Tough times demand that retailers must innovate to generate growth, says Ian Cheshire
For us retailers, 2011 has got off to a challenging start. We’ve had a VAT rise, rising commodity prices, a rampant oil price and the threat of interest rate hikes. One brighter note was the Budget, which was pretty business-friendly, so no complaints on that front.
A raft of profit warnings and administrations show how difficult life is out there. So if our markets are not set to grow in the short term, what should we all be doing? The answer, which was a running theme of the recent Retail Week Conference, is self-help. This means taking the DIY approach and creating your own growth rather than waiting for a rising economic tide to do it for you.
Self-help can take many forms for retailers. It can mean more multichannel, more product innovation, looking abroad for growth, doing more direct sourcing or own-brand development. Or it can mean an improved customer service offer to create a point of difference, like the recent John Lewis announcement that it would put no time limit on product refunds.
If you look at the most successful companies around the world, this is what they do; they create their own growth. Look at Apple, Google, Mini and Sky. It is something we are trying to do more of at Kingfisher. The home improvement market is not growing much in the UK at the moment. But we know there is latent demand as a recent survey by B&Q showed that two thirds of households have a list of jobs that need to be done in the home, but they either don’t have the time or skills to do them. So the onus is on us to make it easier for them to do these jobs, which is what the new B&Q advertising campaign is all about.
We don’t have big manufacturers like Apple or Sony providing the innovation in our part of the retail sector. We have to do it ourselves. That’s why we are offering DIY classes and products that are easier to use, such as wallpaper where you paste the wall rather than the paper, and click-together tiles that need no grout. In France we are offering 3D kitchen planning and click-together decking and fence panels. Social media is playing an increasingly important part too, with iPhone apps and YouTube videos showing customers how to tackle jobs, and chat rooms and blogs where people can ask questions and share tips and experiences.
We are trying to make our scale work harder for us by introducing a common core product range across our stores around the world, with much of it own-brand. And we are looking to expand, initially in our existing markets, where countries like Poland and Turkey have great potential and their economies are growing. But it could also include new markets, possibly through a franchise model. International ambitions needn’t just be the preserve of the big plcs either. Retailers such as Coast and Karen Millen have done well in China, for example.
But finally, self-help is all about the ability to execute well – the principles are simple, but hard to deliver. Or as my favourite new phrase puts it: ‘In theory, there’s no difference between theory and practice. But in practice, there is.’
Ian Cheshire is chief executive of Kingfisher