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Films, food and fiction

Format change in action – a couple of examples from history:

1.  Movies and TV:  in the late 40s/early 50s, movie companies fought broadcasters to protect their industry against the upstart television.  Their frontal attack failed, and consumption of moving pictures largely moved from the cinema to the home.  TV developed wholly new formats (game shows, chat shows), but also reformatted drama (soap operas, seasonal series) beyond what the movies had ever been able to achieve.  Much of the talent that had worked exclusively in the cinema found new ways to make new livings.

2.  Counter service grocers and self-service supermarkets: another mid-century change.  The economies of scale, and the ease with which savings could be passed on to the customer, rendered counter-service stores rapidly obsolete.  Supermarkets sold bulk and sold convenience; as the years passed, they progressively improved product quality, all the time managing value.

In both cases, “big business” created the format shift – just as big businesses have created ereaders and tablets; but thereafter, they had to develop those formats as dictated by the customers.  Publishers in the post-paper world will have to do the same.

Indeed, pbooks are set to join cinemas and small food stores on the junk heap of history – until they reinvent themselves anew for an ebook audience.  But that will have to wait another 10-20 years – a cycle of decline, to be followed by a renaissance in a new and different form?

Hitch: http://jimberkin.wordpress.com; supermarket: business-school.exeter.ac.uk

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Sainsbury’s and Anobii

I’ve written a column for The Bookseller on Sainsbury’s acquisition of the majority of the Anobii business from HMV – you can read it here:

http://www.thebookseller.com/blogs/what-anobii-link-means.html

To read more on the background to the deal, click here.


World E-Reading Congress: Legacy, bookshops and the future

The Bookseller has run a piece on the speech I gave to the World E-Reading Congress earlier this week, so I’m reproducing the text in this blog entry.

Whilst I’ve edited out some of the more obvious “lecture” elements (eg “Good afternoon, my name’s Philip Downer”), this is still a talk, so in places you may find it (even) more rhetorical than some of my usual writing; similarly, the grammar and syntax will be a little sketchy or forced in places!

My audience consisted of publishers, and those who provide publishing services – distribution, analysis, technical support, media coverage, plus a smattering of creatives (writers, illustrators, designers) and some online sellers of books and/or content.  There were no bricks and mortar retailers present.

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My theme for this afternoon is Bookselling: The past is another country, but the future is another planet.

This is a bit clunky, but on an agenda full of brave new worlders, keenly identifying opportunities and breakthroughs for the future of eReading, I am the lucky person who has elected to talk about shops.

I’ve given a few talks over recent months, and as I approach each one, the news for specialist booksellers appears to have got a little bit more challenging.  At Frankfurt last year, I observed that “We are entering a world where a handful of corporations own proprietary formats through which all the books, and a great proportion of all other creative content, are channelled.  New technology can do great things, but it can also damage supplier diversity and consumer choice.”

I stand by these words.  The bigger and more powerful the mega-corporations become, the more entrenched they’ll be.  They operate out of highly protected walled gardens, and their goal is to tie you, very tightly, into their specific eco-system.  It isn’t in their interests to allow this situation to change – even though I would argue, it is clearly not in the best interests of every author, publisher and reader, for a handful of tech-driven organisations to own books and reading.

I’m talking to you today about retailing, rather than the broader outlook for publishing.  However, the old author/agent/publisher/bookseller/reader model is significantly fractured and everyone in this industry needs to decide whether monopolies or diverse markets are more appropriate for its future.

As this is an eReading Congress, I think a show of hands would be appropriate.

Who uses an electronic device in their leisure reading – an eReader, a tablet, a smartphone?  [Practically everybody in the room.]

Put your hand down if your principle device is a Kindle.  [Around half of those present.]

OK.  Now, lower your hand if your principle device is an iPad or iPhone.  [The other half of the room.]

Sony?  Kobo?  Nook?  AN Other?  Samsung phone?  PC?  [No, no, no.  Everybody used Amazon or Apple devices.]

Although they play very different roles, there are of course two, big dominant players in our new world, a retailer and a consumer electronics company.  But Amazon and Apple are an odd couple

Amazon: is setting a course to becoming the world’s biggest retailer, and en route laying waste to the established author/publisher/bookseller ecosystem.

