Blunkett vs Brand

In the keynote address at the first Good Society Lecture of 2014 held by The Centre for Social Justice (CSJ) David Blunkett argued that the "rantings" of comedians like Russell Brand are dangerous as they may deter young people from voting. How right is he? Is this really the thing that discourages us from voting or is it the politicians themselves?

According to Brand politicians are "untrustworthy and irrelevant." He claims "I'm angry because for me it's real. This is what I come from.... There is going to be a revolution." So says the multi millionaire with a house in California, but even his inquisitor Jeremy Paxman thinks he has a point, describing the political choice in this country as "unappetising" and adding "It won't be a bombshell if very large numbers of the electorate simply don't bother to vote. People are sick of the tawdry pretences."

Blunkett claims that Brand risks "undermining democracy" by encouraging people not to vote, but is he really that influential or does the solution lie elsewhere? I have some alternative ideas as to why people might stay away from the ballot box but first a few facts: In the last 50 years voter turnout in the UK has fallen from 77.1% to 65.1% although this is an improvement on the low of 59.4% in 2001. This compares unfavourably to 79.5% in France and a European average of around 70%. So why don't more of us exercise this most important of democratic rights?

For most people there may seem little point. In 2010 there was a 5.6% swing from labour, one of its worst ever results, but only 118 of the 532 contested seats changed hands i.e. the people living in less than a quarter of all constituencies actually determined the result. The elected MP had a winning majority of less than 6% in just 111 seats. I experience this myself as I live within a very safe Conservative seat. Even in the days of the large Labour majority my local politician won by over 4,000 votes so does my vote matter? If I don't want to vote Conservative should I tactically vote for UKIP despite my abhorrence for their political viewpoint? Unappetising indeed.

This is something that is unlikely to change for at least a generation. The two largest political parties will not support electoral reform, not because they don't think it would be more democratic, but because it is not in their interests, and if I start on the issue of an unelected second chamber then it will be me ranting!

Politician fatigue. The expenses scandal - claims for duck houses, clearing moats and tuning pianos amongst other things - showed politicians to be the amoral, self-interested, profiteering low lifes that most of them are. Their routine defence? They didn't do anything outside the rules. Well, maybe not, but surely they can see that didn't make it right? Don't think this has stopped either. Figures show that MP's claimed a total of £98m in 2012/13 a big increase on the £95.4m in 2008/09. "Snouts" and "troughs" spring to mind.

More soundbite than substance. The immediacy of social media, particularly Twitter, make the snappy one liner more important than ever before. So important in fact that it may be difficult for a politician to be successful without mastering this aspect of their performance. Is this at the expense of there actually being something behind the rhetoric? Watching PM questions I suspect so.

The rise of the career politician. Speaking personally I want to feel that our politicians have lived and worked in the real world before being elected. I'm very uncomfortable with the number who have never worked away from the political arena as "Special Advisers". In it together? I think not.

"Lies, damned lies, and statistics." Mark Twain had it right. Why can't they give a straight answer to a question or express a personal opinion? Instead they quote statistics at each other or fall back on claiming that however bad things look, they would look worse if the other party was running things. Tiresome. This might explain why Boris Johnson is so popular. He may seem ridiculous on occasion but at least he actually says something and lets you know what he thinks.

Is it symptomatic of a lack of engagement in society in general? I'm not sure "the good old days" ever actually existed but are we now less likely than before to see ourselves as part of a larger society or community? Would we break up a fight or check on elderly neighbours? No doubt opinions vary.

Technology. Why can't we vote on-line? We already do so many things on the internet that depend on establishing our identity, such as banking or completing tax returns. Why can't we add voting? I've no idea if this would improve the turnout or not, but surely it couldn't hurt?

Whatever the reason, however pointless it may seem, I would argue that the opportunity to vote is both a right and a social responsibility and irrespective of political persuasion would urge everybody to have their say in who governs our country. Even if they do vote for the Monster Raving Loony Party!

Written by Mike Gamble: Director JEM Retail Consultants

So What Could Mike Do For Debenhams?

Amidst the announcements of Christmas trading results Mike Ashley's Sports Direct announced that it had sold its 4.6% stake in Debenhams less than a week after acquiring it (netting a profit of £4.5m) in a move that could see them increase it to 6.7% in the future. Confused? You will be!

 

Despite eschewing most forms of publicity Michael James Wallace "Mike" Ashley is well known for liking a bet (as well as a drink and decorating his house with Christmas lights) and with a potential £64m exposure should it go bust Debenhams would seem to be his latest flutter. Now obviously I don't know what his plans are, but I'd like to share my own vision as to what he could do.

