What makes some retailers successful while others fail? Respected retail marketer Martin Butler’s new book asked retail’s biggest names to find out
With a very small number of exceptions, retailers don’t sell anything that cannot be bought somewhere else. So what makes customers choose to shop with one retailer over another?
Finding the answer was the mission retail advertising and marketing veteran Martin Butler (pictured) set himself in 2008 when he embarked on his second book, The Art of Being Chosen. Based on two years of face-to-face interviews with more than 50 retailers from all over the world, the book became a labour of love, taking him to each continent and from oak-panelled boardrooms to South African townships.
“I had always been fascinated why some places succeed and others don’t,” says Butler. “Even in a recession, some shops and restaurants are packed, and others aren’t. It had always gnawed away at me to find out why.”
On his world tour of retailers Butler stuck to a firm rule. He would see the retailers face-to-face, and ask them one question - what’s the one thing that you have done that has had a profound and positive effect on your business?
No two retailers gave the same answer. But they did fall under six general themes, or as Butler puts them, six secrets, which is how he divides up his book. They are:
Having a company mindset of being chosen
- Being trusted
- Appreciating staff
- Visionary thinking
- Having ideas as the lifeblood of the business
- Being different
Successful retailers, Butler says, have a corporate mindset not of buying and selling, but of being chosen.
It’s a concept as relevant in the boardroom of Macy’s as it is in South Africa, where Butler met Steve Mavuso.
Mavuso is a franchisee for South Africa’s Pick n Pay empire, working in the Khayelitsha township, which Butler describes as “the most deprived place on God’s earth”. Yet thanks to Mavuso, Pick n Pay has competed successfully against street traders by understanding his customers, coming up with new ideas and winning their trust - he even appears as an agony uncle on a township radio station.
Many of UK retail’s biggest names also shared their thoughts on the subject. Here, in a series of extracts from the book, we reveal their secrets of winning shoppers.
Sir Stuart Rose on being chosen
Received wisdom dictates brands do not die; it is their management that kills them. In the late 1990s, for the first time in more than 100 years, UK customers fell spectacularly out of love with one of the most famous retail brands in the world. Why? Competitors had left Marks & Spencer in their wake. Equally worrying, for those who did venture into M&S, conversion rates fell dangerously low. The brand wasn’t being chosen; it was dying.
Programme of change
In 2004 Stuart Rose was parachuted in. He was appointed chief executive and tasked with returning M&S back to its glory days. The challenge he faced was as wide-ranging as it was detailed. He soon realised he needed to address product, systems, stores, morale and the shopping experience - he had to resuscitate the M&S brand.
From the start and to this day the marketing slogan Your M&S championed Rose’s programme of change. “The institution that most British shoppers felt deep affection for, but believed they had lost, was about to be given back to them,” enthuses Rose.
“The business had become introspective. Previous management failed to look outside their windows and see what the competition was doing.
“Deflation in the clothing sector from the mid 1990s was blithely ignored by the top brass at M&S, as were the aspirations of pushy supermarkets offering premium foods. Customers were simply expected to remain loyal. The company had become complacent, become arrogant.”
Politics at head office in the years before Rose came aboard had been a damaging distraction too. Equally detrimental was the fact that many board directors did not have food or high street fashion experience.
Rose knew that reviving M&S could not be done single-handedly. He brought with him two close colleagues - his successful lieutenants from previous ‘turnaround’ ventures: Steve Sharp, for brand building and customer engagement, and Charles Wilson, to oversee operations and stores - leaving Rose to concentrate on leadership and product. As Rose explains: “The secret of our success was close and constant communication. Putting management-speak to one side, we simply talked to each other. “
Interestingly, as soon as Rose arrived he interviewed 70 of the top and middle managers. Individuals he says who knew exactly where the problems lay but weren’t talking to anyone about it. “From the start it was obvious M&S needed to start talking. It needed direction, it needed clarity, and above all, everyone needed a simple message,” claims Rose. “They needed their self-belief back, they wanted somebody to give them confidence and assure them it was going to be a struggle, but together we’d get there.”
Right at the very beginning of his involvement, marketing guru Steve Sharp articulated Rose’s simple message with the clarity of simple words, Your M&S. “It was designed to give the business a direction. It was designed to tell customers look, we’re back on the radar screens,” says Rose.
An extremely effective yet straightforward thought, the colloquial Your M&S, was adopted enthusiastically by Rose. Not just for customer-facing marketing campaigns, but internally too. It ‘spoke’ to staff about how a sense of purpose was being returned to M&S and how it was putting customers back at the centre of everything it did. Rose also needed a central thought for the big defence speeches he was making in the City six weeks into his tenure at M&S.
What Sir Stuart Rose has brought to M&S are the essential skills of never taking customers for granted, the need for a simple vision that demands customer relevance and the fundamental art of talking to each other.
Accordingly, the business now truly understands it doesn’t own the M&S brand - it’s owned by others. They’ll forget that again at their peril.
Justin King on people
When Justin King joined Sainsbury’s as chief executive in 2004, a top priority was to change the culture. He saw this as key to turning around the ailing supermarket group.
This judgement has proved spectacularly right. His leadership has brought about success from a company-wide belief that everyone, from check-out to head office manager, is responsible for propelling the mighty Sainsbury’s machine forward.
Staff are now called colleagues acknowledging everyone is in it together. Far-reaching management training and communication programmes have embedded a real belief that everyone comes to work,not merely to do their job but to add real value to the business.
