Opinion: Screwfix’s Andrew Livingston – ‘product vitality’ must be priority

The doctor admitted that much of medical science operates in a grey zone, but told me: “One thing that is absolutely black and white in medicine is that being ‘fit and slim’ is a clear predictor of future good health.”

Retail leaders are also inundated with measures and scorecards. A standout measure that I watch closely in our business is how new product sales are faring as a percentage of the total.

I’m certain that a healthy flow of new product in the mix is a good predictor of the future health of a business. 3M first coined the term for this as the Vitality Index.

Whether it’s fast fashion or in an industry requiring a slower pace of change, offering an appropriate level of ‘new’ brings competitive edge, builds loyalty, enhances margin and drives healthy stock disciplines. When I see a decreasing trend in our product vitality, it makes me stop and reassess.

So do we give enough resource, focus and time to this important measure?

Product surely is the lead act in the retailer’s proposition, but true product differentiation is hard to achieve.

Price is becoming increasingly transparent thanks to online information, same-day delivery is becoming standard thanks to multiple channels, and stock availability has become easier than ever before.

So, for a retailer seeking true differentiation, the critical path is to ensure a constant stream of new products to the market.

As marketeers tell us, ‘new’ ranks alongside ‘exclusive’ as one of the most influential words.

Retailers who are known to have a regular flow of ‘new’ and ‘exclusive’ are in the driving seat for building customer loyalty.

On the Screwfix website ‘new’ products convert at a higher rate than the web average. Even better, products in an early stage of their lifecycle often operate at enhanced margins.

Bringing new products to market is not easy and requires a holistic business effort in our supply chains and those of our suppliers.

We require a focus on constantly looking for ‘new’ and we need greater agility in how we buy and in our ability to clear old stock. But setting the aspiration for vitality is the really important thing.

One Screwfix supplier puts the Vitality Index as the first agenda point in every board meeting. It’s no coincidence that they have the reputation for being more on trend, more innovative and more thoughtful on design than their competitors. What an excellent example they set.

At one level, all this is nothing new. But have you ever checked through and asked how much of your time is actually spent on product development?

One executive asked Steve Jobs how often he went to see his development team. He expected to hear ‘every two to three weeks’ but was shocked to hear ‘three times a day’.

In my experience, when I ask about metrics on new product vitality, businesses seldom have answers.

There is a great benefit in taking time to look at your vitality statistics and ensure that they are understood by internal teams and indeed by your whole supply chain.

Just some food for thought – hopefully healthy food. Now I should get off my high horse and onto my bike. There’s 11 months to the next health check.

• Andrew Livingston is chief executive of Screwfix