Take a look at its performance for the first quarter of this year:

Q1 2012

Revenue:      $13,180,000,000

Profit:          $      130,000,000

Margin:         1.0%

Amazon sells ebooks and pbooks at low margin, break-even or a loss.  This (we are assured) benefits the customer.

Amazon has very patient investors, who support a high P/E ratio, currently running at over 90x.  I assume they work on the principle that, once world domination is assured, the profits tap will be turned on.  Otherwise, where’s the value?

How many sectors and countries does Amazon have to dominate before this happens?

Apple:  is producing the products that everybody wants, selling phones, tablets and other hardware and content at a spectacular profit.

Notwithstanding Samsung, it pretty much leaves all its competitors in the dust.  It also, by-the-bye, runs a highly successful and much-respected retail chain.

Looking at its quarter one performance:

Q1 2012

Revenue:      $39,200,000,000

Profit:           $11,600,000,000

Margin:         29.6%

This extraordinary margin, we understand, also benefits the customer; so Amazon’s 1% is a good thing, and Apple’s 29.6% is also a good thing.

Naturally, Apple’s investors are as happy as can be, and they’re even being promised dividend payments in the future.  Oh, and Apple’s P/E ratio is a rather more rational 10.5.

Jeff and Steve have made this world for us in which consumers are happy to pay top dollar for the best hardware, and the lowest conceivable prices for content.

In the past month, of course, a new alliance has been formed – something of a 1990s supergroup.  Is the Microsoft/Barnes & Noble alliance strategically brilliant, or a last throw of the dice?  Microsoft has a track record of alliances with previous cycle winners, like Yahoo! and Nokia.

However, publishers and many readers are looking for alternatives to Amazon’s hegemony.  The deal enables B&N’s Nook and College divisions to separate themselves from the old superstore business, and provides the firepower for the Nook to be launched worldwide, with a solid retailer base in the US.

Are Barnes & Noble the future, or is this just a coming together of legacy businesses?  And what is a legacy business, anyway?

Ten years ago, if I’d said “legacy” to you, you’d have understood it in the old sense – “Something handed down from an ancestor or a predecessor or from the past”.  A legacy was a good thing – real value created by previous generations, and a solid foundation for the present and the future.

Today, the word “legacy” is used as an unthinking term of abuse – essentially, any business that has a history longer than a few years is a “legacy” business, and thus unfit for purpose, and ripe to be taken down.  Established publishing houses are described as “legacy businesses” by teenage entrepreneurs seeking to discredit them.  Perhaps they fail to distinguish between a business that has a valuable inheritance, and has the capacity and the drive to embrace the new world, with one that isn’t in control of events.  Or perhaps they confuse all established businesses with the fireworks of the tech sector, the Netscapes and MySpaces that crashed and burned; the Yahoos and Research In Motions whose innovation has been eclipsed by other, newer stars.

It’s inevitable that what appears to be change-making today will become – necessarily – protective and fixed tomorrow.  Perhaps, in this sense, “legacy” simply means “grown-up and responsible”.  Well, there are worse things to be, and, companies that once behaved radically will start to behave protectively instead, in order to maintain their primary income streams.

But let’s talk about retailing, because this is where a physical legacy can become really toxic.  In the 1930s, Woolworths opened nearly 400 brand new stores across the UK.  When I say “opened”, I don’t mean “rented a tin shed and screwed their name to the front”.  I mean, they acquired freeholds, and built big, brand-new stores.  This was a massive investment of cash and confidence in the market.  The crowning glory was the Blackpool store, which opened in Spring 1938.  Five storeys over 75,000 square feet, including two vast restaurants.  Woolworths was one of the biggest and most powerful consumer brands in the world.

Building all those stores guaranteed Woolworth a strong presence in every town in the country.  This was the legacy of its period of supergrowth, but as time passed, the retail offer lost its focus; the freeholds were sold, and the legacy of great stores was no longer a valuable inheritance, it was a millstone of failing retail premises.

Historically, this is what retailers have done – opened stores, and carried on opening them until sometime after the market cries “enough”!  Clintons Cards and Game are two of the most recent examples in the UK – and then, of course, there are the challenges facing the remaining booksellers.

Right, here’s a scary prospect for you.

Imagine you’re running a chain of bookshops.  We may be talking about hundreds or a handful; we may be talking about any country in the developed world.  Two or three years ago, the era of the superstore came to an end.  Now, I would argue, the era of the chain bookshop is going to follow, unless the model is radically reinvented.

