05 Sep Chairman’s Notes – September 2016
I am not sure whether my mood was formed through Nature or Nuture but I have always been a half full not half empty type of person so I was beginning to despair of this summers doom and gloom and the perfect platform that the EU Referendum gave the scaremongers, the nay sayers and “experts”.
However a wonderful HGA evening for over 70 guests with Andy Milligan of the Caffeine Partnership and Brandon Bichler of Elixxr revived the spirits. As speakers both brought enormous energy and purpose to not just our evening but also through their content, to the way we need to be looking at our businesses and our customers.
I think you could apply a Purpose and Energy test to businesses or brands today and you would probably have a very good idea as to whether invest in them or not, join them or not or shop with them. Certainly those businesses with a clear purpose running through both their external and internal workings seem to be the ones turning in the profit and setting the pace in terms of innovation and execution. Likewise the businesses that operate with a sense of energy, market and sell to me with a sense of energy and focus relentlessly on doing things better also seem to be the leaders and winners.
Talking of winners and losers it would be re-miss of me not to touch on Brexit. One must wonder where the amateur blogger would have been over the last six months without Mr Cameron’s decision to hold a referendum!!
As we fully enter the Autumn Winter 2016 season and with a couple of months having now passed since the history making Brexit referendum, each day brings a little more clarity to the small and medium size business operating in the UK, not least within the Retail and Consumer sector which is arguably one of those most effected by the decision the country made to Leave the EU. Whether you decided to Remain or Leave, my sense both before and after the big day was that the way people voted depended on who they were. They ended up being guided by their own motives and objectives.
Bearing in mind the appalling performance of our politicians and the woeful reporting by the media, we had little alternative. Much has been made of how fragile consumer confidence was both in the run up to June 23rd as well as afterwards so it was re-assuring to see July’s numbers hold up so well. Judging by how early and how deep the Summer Sale discounting was, I wonder however if the same picture existed below the top line sales when it came to margins?
60 days on and involved across a range of business and sectors as I am, my reading of who is winning and who is losing in the Retail and Consumer world largely depends on who you are. If your brand, product or service is available in the luxury sector, then the weak pound is resulting in strong purchasing from international and tourist customers.
On the other hand the mainstream business with a more domestic customer audience is seeing imported goods go up in price and with no room to increase prices, margins are by definition further at risk.
It would also appear to be the case for British manufacturers?
Firstly buyers faced with the increasingly high costs of goods from overseas suppliers may begin to review buying closer to home and speed up their on-shoring plans. Really moving away from the marketing department gloss of “UK Made Collections”, seen largely in London flagship stores and the press, to some real commitment to British manufacturing would be a welcome outcome for all parties.
Secondly British manufacturers and brands could see increased demand through exports being cheaper as well as the benefit of international markets outside the EU looking at the UK as being more open for business. Combine this with British manufacturing adopting a broader perspective and more worldly outlook on trading and this could again be a welcome outcome.
So, much depends on who you are and depending on who you are, depends on whether Brexit was good or bad news. As Retailers as in any walk of life, the critical element to any decision, let alone one of this national significance, is that it can only be judged a good or bad decision when combined with the context of time. Even a good decision for the short term might be poor for the long term. As a consequence business is not going to know if Brexit was a good or bad decision for some time and lets face it, we have not even triggered Article 50 yet. So much depends on who you are and what your and your business’s time horizons might be. Uncertainty of this scale calls for some consideration about the principles of the business or brand.
Does your business have true, authentic and understood competitive advantage? Are consumers crystal clear as to why they should buy your product over someone elses? As owners, CEO’s and Directors are you leading or managing the situation? Leaders will not be afraid of the grey and ambiguous nature of the situation we face right now. They will be actively preparing for different scenarios, calling on additional expert advice and insight whilst at the same time keeping plans and capital programmes flexible. They will even be exploiting and taking advantage of the situation.
However Managers of this situation will be reacting and bouncing from one day to the next hoping to get through. Well led as opposed to managed, having a real competitive advantage or not, an entertaining shopping experience as oppose to a bland one and great service over poor service will determine that the winners will be the winners and the losers will be the losers.
t depends on who you are. And it has nothing to do with Brexit………..that is just a Brexcuse. Take July’s announcement from Lloyds Bank.
A £2.5 billion pre tax profit for the half year yet they are culling 3000 jobs and closing 200 branches. Yet the headline on their website page trumpets : “Serving households, businesses and communities since 1765”………hardly. Chief Executive, Antonio Horta-Osorio who is paid £8.5m per year, blames Brexit.
Winner or loser? It depends on who you are Antonio.
As we commence the new season I sincerely hope that you have the clarity of Purpose and the bursting levels of Energy to be a winner or at the least avoid being one of the losers. If our businesses lack the required leadership, purpose and energy then lets work hard to build those vital characteristics and not look to Brexcuses.
If that fails, blame the weather.