Articles

When The Smoke Clears, It’s All About Product & Experience.

The modern retailer has every right to be anxious and confused. The noise emanating from every direction is loud, demanding, energy sapping and distracting. From vendors to staff, shareholders to analysts, media to community activists, customers to suppliers, everybody has an agenda and nobody is afraid to push it. Which leaves leadership teams in retail businesses struggling for air – let alone direction. As a result, there’s a lot of smoke and very few can see where the fire really is.

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Cost Cutting Is Not Growth.

The analogy many Australian retail businesses have trotted out ad infinitum now for two decades is that “You have to aggressively prune the rose bush to ensure you stimulate new growth and strong flowers.” Unfortunately the Australian retailers who are still clinging to this mode of thinking are the custodians of retail franchises that more closely resemble Morticia Addams flowerless sticks than Graham Ross’ luscious Gold Medal Roses.

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Life Is Not A Game.

According to United States government statistics the opt-out rate of 25 to 54 year old males (referred to as the prime income earning years) from the labour pool has doubled since the late 1970’s. For men in their 20’s, more than one in four are not employed. The media often calls these people ‘the lost workers’ due to the fact that they don’t turn up on unemployment benefit registers, on actively looking for work lists, on prison in-mate lists, on single father or home duty surveys but appear to be nowhere at all.

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Give Customers A Sporting Chance.

When I was a kid Australia had some of the best small specialist sporting goods stores in the world. I was a cricketer, so Stan McCabe’s cricket store in the Sydney CBD was a special favourite. They stocked the best cricket gear, had a well laid out store with good visual merchandising and lots of rare cricket memorabilia and had fantastic senior staff all of whom were cricketers themselves – some of them former or current state and national team members.

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Our People Aren’t Stupid.

I was reminded again first hand the other day just how poorly too many retailers manage their relationships with their people. There are two areas in particular that are causing unnecessary disconnection with our teams and a growing sense of disbelief leading to a general lowering of productivity. Those two are the concept of ‘employee loyalty’ and manufactured ‘team passion’.

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Will Retail Stall On Negative Energy?

The crystal ball gazers often make aggressive forecasts of retail’s imminent demise. Not one of these glorified soothsayers have been held accountable for their ‘tea leaf reading’, despite being wrong now for more than 17 years. Many pull all sorts of disparate data (some even have the hide to call it research) to provide ‘apparent evidence’ that supports their mystical prophecies. The most often quoted is consumer sentiment and yet there is no correlation between how people say they feel about the economy or their intended expenditure and ABS data for all retail sales (see ABS 8501.0 Retail Trade Australia).

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Technology Is Making Us Stupid.

We humans have very little foresight and tend to react only when things escalate to the point where we are about to get into imminent danger. Take cars for example. Between modern car manufacturers and the computer industry, the greatest investment in recent times is in the adaption of technology into vehicles, most of it aimed at taking human skill out of the equation in return for marketing advantage that appeals to consumer laziness or worse – ineptitude.

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The 60 Year Old Shopping Centre Model Is Overdue for Re-Imagining.

Most retail historians have acknowledged Victor Gruen as the architect of the ‘mall’, with the first of his realised developments being opened at Southdale Minnesota USA in 1956. While some argue the true inspiration for shopping centres lies in the great Victorian era department stores, Gruen’s personal inspiration came from the central shopping districts of the European cities that he lived in and visited as a young man. In truth, Gruen’s detailed vision for a modern mall that re-created the European town centre – in all its diversity, complexity and richness – under one climate-controlled roof, was never fully realised.

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The Sumo Salad Syndrome.

There is no doubt that resentment felt toward the ‘negotiation’ of retail lease renewals by tenants has been on simmer for a long period of time. But the hotplate has just been turned up to eleven by the latest salvo fired off from Sumo Salad in its ongoing battle with Westfield’s leasing department. The tactic of using protection under voluntary administration provisions to reduce costs – in this case leasing obligations – has been used in the past but not so much as an offensive weapon. An offensive weapon that many other tenants may also consider using as a viable way of changing the conversation.

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Over Inflated Valuations Are Holding Us Back.

The push to align Australian accounting standards to recently introduced changes requiring leasing liabilities to be declared as liabilities on the balance sheet has many commentators mumbling about ‘technical insolvencies’ and ‘bank covenant failures’ leading to widespread industry defaults and disastrous outcomes. From most of the people I have spoken to privately in the banking world this alignment to international standards will have little to no affect for their loan books.

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