So, if you’re running a chain of bookshops today, you have to do two impossible things.

The first is to deal with your straggling real estate, because, as I’ve discussed, the single biggest challenge for any bricks and mortar retailer is their legacy of old stores.  However carefully that estate has been built, however appropriate it was five years ago, it is now shot through with toxicity.  All of those shops are tied to long leases, with upward-only rent reviews.  Landlords are operating in a shrinking market, so are in no position to give concessions to any business that wants to close a shop while the lease still has years to run.  This leads to pre-packs and CVAs (company voluntary arrangement), but these acts of desperation are usually the prelude to administration.

All retail businesses have an unproductive tail, and any location that’s bad at the moment has the scope to get worse.

Archie Norman, Asda’s former CEO, has observed that retailers should close 5% of their estate every year, and he’s absolutely right – but I can think of no retail business that has heeded that advice until it’s much too late.

As a bookseller, your bricks and mortar shops have to be super-viable.  You must close today’s loss-makers, and tomorrow’s loss-makers too.

Plenty of retailers are facing this problem right now – Argos, French Connection, Mothercare and Thorntons have all been in the news in recent weeks.  However, although they’re vulnerable to online sellers, it’s still difficult to digitise a romper suit or a box of chocolates.

So, close your under-performing stores.  Then define your customers and their interests, and close any further stores that don’t match that profile.

Your second impossible challenge, and one that is at the heart of this conference’s purpose, is that you have to compete in an omni-channel marketplace, and you have to do so against some of the richest corporations the world has ever seen.  Logically, this is impossible, because it requires huge resources, and your chain of bookshops can’t do this alone.

This is where the book trade needs to pull together.  This industry is at a crossroads where it either allows the global corporations to progress from being walled gardens to becoming super-fortresses; or it fights to ensure plurality.  I salute unreservedly the stand that Macmillan and Pearson are taking, alongside Apple, in the Department of Justice case regarding agency pricing.  A couple of weeks ago, Amazon decided to give away the Hunger Games eBook free of charge.  Now, maybe I’m just losing it as I get older, but can anyone explain to me how giving away the best-selling book in the world helps to secure current income, or to create a future value proposition, for anyone other than Amazon?  It may be that the publisher and thus the author still got paid, but at the long-term cost of proclaiming their work to be without value.

Booksellers today need the freedom to participate in the omnichannel world, and it is in everyone’s interests to lower those barriers.  That means removing DRM, so that content becomes device-agnostic; customers can buy the hardware that suits them, and the content, at an appropriate price, from the retailer who can do the best job for them.

I would love to see thinking of this sort emerging from Microsoft and Barnes & Noble’s NewCo.  If B&N thinks it now has the firepower to challenge Amazon without also changing the ground rules, then they will find that Amazon can always out-gun them.  Anybody else with a stake in ebookselling needs to do likewise.  You won’t beat Amazon by being a pale imitation of Amazon, pleading with consumers to do what’s best for the long-term health of the book trade.  Consumers have enough to worry about.  They will respond, though, to a different, better offer.

Your retail goal – because you’re running a chain of bookshops, remember? – has to be an integrated ebook and pbook offer, with full online visibility of stock by branch for your customers.  You’ll need a financial model that supports “showrooming”, because it’s a fact of life.  You’ll offer Click and Collect, targeted social marketing and all the rest of it – everything a sophisticated pure-play online retailer does, with a shop attached.  You’ll need to understand more about your individual customers than ever before.

Your online and ebook offer can of course cover all categories.  Your pbook offer must be reshaped to reflect the new reality.  That means fewer fiction paperbacks, and fewer reference books, because the day of the “general bookshop” is over.  You need to be known for doing a few things extremely well, not everything tolerably competently.

All of this sounds scary, and you will all be aware that the number of specialist bookshops in the UK has declined by over 20% since the credit crunch kicked off.

Booksellers – and, by extension, our suppliers and our customers – invested far too much energy in worrying about supermarkets, and not enough in recognising that Amazon wasn’t just another specialist competitor in a healthy eco-system, with a novel twist.  Today, if we take all the UK’s true specialists, the Waterstones, the Foyles, the academic chains, all the independents, and add them together, I don’t suppose their unit sales are as great as Amazon’s are now.

