Diversify – but don’t die
So, Branson looked at what was selling well at the time and decided he’d diversify into mobile phones. Branson says that retail brands facing similar digital pressures should consider a similar approach.
“People who own retail stores should not think of themselves as retailers forever,” he said. “Be entrepreneurial and spin off businesses to survive.”
The Intercontinental Group of Department Stores (IGDS) is based in Switzerland and has existed since 1946. It only has one member in each country – the member in Australia is Myer and the member in Singapore is CK Tang.
In the mid-90s, I was fortunate to meet with the then managing director, Emil Senn. CK Tang had a highly successful smaller shop in Scotts Road called Studio. They decided to close it and move into the Takashimaya centre in Orchard Road, developing a much larger and totally different award-winning store. It was magnificent, if not a bit sterile. It did not have the personality of the old Studio and the target market of wealthy young professionals voted with their feet. I was proudly showing Emil around when he turned to me and said “Stuart, I smell death”. The rest is history as is Studio.
So being entrepreneurial has its risks. Do nothing and you’ll most likely die, but get it wrong and you’ll die a lot faster. In the case of Studio, it was a welcome relief. Every day it endured was a day too long.
When things get tough, especially in retail, the tendency is to analyse and make changes which include cutting costs, restructuring, retrenching staff, rationalising, strategising, etc. All good words. Or do what Branson says and spin off a business. Department stores are prone to this and when it goes wrong, it goes horribly wrong. Ask David Jones, which opened a number of small food halls or delicatessens some years ago. Their food hall which is very good, was the catalyst. And another department store that figured that fashion accessories and cosmetics were good money earners so they opened a number of small stores – all gone.
If you are thinking of following Branson’s advice, do so. But make sure that someone has vision like Sir Richard’s.
Stuart Bennie is a retail consultant at Impact Retailing www.impactretailing.com.au and can be contacted at [email protected] or 0414 631 702