Proof_The Retailer Spring 2018_FA

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14 | SPRING 2018 | retailer
Nevertheless, established brands can succeed by identifying
change, listening to customers (and fellow employees) and
responding quickly.
GAVIN MASTERS
// 07966 648733
//
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Facing the challenge of a
“new kid on the block”
HOW TO COMBAT AN ESTABLISHED RETAILER’S WORST
NIGHTMARE – A NEW, AGILE COMPETITOR GAINING
SIGNIFICANT MARKET SHARE.
It’s a frequent observation when an established High Street
retailer goes into administration nowadays – “they simply failed to
adapt to the modern retail landscape”. Many retailers are running
at fine margins (and even finer profits), and the slightest change to
the competitive line-up can tip them over the edge and once the
decline begins, negativity and reticence can set in. More often
than not, this leads to a lingering decline and the possibility of
downsizing, or even administration.
Whilst it’s impossible to predict the future, a well established
retailer can be geared up to respond quickly to opportunity (and
threat). This can be achieved by having a culture that embraces
change and constant improvement to give a retailer the best
possible opportunity to succeed. Many retailers rely on history
and brand providence, believing these things hold stronger than
change and modern approaches (I know, I’ve worked in a few…)
and by the time they find out the truth, it’s often too late.
The High Street is littered with big brand names
who have failed to adapt to a rapidly changing
retail landscape.
Time after time, the brands that fail to succeed are the ones who,
in hindsight, had the best opportunities to capitalise on the
changing market – Blockbuster, HMV, Maplin, Game, Borders. All
were leaders in their sector that could have acquired start-up
competitors in their nascent state to take them into the digital
space, but all refused to accept that change was coming, and paid
the ultimate price.
The most important factor in building a climate that embraces
change comes from the top. There must be a willingness within
the senior management team to foster an environment in which
change is celebrated, not avoided, and where constant
introspective evaluation is used to understand the vulnerabilities,
which may be present within the business and its operations.
There are a number of simple measurements, which a retailer can
use to ensure it is organised to be responsive to change:
• Are there people within your business who are responsible
for understanding changes in the competition landscape, and
do they feed back to the rest of the business when things do
change?
• Does the company have defined KPIs for identifying threats
to business performance (as well as the traditional “success”
KPIs)? KPI’s such as Customer Attrition Rate, Market Share
of Key Competitors, Non-converting footfall/email rates,
Acquisition Costs
• Does your business strategy have a “Plan B” in the event of a
new competitor or product entering your market?
• Is your IT infrastructure set up to accommodate rapid or
significant changes in process, systems or product?
• Do you frequently review customer satisfaction, and do you
take on board customer feedback on what they expect from
your business?
• Are you aware of what barriers and frustrations your customers
face when dealing with you, and what would happen if a
competitor removed those barriers?
If your business can’t confidently answer these questions, then
there is a very real risk you won’t identify changes to your sector
until it’s too late. New start-ups – especially those with a digital
focus – can often go to market with significant investment, an
experienced management team and a slick operational setup. This
allows them to grow and adapt quickly, and establish a reputation
(and a brand identity) within a matter of weeks using social media.
It’s true that not every new competitor is going to be a threat, and
a lot of start-ups will fail quickly (or at least fail to grow).
However, retailers, such as Toys R Us and HMV, have learnt to
their peril the dangers of ignoring upstart competitors for too
long, or assuming that the brand will win out against all adversity
in the medium to long term.
A culture of communication and a meritocratic approach
to feedback and information can allow things to come to
light, which may not be flagged in companies with a strict
hierarchy and a lack of open communication.
It is very often the case that employees on the shop floor, or
dealing with low-value accounts in customer service are the first
people exposed to insight into a competitor’s growing reputation,
but they will not pass this information on if they feel it won’t be
listened to or acted upon.
Change is a hard thing to instigate in a company which is not used
to it, but the dangers of avoiding change or (worse still) actively
pushing against it are too great to ignore. I have seen first-hand
the impact of refusing to change – watching helplessly as a
competitor grabs an opportunity and corners the market as your
company belligerently pushes ahead with its 5-year strategy.
In conclusion, one must never underestimate the effect a
company’s leadership and culture has on its ability to adapt to a
changing market. Arrogance and a blinkered approach from a
company’s directors will inevitably be reflected throughout the
wider business. A misplaced sense of invincibility has led to the
downfall of some of the UK’s biggest retail brands in recent years.
“Change is
a hard thing
to instigate in
a company
which is not
used to it, but
the dangers of
avoiding change
or (worse still)
actively pushing
against it
are too great
to ignore.”
retailer | SPRING 2018 | 15
Gavin masters
ecommerce industry principal
Maginus