Before I do, back to that arcane derivatives deal. Sports Direct has acknowledged that it is betting with a third party about how far the shares will fall with the said (unknown) third party believing that the shares will fall further. Simon Neville from The Independent reports that "Under the deal Sports Direct is paid a fee for agreeing to buy the shares at a preset - and undisclosed - strike price in the future. If the shares fall below the strike price, it will buy a 6.7% stake in Debenhams at the agreed price, or pay the cash difference between the share and strike price. If the share price continues to rise then the deal is off and Sports Direct pockets the fee from the third party."

Clear? No? Well you're not the only one but it would take a brave person to bet against him as the self styled "Northern club" of David Hughes and Dave Whelan will tell you. It might not be the prettiest retailer to look at, but Sports Direct entered the FTSE 100 in September and is worth more than £4bn. Rather more than be said for Allsports and JJB!

The Telegraph's analysis ran as follows: "Sports Direct may well be the craziest business on the high street. Not only is it run by Mike Ashley, a pantomime villain in Newcastle, but it has publicly fallen out with one of its two biggest suppliers, employs the vast majority of its workers on zero hours contracts and has stores that resemble a jumble sale. And yet, while Sports Direct may be unconventional, it has also been hugely successful. Last year its shares rose 86% and its sales were up more than 20%. This means that now, Sports Direct is also the craziest business in the FTSE 100."

Ashley's strategy, in broad terms, has been to get customers through the doors by selling products from the brands he owns (Donnay, Lonsdale, and Dunlop Slazenger) at a cut price alongside those from Adidas and Nike.

I have read that his team benefits from his passion and enthusiasm. If he can bring this energy to Debenhams then that's the first point in his favour. There is commentary about "sharing brands" between the two businesses but I would assume that Mr Ashley's plans are bigger than this. It should not be forgotten that he has bought Flannels as a foray into the luxury market. USC then Republic, was interested in Debenhams and, I believe, Nicole Farhi.

So, in my imaginary world Mr Ashley would....

Divest the Debenhams chain of some stores and use selected others as "value" stores for his own sports brands and Debenhams own brands.

Set up no more than a dozen Debenhams stores as true upmarket Department stores to rival, and better, House of Fraser. These would house established and new affordable luxury UK and international brands. He also has the cash to support new British designer talent in a way other store groups can't. The problem with achieving all this is him himself. His relationship with suppliers is not great and prestigious brands may be wary of doing business with him.

He would need to invest in store improvements to the tired Debenhams chain, but all is not yet lost at Debenhams. Aside from my ideas above, Mike Ashley can make immediate improvements by using his extremely slick logistics function. Moving stock around and making it available has been a key to his success and this platform could improve customer experience straight away.

Debenhams needs to be "re-energised" and energy is one resource Mike Ashley has in abundance. It seems to me that he needs an expert in managing suppliers to help relationships across all of the brands in which he has a stake. This may be his Achilles heel and if he really wants to succeed in the more upmarket end of retail he needs to change people's perception of him and trust someone else to build this part of his empire.

But even if he just sorts out the Debenhams store estate and gets a new senior team on board, plus use his logistics operation, Debenhams will still benefit hugely from his involvement.

Written by Erica Vilkauls: Director JEM Retail Consultants

Do We Judge All Books By The Cover?

If it walks like a duck and quacks like a duck it's got to be a duck. Right? How about if it looks like a platypus? Does someone have to look the part in order to be taken seriously?

On the Daily Politics programme comedian David Schneider suggested that Ed Miliband is unelectable on the grounds that he looks like a "human platypus". Is he right? If such shallow considerations are likely to influence who will be the next leader of the country what effect does appearance have on other walks of life such as retail?

Like it or not the reality is that we all make an initial judgement of people in the first few seconds of meeting them, long before characteristics such as leadership skills and empathy have had a chance to show themselves, before even the demonstration of the obligatory strong handshake.

This is sometimes referred to as the "halo effect" or the "physical attractiveness stereotype". According to Dr Gordon Patzer human beings are hard-wired to respond more favourably to attractive people: "Good-looking men and women are generally regarded to be more talented, kind, honest and intelligent than their less attractive counterparts." He contends that "controlled studies show people go out of their way to help attractive people - of the same sex and opposite sex - because they want to be liked and accepted by good looking people."

But is appearance as important away from the public eye? It would seem so. One report by 20 20 Skills states that "physically attractive job candidates whose qualifications are similar to those of less attractive candidates are more likely to be hired for the same job." It is no surprise that there are some occupations in which this is true, would you use an overweight personal trainer for example? But Professor of Psychology Comila Shahani-Denning agrees that it is important even when irrelevant to the nature of the work: "There is considerable empirical evidence that physical attractiveness impacts employment decision making, with the result that the more attractive the individual, the greater the likelihood that the person will be hired."

