It’s evolution, plain and simple

Reading the latest Sainsbury’s and Morrisons results made me think it’s about time we got this whole credit crunch thing into perspective.

Business is, and has always been, about competition and Darwinian laws apply. Looking back over the past 10 years these laws, for various reasons, were suspended but did not go away. What we are now experiencing is a resumption of a situation that has been normal throughout history.

Good businesses are built on the foundations of providing customers with great products and services at prices that represent great value, combined with flair and innovation. That applies as much to a loaf of bread as to a luxury car. If any of the vital elements are missing, the proposition falls down. Nothing wrong with that.

Sure, consumers are tightening their belts and certainly the rise of conspicuous spending has temporarily come to an end, but is that a bad thing?

The crocodile tears wept at Woolworths’ demise were just that. Woolworths had a proud history – that’s all. For a long time it lacked a clear identity, with no discernible innovation for the past three decades, and was sliced and diced through successive corporate structures.

It did not pass the “if it wasn’t here already, would I invent it?” test. As with Darwinian theory, the laws of evolve or die apply. Woolworths didn’t, so it is no longer with us.

The bottom line is that every one of its competitors did a better job, whether in entertainment, household, clothing or electricals. No business can survive by pick ’n’ mix alone.

Look at other casualties: Land of Leather, MFI and Sofa Workshop. Many rode the economic bubble but did not develop their offer.

You have to ask: were innovation and a great customer proposition at the heart of their business philosophies? I’m sure their management teams would protest, but ultimately the customer decides and the fittest wins. An example is DFS, which continues to gain market share. Founder Lord Kirkham is just as enthusiastic about the business today as he was when he started it.

There were, and probably still are, too many brands that have been saved from the edge of extinction by private equity and excess liquidity. In many cases that is no bad thing – arguably many have done much better than their Plc competitors.

But, at the margins, some brands should have been put out of their misery years ago. Who now remembers Bejam, Fine Fare and Rumbelows? Are our lives any poorer for their demise?

So why am I a fan of evolution? For the simple reason that the businesses that remain behind, the winners, will have space to grow through innovation, providing customers with what they want, how they want it, when they want it.

Their offers will be based on sound principles that we can all identify with. There are businesses that cannot avoid the eye of the storm and some will unfortunately be swept away, but the majority will not only survive but come through fitter, more focused and ready to grow. It’s called evolution.

Steven Esom, Former director of food, Marks & Spencer, and ex-managing director, Waitrose