A landslide starts with this

Can you hear the dripping pipe?

Most people were asleep in their beds when the sound, described as being ‘like a fighter jet’, woke those in surrounding lodges.

Outside they discovered a black void where two large buildings had once stood and they started digging frantically, spurred on by desperate cries from the rubble.

The main cause of the 1997 Thredbo landslide was the collapse of the Alpine Way above the town. It was the result of a combination of factors, including wet weather and the way the road had been constructed. 

The Alpine Way, which runs above the village of Thredbo and through the Snowy Mountains, was originally built as a service road during the construction of the Murray 1 and 2 hydroelectric power stations in the 1950s. After the hydroelectric stations were finished, the road was upgraded, which included the addition of landfill.

The people weren’t killed by the snow or the weather; it wasn’t the buildings and it wasn’t a slow emergency response. At least none of these were the root cause of these deaths.

Why did the road collapse?

The eventual root cause was determined to be a dripping pipe that undermined the foundation of the road which eventually caused it to collapse.

In your business you are constantly troubleshooting, trying to find the problems and trying to fix them. The real issue is that people misunderstand the difference between problem and symptom.

Managers/ owners (even CEOs) say they have a ‘problem’ because of “poor sales volume”. Or that the “market share is declining” for instance.

How often do YOU say or think that you have a problem because of declining revenues?

Declining revenue is not a problem – it is a symptom. Ditto for market share. And shrinkage. And many more…

The Solution

The way to get to the root is to ask ‘WHY’ at least five times – or until the answer to your question is ‘just because’. Only then will you have reached the likely root cause. The same techniques can be applied to any ‘issue’ – say absenteeism or poor customer service.

The Exercise:

Most people say they have a problem with ‘declining revenue’. 

I cannot tell you why your business has declining revenue (without knowing much more) but I can tell you how to determine the answer. So, here is the challenge for AGHA members:

Keep asking WHY to the question below and keep going until the answer is ‘because’ or there is no other answer.

Q: Why is my revenue declining?

Have fun.

Dennis Price

GANADOR: Architects of high-performance retail environments.

Free eBook – ‘101 uncomfortable truths’ and like the Facebook page for a daily dose of smarts.

7 things you should know before signing a franchise agreement

1. Know how you are going to get out. Like a Hollywood wedding, the pre-nup is the most important part because when the romance is gone, all you have is the paperwork. Make sure you read yourself and ask professionals about the things you don’t understand – don’t simply rely on (e.g.) lawyers to do everything for you because YOU are the one getting married – not the lawyer.
2. The franchisor is in a different business to you. They are selling businesses (B2B) and you will run that business, which is more often than not a B2C business. This means franchisor and franchisee have different objectives and metrics of success. If both parties understand this, there is much less conflict later on.
3. You should know why you are getting into the business. Understand your own motives and be honest. If you are looking for an easy way to make money, don’t do it because despite what a franchisor might say, it is never easy – at least not the first five years.
4. Know that no one can guarantee anything and that you are still exposed to some risk. A franchise system is attractive because it offers lower risk – not because it has no risk.
5. Every market is different and every franchisee is different and franchisors are constantly learning and adapting their offer to the market. The franchisee has an important role to play in all that by providing feedback and market intelligence. However, you must be willing to accept and live by the system because whilst every market is different, yours is not as unique as you would like to believe. If you can’t live by the system, don’t buy into the system.
6. The franchisor wants to sell franchises so they will present the realistic, best-case scenario. You should instead plan for the realistic, worst-case scenario – especially in terms of financing the business.
7. The best franchisors have the best communication systems. Things like conferences, training opportunities, supplier meetups, newsletters and intranets demonstrate that they take their network seriously and franchisees can take comfort from that.

Dennis:

PS: Franchisors we can help you save time, money and reduce risk and effort. Have a look...

Adopting the cloud is risky but at least the insurance is cheap

To cloud or not to cloud - that is the question...

