Deutsch Delights

In a city full of surprises, I discover the independent in Berlin’s retailers.

Berlin. The powerhouse within the European Union, the driving force of the continent’s economy. Visitors to this dynamic capital could be forgiven for assuming that the city’s retail landscape is dominated by the big in-your-face brands.

But this vibrant, thriving city also sings with an independent spirit – brimming with unconventional delights, enthusiastically celebrating individual audacity and placing an intricate focus on service. While there is plenty on offer for those seeking the big and the bold, those seeking to explore a new path will find a world of much smaller delights at their fingertips.

MUHLE is a beacon of tradition in a world of technology. This smart, modern barbershop offers an array of grooming services and products, all with the highest level of personal service and luxury.

Here, the chore of shaving is transformed into an indulgent experience, a celebration of modern masculine wellbeing. Light, welcoming and unhurried in store, shoppers can easily browse, and everything is wrapped up in an air of simplicity. The store makes clever connections with customers, using traditional masculine words, and old-school chair, with the barber expertly dispensing the signature ‘cut throat’ razor shave. Muhle is the equivalent of a day spa for men – the conversation may be a little different but the experience equally as indulgent.

This independent bookstore makes no pretension to compete with national chains or online behemoths. Instead, it delights in being a simple haven for those with a love for specialist books in travel, art, design, architecture and food. This tiny store is highly curated, and shoppers can rest assured that all titles have been carefully selected.

Its unassuming interior has a jumbled appearance, striking a youthful vibe. The sole intent here is to display the books to best effect. It’s also clear that store staff know their stuff and then some, interacting happily with shoppers, discussing authors, works and everyday life.

Those who don’t find the title they were looking for will leave instead with something else that sparks their interest, be that a uniquely designed jacket or a coffee table classic.

This bespoke men’s tailor offers traditional, one-to-one service, with its proposition focused on the design and making up of made-to-measure men’s apparel and ready-to-buy formal accessories.

As a compact retail space, and with a tailor’s workroom within, optimising the limited area for product displays is key. The store layout aims to inspire but equally let shoppers make their own decision. Customers are encouraged to take their first and final fitting in store as part of the overall experience, which also acts as a ‘show’ to other shoppers.

My first thoughts are that Room Capacity resembles an upmarket antique store, grouping products together because they are from the same seller or share a similar period. But on second glance, it’s clear that Room Capacity is cleverer than this, more exclusive in concept and very sophisticated and elevated in execution.

Its considered display includes a carefully chosen retro and vintage product range. Lighting and theatrical placement is deployed to great effect, given the limited space, and seemingly effortless product presentation techniques are to be applauded.

Room Capacity is a masterclass in the power of compelling story telling – collections are presented with expert placement and exceptionally high standards. But the store keeps its own mystique – no blaze of loud self-promotion here, simply a discreet introduction, enticing curious customers inside.

Time to hit ‘reset’

I review the impact retailers can make when creating a reset in this motnh’s Retail Focus Column.

It is time to hit the reset button. I’m not talking about complex five-year retail transformation strategies designed to find a new sense of purpose and better engage customers in the face of evolving shopping behaviour – though, clearly, many retailers have lots of big-picture thinking still to do. And not as a knee-jerk reaction as the end of the year fast approaches (there’ll be plenty of time for the whole ‘New Year, New Start’ resolutions thing, come January). No, I’m talking about a different kind of reset.

I’m sure it’s not passed you by, but ‘reset’ seems to be the word of the moment at present – attracting a good deal of media attention, largely thanks to Topshop. Dubbed ‘Project Reboot’, the retailer’s decision to temporarily close the vast majority of its stores in order to overhaul its merchandising before the start of Christmas was hailed by some journalists as an ‘unusual step’. For Arcadia: yes. But as with many good ideas, the old ones are often the best.

In truth, closing the store in order to launch the new season is a practice first started decades ago by Next. Though the rapid and seamless transition from one seasonal promotion to another may make sense from an operational perspective – delivering fundamental change instore while the store is trading is almost impossible – the decision by most retailers to manage stores metamorphosis under the cover of darkness has never been more at odds with the need for retailers to create more of an experience and ‘theatre’ around the store environment.

There’s much to be said for adopting the ‘(re)build it and they will come’ approach. In many respects, the idea alone that a retailer is bold enough to close its stores is also something that is likely to resonate well with shoppers. To steal a quote from another well-known industry voice, resets also afford retailers a valuable opportunity to “remerchandise rather than muddling through”. In December last year, US health retailer GNC shuttered all 4,464 stores for a one-day reset designed to “leave [its] old, broken model behind”.

