WSL Future of Health Event

Retailers get back to the basics

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Globally, retail companies recently at the top of their game have begun to struggle to keep up. Not that they’re in imminent danger of losing the battle, but rather because they’ve lost sight of the basics that keep great retailers atop their trade.

Globally, retail companies recently at the top of their game have begun to struggle to keep up. Not that they’re in imminent danger of losing the battle, but rather because they’ve lost sight of the basics that keep great retailers atop their trade.

A recent article in the Sidney Morning Herald chronicled the current struggles of the Woolworths grocery chain, once Australia’s No. 1 supermarket operator but, more recently, a victim of its own sloppy attention to such basics as in-stock position and the importance of customer service. One might add that Roger Corbett, Woolies’ former chief executive officer, is currently a member of Walmart’s board of directors, so highly is he rated as a supermarket executive.

In France, Carrefour, a food and general merchandise retailer once second only to Walmart in terms of performance, is now struggling to reestablish its identity and win back customers who have deserted it in favor of newer, more aggressive competitors. Carrefour, it appears, simply grew too quickly in too many parts of the world without wrapping that growth around a unified global strategy. Now, the solution seems to be to cut back on growth, pare its size and remedy issues that have come to slow Carrefour’s momentum.

In England, Tesco, another of the global grocery retailers that, until recently, challenged Walmart for supremacy in the United Kingdom while establishing itself as a major retailer in Eastern Europe and Asia, has stumbled, another victim of unregulated growth.

What Tesco has appeared to have learned is that a retailing model that works in one country — or, indeed, one part of the world — will not necessarily succeed in another part. Like other retailing leaders, Tesco is retrenching, reducing its presence in some markets to emphasize others.

In the United States, Target is only now emerging from a prolonged struggle that has seen it abandon Canada as a market and rethink several of its product strategies, once seen as nearly invincible. Indeed, it appears that only the arrival, last year, of Brian Cornell, as chief executive officer has gotten Target back on track and returned it to some semblance of its former halcyon days.

These false starts, and others too numerous to mention, have raised some important questions: Is there some inherent fault in the retailing community that ultimately causes even the best practitioners to stumble? Is good no longer good enough? Is today’s strategy not strong enough to carry tomorrow?

The answer, obviously, is no. These are the premier retailers in the world, retailers that have beaten the best in their various trade classes. The fault, then, must lie elsewhere. Perhaps the problem is that no retail strategy is strong enough or durable enough to outlast a marketplace that has become too fluid, too prone to change, too susceptible to even slight shifts in demographics or the financial underpinnings of a community, a city or a nation.

The struggles now enmeshing Woolworths, Carrefour, Tesco and Target, among others, are the result of marketplace realities. Faults that were overlooked, ignored or laughed at in good times become serious shortcomings when times get difficult. Mistakes that were once accepted both inside and outside retail organizations are, when economies change, errors that customers won’t accept when times are hard.

So retailers, even world-class retailers, are busy cleaning up their stores, adding staff when strategy previously dictated that staffing levels be reduced, remodeling stores while slowing new-store construction, rethinking growth strategies that had them entering new markets, new countries, new global outposts simply because that was the next logical growth step.

There’s really nothing new in all this. Good retailers have always struggled from time to time. The difference here is size and scope. The retailers that are struggling today are global in size, scope and ambition.

A downturn in one market inevitably spells trouble in other, often unrelated markets. No longer is trouble an isolated incident or series of incidents. To stay out of trouble today demands a constant reevaluation of strategies only recently conceived and still producing ­results.

Retailing today, in other words, is as healthy as it’s always been. That’s the good — and the bad.


ECRM_06-01-22


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