I am a big user of cloud-based applications

• Tradeshift (Invoicing)
• Sugarsync & Bitcasa (Backup)
• e-Academy Knowledge Management
• Social Learning
• All Social Media Applications (Hootsuite, Twitter etc.)
• Mailchimp (Newsletter/ Autoresponder)
• Dropbox
• Feedly

But at the same time, I am predicting a massive disruption for the internet (virus/ cyber-terrorism) which seems to be that I don’t believe my own predictions.

A few points:

1. When that disruption happens it will of course not be aimed at your business specifically – but at internet infrastructure.
2. Even if you manage to stay ‘up’ – your clients won’t anyway, so the disruption will be effective despite those local/effective back-ups  & strategies
3. Most companies nowadays do their back-ups to the cloud which does not make your back-up accessible anyway when the cloud has some thunder…J

So there are two distinctions here to be considered: internet as a piece of infrastructure and just data records and storage. (You may use the internet to access your storage or you may not.)

 INFRASTRUCTURE:

The internet may be temporarily disabled in a big way in the future (like a road being blown up in a war) but that will eventually be fixed.

The bigger risk I see is that if the cyber-terrorists destroy the integrity of the banking system (or health, or government). That would be a huge issue that affects every business. The general internet may still work and the cloud may still be relatively safe. There is not much you can do about this risk I imagine?

 DATA RECORDS:

You can easily store your data onsite – but will that data have value when you don’t have the infrastructure to access/service your clients?

If so, then local storage/servers is an option. This depends on the nature of your business and how mission critical your data records are.

Generally speaking, the cloud providers are easier, bigger targets for mischief makers, but this is balanced by the fact that they generally put resources into protecting their assets – probably more effectively and more robustly than you can?

 MY ADVICE:

On balance I would say that on cost/benefit analysis the Cloud is as good as any other option for most businesses (depending on the independent value of your data records).

What you SHOULD DO is to INSURE against these risks – because that is ultimately all that it is.

I don’t know for sure, but I reckon this risk is under-priced in insurance companies (because their actuarial models work on finding patterns in past data occurrences and they are NOT geared for these Black Swan events.) That means the insurance will be relatively cheap – until it happens once. That is; there are business continuity insurance products and there are ‘cyber’ products available – it is just that I do not think the insurance companies will have been able to truly cost the actual risk, and therefore these insurance products will be relatively cheap.

Standing on the shoulders of giants to see retail's future

To continue this weeks theme on the FUTURE and PREDICTIONS, I want to take you back to the 1980s when Alvin Toffler wrote Future Shock (1980) and The Third Wave.

Remember that when he wrote this, we had not yet seen the wide-scale adoption of the PC or the Internet.

This is what Toffler predicted:

"For Third Wave civilization, the most basic raw material of all--and on that can never be exhausted--is information... With information becoming more important than ever before, the new civilization will restructure education, redefine scientific research and, above all, reorganize the media of communication... Instead of being culturally dominated by a few mass media, Third Wave civilization will rest on inter- active, de-massified media, feeding extremely diverse and often highly personalized imagery into and out of the mind- stream of the society.

"The giant centralized computer with its whirring tapes and complex cooling systems--where it still exists--will be supplemented by myriad chips of intelligence, embedded in one form or another in every home, hospital, and hotel, every vehicle, and appliance, virtually every building-brick. The electronic environment will literally converse with us" (352).

"To operate these factories and offices of the future, Third Wave companies will need workers capable of discretion and resourcefulness rather than rote responses. To prepare such employees, schools will increasingly shift away from present methods still largely geared to producing Second Wave workers for highly repetitive work" (353).

Today we are living these predictions.

Toffler got it right because he did not simply look at basic statistical trends, he looked at the fundamentals and did a meta-analysis on the context. He understood human nature and based his thinking on those timeless principles.

I am sure there are a few companies out there who wished they had paid a bit more attention back then.

