Tag Archives: High Street

Remember that business is about people – and not just your customers

A great post at Engadget UK by Caitlin Layshon provides a sobering insiders view on the Zavvi and HMV collapses.

Caitlin brings home brilliantly the point that whilst we discuss the clear failings of HMV and other high street companies to evolve and adapt, the brutal reality is that it is peoples’ livelihoods and families that we are talking about. When a business closes, peoples’ lives are affected. It is tempting to say that unless you have been through this you cannot appreciate it, but I’m sure most people can – it is just that the reality is worse than you think. The initial fears of cashflow and paying bills quickly give way to longer term concerns about careers, mortgages and house. Over the longer term falling personal confidence can make finding a new job harder. In far too many cases, failure to find another job can lead to depression and other health related issues.

Online posts of former employees shows that whilst the closure or move into administration was shock, it was rarely a surprise. Staff and employees on the front line of the company are more aware than most about the problems and challenges facing the company.  They may not know the details of the corporate debt status, but they know when products are not selling and customer numbers are falling.

But despite seeing this, how often are employees involved in helping change (actually meaning save) the company?

I don’t mean passively involved, by losing overtime and benefits, but actively involved by sharing feedback and ideas about how to improve?

How often are frontline staff made a real part of the business? Able to help save their own store, incentivised to boost sales, motivated to improve customer service?

By the time the administrators are appointed it is too late. For them, it is all about the Benjamins – or should that be Fry’s, Darwen’s or Nightingales? – It is about corporate financial restructuring. Only the balance sheet matters. Nothing else. People are merely a line on the balance sheet, as dispensable to administrators as any other ‘asset’ or liability. If the numbers don’t add up – the stores close and the people lose their jobs. Simple as that.

And we wonder why businesses fail.

We wonder why companies that don’t involve their employees, fail to utilise their passion, energy and ideas too often struggle?

This isn’t rocket science.

Retail is about the EXPERIENCE as much as the product. Your employees are not only important to this, but critical. You cannot have a great retail experience without great employees who are passionate about the company, but too many companies treat people as resources … assets to be consumed and replaced as needed.

Think of a great retail or service company.

It is hard think of a great retail or service company that has poor customer service.

If they have poor customer service, they are not a great company. Simple as that.

So, if a retail company wants to be successful, then it needs to have excellent customer service. This will not happen if the employees feel disconnected from the company. They need to involved, aware, engaged.

The extreme example of retailing as an experience is Apple – which has the highest sales per square foot, but many smaller retailers survive because of their excellent local service. My local butcher can quickly check the order book what Turkey size I have ordered for the last two years. I cannot imagine Tesco ever doing that. Specialist retailers such as REI and Wholefoods in the US lead the way in truly showing what experience retailing can be. The UK High Street story is much more mixed, with poor service unfortunately being the norm. I don’t think I’m unusual in being able to shop in a Town Centre and not once see a smile, eye contact or any attempt to engage in conversation. Although I may be asked whether staff can help on entering a store, this more often is a pointless formality rather than driven by a true willingness to want to help and serve.

The blame doesn’t lie with the employees though, but with companies paying minimum wage, operating low trust cultures with little or no empowerment and spending next to nothing on training. All of these say one thing … ‘you don’t matter’. The companies couldn’t be more wrong.

Not only do employees matter – they are the most valuable part of a retail experience.

2013 is going to see a brutal culling of the UK High Street. This is not good news for anyone, but my personal experience is that few of the companies that have failed recently had anything other than poor or indifferent service. You may disagree, but a quick read of comments on news sites shows similar experiences from many other shoppers. If High Street stores are to remain viable, a number of strategic changes and investments may be required – but at the top of all of these should be customer service.

And a few quick tips for business executives and leaders who want to reform their customer service: 

  1. Spend a day on the front line. Make all execs spend time serving customers. No exceptions.
  2. Give the difference between your daily pay and average shop pay to the staff in the store. Buy coffees, cakes or donate it. But give it.
  3. Listen to what your employees are telling you.
  4. Then act on it.
  5. Establish a way for front line employees to tell you when something isn’t working.