King has succeeded where predecessors failed. But how? Overarching everything is colleague alignment and engagement. As King explains: “Though hardly radical, one particularly successful initiative is a suggestion programme. It’s designed to encourage colleagues to interact with the business as a whole.” Sent directly to King, it’s a rich seam of ideas from the coalface. Each suggestion is confidential and intended to help the business change and do things better.
“It’s the depth of enthusiasm for Tell Justin that’s astounded everyone. Each month I receive hundreds of suggestions, which I or members of the board read - all ideas are researched with many being put into practice. Every suggestion gets a response from a senior manager personally signed, with a small memento such as a Tell Justin pen.”
About 10% of suggestions are implemented. Save for duplication, the percentage would be much higher. One lorry driver suggested a shorter route into his depot saving £20,000 a year. In four years, more than 25,000 suggestions have flooded in and ‘Justin’s signing pen’ is famous. It’s an icon of King’s involvement in the process. To much applause it was once stolen and thrown into the audience by the MC, American comedian Ruby Wax, while on stage at their annual conference.
Successful suggestions are rewarded by recognition rather than value. The ‘suggestion of the year’ is celebrated at the annual conference and worth £1,000. The staff magazine publishes all winning ideas and Shining Star vouchers worth £10 are awarded. But as King says: “Many vouchers are not redeemed - colleagues keep them as trophies.”
Eschewing ‘command and control’, King drives the business forward by personally engaging the workforce. He is formally educating and openly challenging the business to work better together - trying to create a close-knit team of like-minded companions. It’s a remarkably joined-up piece of leadership management with change at its heart. There’s a dynamic ethos of newness throughout the business.
Simon Fox on visionary thinking
HMV has been a traditional music specialist for much of its 90-year history. But through necessity the business and brand has had to reinvent itself.
Despite benefiting from competitors that disappeared without trace following the supermarkets’ decision to move into their product areas, it is the sales-crushing arrival of digital downloads and file-sharing that potentially represents the sector’s biggest challenge. But as Fox acknowledges: “Still less than 10% of our business is online. We knew we had a respected brand, to survive we simply needed to adapt with the times.”
But to be chosen, how far can the HMV brand credibly stretch? “We have an enormous amount of highly detailed customer research that guides us. Opening the horizons of a business like this needs a mechanism that allows teams to make the right decisions quickly,” explains Fox. “We’ve developed a metaphorical ‘funnel’.
“It’s a business model that, as best you can, separates winning ideas from losers. It’s a progressively rigorous thought-process that requires any new idea, service or product to successfully tick boxes in order to progress to the next stage. The overriding filter for everything is: ‘personal media-based entertainment’. Filters from research then refine further. It works very well allowing the right amount of intuition too. The ‘funnel’ is fast and keeps us on track - we know where our magnetic north is, so to speak.”
Indeed it’s a logical process that graphically explains how a business that knows it must reinvent itself stays focused. Fox says: “We now sell a lot of MP3 players, but won’t sell televisions. Both are media entertainment but TVs are family-based, not personal.
“We weren’t selling MP3 players, headphones and speakers a few years ago; now they make up 9% of sales. We have nearly a quarter of a billion US dollars in sales from products that weren’t in stores just three years ago.
“Concert tickets also meet our criteria - so ticket offices are going into stores. Mobile phone offerings with strong entertainment packages are now in 60 stores and a clothing franchise with licensed TV and film show merchandise called ‘The Studio’ is rolling out.”
In recognition of the importance of live music to its customers, HMV has diversified into this market too. With live gigs and personal appearances continuing, the stores are becoming increasingly experiential. “They’re becoming more immersive,” explains Fox. “We are currently testing Gamerbase ‘pay-to-play’ gaming centres, boasting banks of PCs where customers can rent stations by the hour. People come in small groups or large parties. We run competitions and events, making gaming more sociable, more competitive. In partnership with Curzon we’re also opening specialist small cinemas in selected stores for the cognoscenti - complete with a glass of wine.”
Get Closer, HMV’s marketing strapline, perfectly communicates the company’s promise, beautifully tempting customers to choose the brand. “Our full vision is no one gets you closer to the music, film and games you love,” says Fox. “Pure, our new loyalty programme, has proved an excellent way to endorse this. We charge £3 for customers to join. The assertion being that only committed fans of music and film should and would apply. We wanted them to genuinely value belonging - in under a year, more than one million customers have signed up. The rewards aren’t primarily about discounts; they’re about experiences money can’t buy.”
By being commercially connected to artists and venues, securing a dazzling array of experiences appears easy.
Fox claims Pure really is getting his customers closer to what they love. “We’re targeting half of all sales to come through the Pure programme within 12 months - the data mining opportunities are phenomenal.
“Customers’ spending patterns, shopping habits and preferred channels are easily understood, effortlessly translating to highly personalised and ‘welcomed’ marketing campaigns. Imagine, we’ll know someone went to a Florence and the Machine concert at the Apollo because they bought a ticket through us. We will then offer a relevant download or bundle that download with the ticket; we are just understanding what works and what doesn’t.”
Successfully being chosen needs a committed workforce and here Get Closer is working too. A record-breaking 92% engagement was recently verified among HMV’s 12,000 staff, with churn well below 20%. Fox calls it magnetic north. Marketers call it brand. The business is growing by trusting it.
Like his committed teams, Fox doesn’t know what the business will look like in a year or two’s time. But that’s OK. In a digital age that’s speeding up, he trusts his customers will drive the business in the direction they want - in truth not even they know where that will be, either.
Retail Week readers can buy this book at a discounted price of £9.99 (plus p&p). To take advantage of this offer either visit www.mb2000.com/acatalog/Retail-Week-Reader-Offer.html, or call the publisher, Management Books 2000 on 01285 771441, quoting the promotion code RWMB.