Dennis

---

We have created a market for IDEAS and you are welcome to swing by and get yourself some.

Franchisors: Convert your OPS MANUAL into a custom-branded, interactive web-based application for $5k only

Connecting the dots like a turkey

NN Taleb explains the turkey problem thus:

“Consider a turkey that is fed every day, Every single feeding will firm up the bird’s belief that it is the general rule of life to be fed every day by friendly members of the human race ‘looking out for its best interests,’ as a politician would say. On the afternoon of the Wednesday before Thanksgiving, something unexpected will happen to the turkey. It will incur a revision of belief.”

Of course most people who think about the future, think they are thinking when they are simply extrapolating the trends.

They are usually right about tomorrow looking like today, But the further out you go the more useful your predictions would be, the less accurate they are.

There is of course a better way - a smarter way. More about that some other time.

We have created a market for IDEAS and you are welcome to swing by and get yourself some.

Franchisors: Convert your OPS MANUAL into a custom-branded, interactive web-based application for $5k only.

Declining sales is not a problem

Most people were asleep in their beds when the sound, described as being ‘like a fighter jet’, woke those in surrounding lodges.

Outside they discovered a black void where two large buildings had once stood and they started digging frantically, spurred on by desperate cries from the rubble.

The main cause of the 1997 Thredbo landslide was the collapse of the Alpine Way above the town. It was the result of a combination of factors, including wet weather and the way the road had been constructed. 

The Alpine Way, which runs above the village of Thredbo and through the Snowy Mountains, was originally built as a service road during the construction of the Murray 1 and 2 hydroelectric power stations in the 1950s. After the hydroelectric stations were finished, the road was upgraded, which included the addition of landfill.

The people weren’t killed by the snow or the weather; it wasn’t the buildings and it wasn’t a slow emergency response. At least none of these were the root cause of these deaths.

Why did the road collapse?

The eventual root cause was determined to be a dripping pipe that undermined the foundation of the road which eventually caused it to collapse.

In your business you are constantly troubleshooting, trying to find the problems and trying to fix them. The real issue is that people misunderstand the difference between problem and symptom.

Managers/ owners (even CEOs) say they have a ‘problem’ because of “poor sales volume”. Or that the “market share is declining” for instance.

How often do YOU say or think that you have a problem because of declining revenues?

Declining revenue is not a problem – it is a symptom. Ditto for market share. And shrinkage. And many more…

The Solution

The way to get to the root is to ask ‘WHY’ at least five times – or until the answer to your question is ‘just because’. Only then will you have reached the likely root cause. The same techniques can be applied to any ‘issue’ – say absenteeism or poor customer service.

The Exercise:

Most people say they have a problem with ‘declining revenue’. 

I cannot tell you why your business has declining revenue (without knowing much more) but I can tell you how to determine the answer. So, here is the challenge for AGHA members:

Keep asking WHY to the question below and keep going until the answer is ‘because’ or there is no other answer.

Q: Why is my revenue declining?

Share your answer in the comments below.

And if you are not going to play along, my question is this:

Can you hear the dripping pipe?

Dennis Price

• GANADOR: Architects of high-performance retail environments.
• Get RetailSmart:  Daily, Weekly or Monthly Options – CHOOSE HERE.

Hero worship: Taleb & Kahneman

Meet two of the people who are my intellectual sherpas.

You will NOT spend a better 90 minutes

You can find the books here.

You can find a short take on ONE theme of Antifragility in this blog post.

The third option is.. (and yes, there is always one)

If you are feeling a bit ‘flu-ey’ a quack might prescribe antibiotics. You will feel better in a bout a week. Without the pharmaceuticals it will take about 7 days.

Don’t blame the doctor, they suffer from the same thing business people do: we feel compelled to take action. (Nassim Nicholas Taleb calls it interventionism.) A bias for action is glorified by all the self-help gurus who read each other.

