Leader: Confidence counts as retail faces up to tough times

If there’s one thing the new prime minister possesses by the bucketload it’s confidence. But confidence is in short supply elsewhere.

Consumer confidence slipped across all measures according to the latest GfK study. It will be fascinating to see what the next survey finds as Johnson’s administration takes over. Because confidence is an elusive quality in retail at the moment. Not just as a result of Brexit uncertainty – that’s perhaps the least of it.

It’s down to the consumer, that ultimate retail disruptor. New ways of shopping, new patterns of spending and an ability vote to with their purse, unconstrained by any chief whip, have knocked the wind out of some big retail names whose belief in themselves was once unassailable.

M&S needs a boost

The departure of Marks & Spencer fashion boss Jill McDonald earlier this month after less than two years in the role is a case in point.

M&S was hit by supply problems, partly technical but fundamentally reflecting a business where confidence is shaky. And when confidence wobbles, business suffers.

Its apparel buyers, demoralised by falling sales and questioning their judgement, became frightened of backing winning product in depth.

Instead, they spread risk too much by buying too wide, resulting in the sad situation that when customers rushed to buy a strong product, it was simply not to be found on the rails.

A source familiar with what happened told Retail Week: “The reality is that fashion is a confidence game. Where you’ve had a decade of up-and-down performance, your buying confidence gets eroded. That leads to teams buying wide and backing every horse in the race.

“When you’ve got a really big, broad clothing offer that has a knock-on effect into the supply chain, which slows down, which itself has a knock-on effect on the customer experience.”

It now falls to chief executive Steve Rowe to restore confidence as he takes on direct responsibility for the clothing business on an interim basis.

Team building

As has been observed of Johnson, confidence on its own is not enough. In retail, as in politics, it must be backed up by strategy and execution.

For shopkeepers, that stretches right through the business from how close they are to customers – their electorate – to the tone of voice adopted, shopping options provided, service standards and product value and quality.

Increasingly that depends not just on the capabilities and charisma of the leader, but their ability to create strong teams. From that point of view, M&S is right to have turned up the volume on the voice of its staff.

Not only should that result in better intelligence about what’s working – or not – it should help create confidence that insights are being heard and acted upon.

“While lobbying and campaigning on behalf of the industry must continue, self-help is the order of the day”

M&S has told itself some hard truths. As chair Archie Norman wrote in its latest annual report: “I made clear that the genesis of any turnaround starts with the unvarnished truth, setting aside corporate vanity to face the facts about the state of a business. Behind most financial failures sits an organisational failure and an inability to be self-critical and embrace the challenges ahead.”

No doubt there will be more straight-talking to come, but the hope is that soon the tone can move from self-criticism to celebrating steps to renewed success. Norman also said that he expects “to see improvement in trading in each of our major businesses in the year ahead”. And the appointment of former McDonald’s executive Harriet Hounsell as human resources director should also help as M&S seeks to transform its culture and move forward.

While M&S may need to build confidence internally it, and retailers more generally, must do all they can to keep consumer confidence up in the coming months as political turbulence plays out. They can do that as they always have, through the provision of great choice, value and quality.

There’s no point in simply hand-wringing at the division and uncertainty plaguing the country. While lobbying and campaigning on behalf of the industry must continue, self-help is the order of the day. And the foundation stone for that is confidence.