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Turnaround and Leadership in Retail
There is only one thing that has remained consistent in the retail market over the past 10 years and that is the pace of change. Most recently the pressure put on the “squeezed middle” is relentless. Aldi, Lidl, Primark and Poundland are booming. Luxury brands continue to be fuelled by the South East Asian market. Then there are the companies stuck in the middle like M&S, Morrisons etc.
So, how do you effectively improve the performance of the companies stuck in the middle?
Mothercare as an example
Mothercare is a typical product of the squeezed middle. It has been hit hard by online it’s trying to grow its way out of trouble through its international business and it needs to be innovative digitally. Simon Calver, who recently resigned, was brought onboard as CEO in 2012 to lead its turnaround effort, after years of falling sales. Having come from LoveFilm, a rapid growth, digital business, Simon was used to working in a positive growth market. No stores, a smaller head office and a company which was changing the way we consume films. This is great in terms of being a digital visionary but he had no experience of how you manage a struggling business in a saturated and traditional market.
Who is responsible?
Let’s be quite clear, many of the retail administrations have been as a result of precarious debt positions set up between 2002 and 2007 as well as the race for space in the early noughties where stores were aggressively targeting increased footprint. That is not always the fault of the current incumbents and actually, although obvious now, not many people predicted the massive increase in digital commerce. Should we hold the people who managed this toxic combination of market events in a bad light, even if the company they ran may have entered administration?
Running a successful business is not the same skill set as turning one around
The right people for the job
Ironically, I think some of the best people to run a business that is struggling are people who have been through an administration because:
- They know the behaviours of both suppliers and banks and understand when those relationships are likely to break.
- They know how to “trade” and really make the most of every penny in terms of both marketing spend and ROI.
- They will have spent time managing cash and living day-to-day. Once you have done that, everything else is easier.
- Everyone learns from their mistakes - you will be more likely to make the right decisions if you have made the wrong ones in the past.
Of course, there are concerns here; mismanagement vs. the market conditions being the crucial one. Nevertheless, if you want to change a business you need a combination of experience and vision.
Everyone learns from their mistakes
Running a successful business is not necessarily the same skill set as turning around an underperforming one, especially if you have no experience within the specific sector.
There is a real fear of failure in the UK. In the US, it is better to have tried and failed than not to have tried at all but I don’t think that this sentiment exists in the UK. I believe we should not allow this fear of failure to result in bad business decisions. Companies in challenging times need to look for leaders who have been through it before.
For more information and to discuss your executive retail recruitment process, don’t hesitate to get in touch.