As regular readers will know, the recent announcement by Woolworths regarding the future of Masters should have come as a surprise to no one. The accompanying announcement about Home Hardware was more of a surprise, but as a comparatively small business nestled in an out-of-favour segment in the Woolworths empire that decision probably makes sense. (It doesn’t look good for Woolworth’s competence outside of groceries and liquor that Big W, Masters and previously Dick Smith Electronics all either failed or struggle to return a respectable profit. Having said that, the presentation and some product ranges of Woolworths supermarkets isn’t saying a lot about their competence in their core business right now either.)
SME business leaders are regularly encouraged to spend more time working “on their business” rather than “in” it – and for all the right reasons of seeing the bigger perspective, opportunities, challenges and so on. Conversely, can it also be a problem where those at the helm spend too much time working on the business and not enough time in it?
In September last year I argued that Masters’ failure stemmed from things including:
- Overabundance of finance
- Poor customer experience design
- Poor timing
- Over-generalisation/ lack of specialisation
- Ineffective advertising
There’s no doubt that Woolworths had an eminently defendable big-picture strategy behind their decisions. I’m sure that there was research, advice and scenario planning. In Masters’ case, partnering with Lowe’s– a business with over 60 years’ experience, 1800 stores and $56 billion turnover, with all the expertise and access to supply that comes with that, might have even been a master stroke. Finding sites was always going to be a bit harder, but if the offer is superior and the attraction strong enough many people will travel to a worthy destination – Ikea, Costco and the mega-regional shopping malls have proven this.
However, as the focus narrows, decisions become harder to excuse. From designing product categories and ranges from a flawed concept rather than customer demand (exemplified by the inclusion of a whitegoods range with high competition and low margins), through to a customer service model that simply didn’t work, it was the smaller (if you can call those things smaller) details that failed to engage. Obstinately sticking with poor decisions didn’t help either. Let me give you an example.
Last week I needed to purchase pool salt and chose to support Masters, as if my $6 spend would help them out. (How can anyone make a profit selling a 20 kilo bag of salt for $6? The freight cost alone…). I also wanted to buy another basic pool care product, but the generic name for it didn’t appear on the packaging of any of their products, so either they didn’t have it or it went under a different (American?) name. As there were no staff around to ask, a potential $26 sale remained a $6 sale. No biggy on its own – unless it happens a lot, in which case the business had done the hard work of getting people in but failed for the most basic of reasons to convert that store traffic into store sales.
But that wasn’t the annoying bit. When I got to the obligatory and unpopular self-service checkout, it turned out the 20 kilo bag of salt had no barcode. I rotated it a few times in case magic happened, but as that energetic tactic was all to no avail I pushed the button that made a little red light turn on. I was hoping for a siren too, but my luck remained absent. After a period spent muttering and looking as pointedly at space as possible, two staff members looked at the little red light from afar before deciding they had more important things to not do elsewhere.
After another small while and a large amount of arm waving a different vaguely smiling and specifically lethargic sales assistant came along, looked at the bag of salt and then went away to read a book, possibly War and Peace. A few minutes later he did his work with the screen and I was ready to pay my $6. Except when I entered the obligatory postcode the self-checkout decided that a staff member was required, for no known reason. After a few minutes a different but even more lethargic member of staff came over and did her thing, offering no explanation and few signs of life.
(If it wasn’t for the sight of the two old guys trying to fit a 3 metre package into the boot of a Mitsubishi Magna in the carpark the whole experience of spending 20 minutes to purchase a $6 bag of salt might have been considered even less satisfying. I think the two staff members watching enjoyed it too. Also, it was easy to get a parking spot so that was a win.)
It turns out that one of the biggest differences between Bunnings and Masters is their workplace culture. On the ground, Masters’ is reported to be one of control, regulation and hierarchy, where Bunnings’ is one of empowerment, inclusion and two-way communication. What difference might the Bunnings culture have made to Masters? I’m guessing, considering the direct feedback available on customer demand around product ranging and service, quite a bit. Maybe even enough to buy some more time to fix other problems. Maybe not.
This takes me to one of my favourite whipping boys, David Jones. There is absolutely no doubt that the customer service given at Bunnings, and indeed many other hardware stores, is substantially, stratospherically and, when you think about it, incredibly superior to that offered at our nations’ premium department stores. Does it make sense that the service available for someone who needs to buy a $5 bag of nails is superior to that offered to someone considering a $800 suit? That a gross profit of $3-ish covers the cost of labour for a minute or two but a gross profit of $400-ish doesn’t? Of course not – unless the perspective is wrong.
The big picture strategists at David Jones (notwithstanding the recent takeover) supported by decades of data based on the outcomes from poorly trained, motivated and supported sales people, appear to have perceived customer service and the people who provide it as an expense and therefore, quite logically, tried to reduce it. However, the big picture strategists at Bunnings, supported by an in-depth knowledge of the small picture of what individual customers want, have seen customer service provided by trained, empowered and well-supported salespeople (and the salespeople themselves) as an investment and has tried to maximise it. Sales and profit results over the last decade from both businesses attest to the effectiveness of each of these tactics.
The first of these perspectives is typical from those who understand only the big-picture view, where the latter is more likely when those based in cloistered offices work hard to maintain a ground-roots understanding of the business and its customers.
Staying in touch with the big and small pictures is not that hard. Here’s a few tips:
- Know your market and what is expected of your brand in comparison to your competitors within your industry according to your market position (Need help with that? Talk to me about the 21T Value Grid or read more about it here: https://www.21triangles.com/the-21t-value-grid/)
- Engage with, ask and listen to your customers – they don’t know everything but they do know plenty. (Need help with that?https://www.21triangles.com/customer-experience-design/)
- Engage with, train, support, empower, ask and listen to your team – they don’t know everything either, but they’ll know some things the people in the offices looking at reports don’t, even if only to help the people in the office understand what’s behind the numbers. (Yep, you guessed it, we help with that too: https://www.21triangles.com/your-team-employee-engagement-performance-management-and-recruitment-2/)
Perhaps most of all, try to be aware of what you do and don’t know. Look for gaps and assumptions. Speak with a diverse range of people. Seek and listen to feedback and ideas with a view to collaboration, not criticism. Look at the numbers as predictions or results, not questions or answers. Be humble, be open, and be in touch. Be aware of how your emotional brain is influencing your logical brain and listen to both. Stay positive, inquisitive and take time to let thoughts evolve. And, in keeping with the theme of this article, be intentional about having the big and small pictures inform and shape each other.