“The evidence will show this case is about misinterpretation, misinformation and misdiagnosis from day one.” – Richard Barrar

Did you hear the one about the retailer that went to the doctor? The patient could explain the pain, although not what caused it.

Not especially funny, although quite often the reason why many tactics employed by retailers to fix their pain misses the very cause of that pain.

In fact, in many cases a literal interpretation (or diagnosis) is made that might just treat a symptom and not the interrelationship of the causes (diabolical if a retail consultant makes the same error, I might add).

Or perhaps the panacea is to ‘throw strategy’ at a tactical problem. On this topic, I am always reminded of the adage that a good strategy poorly executed won’t pull the skin of a rice pudding.

Let me provide a simple operational example:

Doctor, my sales are below last year.  Now, dear reader, what would you say to this?

Well, sales will emanate from (among a few other little trade secrets) the following:

  • Relativity and attractiveness of offer relative to the market appetite and competitive intensity
  • Relative level of capital investment intensity and maturation of the brand and its offer
  • Branded differentiation, relevance of the marketing and promotional activity – attracting the right customer involves understanding the sweet spot of the customer
  • Inventory levels in quantity, replenishment and profile, aged, and forecasting to sales movement at a granular level
  • Visual merchandise, by categories, store layout, add on opportunities
  • Staffing, focus, quantity, skills, attitude, knowledge – the effective people component of this is a large area
  • Sales and customer service measurement mechanisms
  • The systemised and productive methodologies within the business
  • Business information systems that identify the movement of these variables accurately and in real time.

And the more hidden element is the culture of that team. Involved, motivated, inspired, performing, fun, rewarded, standards, visibility of the leaders, happy staff = happy customers!

So equally, the adage that improving customer service will improve sales is often a simplistically wrong assumption. In fact, customer service scores generally have not risen for Australian retailers, while the growth of global retailers and online has. In part, this is because the correlation of customer service to sales growth can be thin at best.

Many of the variables I have mentioned are inputs to increasing sales – sales below target is a historical record of not having these variables aligned.

There are many other examples to choose, although the commonality,(and often that which can unglue the operation) is that these elements contributing to sales are not lineal or in isolation. They are the simultaneously moving parts of the retail operations of a business.

Interestingly, strategy plays a large part in the architecture of the business, yet a far lessor part in the tactical implementation. Perhaps a simple metaphor is the inner mechanisms of a well engineered watch – one cog out of alignment and we are unable to tell the time.

Like pilots, the risk of poor diagnosis for a CEO is that they can sometimes go down with their planes. Some of our more spectacular unfit retail businesses can look from the crash site now and perhaps contemplate that much of their sales decline occurred within their four walls and some possible misdiagnosis.

Did I tell you the one about the patient that went to the doctor with a sore left foot only to be operated on for a sore right hand?

Happy fit retailing,

First published by Inside Retail, 14 May 2014