Customer Experience Matters: ask BHS

There’s been lots of bad news around the High Street recently. High Street stalwart BHS finally collapsed under a mountain of debt, with stories of the previous and present owners extracting large amounts of cash from the business, and menswear retailer Austin Reed (much less noisily) followed it into administration. Meanwhile, many of our supermarkets, department stores and other large retailers are struggling.

As I’ve spent most of my life in and around the retail sector, I do a considerable amount of thinking and writing about its future, as well as working with clients to help them create better outcomes from their retailing activities.

So I wrote a couple of blog posts about BHS: what lessons businesses should learn from its demise, and what BHS could have done differently, as a retail proposition, to survive and thrive. That led to a lengthy and lively debate on Twitter, with a Retail Week/Huffington Post columnist, about the future of retail and of the department store in particular. We even attracted the attention of retail guru Mary Portas, who called our discussion “fascinating”!

At that point, I realised that I’d really like to share is not specifically about the future of retailing: it’s about the lessons the retail sector is (or isn’t learning) and how we can/must apply them to business generally.

To set the scene, it’s vital that any business understands its market – customers, competitors, trends – that’s obvious. In today’s connected world however, things happen so fast that it’s now essential to understand the future as well as the present! By which I mean, it’s vital to be aware of the trends that will change your market in the foreseeable future and to think about the challenges and opportunities they present.

I was recently given this list of six global Customer Experience trends by my friend Professor Ian Yeoman, who is a tourism futurologist and writes the Tomorrow’s Tourist blog:

1. Demanding Consumers – better educated, culturally aware, price sensitive, wider choice
2. Mobile Living – living life through smart devices, wearable technologies, big data, social media, augmented/virtual reality, facial recognition
3. Global Economy – deflation, disinflation, over supply, more choice
4. Professional Concierge – one to one predictions, technology enabled
5. Demographics – ageing population, ageless society, family focused
6. Political Instability – immigration, institutional failures, trust redefined

So what does all this mean for business?

According to global trends consultancy Future Foundation, “whereas consumers may once have simply accepted without question whatever suppliers offered them, the dynamics have changed and they now want low prices and high quality, attentive customer service yet speedy convenience, personalised offers yet their privacy respected, complex solutions that are also easy to understand.”

So if you’re wondering how to respond to all of this, the starting point is to find out as much as you can about the trends that will affect the way customers behave, and how these might affect your business. Why not sit down with your team, or trusted advisor, and ask:

• What’s the future for my sector – is it growing, shrinking, changing, disappearing?
• How are the specifications for, and expectations of, my product and service changing?
• Will alternative choices will my customer have?
• What will my competition be offering?
• How can I stand out and be different?

And so on.

Once you understand the issues, think about how you will design your strategy to reflect the most appropriate image of you, targeted to the right customers.

The good news is that there are huge opportunities in these trends: to know your customer better through technology (Professional Concierge), to be a trusted partner in a world where corporations and big brands have lost that position (Political Instability), and to offer products and experiences that excite and engage an ageing population that age cannot wither (Demographics).

So what can we learn from the High Street?

I started working in the retail sector at age 15, in a High Street garden centre and pet shop (now owned by Wyevale). Here I spent much of my time advising customers on what foods to buy for their pets, what seeds to plant in a given season, and so on.

Later I had a Saturday job at WH Smith. I enjoyed it so much that, when I took a year off before university, I decided to take the opportunity to spend that year working on what was then called the Special Products Counter – selling home computers, calculators, game consoles, cameras, watches and pens. I quickly learned that customers were looking for advice and support to enhance their lives, with gadgets that would create fun experiences, or solve a problem. And, when things went wrong – when their home computers didn’t work as they were supposed to, or when their watches stopped working – they wanted efficient, personalised solutions.

Lesson: Customers are looking for insights – how to solve problems, how to make technology work for them, how you can make their lives better (WH Smith seems to have deserted this space).

After university I joined Hamleys of Regent Street, London, “The Finest Toyshop in the World”. Through a number of twists of fate I found myself working in the buying department, and subsequently headed up a new department, managing the flow of merchandise from suppliers, via the warehouse, to the stores. This department dramatically improved the efficiency of getting the right product to the right place at the right time, and the business beat its sales target in the six weeks leading up to Christmas – the period when Hamleys expected to achieve 60% of its sales for the whole year.

Lessons:

(1) The best products in the world are only the answer when they are available for the customer to buy when she wants to buy them.

(2) Know the crucial trading periods are for your business, and organise to exploit them to the full.

When I joined the Royal Collection (the charity that opens the Royal Palaces to the public) I was asked to set up the shop for the first ever Buckingham Palace summer opening. On a limited budget, and in a limited space, and in a limited time period (eight weeks), we created exclusive products, reflecting the interiors and artworks on show in the Palace, using only British manufacturers and craftspeople, and displayed them as if they too were priceless works of art. The shop beat budget by over 300% and went on to make over £6m profit in five years (40 weeks)!

Lessons:

(1) Customers want exclusivity, quality and authenticity – and scarcity makes the price elastic.

(2) Make sure that your core product, service or major new launch is done as well as it can be done – benchmark best practice as widely as you can, so that you can adapt what you see others doing and create something not just different, but also better.

I spent a happy and eventful six years as Managing Director of National Trust for Scotland Enterprises, developing shops, restaurants, holidays and a range of authentic experiences across 127 special places. My first chairman ran what was then one of the largest booksellers in the UK, although its shops were tired and unappealing. Two years later, the chain was no more. It had lost just 5% of its sales to Amazon and other new competitors – but that 5% was its profit margin.

Lessons:

(1) Understand the trends and what they mean for your business – and develop a winning strategy. Don’t bury your head in the sand!

(2) Waterstones, under CEO James Daunt, has shown that customers still want to be able to browse and buy in a physical environment. Authority, service, price and availability are vital across all channels – experience, however, trumps them all.

And that last lesson brings us full circle. As I – and Mary Portas – have argued, BHS failed because its owners had neither the imagination nor the desire to reinvent it for today’s customer.

If you’d like to know what I would have done with BHS you can read it here. The more important point, however, is that what happened to BHS could happen to any business. It’s not just the High Street that is going to see dramatic, permanent change over the next few years, it’s just about every business sector you can think of.

That’s because it’s the customer who is changing. And that’s why focusing on the experience your customer has of you – your whole business, your people, your brand – and planning to be a future winner in the Customer Experience stakes, is probably the most important thing you will ever do in business.