Done well, resets create excitement amongst shoppers and store teams alike. Think of the buzz that surrounds new store openings and you quickly start to understand the all-round benefits. Just look at the interest and queues that the recent launch of Arket on Regent Street drew. Parent company H&M understands this (and executes it) better than most – its collaborations with the likes of Kenzo and Erdem are able to lure shoppers to Oxford Street at 3am. Supreme is another great example – its store Drops always pull the Gen Z shopper crowd hungry for its latest collections. Topshop’s Gucci-inspired ‘Merci Mon Cheri’ tee may have sold out when it came out in May, but it was a far cry from the frenzy generated and enjoyed by H&M.

Given that ex-Burberry chief merchandising officer Paul Price is now installed as Topshop’s CEO, the introduction of resets comes as little surprise. In recent times, its rivals have outflanked Topshop, with the Instagram generation willingly seduced by the ability of H&M, and online competitors such as Boohoo, to whip up a sense of interest and intrigue.

Large-scale merchandising resets of a store’s products can also prove complex, and completing them successfully requires merchandisers to have knowledge, project-specific training and clear retail communication if they are to deliver on plan and reach 100% execution. Managed well, however, resets provide the perfect opportunity to do just that, helping retailers to quicken the pulse of shoppers and conjure up both short- and long-term anticipation around what they can expect from the retail environment. What’s more, retailers can quickly recoup any revenue loss associated with closing the store for a day.

But a cautionary word of warning: if you do it, the spotlight will be firmly on you to get it right. If you want the transformation from pre- to post-reset to cause shoppers to stop in their tracks, you had better make sure the end result is damn good. Fail to deliver something with genuine newness, and well executed, and you will have no hiding place amongst the criticism you will open yourself up to – especially in a world hungry for instant gratification and driven by instant ‘likes’ (or not, as the case may be). Shuttering stores for a day only to reveal more of the same, no matter how solid your merchandising principles, just won’t cut it.

Whether Topshop’s reset will prove to be an outstanding success, only time will tell. As a wider concept, however, borrowing from the past could be just what is needed to ensure visible change instore is delivered with real impact – providing a greater sense of future optimism for a good number of retailers in the here and now. It makes you wonder why retailers have been so slow to embrace the idea.

Toying with transformation

I share my views on how toy stores are being affected in month’s Retail focus Column.

When America’s oldest toy store FAO Schwarz said goodbye to its spiritual home on New York’s Fifth Avenue in 2015, the decision by parent company Toys R Us sent shock waves through the industry. Immortalised by Tom Hanks in cult 1980s’ film Big, the store itself may have been a wonderland of fun. But, while kids went into the store and had a great time, their enjoyment did not translate into revenue. Now Toys R Us themselves are in trouble.

As we head into the busiest toy-buying season of the year, the world’s largest toy retailer has filed for bankruptcy in the US and Canada, loaded with a staggering £3.7bn worth of debt. For Toys R Us fun has come at a price.

No one is safe. The future of its 110 UK stores is said to be secure, for now, while in North America it has filed for Chapter 11 protection. But in truth, there is no hiding place for its failings. As recent examples have gone to show, survival in the current volatility requires not just resilience but the vision to successfully land transformational change. The retailer’s statement that its stores will ‘continue to operate as usual’ is clearly a statement designed to provide comfort in turbulent times, (for investors, store teams, and shoppers). Though in reality what it must do is anything but the ‘usual’ – and fast.

The way in which people shop for toys has drastically changed, thanks in the main to the rise of Amazon. At the heart of the challenge for Toys R Us is the company’s fundamental cultural belief in the ‘pile it high’ big box approach. In the UK, this way of thinking went the way of the dinosaurs sometime ago for all but the likes of B&M and The Range, who are happy to pursue the ‘sell it cheap’ half of the famed phrase.

The toy story success of The Entertainer goes to show that there is still profit to be made. Owned by self-proclaimed “charismatic evangelical” Christian Gary Grant, the retailer defies many modern retail conventions. It does not open on Sundays and has taken a conscious decision not to stock even the biggest selling merchandise ranges if they are deemed to have a connection to the occult.

