You will be relieved to hear that I’m not writing about the current situation – we’re all deluged with information already and anything I wrote would be out of date before you read it.
Clearly chief executives must lead from the front and show visible leadership on operational issues through this crisis, but those who deploy resources and spend time thinking through what the ‘new normal’ will look like post-coronavirus will come out stronger, fitter and better equipped to respond to new market dynamics.
A recent OC&C report said: “Thinking about the future cannot be deferred; those who will emerge as winners are making bold decisions now. They will reinvent themselves to make the most of better insight and foresight and will disproportionally succeed.”
As Next chief executive Lord Wolfson said: “At some point, this will pass. The most important thing is to manage through the crisis, but it’s also important to move the business forward.”
I thought it would be interesting to find out what retail CEOs are doing to plan for the future while focusing the organisation on meeting and overcoming new challenges on a day to day basis.
“We won’t need anything like the same amount of physical space in future. In two weeks, we have reorganised our workforce so that 98% of all tasks can be done at home”
Nick Beighton, Asos
The chief executives I spoke to all started by reflecting on the human side of the current crisis before the cost to the business and agreed that the world has changed forever, not just in how we shop and consume but in how we interact as a global community.
Nick Beighton, boss of Asos, was philosophical: “This is a life-changing event for a generation – it reinforces how we are all connected globally and should lead us to re-evaluate our approach to world politics and how we tackle the big issues such as poverty, climate and plastic.
“What’s happening now will fundamentally transform our attitude to how we live, work, consume, what we value and that in turn will impact what products we sell and how customers experience them. Consumers will need different products and experiences from Asos and expect us to be less transactional.
“One thing is certain: we won’t need anything like the same amount of physical space in future. In two weeks, we have reorganised our workforce so that 98% of all tasks can be done at home. Take sample management – this is done digitally or they are shipped to buyers’ homes, who then accept them electronically and place an order.
“All our model images are uploaded virtually now, and customers can use AR [augmented reality] to select shape and size. We have trialled this technology and are now rolling it out at a rate of 1,000 images per week. I’m glad to say, our engagement statistics are higher than ever. Influencers are working from their bedrooms on Asos at home, sharing great outfits, tips and workouts on social media.”
“Companies that are strong going into this situation improve their chances of still being strong coming out – I’m in that camp”
Peter Pritchard, Pets at Home
Peter Pritchard, chief executive of Pets at Home, which posted strong year-end results recently, said while cash flow and liquidity are paramount, he will continue to prioritise digital investment. “Companies that are strong going into this situation improve their chances of still being strong coming out – I’m in that camp,” he said.
He has a small, dedicated team scanning current trends and analysing customer insight data to try to formulate a view on which changes in behaviour will be sustained into the future.
“What we’re forced to do now will become the new normal. The role of pet companionship will change and in our vet business we’ve talked about telemedicine for a long time; now it’s a reality”.
He admits it is too early to know what shape the business will be in this time next year, but one thing he is clear on is that he must preserve the Pets at Home workforce: “They are our most precious asset. We must reward them for stepping up, emotionally as well as financially. That’s the best way to ensure we are ready to come out of this fast with our IP [intellectual property] intact”.
“Longer-term, we need to radically change, or we’re doomed – and this applies to all retailers. We must not waste the opportunity to fundamentally change our infrastructure”
Seb James, Boots
Boots chief executive Seb James is thinking in three timeframes – today, three months and long-term – ie: when this crisis is over.
Today is being led by the chief operating officer and is about colleagues, communication, practicalities and operational issues – not the commercial aspects. He is proud this includes setting up test centres for NHS staff.
In three months – and this is the remit of the chief financial officer – what will the business look like? “How do we optimise sales, preserve cash and make sure we get all the assistance being offered by the government?” he asks.
“Longer-term, we need to radically change, or we’re doomed – and this applies to all retailers; the fixed cost base is too large and growing. We must not waste the opportunity to fundamentally change our infrastructure.
“How many people do we really need in the central support office? We have to really think hard about the underlying cost structure. At Boots, we must lobby the regulator to allow us to change how we dispense. Today, we have a highly qualified resource putting labels on boxes.”
As part of Walgreens Boots Alliance, the Boots strategy group has the benefit of being able to access the learnings of the global business from China, the USA and Europe when building its hypotheses and Seb James is drawing on that when mobilising his team to think through the bigger questions: “What does Boots mean to the community? A sandwich, beauty, health? We will emerge differently; we have the opportunity to influence that now.”
He agrees that we will see profound social change, with working from home becoming more commonplace, a sharp reduction in business travel and a less materialistic approach to life.
“We’ve assembled a team to think through how we will work in the future. We must organise around how customers shop online – this is the new normal”
Grocery chief executive
A leading grocery chief executive prefaced his comments by praising colleagues front and back of house for how they have stepped up to the current challenge.
“A crisis brings the opportunity to fast-track certain plans and face into the structural changes that are taking place in grocery anyway. We’ve assembled a team to think through how we will work in the future. Online sales could easily double and if so, how will our infrastructure respond? We must organise around how customers shop online – this is the new normal. We will all work and shop differently”.
I’d like to finish with a quote:
“For some organisations, near-term survival is the only agenda item. Others are peering through the fog of uncertainty, thinking about how to position themselves once the crisis has passed and things return to normal. The question is: ‘what will normal look like?’ While no one can say how long the crisis will last, what we find on the other side will not look like the normal of recent years”.
You might be surprised to learn this is from a McKinsey report in 2009.
We weathered that crisis and we will get through this one too. It will be fascinating to check back in 12 months’ time to see just how fundamentally the retail world has changed.
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