Retail is making some very uncomfortable headlines, and I’m sure I’m far from alone in feeling a mix of sadness, despair and resentment.

The reputation of our industry is being diminished and its values as the biggest employer outside the public sector are being questioned. This is a people business and it has a responsibility to treat its people with respect. In my view it hasn’t.

The Select Committee hearings show how many players are culpable on the BHS saga. They go way beyond retail owners and include advisers and certainly include politicians, who have failed to provide a legal framework to protect pensions. Nevertheless, the biggest responsibility is around owners and there is a clear message for the whole industry.

“Too many leadership teams treat staff as a cost when they should be treated as the key component of added value”

Richard Hyman

Beyond pensions, too many leadership teams treat staff as a cost when they should be treated as the key component of added value – an asset. The competitive landscape is changing on a scale never seen before. The value retail adds in the distribution chain is under growing pressure in the toughest retail market we have ever seen.

Retailers no longer have a monopoly on bringing the product and the customer together. Today 23% of all non-food sales are online, and that number is growing steadily. Adding value is built around people. Try defending added value though tech – any new development that works well will be quickly copied by your rivals. Defending added value is ultimately about people and goes way beyond the leadership team.

On the front line

The single most important asset a retailer has is the customer relationship. And that relationship is in the hands of staff on the shopfloor. They are the critical link in the chain.

This is the most promotional market I have seen in 35 years in the industry. Many think it is cyclical but this is wishful thinking. It is structural and will prevail well into the medium term. It will hit margins and it will create a raft of casualties, way beyond BHS and Austin Reed. There are far too many mouths to feed and the casualties and inevitable job losses make it even more important to treat staff in a respectful and fair manner.

“Investing in people is not a rose-tinted, politically correct ideal but fundamental business sense”

Richard Hyman

The price promotions that are rife are literally devaluing the cost of goods. We have had year-on-year price deflation across the entire industry every month for the past two years. Clearly this is having a real and present impact on margins, but it is doing something even more damaging and longer-lasting. It is devaluing the relative attractiveness of what retailers sell in the eyes of customers. It is undermining their confidence in retailers’ price integrity – undermining their added value.

Retail is losing share of consumer spending and needs to work much harder to defend its added value. Investing in its people is not a rose-tinted, politically correct ideal but fundamental business sense.

Our industry is under the microscope and does not look good. Trust is very hard to win and easy to lose. For an industry that depends so much on reputation, this is a very uncomfortable time. 

  • Richard Hyman is founder of Richardtalksretail.co.uk