Not only does it illustrate that a retailer can be both principled and profitable but that meticulous attention to detail instore matters. With a clear ‘thinking like a customer’ approach to its stores, small touches. For instance, steps by the till that enable children to pay for toys themselves at eye level. All help to make a big difference and create a “special” shopping experience.

Toys R Us chief executive Dave Brandon has been quoted as saying that bankruptcy protection will provide greater financial flexibility to “continue to improve the customer experience in physical stores… in an increasingly challenging and rapidly changing retail marketplace.”

In truth, a large part of the woes of Toys R Us is about its vast physical scale and the immense distribution centre like spaces that it calls stores. While Toys R Us has experimented with smaller format shopping centre locations, such as its Highcross Leicester store that opened earlier this year. The one thing that most Toys R Us stores do still have going for them is space – lots of it. Should they have jumped on the back of the boom in child’s play centres and incorporated them into big box toy stores? Surely the missed opportunity of the last decade within the sector. The sight of a child speeding down the aisle in a go-kart may bring health & safety professionals out in hives. But, the sheer joy that it brings to their face is priceless, as is the large dose of “pester power” that it provides.

Anyone who has visited a Hamleys or LEGO store recently knows that a kids love of play and toys is still strong – even if their iPhone or iPod is never far from reach. Yet with physical stores focusing on delivering satisfying experiences as a means of differentiation and viability. Toys R Us proceeded to close two of New York City’s most “experiential” stores — its flagship store in Times Square also closed in 2015.

Clearly, design has a huge role to play – Imaginarium’s adult and child-sized dual store entrance. LEGO’s use of augmented reality to bring the contents of its box products to life instore. Both great examples. For me though, this is not how you make the real magic happen instore.

Despite the aircraft-hangar-sized rooms filled with enough toys for a thousand Christmases, and putting retail design considerations aside for a moment. Most Toys R Us stores are soulless places, far removed from the word fun – and for far more fundamental reasons. Hardworking and diligent they may be, but few would describe Toys R Us store staff as being filled with childlike enthusiasm, or demonstrating a love for the brand that is engaging and infectious – in contrast to, say, Hamleys. Little wonder the result is a lifeless brand experience that has failed to capture the imagination of children for so long now.

By all means, invest in new store concepts. They remain vitally important for testing new ideas, motivating employees, ruffling competitor feathers, and wooing would-be investors. Delivering truly sustainable transformation, however, will demand not only investment in the physical store environment, but also investment in those ultimately responsible for making change happen. I fear though that this will all come too late to ‘save’ Toys R Us in its current form. Shrinking this goliath business to a more realistic and useful scale that reflects shoppers needs of today, whilst painful, could in truth be the antidote it needs. This though will be hard for everyone involved.

To seize the advantage in a highly competitive marketplace store employees don’t just need to ‘get’ the message but ‘live’ it. To take stores from the every day to the exceptional requires more than simply attitude and efficiency. It requires a love-what-you-do, do-it better mentality. It requires store teams who are not just fully engaged with objectives. But have a genuine desire to do more than just process transactions – algorithms and websites already make that look like child’s play. Make no mistake: the challenge ahead for the retailer is huge. But with the right approach, Toys R Us could emerge more colourfully and compactly packaged, like the products it sells.

Making the cut

In this months Retail Focus Column, I discuss the importance of investing in store teams. 

Some of you will have flown back from holiday last month having made a summer resolution to ‘make a change’ and seek out new job opportunities. Many others, though, arrived back to their retailer’s head office and stores after the summer break to discover that someone else had taken that decision for them.

While the rest of us have just begun readjusting to life back at the office, several retailers have announced that the axe will fall on thousands of jobs; 1,000 head office positions are to go at grocer Sainsbury’s, 3,000 store staff at Asda will also soon be left without a position, and meanwhile, Wilko has placed 3,900 members of its store team into redundancy consultation. They are just the latest in a growing number of retailers to embark on major restructuring programmes that, in one form or another, will have a significant impact on retail operations.

The British Retail Consortium’s (BRC) latest employment figures suggest the downward trend is set to continue. For decades, retail has been home to a rich source of employment opportunities. But by 2025, the BRC estimates that there will be nearly a million fewer retail jobs. The reason being given for the change is quickly becoming a familiar one: a desire by retailers to create simpler structures that will deliver a better shopper experience. Commenting on its most recent round of job cuts, Tesco said its move was less about cutting costs and more part of a drive to “help improve service to shoppers” by “aiming to have more colleagues on the shop floor, more often”.