Taking action makes (ironically) feel better because we are doing something. How is that for a circular argument?

As entrepreneurs grow their businesses into corporations this problem will be come exacerbated as they eventually appoint CEOs/ COOs.

Corporations believe equally that (a) success comes from focussing on the core business and (b) that one should diversify so that all your eggs aren’t in one basket. What happens next would be funny if it weren’t for the pain it causes so many people:

Each successive CEO adopts a version of the opposite strategy to their predecessor. Not because it is the right thing to do (there are arguments both ways and you can stack up the research and the numbers anyway you want), but they do it because it frames them as a ‘man’ of action.

The third option is not so sexy. You could choose to observe and wait. You could choose to think carefully and decide to do nothing. Yet.

Our glorification of the ‘man of action’ stereotype has resulted in the unilateral dismissal of watchful waiting in favour of mindless action. We dismiss all thinking as ‘academic’   - when it is only sometimes the case, and we consider all action beneficial – when it only the right actions are.

Taking no action – purposefully and mindfully – is a legitimate form of action and very often it is a more informed strategy with a higher chance of success.

Of course, if you do nothing, nothing gets done. We all know and we all agree. But when you act is arguably more important than the act itself. Timing is really everything. And THINKING is a prerequisite for getting your timing right. Action for the sake of the action is worse than no action at all.

Market research is often used as a substitute for thinking. But executives need the ‘research’ to write a board paper. Of course a board paper is nothing more than an exercise in political judgement about what can be justified rather than what really needs to be done.

In a rapidly changing world timing your actions is harder and is more important than ever. Organisations have limited capacity for change. When you do decide on a course of action, make it simple and make it count. It might be your only chance.

Dennis Price

GANADOR: Conceiving and implementing SMART solutions to create high-performance retail environments.

PS: Latest newsletter is out - and it's a cracker. Subscribe at the website.

The agency problem and having skin in the game

Never trust a vegan butcher

My favourite book (in the last 10 years at least) is Antifragile. Taleb identifies ‘the agency problem’ as one of his pet hates: Never get on a plane if the pilot is not on board. The agency problem is simply translated: there is a problem when a person has no ‘skin in the game’.

In (large) corporations this is an obvious and major problem because the decision-maker suffers no/little negative consequences for the decisions that they make. Modern executive compensation options superficially attempts to address this, but when the shares are only ever given (never taken away once ‘earned’) and the shares are allocated (via non-recourse loans) there is only upside and no downside.

The problem extends of course to other spheres in life. A stockbroker who recommends a stock but suffers no consequences from his/her error is an example of the agency problem. A doctor will perform an operation or prescribe pharmaceuticals that they may not willingly take up themselves.

By the same token, consultants advise businesses on strategy and execution with absolutely no skin in the game. And this is an issue (retail) executives  must deal with.

Right now retailers are faced with many decisions and particularly decisions that are driven by technology and the internet. They feel compelled to act and they are inundated with advice. There has never been a more important time in our generation for retailers to effect a real step-change in their operations.

To overcome this problem, consider these three steps:

#1. Ignore all unsolicited advice.

Whoever gave it has no skin in the game. If a vegan is manning the barbecue, run. (How is that for some free advice?). Free advice is worth what you pay for it, so there is really no harm.

You have to learn to trust your own judgement, experience and intellect. Corporate managers find this scary. They use market research as a substitute for thinking, because whatever they decide has to go into a board paper which is an exercise in political judgment, not strategic thinking.

#2. When you procure advice, make sure the outcome is tied to the advisor’s remuneration. 

On personal note, we offer this to clients but more often than not they are more comfortable to pay a lesser, fixed amount than potentially paying much more even if there is more upside. 

Businesses often insist on knowing an hourly rate when it is clearly not in their interest to buy services based on an INPUT. This is a classic example of the agency problem in action when they prefer certainty of the cost (input) to the potential of positive upside (output).

