver faster, cheaper and to reduce costs; rarely on the need to add value back into the store environment. Their idea to develop greater customer loyalty is all too frequently based on low price. Why? Many leaders feel that to innovate and engage consumers through the experience of their environments is overshadowed by transactional cultures that view process as the end, not the means. It seems few big companies remember what it was that made them what they are. Their worlds revolve around revenue rather than value; demographic segments instead of people. And what requires good common sense becomes over-analysis of the abstract. The new silver bullet of ‘big data’ is crazy given the way so many business people use it to define their strategic priorities – what’s the point of knowing more about your customer if you’re not able to truly understand or reflect why your business should matter to them?
The opportunity for offline retail has never been greater, but retail’s existential threat is itself. Who’d choose to shop online if they could get the benefit of price as well as experience? This model starts by offering a better way by asking if what you’re presenting to the buying public actually matters. If it does you win; if it doesn’t you discount.
Amazon’s Threat Isn’t From Being Online, It’s By Being Customer Obsessed
Ironically the one business that retailers fears most is Amazon. Yet, in that company’s 2013 letter to shareholders, Jeff Bezos wrote:
“We are internally driven to improve our services, adding benefits and features, before we have to. We lower prices and increase value for customers before we have to. We invent before we have to. These investments are motivated by customer focus rather than by reaction to competition. Proactively delighting customers earns trust, which earns more business from those customers, even in new business arenas. Take a long-term view, and the interests of customers and shareholders align.”
So the company that makes every retailer question whether there’s a future for brick-and-mortar has customer delight at the core of its DNA. The same business that’s been referred to as “socialist” in its ideals by investors focused exclusively on short-term results has proven that long-term success can only come by thinking first about customers. Not surprisingly, you find a similar philosophy at the heart of the one retailer whose performance on Oxford Street outperforms the others.
The Weston family that owns Selfridges is the second largest luxury retailer in the world with holdings that include Brown Thomas in Ireland, de Bijenkorf in the Netherlands, Fortnum & Mason and Primark in the UK, and Holt Renfrew in Canada.
Their retail philosophy, expressed by Alannah Weston, the Selfridge group’s Vice Chair, is that there’s a lot more to the experience of their stores than just shopping. Her vision is to be the destination for exceptional experiences and believes that with such an enormous space the bounds of creativity have to be limitless. In a recent interview she explained that, “In an all-access shopping culture, remaining relevant is essential because you can buy anything at the airport shop, so why come to a department store?”
Weston’s advice for success is that you’ve got to have passion, “If you don’t believe it, you won’t do it well.” It’s simple: you’ve got to matter to your stakeholders if you’re to succeed. And while there’s little passion to be found in a spreadsheet, you may just find it in yourself by walking the shop floor, listening to customers, hearing what really matters, and by attempting to build back into your business that one thing which you can take true pride in. If you do a walkabout, invite your colleagues along – retail is a team sport.