There’s a school of thought that says, well, you pesky booksellers, you should have done more.  Should have done it sooner.  More fool you.  I think this is a little like acknowledging that a fine historical building has caught fire, and saying “they should have installed a better sprinkler system.  I’m not calling the fire brigade” – when there is still plenty of merit worth saving, and plenty that you’d miss if that magnificent building was gone.

Specialist booksellers – including independents – are now barely competing with each other at all any more.  They’re competing with Amazon and Apple; they’re competing for time as well as spending.

However, here’s the interesting thing.  At the risk of sounding like Clement Freud on Just A Minute, I’m going to run through a diverse list of retailers.  Here goes:

Anthropologie • Argos • Asda • B&Q • Bentalls • Blacks • Comet • Conran Shop • Cotswold Outdoor • Dobbies • Eden Project • English Heritage • The Entertainer • Fortnum & Mason • Habitat • Halfords • Hamleys • Harrods • Harvey Nicholls • HMV • Historic Royal Palaces • Hobbycraft • Homebase • John Lewis • Lakeland • Morrisons • Mothercare • National Gallery • National Trust • 99p Stores • Oliver Bonas • PC World • Pets At Home • Poundland • Royal Horticultural Society Wisley • Ryman • Sainsbury’s • Selfridges • Tate • Tesco • Toys ‘R’ Us • Urban Outfitters • Wyevale Garden Centres

Most of these businesses are thriving, successful enterprises.  Some are struggling – but all of these chains are also booksellers.

Some, like the supermarkets, are big, important players.  Others offer books as a value proposition, or as part of the lifestyle offer they’re promoting, or as a souvenir of a day out.

But they all believe that there’s a place in their shops for physical books.  Most of these retailers have a much clearer understanding of their brand, and of their customer, than general bookshops have.

The physical bookshop struggles, but the physical book can thrive.

We tend to look at the problem from a “growing online, declining physical” standpoint.  But if the solution is to ensure that all physical stores have multichannel capability, surely the same applies to pureplay online retailers?

As Sarah Wilson of the Egremont Group has argued persuasively, without a high street presence, without the ability to see and touch the goods you want to buy, online sales will plateau.  After all, if we all really wanted to, we could stop using bricks and mortar shops tomorrow, and just buy everything online – it’s all there, after all.  But we don’t.  Consumers of the future will be looking for an “integrated experience… as they choose to shop across channels and increasingly look on pure plays as employing yesterday’s model”.

OK, this is where it gets interesting.  You’re running a chain of bookshops, remember?  But chains are inevitably bland.  Chains are corporate.  Chains are bound by process; necessarily managed to lowest common denominator standards.

I’d posit that more good managers leave book chains and open their own bookshops than happens in most other sectors.  They do it because they love what they do.

So, at this stage in the development of the bookshop, I think it’s time to acknowledge this.  You could create a partnership model, like John Lewis’s.

Or you could be bolder, and create a franchise model.  The centre would provide the technology, the systems back-up, the buying power.  The managers acquire ownership of the stores, buying an interest in them or purchasing them outright, customising their shops as appropriate for their markets.

You cease to have a chain of stores.  Instead, you have a network of individual specialists.  They may go down the children’s route, open cafes, build non-book sales.  Or they may, like the Harvard Bookstore, invest in Espresso Book machines; providing a real specialist service, with same-day delivery to local addresses, and next-day around the world.

That network of stores doesn’t have to be restricted to your core business.  You can sell your chain’s expertise to other independent bookstores, and reinvent yourself as a bookshop service organisation.

We have a number of good businesses supporting UK booksellers.  Gardners’ networked Hive website, offering pBooks and eBooks online; the Bookseller and Nielsen, providing news and reliable data; and of course the support of the Booksellers Association.  I’d like to see all of these organisations – and others – committed to supporting everyone who is a bookselling specialist, whether they’re primarily selling eBooks or pBooks, online or instore.  If anyone could pull this together it would be the BA, but the organisation would have to repurpose itself appropriately.

There’s a way forward for individually managed and owned shops that have full access to ebooks, and yet can localise their offer to suit each physical location, each local residential, business and academic population, in a way that chains inevitably struggle to deliver.

And funnily enough, your carefully tailored local offer could be exactly what individual customers around the world are looking for.  And today, you can reach out to any potential customers.  You can identify where there are similar populations, elsewhere in the country, elsewhere in the world, and serve them too.