I am not suggesting you don’t use consultants; there is a time and place for that, but HOW you structure the relationship is very important.

#3. When you do decide to act on advice, consider whether acting is the right decision at all. 

Taking no action – purposefully and mindfully – is a legitimate form of action and very often it is a more informed strategy with a higher chance of success.

Of course, if you do nothing, nothing gets done. We all know and we all agree. But when you act is arguably more important than the act itself. Timing is really everything. And THINKING is a prerequisite for getting your timing right. Action for the sake of the action is worse than no action at all.

The agency problem is an insidious one. The people (executives and managers) who must recognise the problem and mitigate its effects are actually the agents! It is extraordinarily difficult to manage because it means making decisions that might not be in your personal interest and that is a big ask. Involving smart, ethical consultants can prove invaluable but only if executives also manage the agency problem of the consultant who does not have skin in the game.

Dennis Price

GANADOR: Conceiving and implementing SMART solutions to create high-performance retail environments. (Get your free eBook – 101 uncomfortable truths about marketing you don’t want to know on our website or like the Facebook page for more ideas like that.)

Read all about it: The Pendulum

There is a very insightful book on the market titled Pendulum (Williams & Drew, 2012). I don’t suspect it is going to be piled up at the entrance to Dymocks any time soon – but it is an important work – and does a very good job of indentifying the meta-cycles in western society.

They argue that there are distinct social patterns that exist on a fixed cycle of 80 years, which are divided into 4 equal 20 year quarters. The two peaks of cycle are the polar opposites where we get a ME- Society and a WE-Society.

Western society is currently experiencing the upswing towards the peak of the WE Society. Australia seems to follow the US cycle of the pendulum but the Asian cycle appears out of sync with the Western cycle. China shows evidence of entering a ME cycle with and what happens to Australia will be really interesting to see. Will we synchronise with Asia? Will we stay in tune with the West?

The pendulum metaphor is apt as there are two distinct peaks in the rhythm of society – and they are polar opposites.

The next 10 years (2013 – 2023) will take us towards the peak of the WE generation. It is no surprise that ‘social media’ is the driving force that it is because that technology has found fertile soil in the collective societal mindset.

If you want to understand what is going to drive social norms and popular culture over the next 10 years, then find the defining moments and attributes of 1933-1943. If we turn back the clock 80 years we will find the defining technology in the US was radio. Vacuum tubes in the early 20’s led to a proliferation of radio sets being sold and radio stations mushroomed in the late 20s and early thirties – paving the way for the mass communications – much like early chat rooms gave way to social media in the current upswing to a new collective ‘WE’.

If you consider the mid 30s to mid 40s the equivalent period in history, then there are quite a few major events and decisions that seem to support the thesis.

The equivalent phase of the cycle in Australian history illustrates the prevailing WE culture clearly.

1. At the 1937 elections, both political parties advocated increased defence spending – the arguments being that it was for the common good.
2. Minister for War Organisation of Industry, John Dedman introduced a degree of austerity and government control previously unknown, to such an extent that he was nicknamed "the man who killed Father Christmas." In May 1942 uniform tax laws were introduced in Australia, as state governments relinquished their control over income taxation.
3. Immigration was initially introduced to protect the collective: In 1945, Minister for Immigration, Arthur Calwell wrote “If the experience of the Pacific War has taught us one thing, it surely is that seven million Australians cannot hold three million square miles of this earth’s surface indefinitely. (The current debate about boat people being denied access is exactly to be expected as we move towards an era where our identity will largely be defined by our membership of a particular group.)

All of these are prime examples of how individual freedom and needs are suppressed and even sacrificed for the ‘common good’ which defines the WE era.

The Vietnam War coincided with the downswing into the ‘ME’. Authority was questioned. Previously unquestioned alliances with the US were questioned. Despite Holt’s sentiments and his government’s electoral success in 1966, the war became unpopular in Australia, as it did in the United States. The movements to end Australia’s involvement gathered strength after the Tet Offensive of early 1968 and compulsory national service became increasingly unpopular too.

