Lessons for all

The closure of a number of retail brands in Britain, the US and Australia is not a coincidence. So what are the themes of their failures?

Here are some of the companies we’ve seen strike trouble:

• MFI and Adams in the UK.
• Woolworths in the UK.
• Waterford Wedgewood.
• Herringbone.
• EzyDVD.
• Circuit City.

What they all did:

• Took on debt and didn’t reach their end game.
• Traded unprofitably for too long.
• Re-built their balance sheet with more debt.
• Stayed in one space for too long.

What they didn’t do:

• Use the original debt to launch innovative products.
• Use the original debt to fund structural changes to lower cost.
• Find new markets or customers.
• Innovate their approach, their products and their brands.

Retailer survival trends for the year ahead

Many “tired” retail techniques will be challenged in the quest to achieve high quality, lower cost products and services.

Outsourcing of people, logistics and production will deliver newer, better technologies in both the retail and manufacturing industries.

In stores “retail theatre” will come to the fore and the shopping experience will be enhanced with entertaining and interactive displays to drive sales. Shopping will be reinvented as a source of entertainment and leisure, like watching movie or sports.

This is happening already in the US, but Australia is lagging. Wal-Mart has invested in the shopper experience by bringing specialist in-store events teams in to create displays and interactive opportunities for the customer, to increase shopper satisfaction, loyalty and basket.

Australia has begun to act through clever cost-cutting measures. Some retailers have installed new programs to convert currently unproductive hours directly into effective customer-facing activity.

Another area for strong retailer growth is the acquisition “fire sale” created when desperate retailers close and leave the market open for acquisitions at bargain prices – often in one fell swoop. This presents a unique position for “strong” retailers to gain incredible store and site networks from competitors who had been building them for decades. Think Woolworths in the UK, and Circuit City in the US and EzyDVD here in Australia.

Manufacturers too will play their part. They will work with strong retailers to build exclusive retailer brands that strengthen a retailers offering through point of difference. Ryobi power tool exclusive supply through Bunnings is an example. Nippon paints too. It makes good retailers stronger.

Food for thought as we move into this testing year.

In his role as CEO of CROSSMARK, Kevin Moore looks at the world of retailing from grocery to pharmacy, bottle shops to car dealers, corner store to department stores. In this insightful blog, Kevin covers retail news, ideas, companies and emerging opportunities in Australia, NZ, the US and Europe. His international career in sales and marketing has seen him responsible for business in over 40 countries, which has earned him grey hair and a wealth of expertise in international retailers and brands. CROSSMARK Asia Pacific is Australasia’s largest provider of retail marketing services, consulting to and servicing some of Australasia’s biggest retailers and manufacturers.