“We know, in other words, the general conditions in which what we call, somewhat misleadingly, an equilibrium will establish itself: but we never know what the particular prices or wages are which would exist if the market were to bring about such an equilibrium.” – Friedrich August von Hayek

Dear readers:

Happy New Year from the team at Retail Doctor Group and RDG insights. Looking forward to another great year of helping retailers build their business fitness.

Interesting, as it always is, to observe the performance of retailers across the world in 2014 and with particular emphasis on our own. In reviewing many channel results, we see another year of variability in overall performance past and pending.

Much of the answer can be seen in the concept of equilibrium and the constant and somewhat futile battle to consistently achieve this state.

If equilibrium (a natural balanced state) is the fundamental goal of all  moving objects, spare a thought for those leading multiple retail store operations, where disequilibrium is far more the natural order of events and a constant leadership challenge and always has been.

Variable measurements of performance in location dynamics, consumer trends and behaviour, retail  leadership, delegation, capability sales, margin customer satisfaction, and staff turnover, to name a few measures is always the order of the day with owners and managers seeking out the maximum return for their efforts (or in other words the point of disequilibrium that produces an acceptable result closest to equilibrium).

We have known from many years of managing and consulting to retail channels of multiple stores that we can expect a broad ratio of performance among the store network akin to:

20% high performers

40% Ranging from mediocre to the cusp of inconsistently high

20%  Low performers to mediocre.

Here we have one of the central reasons as to why many channel wide performance improvement programs only produce marginal results. Simply put, they are overlaid upon a wide range of variance or disequilibrium to start with. Such that the programs, such as training, immediately motivate the top 20 per cent to 40 per cent (if they are good) and leave the balance in varying states of a low level of investment return.

The single mitigating factor to consider that a embracing culture, built over many years with comparatively low staff turnover, will skew these ranges of predictable performance to some degree and is case specific.

Overall, our key business fitness learning is to work with the best performers in implementing change in 2015. Start by work closely with a smaller subset of the best (i.e. the top 20 per cent ) in a collegiate manner, implementing proven change management processes and drive the results such that real business benchmarks are increased. These 20 per cent are the beachhead of change – the results they motivate are one of the single great opportunities to lift channel performance because performance and measurements among peers is one of the great motivating forces.

If advising business, or leading on channel change and business improvement, our business fitness tip is not take the entire channel on at once, it simply doesn’t generally produce the channel performance that many leaders aspire to, build the frameworks, work with the best and that will influence change at its greatest rate of improvement.

To grow your business fitness – contact Brian Walker, CEO, Retail Doctor Group, on (02) 9460 2882.

First published in Inside Retail on the 7th of January 2015