Suddenly the ‘WE’ wasn’t such a compelling cause any more.

Of course the defining behaviours of the 60s were the hippy revolution and free love. In the lead up to the ME (1960s) about 60% of Australian manufacturing was protected by tariffs.

Approaching the peak of the ME cycle, in 1983 Hawke and Keating abandoned traditional Labor support for tariffs to protect industry and jobs. They moved to deregulate Australia’s financial system and ‘floated’ the Australian dollar. In 1987 the defining movie of this generation was Wall Street in which Michael Douglas famously quipped: Greed is Good.

Movies like Rambo Rocky and the Chuck Norris genre was all about Lone Rangers conquering the world against all the odds. The #1 song for 1983 was Every Breath You Take

If you believe that pop culture reflects society – then consider the extreme individualism and excesses of Kiss and The Village People.

Today, as we head into the WE – Rambo has made room for the Expendables where all yesterdays. Heroes have seen the light and joined forces.

Everybody is now in a community having conversations…

Unfortunately, we are going to take this too far:

• Read this and weep I (Global Noise)
• Read this and weep II (Victoria’s Secret)

It is a fascinating read and the insights are quite profound. If you have a strategic responsibility of any kind in your business, you should get the book. (Amazon link – not available at Dymocks.)

Newsletter subscribers received this article first - for an extended version of this article, including tables and graphs, you can subscribe to get (free) access to all current and past content.

HAVE FUN (but don’t take it too far.)

The new war of Retail

I was a lieutenant in the SADF – and I can honestly say that I learned more there about people and management during that time than the 4 year MBA. That is probably no surprise as we have the US Defence Force to thank (or blame) not only for the Internet but also for Strategic Management. 

The US Military shaped the systematic development of the management discipline more than any other organisation – hence the proliferation of terms such as mission, strategy, targeting and tactics.

If you are familiar with Organisational Behaviour, you will know that the (type of) language you use shapes your mindset which shapes your behaviour.

Because businesses/managers think like thy do, talk like they do, they consequently produce battle plans (strategies) that reflect their language and thinking. Your competitor is the enemy and you have to ‘win’ market share as if it is a ‘territory’ to be conquered.

All of this had its time and place in a different era.

This was an era when battles were symmetrical: two opposing forces face off on a defined battlefield, with roughly similar formations, similar firepower, similar manpower and generally accepted principles of warfare. You dig your trenches and I will dig mine.

You can see where I am going with this.

Things have changed: Now is a time where strikes are made from thousands of kilometres away. It is an era of chemicals, of unmanned drones. It is an era of cyber attacks. It is a war where foreign correspondents fight for the minds of the viewers alongside the soldiers who are fighting for that same audience’s heart.

It is a world of war where small mistakes are magnified and where the soldiers question the commanders and traitors hide behind the guise of transparency.

This war is no longer symmetrical and this war has different rules. The battle fields extend into space where there are no boundaries and where there are no universal laws or Geneva Conventions.

Business and retail is no different.

The fight is no longer restricted to a defined battle field. The enemy is elusive – and very often within. The rules of engagement are fluid. We may want to turn to convention or traditional authority to make the conflict fairer, but we know that in truth they cannot control this new conflict.

If we arrive at the battlefield dressed in our traditional uniforms with our traditional weapons, we will become what the movies have popularised: collateral damage. Somewhere out there an unmanned drone has just been launched from 10,000 miles away and it has your name on it.

As explained in this post, it is no use to blame the government, the landlord, the employees, the customers, the internet or even the suppliers. There is a new war to be fought and the objectives are different and the methods are different.

** I could go on – but look forward to YOUR take on some changes in the comments section below.

I break down the imperatives into six distinct steps.

