Articles

Time to Find Your Soul.

It is both fascinating and sad to watch so many Australian retailers floundering as they face the onslaught of global retail brands entering their previously under-contested local markets. While competitive performance has always been (and always will be) subject to the context of the competition at any point in time, many retailers in this country have historically been allowed to get away with being little more than logistics operators.

One of the truths of life is that you will always get what you tolerate. But customers have previously had little choice. Now they have a broader choice, they are exercising their right to experiment and many retailers are struggling to cope. Why? Because many of them have no ‘soul’. They do not stand for anything nor have any perceived sense of customer value proposition that drives them.

As a result they flinch and try to cover competitors rather than play to who they are at their heart. This is true of the biggest retailers in the country and the smallest. If you seriously think the answer to increased competition is to dramatically shed internal costs and maniacally reduce prices as a sole recourse, you should get out of retail now before you destroy the asset you are meant to be growing.

I find it gobsmacking that Woolworths and Coles – who combined control nearly $90 billion of food and liquor sales in this country – were so arrogant about the entry of Aldi into this market but are now so threatened by a player who has just reached through $5 billion in sales. Their reaction seems to be to destroy their internal cultures by parachuting in global ‘talent’ to take any uniqueness out of their businesses so that a sea of me-too options competing solely on price confronts customers.

30 years ago I played a minor role as a member of the team that developed ‘the fresh food people strategy’ for Woolworths. Today there isn’t anyone left at Woolworths who was there at the time nor understands how that strategy formed the ‘soul’ that drove the profitability as well as the decision-making of the business. Competitors don’t set your strategy. They inform the competitive context. But that’s it.

More Australian retailers need to come to terms with what makes them magnetic to Australians, not how to become a watered down version of ‘global best practice’ – a concept which belongs in a university lecture room not a Board room.

Find your soul and drive your organisation from it to reinforce it as a point of magnetism to customers. There is no guarantee of success in contemporary retail. But if you fight from a strong belief in the customer value proposition that makes you better and different, you have the greatest chance of success. Be the same as everyone else and you won’t be able to cut your costs of doing business fast enough to offset the margin erosion.

Customers don’t want a sea of sameness and everything dumbed down to ‘cheap’. They want choice. Find your soul and grow a pair!