Of course, this means that you and your shop need to have to have an opinion.  A point of view.  A personality.  All of these things rolled up into a specific and saleable competence.  Please some of the people most of the time, because you can’t be all things to all people.

Supermarkets have done their damage, and will reduce their book ranges as the mass-market transitions away from paper books.  This is an opportunity for our industry’s specialists, who need to improve in quality and consistency.  Some of our best bookshops are among the smallest and most independent, in every sense of the word.

Customers will still seek out good, well-run shops, and I suggest that the distinction between “independent” and “specialist chain” is a whole lot less important to everyone’s future, than the distinction between “specialist” and “non-specialist”.

A healthy bookselling sector is in the best interests of everyone in the trade – authors, agents, publishers, readers.  Bookselling needs to remodel itself for the future, and do so in partnership with all the other key players in the publishing business.

But books and bookshops still matter, and there are still people who want to sell books.  If those specialist bookshops focus on competing with each other for ever diminishing returns, they might disappear altogether.  The more effectively they can work together, the more robust our retail offer in the future.

To comment on this blog post, just click on “leave a comment” in the Tags block above.

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My eBook, A Year at Front of Store, is available in these Amazon Kindle territories –

United States, United Kingdom, Germany, France, Italy and Spain


Big Box Man: options for Tesco and Dixons

The festive season hangover – the publication of Christmas trading results – is almost completed.  WH Smith will announce next week and, on past form, that is likely to be the end of it.  Thereafter, we will have to wait for actual half-year and full-year reporting, so that we can understand the levels of discounting that were needed to deliver some of those better-than-expected like-for-likes.

Away from the real strugglers, two businesses caught my attention.  The first was, of course, Tesco, whose -2.3% LFLs sat uncomfortably next to Sainsbury’s +2.1% and Morrisons +0.7%.  CEO Philip Clarke has now been in post for well over a hundred days, but he is acknowledging that Tesco has to change.  His comments, allied to the poor trading figures, caused a sharp fall in Tesco’s share price, but it’s very clear that action is under way.

I’ve written before about the grudging nature of the Tesco store experience (here), and the sense I always get that the best interests of the consumer have to be aligned with the best interests of Tesco, rather than the other way around.  It looks as though Clarke understands this – the Big Price Drop was yesterday’s response to today’s problem, and achieved the double of being trumped by other supermarkets’ vouchers whilst alienating loyal Clubcard holders; Fresh & Easy is looking like a bullet that needs to be bitten.

And here’s what interested me most: in conversation with Retail Week’s Alex Lawson, Clarke said:

You can go on growing space but we probably won’t be growing very big hypermarket space any more. We have got a few hypermarkets coming but will be announcing more on the bias of stores in April.

In other words, less of this in future?

And rather more of this?

We’ve seen problems for big box operators, as a result of online competition, in specialist sectors – Comet, Best Buy, Borders, Virgin Megastore and many more.  However, the suggestion that Non-Food isn’t pulling its weight at Tesco; that Non-Food is as vulnerable in Tesco to online competition and showrooming as it is in less diversified specialist retailers – well, that is quite a sea-change.  With 10% of all retail spending in the UK now taking place online, it’s inevitable that Tesco will be suffering attrition from online-only retailers, but the strategic shift implied by Philip Clarke (presaging an announcement in April) could herald the biggest shift in the pattern of UK retailing since Woolworth failed.  Perhaps it also paves the way for Tesco to save the high street…?!

However, I don’t buy the “big box dinosaur” argument, although – as the Tesco Extra picture above demonstrates – you can reach a point when the size of your store becomes oppressive, and just adds to the unwelcomeness that can be part of the Tesco experience.

But good big boxes will survive and thrive, both because retail parks work exceptionally well (particularly away from London) as the most cost-effective way of bringing a diverse retail offer to a scattered population, but also because the big box experience, when done well, can deliver results that the high street just can’t match.

And so to Dixons.  It’s been a filthy Christmas in electricals, with Best Buy closing down and Comet getting worse and worse as Kesa takes time to sell, leaving Dixons looking relatively healthy with a -7.0% like-for-likes.  Chief Executive John Browett has been concentrating on changing the way the stores look and – more importantly – the way the customer feels about his business.  I think he’s on the road to success – I liked the “Black” store at Westfield, and I really liked the refurbished Currys/PCWorld retail park store I visited earlier this week.