This may not be enough to save a failing business model, but it will help show the Caitlins of this world know that you did CARE, did listen and did want to fix this.

You also show your customers that THEY MATTER, and you appreciate their custom.

That’s enough to get my business.

Learning lessons from HMV

The collapse of the High Street continues as HMV enters administration this week with the potential loss of over 4000 jobs.

Unfortunately, this was a failure that was absolutely predictable.  There were no shortage of signs – from the first profit warning in early 2011 ago, subsequent profit warnings, and finally the drop in sales to below £1bn in mid-2012. The final closure this week is the inevitable result of failure to respond to pressures on the business.

The problems didn’t start though in 2010 with the profit warning. They started in 2003 with the launch of iTunes. Music services were available before then, but when Apple moves, companies should be taking notice. Even when Apple became the most popular music vendor in the US in 2008 HMV had not committed to a digital future. By 2010 when Apple was the worlds largest music vendor, the point of no return had surely been reached.

As a former fan and big spender in HMV I have watched the demise with a combination of amazement and anger.

Amazement that HMV fails to make any change in its operations that is visible to me (as a customer), and anger as it is clear where this will end – in the demise of a once great British company and the loss of many jobs.

Failing to adapt was never going to be a viable strategy. Yet, this is the one strategy that I, as a customer saw HMV adopt, the ‘head in the sand strategy’. Core problems in the business and operating model were simply not addressed, despite these being repeatedly raised by analysts and their own staff to senior management over many years. Philip Beaching gives a very readable account of this, clearly describing the hubris and sheer ignorance of wider market shifts at the senior levels in HMV.

And then the inevitable happens …

A long list of causes is cited: internet shopping, supermarkets, pricing strategy, High Street costs, digital downloads … and so on.

And yes, each of these is a valid contributing factor to the problems that HMV faced, but the core issue lies not outside the company, but within.

The core problem was an unwillingness to change; it was sheer arrogance. Arrogance that HMV was immune to market changes and was assured a future.

Wrong. It wasn’t.

No company is. Every company is at risk. Constantly. Failing to respond to changing markets and evolving customer demand sows the seeds of your own failure. It is simply a matter of time for the seeds to germinate.

Adapt or die. Simplistic, but true.

This is nothing new. Good to Great by Jim Collins does an excellent job of explaining why companies fail, but despite these lessons many executives in failing companies still fail to act. Only when put into administration are hard decisions taken. Often these decisions are the same ones that done 3 or so years ago would have helped the company survive.

So where do business leaders go to learn these lessons?

Going back further to economist Joseph Schumpter’s ‘Creative Destruction’ in the 1950s we find useful lessons for managers. Continuing back through Hegel, Marx and beyond we find the same lessons with the same outcomes for those who ignore change. Look at many empires and civilisation failures and the same lessons apply.

So how do we prevent this?

How do we build companies that can evolve and adapt?

How do we develop leaders who can keep companies alive?

The starting point has to be with the education of those responsible for companies, that is executives – the business leaders – those intelligent few trusted with steering the corporate ship and keeping it away from the rocks of administration and bankruptcy.

But is this happening?

It appears to me that a fascination with complex financial engineering, operations efficiency and supply chain management is giving us leaders able to manage the minutiae of business, but unable to recognise the disruptive forces that threaten the viability of the organisation? We are managing the stocking of the wine cellar, but failing to notice the ship is heading for the rocks.

Instead of seeking professional business leaders obsessed with micro managing market performance, we should be looking for passionate explorers with a good understanding of history – able to spot the rocks and storms that threaten the ships very survival.

HMV is the first High Street casualty of 2013, but it will not be the last.

I hope the one positive outcome of the HMV debacle is the recognition that many High Street companies need to quickly change direction. You can argue against the rocks, you can shout they they shouldn’t be there, but fail to change direction and they will sink you.