In truth, this is a ‘veneer’ being applied to a somewhat starker reality. Competition is fierce. Sterling’s value is weak. Costs are rising (the national living wage presents very real challenges to labour-intensive industries like retail), and growth for many retailers is proving increasingly difficult to come by. In the UK, the introduction of the Living Wage and Workplace Pension reforms have come at a cost too.

Then there is the brave new age of technological automation that is quickly spreading throughout all aspects of our daily lives. Smart homes, driverless cars, self-scan checkouts, and mobile pay in store – it is not surprising that retailers are currently asking serious questions about how they and their stores are resourced.

It is impossible to ignore the reality: retail is not what it used to be, and progress cannot (indeed should not) be stopped. As a result, many of the established operating models must quickly adapt to keep pace with change.

For all of the focus placed on what the Store of the Future will look like in physical terms (technology, design, its ‘reason for being’), what it looks like operationally is arguably the more interesting and pertinent question right now. Put simply, stores do not need as many staff as they once did.

The unavoidable truth is this: being able to work smarter invariably requires a fundamental change in behaviour.

So what are the operational realities of this new dawn?

The BRC has talked about a future of “fewer but more productive jobs”. Yet surely, shouldn’t store teams working productively be a given? Even those retailers without plans for reducing headcount should be ensuring that every store team member, in every store, is working as productively as possible. For me, there remains too little discussion focused on how this is (or rather, why this isn’t) routinely achieved within our industry. And that is a mistake.

Sainsbury’s decision to draft in consultant McKinsey is part of a stated three-year plan by the retailer to deliver cost savings of £500 million. I think most would agree that, arguably, there is too much operational complexity within many retailers. The result can often have a stifling, suffocating effect on the business, especially when it comes to decision-making. Simply reducing headcount, however, doesn’t equal greater efficiency – just a lower cost-base, as well as the potential threat of a demoralised workforce.

Visual operations and maintaining retail standards already have to fight to avoid taking a backseat to other instore priorities. Too often, these are viewed as a ‘nice to do’ rather than an operational imperative. Too often, when store teams are tasked with activating visual programmes instore, there is a lack of time allocated within their working day to doing these and doing them well.

The unavoidable truth is this: being able to work smarter invariably requires a fundamental change in behaviour. And this is especially true at store level. As a result, there will be a great deal of hard work ahead before the benefits of restructuring starts to be seen.

Delivering improvements in productivity will require some of the savings that retailers achieve through reducing staff numbers to be reinvested into learning and development programmes. You simply can’t strip out layers of store teams without providing those that remain with the knowledge, skills and tools needed to help them perform more effectively and efficiently. Failure to do so could result in retailers suffering from a further (this time, unplanned) exodus of talent from their business.

If store teams are asked to perform a different role moving forward, responsibilities need to be properly defined and communicated.

Retailers have a responsibility to ensure that store teams tasked with seeing through the transformation are full of inspiration, motivated and, most importantly, capable of delivering on the vision – not only in terms of customer service, but also in respect of performing the daily routine tasks that go towards creating the kind of ‘improved’ instore environment that the future promises and shoppers are demanding.

Retail history reminds us of the many cost-cutting, slide-ruling measures that have previously gone before. Retailers should not forget the ‘unseen’ impact of reducing staff numbers on the shop floor – so much of what makes an effective retail business is all about the people who work there. Retailers who ignore the ‘fundamentals’ of what make the ‘bricks’ operations different to their ‘clicks’ transactions will do so at their peril: people to deliver well-planned, well-stocked and great looking stores, and the much-valued service that keep shoppers coming back for more. Cutting costs is quick. Rebuilding performance takes considerably longer and, ultimately, comes at its own cost.

Going places this summer?

I discuss the necessity for instore transformation in this months Retail Focus Magazine Column.

Whether you’re jetting off or staying closer to home this summer, the holiday season will hopefully provide a valuable opportunity to re-charge, regroup, reflect, and gather your thoughts. On a personal level, I’m indulging in a little reflective thinking of my own at the moment. The start of summer not only marked another new financial year for Visual Thinking, but also the beginning of our Silver Anniversary celebrations.