Like the store in this photograph, a consolidated electricals offer is now available under one roof, and sensibly the consumer electronics – audio, visual and computing – are on the ground level, with white goods – washing machines and vacuum cleaners – on a mezzanine.  This makes for a smaller and more efficient footprint, but it also enables Dixons to create an electronics offer that I think makes John Lewis look tired and off-pace.

John Lewis?  Bow, bow ye upper middle classes!  But where JLP presents a brown goods world of carefully delineated TVs, radios, hifi and computing, the new Dixons layout recognises that we don’t use devices in this way any more, and that the distinctions between various product lines are now blurred.  Its layout and flow presents a more effective offer for the consumer, and invites them to enhance their home electronics more effectively than old-style competitors.  Wireless sound systems and big screens are now computer adjuncts, not “hi-fi” and “television”, and Dixons gets it.

Their Knowhow sub-brand message is driven home with relentless effectiveness – we really do understand this stuff, it says.  Much has been made of the culture changes within the business, recognising (at last) that an ill-informed hard sell in an intimidating environment just doesn’t work any more.  The new stores are customer friendly with good graphics, plenty of explanation and demonstration items, and informed but unpushy service.

Dixons has a huge estate – over 600 stores of various ages and configurations – and it has much to do to bring them all into line with current best practice.  I’m optimistic, though – I think they’ve really got something here.  However – please – they’ve got to do something about branding.  The new stores aren’t “two stores under one roof” – they offer an integrated selection of electricals for the kitchen and every other room in the house (and office).  Currys was a dismal washing machine shop, with neglible brand heritage (and it’s a word that looks poor on fascias, sounds blah when you say it).  PC World harks back to the glories of Windows 95, but it leads with Apple and Kindle – suddenly, “PC World” sounds about as on-brand as Radio Rentals.  Time to can these hoary old brands, and return to the one with the best heritage in the sector:

Images: Wikipedia; The Guardian; Peterborough Today


Independent bookshops and the BA: “Rate relief for businesses with a cultural and educational value would be welcome”

The Booksellers Association has moved on, and with the publication of stats confirming a fall in the number of independent members of 26% (compared to a total membership fall of 20%) has publicly acknowledged that it represents a sector in crisis.

nb that’s sector, not industry.  There are elements of the book trade that continue to do very nicely, thank you.  That American corporation that released all those new eReaders and tablets last week, for instance.  There may even be independent shop owners who greet each new day with a song, though I’m struggling to imagine where they may be.

But those in the trade – in bookselling, publishing, the BA – who may have wished (and wished) we were “weathering a storm” now all recognise that the rules have changed, as customers’ bookbuying choice settles down to either Amazon (for printed books) or, alternatively, Amazon (for eBooks).  (Though there is much activity over at Kobo/Facebook, and indeed NetFlix/Spotify, not to mention Google Books too.)

Given that the market for printed books, and the opportunities for specialist bookshops, are shrinking, I believe the BA should reconstitute itself as a smaller organisation that represents the true specialists.  These don’t just have to be independent bookshops, in the classic definition; branches of Waterstone’s, second-hand or online sellers could all be eligible.  There are things that the BA would have to stop doing, but I believe it would benefit from no longer trying to square the expectations of supermarkets with those of its independent membership.  (And Amazon, of course, is not a member.)

I don’t think that rates relief for bookshops is a bad idea – it’s routinely offered in countries from France to Finland.  We live in a country where some cultural institutions receive massive state asisstance (opera houses, galleries) and others receive none.  If the government, and everybody else with an interest, believes that books are just another product that should live or die by the market, then so be it – but we would all be much poorer as a result.

The Twitterati were revelling in this timeline last week, which purports to show the extinction of the physical book trade betwen now and 2025.  It’s US-centric, so we should expect to hold out in the UK until – well, 2026 at least.


Thinking about Tesco

Cards on the table: I’ve never worked for or with a major supermarket chain.  Whereas I can draw on diverse experience with department stores, fashion or electricals, when it comes to the Big Four, I’m an outsider.  Or “customer”.

So I’m watching the latest round in the endless supermarket wars with interest.  Tesco is moving away from multibuys, canning double Clubcard points, and throwing all its weight behind lower prices, set to roll out on Monday after some unprecedented remerchandising on Sunday night.