1.     Recognise and accept that we are fighting a war with new rules.

2.     Figure out how to win this new war.

3.     Accept responsibility for our successes and failures

4.     Embrace change; take risks… and DO STUFF DIFFERENTLY

[Stop the endless visioning, ‘missioning’ and strategising – and especially stop the SITREPS+.]

5.     Become good at the new skills of war

6.     Re-build your business system to be one of constant adaptation so that you don’t find yourself in this position again…

Dennis

GANADOR: Systems, skills & strategies that brings brands to life in retail.

Stay in touch: Newsletter. Facebook. Blog. Twitter. LinkedIn. (Mention this blog.)

+ SITREP – Army lingo for Situation Report

You are not in charge any more

The balance of power has shifted away

Every retail business is in a constant state of transformation.

Bennie spoke about the perceived ‘plight’ of the newsagent for instance. The subsequent commentary highlighted the fact that whilst it is a sector in transformation, there is nothing really unique about the challenges they face – all retailers have to constantly reinvent their business models.

I have been engaged in this sector for a long time now – directly with newsagents/ marketing groups as well as with suppliers in this channel and have delivered many success stories. By and large, most retailers faced with change (including newsagents) KNOW they have to change, but they don’t know HOW to change. (I don’t agree with Stuart Bennie that the majority - 80% - don’t want to change.)

Successful transformation is driven by people. During the challenge of the transformation, we must resolve the role of each stakeholder and possibly more importantly, identify which stakeholder is critical to our future success.

The key stakeholders in the typical retail business are customer, suppliers, staff and of course the owners/investors. They are all important in different ways for different things.

If pressed, most people say the customer is the most important. I have written about it and I have spoken about it too. Arguably, it is the staff who must do the servicing of the customer’ needs so they may be considered the most important. Of course, without an investor you don’t have a business.

But since Ganador’s business focus is working through the whole retail supply chain to get better outcomes on the shopfloor, we work both sides of the fence. From this experience I can unequivocally say to all retailers reading this that you need to think very differently about your suppliers:

What if your supplier is your real customer?

What if the consumer is simply a resource/asset that retailer can ‘sell’ to brand suppliers?

What if the retailer’s job is to create an environment that attracts potential consumers to the store in order to satisfy the needs of its ‘real customers – the supplier?

Is a retail brand not simply a meta-brand? (A brand of brands.)

Is a student a ‘product’ of a university that is ‘bought’ by society or industry; or is a student a customers of the university simply buying educational services?

Similarly, the retail supply chain needs to evaluate its philosophy towards the various stakeholders.

Historically, access to the retail distribution network was the only option for suppliers/brands, and retailers could use this threat of responding to the needs of consumers to vary your offering to manipulate suppliers. Is it any surprise that the retail brands who are suffering the most have traditionally been the most powerful?

The larger retailers introduced house brands (private labels) to further weaken the position of suppliers.

Many retailers, including smaller retailers, have dismissive attitudes towards supplier representatives.

Times have changed: The web has enabled the creation of an alternative channel (directly) to the consumer for the supplier.

Retailers who have wielded their power (of distribution and access to the consumer) may now be paying the price as their ‘customers’ (the suppliers) AND their consumers (their assets) are connecting directly.

This channel disruption demands price convergence (between offline and online) and retailers who are stuck with legacy infrastructure (including rents) must now secure better prices from the suppliers in order to remain competitive; ironically at a time when relationships are at a low point.

The balance of power is shifting - possibly to the extent that you have to consider your supplier as your real customer.

All stakeholders are important, but at this particular juncture the balance of power in the retail supply chain is being redressed in favour of a long-neglected stakeholder: the supplier. This means that retailers must adopt a different mindset towards their suppliers. (And so should some suppliers, but that is another story.)

How do you treat suppliers?

Has it changed in recent times?

What role will suppliers play in your success at the requisite retail transformation?

Every retailer has a marketing strategy, a pricing strategy etc.

What about a supplier engagement strategy?

I would love to hear your thoughts.