It was with great sadness that I read the news about the collapse of Darrell Lea. And I was sad to see that they join the growing numbers who have met a similar fate. Last year, the Australian Securities and Investments Commission reported 864 retail companies in its insolvency statistics*. Of those, over 80% were SMEs.
Whether it’s a family business or a listed retailer, it’s important to note that successful ‘fit’ retail businesses don’t die. And Darrell Lea’s retail obituary makes very interesting reading. Snippets include:
- “…retail analysts were not surprised by the retailer’s demise”
- “…breakdown in the relationship between key family members…”
- “…could never adapt to the fact that the good times had gone and that the old boom-time strategies had to be changed…”
- “…stores still look almost exactly as I knew them as a child. Yet they don’t have the same magic…”
It’s certainly not how a quintessential Australian company, operating for 85 years, would like to be remembered.
So how do you ensure a successful and sustainable future in retail? There is no silver bullet. Rather, it is the smart combination of fit retail practices combining vision, differentiation, innovation, operation and customer centricity that will win the day. One of the most important elements I discuss with my clients when we talk about retail fitness to avoid ‘premature retail death’ is to start with the vision and differentiation.
Always have a vision
If you want to be remembered for something, it is imperative you start with communicating why you are doing what you do. Your big vision is the setting of your destination. Without it, you are on a continuous journey. Have a think about how you want to disrupt the world and the changes that your business will make to people’s lives. Start by selling your dream before you start selling your product. Then set the compass and point your entire business and team in the right direction in both vision and concrete detail.
What is your unique selling proposition (USP)?
‘Fit’ retailers are those who can easily and quickly answer this question. They are also aware of marketplace opportunities and trends, competitor activities, economic opportunities, customer feedback, innovation in retail practice and are often highly intuitive and experienced.
No surprises that this is an evolving aspect as marketplace dynamics change and ‘fit’ retailers always move one step ahead of the market towards their end goal. There are indeed challenger retail brands. However, the fittest retailers of all identify a gap and fill it with a reason/offer based on true consumer insights to solve consumers’ problems. Better still, they open up a new market with no challenger brand in sight.
Many retailers cite ‘customer service’ as a quality differentiator when asked about their USP. However, it’s important to understand that “what the customer gets” and “how the customer gets it” should not be grouped together in the ‘differentiation thinking’. Indeed, understanding and delivering ongoing innovative and profitable uniqueness in your retail offer is a key driver in maximising the value of your business.
So who’s doing it well?
There are many Australian retailers who are delivering this well. One such Australian retailer, who has just been named amongst the top six finalists for a Retail Innovation Award, to be judged by at September’s World Retail Congress in London, is top3 by design. This is a company who had a clear vision from the start and pointed every person, in concrete detail, towards its ‘due north’. It found a USP, implemented smart operational practices and has a superb cross-channel customer-centric strategy that has resulted in a membership growth of 1,800% since 2007!
Truly ‘fit’ retailers will never be reading their business’ obituary. Instead, they’ll be guiding their team to their vision and goals for a successful, sustainable future.
Happy ‘Fit’ Retailing,
Retail Doctor Group
*Table 22.214.171.124 – Australian Investment & Securities Commission: Initial external administrators’ reports for Retail trade industry—Size of company as measured by number of FTEs by region (1 July 2010–30 June 2011).
Brian Walker is the managing director of Australasia’s leading retail consultancy, Retail Doctor Group.