Tesco needs to regain the initiative because – despite being Britain’s largest retailer and ipso facto retail bogeyman, it’s been on the back foot for a little while.  Price wars have been going on since the end of Green Shield stamps, and sometimes the wars are phonier than others, but Tesco has (finally) recognised that its battered customers will respond more positively to sustained price-cuts than to “value” spin.  It’s competitors have responded “smoke and mirrors!”, but competing with the new programme will be more costly for them (in terms of impact on total profitability) than for Tesco itself.

Tesco’s success and its mixed reputation have gone hand-in-hand, which partly illustrates the contraryness of the consumer, and is partly all Tesco’s own doing.  There are other corporations with greater monopolies over their sector – Apple, Amazon, Sky – about which the man on the Clapham omnibus feels largely benign, whether he reads the Guardian or the Telegraph.  And there are big retailers – Marks & Spencer, John Lewis, Selfridges – where the profit motive is pursued quite as vigorously as at Tesco (if not always as securely delivered) – that the British hug to our collective bosom.

For me, the challenge with the Tesco experience is the feeling I always get, however large or small the store, that I am being pushed and pulled around by a big machine, and that my presence in Tesco is subservient to that machine.  I get the impression that the same applies to Tesco’s staff; I am sure that thousands of fine people work for Tesco, but their individuality appears to be suppressed to a greater extent than at Waitrose or indeed Morrisons.

All large companies are run using formularised systems and procedures, overlaid with clear accountabilities for each job-holder, but Tesco’s very success and efficiency seem to militate against individual expression.  Patrick Collinson blogged in the Guardian last week about Tesco’s heavy-handed attitude towards his writing down their prices – a situation that would have been easily resolved by applying some human common sense.  When I was being processed through the tills in my local Tesco last week, the check-out girl was being berated (sorry, given-on-the-job training) regarding an erroneous transaction, but was expected to continue to serve customers while the supervisor hectored.  The experience was clearly doing nothing for the girl (and she was just a girl), and did nothing for this customer either.  Better that, though, than the new corral of badly managed and unreliable self-scanners, where any error is the customer’s fault.

My own samizdat action was to photograph a sign over the new chiller cabinet:

What, just these two doors?  Or all the doors in the country?  What about the stores that still have open cabinets?  And these new, narrower cabinets are accompanied by narrower aisles, so the quality of the shopping experience has been diminished.  I believe Marks & Spencer’s Plan A, whereas this sort of puffery just induces cynicism, I’m afraid.

The primary responsibility of any company is towards its shareholders, and the broader stakeholder community of customers, staff, suppliers and communities must necessarily be secondary.  However, companies in the service sector – and retailers most of all – must maintain a balanced and open attitude towards all of these groups, in order to maintain their reputation and secure their future.  And for mid-market retailers, this balance matters most of all.  If a company’s only USP is price, and its goal is always to be the cheapest in the market, then consumers will accept a trade-off against service, environment etc.  They’ll tolerate idiosyncrasies in service and availability that they wouldn’t accept in the mid-market, but the rock-bottom retailer still gives the impression that they are on the side of the shopper.

The modern Tesco no longer does this; its customer face is more appropriate to a middle-ground-straddling monopolistic provider – a utility company, a train company; and of all the supermarket businesses, Tesco comes closest to monopoly, thanks to its multi-format success, and its ability to “Tesco-ise” a town – Inverness, for instance.

Shopping for food is usually a chore, but the application of value or individuality, be at Poundland or Morrisons, Waitrose or Whole Foods, can add some pleasure, a je ne sais quoi, to the experience.  Tesco offers little expectation of surprise-and-delight.  Its ruthless efficiency makes it one of the world’s most successful retailers; as Brits we should be proud of it, but our experience as simple shoppers make it very difficult to love.

 

POSTSCRIPT:  this piece from the Guardian, taking a broader look at Store Wars, is also well worth reading.


Fnac and the French book market: new shops, diversification and the Lang Law

I’ve written a full-length and carefully researched piece on the French market, in light of Fnac’s announced intention to double its store numbers.  The differences between Fnac’s ambitions and (say) Waterstone’s underline the massive structural differences between the French and British book trades.

You can read the article, entitled Fnac: French Connection? here.