A global lens on Australian retail productivity

I’ve written many times about the changing composition of retailer and manufacturer boards around the world. To better understand shopper’s needs, and to deliver new shopping experiences, both manufacturers and retailers are mixing up their boards.

Historically, retailer boards were comprised of lifelong retailers and manufacturer boards were comprised of lifelong manufacturer execs. That began to change about five years ago.

In January, Woolworths appointed David Mackay as a new non-executive director to the Woolworths Group Board. Now I’ve never met David, but I’ve met his Dad. And based upon that alone, I think Woolies has added a level of calm wisdom and strength to their board, even before they add David’s global brand experience with Kelloggs.

Several years ago I sat talking with a fascinating and worldly gentleman. He was a retired veterinarian who had come to Australia via New Zealand, for very touching reasons. But our common ground was East Africa and Yemen. We swapped stories about him working as a young vet in Yemen, my daughter being born in Djibouti, and my Dad working in Kenya when he was younger.

During our conversation he told me one of his sons was quite senior in an American company based in Battle Creek, Michigan. There is only one “big” company based there, and I realised I was talking to the father of global CEO of Kelloggs, David Mackay. I knew of David as he is one of only a small handful of Australians who headed up global companies. Jac Nasser who chairs BHP Billiton, Bill Ryan, who was CEO at Rothmans and Doug Daft who was CEO of Coca Cola being three others.

We often talk about retailer consolidation and power, but forget that around the globe the top ten consumer goods manufacturers own almost 80% of the international brands we know and love, so it’s a very evenly matched balance of power. I have a fascinating A3 schematic on my office wall showing these top 10, which includes Kelloggs, and the 300 brands these top 10 manufacturers own across food, health and well being, drinks, personal care and cosmetics.

Adding a global manufacturer’s knowledge of brand-building and category investment strategies to a retailer is a huge advantage. Adding the perspective of having worked alongside, or sometimes head to head, with other major retailers gives the CEO and senior executive team at Woolworths a very real and personal insight into the challenges and innovations major brand owners embrace to grow profitably with retailers. Because manufacturers are innovators. Sam Walton used to drop into buying meetings in Walmart because he understood that manufacturers and brand owners have a much deeper knowledge of their consumers than retailers. He was fascinated by these brands and their power in his shoppers’ minds.

In a recent AFR article, Woolies recruit stocks up on ideas, David talks about several of his overall perceptions on returning to Australia after 12 years away. One of his observations was that “the level of productivity improvement has… level(led) out and reduced significantly over the last few years”. This is a view shared by another global level returnee exec in Dene Rogers, the newly appointed CEO of Target, Australia  and Jac Nasser, chairman of BHP.

If we forget politics and just focus on the needs of the almost two million working Australians who work in and around retailing, it is a sad indictment of where we find ourselves.

Expatriate Australians, who have built and lead great companies internationally, creating jobs along the way, can see that our current climate for innovation and improvement is badly in need of help from government.

I hope Canberra, and our state and territory capitals, are listening.

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.