On Planet Retail, keep your head or you'll lose it
As Mulberry's chief became the latest shopkeeper to fall on his sword amid profit warnings, survivors tell Alex Lawson how they beat the stress
Friday 21 March 2014
Next's relentless rising profits, reported yesterday, stuck out like a sore thumb as its quoted rivals go on the defensive.
Lord Wolfson, the Tory peer and Next boss, has spent his 13 years at the helm serenely ensuring the continuing appeal of the affordable, fairly fashionable clothing retailer. He has shunned the limelight courted by peers and gained gravitas simply by speaking about the subjects – Europe, local planning, government policy – which push his agenda.
His unfussy approach is incongruous to the bombast and bluster of most retail chiefs. And there's been bluster by the busload in Planet Retail lately. Facing empty high streets and rivals armed with billions to spend after successful stock-market listings, Britain's high street executives are feeling the heat.
Already this year, internal and external pressures have triggered the departures of Simon Calver from Mothercare and Euan Sutherland from the top spot at the Co-op. Yesterday Bruno Guillon resigned his post at the luxury handbags specialist Mulberry shortly after issuing a profit warning. Bookies have even been taking bets on which chief will exit next from Marks & Spencer, Morrisons and Tesco.
Only last week, Mr Calver's successor at Mothercare, Mark Newton-Jones, said retail chief executives need the "constitution of a horse" to do the job. He should know. He has had staff at two northern call centres he shut down, while at Littlewoods owner Shop Direct, burn effigies of him.
But when sweat gathers on the brow, how do retail chiefs stay focused and motivate their huge workforces?
"The key is to keep smiling even when it's raining, as staff morale is really important," says Iceland's founder, Malcolm Walker.
He has run the frozen food retailer as a public and private entity and vehemently favours the latter ownership structure. "The problem with public companies is that you sometimes fudge decisions to keep the like-for-likes and profit moving."
Dalton Philips tried to keep the City on side last week – raising Morrisons' dividend despite plunging profits – but not everyone is clear on who "the City" really is.
One retail chief says: "Who is the City? The most vocal are a collection of analysts, journalists and outspoken fund managers. It would be easier to do what the Daily Mail says to gain approval but it's not the right thing for the company."
Ocado's chief executive, Tim Steiner, who has shrugged off City criticism over its lack of profitability, prioritises explaining strategy to those who "matter most". "The important thing is when there is external pressure, you have to understand what is causing it," he tells The Independent. "If you are confident it is not an issue, concentrate on your strategy and explain it to the people who matter most – your staff, customers, shareholders and suppliers.
"If people outside of that group don't understand or want to understand, it's less relevant and shouldn't deviate you from your strategy."
Away from the boardroom, keeping fit helps the psyche – Mr Philips runs 10km each night and is in training for a marathon. The cycling retailer Wiggle's chairman, Andy Bond, once cycled from Land's End to John O'Groats while he was Asda chief.
Sue Shipley, head of retail at headhunter The Miles Partnership, says: "It's important to stay fit and healthy. It can be hard to justify time outside the office, but you need to ensure you do not burn out."
Asda's boss, Andy Clarke, said last month that he still calls former Asda chief executives Allan Leighton and Archie Norman for advice.
Anthony Thompson, the chief executive of the revitalised float candidate Fat Face, at last week’s Retail Week Live conference said: "If you treat every day as if it's your first day then you remain open-minded and you have plenty of energy. It's important for people to believe that you believe that it's doable."
The headhunter Korn Ferry's head of retail, Sally Elliott, adds: "The most successful chief executives are energised under pressure rather than stressed by it. They demonstrate the ability to strike the right balance between self-assurance and misplaced over-confidence."
Resilience is a prized asset in a chief executive. Retail is one of the most competitive markets and with new propositions wreaking havoc with established business models, willpower remains vital. Just ask Lord Wolfson.
What's Next? Wolfson's worries
Lord Wolfson cast more doubts over the strength of the UK's recovery yesterday, 24 hours after George Osborne promised a Budget for investment and savers.
The warning by the Next chief executive, left, came as the FTSE 100 retail behemoth overtook Marks & Spencer with a 12 per cent rise in annual profits to £695m for the year to January. Sales at the UK's second-biggest clothing chain could rise by up to 8 per cent this year with profits hitting £770m, Lord Wolfson added.
However, the comments of the Tory peer, who is married to the Chancellor's adviser Eleanor Shawcross, poured cold water on Mr Osborne's efforts to kick-start investment yesterday. He said there "didn't seem to be anything that is going to dramatically change the course of the UK economy one way or another over the next year or so", and that, despite "encouraging signs" for consumers, "the economy is at a turning point but we can't be sure which way it is going to go".
He urged politicians to do more to encourage growth.
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