Like most of you, I’m not sure where the first part of 2017 (let alone the last 25 years) has gone. I have a suspicion that for the retail executives amongst you, a large portion of it has been spent simply trying to swim with the tide. If you stop and think about it (should you find a precious spare minute to do so), the speed at which most of us within the industry now routinely work is truly staggering. Little wonder then that a week or two away from desks (hopefully somewhere hot) is so warmly received.

Notwithstanding the fact that your well-earned holiday will no doubt fly by in the blink of an eye, there are rarely ever enough hours in the day. Waiting for you on your return will be the usual flurry of seasonal instore events, providing another busy end to the year. From the launch of AW collections to Halloween, Black Friday, and (dare I even mention it?) the C-word. All will offer a welcome spike in trading activity. But they also serve to reinforce the short-term, tactical nature of the world we now operate in – one that is, it seems, increasingly focused on immediate priorities and results, with less and less time afforded to strategic thinking and sustainable success.

Research presented at this year’s World Retail Congress suggested that 80 per cent of retailers understand the need for instore transformation. And yet, according to the data, just 24 per cent of retail executives say they know what transformation looks like on a day-to-day basis. It’s perhaps not surprising. Simply ensuring that routine instore tasks are completed is often challenging enough.

In reality, there is no shortage of retailers for which instore transformation will be a commercial imperative in the months ahead. The Body Shop, now under new ownership, and fashion retailer New Look are just two of the names that immediately spring to mind.

In some instances, the answers to the question of what real transformation looks like may already exist within. But often, even when they do, there is rarely sufficient time for internal teams to realise them on their own. In the time-starved world that today’s retail executives operate within, accepting external specialist support is increasingly a must-have, rather a nice-to-have. The rewards of doing so can be enormous. From identifying the reality of what is currently happening instore to providing strategic guidance and gifting leadership teams with the ability to make more decisive and informed decisions. One thing is certain: if you don’t deliver positive and effective retail transformation at store level, others will.

One retailer for which a clear strategic vision is starting to pay dividends instore is Morrisons. Much maligned in recent years, its star is now in the ascendency under the stewardship of David Potts. In recent weeks, I have spent some of my own time with those responsible for delivering change within Morrisons on a day-to-day basis. Talking to them, in my role as an industry awards judge, the sense of transformation and, most importantly, the engagement and energy behind the retailer’s transformation strategy were both palpable and truly inspiring. The retailer’s extended foray into clothing, via its Nutmeg range, could yet demand further transformation, both in terms of strategic approach and practical visual merchandising, if it is to deliver a truly winning shopper experience cross-category. But what I saw with my own eyes is proof that the time invested at a strategic level is starting to pay dividends, and is matched by a willingness at store level to make it happen.

So, perhaps now is an opportune moment for other retail executives out there to reflect on how you should divide your focus when you return. Maybe take the time to think like the lifeguards that you will come across while on the beach this summer. As the saying goes: good lifeguards rarely get wet – because 95% of their work is preventative.

Chinese fashion brand targets UK

With Chinese mega-brand Urban Revivo eyeing the UK, I share my views with ChinaDaily.com

Just days after US retailer American Eagle confirmed it is to fly out of the UK, Chinese clothing brand Urban Revivo has announced that it has chosen the UK to open its first store outside Asia, early next year, as the “fast fashion” label continues its ambitious expansion. Founded in 2006 by Leo Li, Urban Revivo currently has 160 stores in China and one in Singapore.

Speaking to media outlet China Daily this week, I discussed Urban Revivo’s entrance to the European market: “London, specifically, is one of those places where all international brands want to be established.” However, the retailer will need to differentiate itself from similar brands in London’s crowded fashion market.

Urban Revivo will open a branch in West London Westfield in March 2018, and then plans stores in Japan, France, the US and the Middle East as part of a £600 million international expansion.

London is a strategic priority for building UR’s fashion empire

According to China Daily, a spokeswoman for Urban Revivo said: “London is going to be UR’s first step to expand into the European market and is a strategic priority for building UR’s fashion empire.”

The decision comes off the back of a number of other high-profile announcements from international retailer relating to investment in the UK. Earlier in the week, Retail Week revealed that Australian homewares retailer House was plotting its own overseas push that will soon see it land on UK shores. With the stated aim of launching 75 stores in the next three years, it will surely heighten the competitive landscape for retailers such as Lakeland.

The announcements by both House and Urban Revivo demonstrate that, while UK retailers may still view the impact of the Brexit vote will concern, a growing number of overseas retailers are clearly eyeing the UK and seeing opportunities.

Read my comments in full here