Articles

The Love-in Is Back

For the last decade many retail businesses have been building best of breed competency, processes, systems and enablers in key functional areas in an effort to reduce cost and gain competitive advantage.

In some case studies, these initiatives have produced remarkable short-term gains in the key metrics the programs were designed to work to.

However, in overall organisational outcomes and sustainable profit growth (both at the EBIT and asset lines in the medium term) many have failed - and failed dramatically. The reason for this is simple. Silo based thinking, driven and rewarded against singular deliverables or achievements is often more destructive than constructive to a retail organization's medium term performance.

The term of the moment is "organisational co-operation".

What this means is the whole organization working together to create and sustain a more productive business in a continual improvement cycle. This is a way of looking at all initiatives as part of an organisational whole rather than in isolation. It is also about understanding that the heart and soul of a retail business is customer centricity.

Customer centricity relies on using understanding of customer behaviour and trend to ensure that the selling environment is optimised for sales productivity. Everything back from the selling environment is an enabler for what goes on there.

The people that come first aren't the customers, but the sales staff in the stores. They make or break the business. They must have the right product, the right value proposition, the right environment to sell.

The organisation's job is to organise the business around the selling arena and to make sure that whatever improvement projects or business initiatives are undertaken, they enhance the ability of the sales arena to ensure increasing sales, lower cost of doing business and increasing margin contribution. This means initiatives must always think through the knock on effect of the activity. Leaders of such projects must ensure the ability of people throughout the organization to understand, see benefit in and actively support these initiatives to deliver successful outcomes.

Less things done flawlessly will always win at retail.

This means that before any initiative is undertaken, the business case must justify the reward - in sustainable profit growth - to justify the action. And the organization across all key functions - not just within a silo - must embrace the relevance and the return of the initiative. Organisational co-operation delivers the 1+1=4 holy grail. Organisational co-operation beats competitors and transforms retail businesses. One off initiatives may make great publicity fodder. But a love-in beats a headline in producing what keeps retail businesses afloat - asset and profit growth.