If there has always been one certainty in the retail industry, then it is uncertainty.
We deal with customers who are unpredictable. We forward guess every season in terms of what we should stock in the hope we can sell it. We are at the mercy of the weather, the geo-politics of the world and even the performances of our sporting teams.
Much of this we accept because it is simply part of being a retailer.
But as we sit here in the middle of the golden quarter 2024, uncertainty is everywhere.
We are still reeling from budget uncertainty. Wrestling with the ramifications for our costs, our sales, and our ability to invest. On the one hand we are told the National Insurance freeze for employees is good. It will mean more money in the customer’s pocket. But on the other hand, the NI increase for employers means we must deal with less money in our own business pockets.
Higher minimum wage thresholds also hold the promise of more customer disposable income, yet again it will cost us more as retailers, with potentially less staff, less training and again less investment. The jury is undecided on everything.
And in an industry where all retailers need to stand together more than ever, (retail crime being a good example) there is also uncertainty and division on who will be the losers and the winners amongst us. For some observers it is clearly the SMEs who will be mostly affected by tax increases, whilst for others, it is the larger retail operators who will be forced to subsidise the more local businesses.
One certainty is still the same. As always, we need to get on with things. We need to find ways to be better. We must continue to become as professional and as efficient as ever. And as we all face the same head-winds we must learn from each other.
Next has just announced it will surpass £1bn profits this year for the first time. It is not yet an absolute definite, but it is about as certain as anything can be in today’s retail climate.
What does this mean for us? Well, because Next is a retailer just like us, and whatever size we are, we should learn from them.
Next is not an accidental beneficiary of its profits. It is pragmatic and efficient, and by being so it creates as much certainty and stability as it can in this world of retail unpredictability.
Their lesson to us all is focus. A relentless focus to execute well in everything they do. This focus is born from a simplicity of purpose. Why are we doing this? How will it benefit us?
Next is clearly a complex business whose success is not just about exemplary product development and omnichannel operations. It is also a developer and implementer of leading market technologies. Next manages complexity through focus.
Every investment and development, no matter how large or small, must deliver on at least one of four simple criteria. They must have purpose. They must either drive sales growth, improve customer service, cut costs, or enhance services.
If the initiative cannot meet at least one of the criteria, if it cannot justify its purpose, its benefit to the customer and the business, then it will not justify the investment. This is a daily and a relentless process for every Next team and employee.
It is a simple lesson for all of us. Can any of us claim to have such focus?
Don’t we often get distracted by more attractive but less sensible initiatives? Don’t we get swayed by popular ‘easy’ solutions, instead of applying ourselves to the essential details of retailing?
The approach of Next is not exclusive. There has never been a better time for any business to re-focus. What is the purpose of our business? What criteria do we need to apply in everything we do to ensure that our actions always benefit and drive forward our purpose?
Time for us to create our own certainty in this world of retail uncertainty.