Perhaps selection interviewing should copy "The Voice" and prevent those responsible for making decisions from seeing the candidates!

The advantages of being attractive also continue after recruitment: Forbes reports that "A landmark study from Cornell University found that when white females put on an additional 64 pounds, her wages drop 9% and according to a 2007 paper from the US Bureau of Labor Statistics, there is a significant "wage penalty" for overweight and obese white women."

So is this an example of male chauvinism? Actually no, as there is plenty of evidence that good looks are important to both men and women in the workplace. In one study 61% who rated their male bosses as attractive also found them competent, compared with 41% for those thought "average" looking and just 25% considered unattractive. According to Ken Siegel women may even have the upper hand as they have a higher awareness that looks sell, while "men don't realise it's an important dynamic."

For someone in the public eye dress alone is not enough. If your picture is going to be splashed across the media the public demands that you must look the part. We want to have pride in our politicians as ambassadors for our country and therefore they have to ooze charisma. If you bear an unfortunate resemblance to a muppet (one of the scary ones) when your picture is taken from the wrong angle, you can be sure that this is the image the camera will capture every time. Sorry Ed, human nature can be tough!

While looks have little to do with actual ability I do believe that to be taken seriously in any chosen line of work you have to dress and walk the part. After all, to get people to listen to you means that you first have to be heard and image can be all important. Regardless of attractiveness everyone can have a good haircut, clean teeth and nails, wear good fitting, appropriate clothing and hold themselves well. If you don't take a pride in these things then can you really expect others to believe in you? (Although I still think ties are unnecessary!)

The beautiful people among us should also be aware that the stereotype can be a double edged sword. They are also more likely to be perceived as vain, dishonest and manipulative. I guess you just can't win!

Written by Mike Gamble: Director JEM Retail Consultants

How To Make CPD Work

I have been a little dismayed at the media coverage of Labour's plan to introduce licensing for teachers as part of Continuous Professional Development (CPD) as it is being portrayed as a method of making it easier to "get rid" of under performing members of staff. Isn't this missing the point of CPD?

 

I passionately believe that the first responsibility of leadership is to provide people with the opportunity, support, encouragement, guidance and advice to allow them to develop.

In this context I use the word "allow" with care as while I think it is something that everyone is capable of people must want and choose to do it. You can't "develop" others as if they are some kind of photographic negative (for younger readers this is what we used before digital imaging) and this means that you can't threaten anyone into learning new skills, much as you can't beat them until morale improves. Although many have tried!

I've no idea if this is any kind of established training doctrine, no doubt my friends at Training for Advancement (TFA) would be happy to tell me, but in my experience there is a simple truth that affects almost everyone's willingness to learn, and that is that we all enjoy doing the things that we are good at. These are the activities that bring us recognition, they confirm our place in the team and provide us with a feeling of validation and security. They are safe.

By definition these are things that we have done before. That's how we know we are good at them. It also means that we are less inclined to enjoy things that are new to us. How do we know if we are going to be any good at them? Participating in something unknown therefore becomes unsafe, inherently high risk behaviour that is to be avoided if at all possible.

Education is probably a unique environment in this regard as learning new things is the whole point. The "thing we are good at" and therefore enjoy doing may be (ought to be) learning itself. The workplace is very unlikely to resemble this as most of us are employed to complete tasks. We may know that the way in which we are doing this is flawed, but they are are our flaws, and we have come to understand and to love them.

As a Project Manager I encounter this attitude towards change all the time, but is it unavoidable? Well, only if the environment created by leadership fails to encourage and promote personal risk. If, when introducing a new approach to CPD you do so in the context of making it easier to get rid of people that perform poorly it seems to me that this failure is almost guaranteed. Personal development demands acquiring new skills and putting them into practice and this will almost certainly involve a degree of failure. Leadership must accept and embrace this rather than threatening to punish it.

Take project management as an example: you can send someone on a Prince2 training course but it would be unrealistic to expect them to return to the workplace transformed into an expert Project Manager. This is not going to happen. At best they have been provided with a set of tools, rules and guidelines. To learn how to apply these in practice they need experience and support when they make mistakes as this is an inevitable part of learning. It is also particularly true of projects as by their very nature they can't be rehearsed.

If your fledgling Project Manager's first mistake (or second, or third) is met with "I thought you'd been trained" they are likely to run for the hills. Trust me, they already feel whatever the error is more keenly than you can imagine and even spoken in jest these words can destroy any remaining confidence.

I feel I must make the point here that this is not necessarily, or even mostly, about attending courses. I once took over an under performing site as General Manager. One of the first things I did was interview every member of the management team on a one-to-one basis. When asking about CPD I was initially baffled by the response of "I haven't done any because I don't know what courses are available." Surely training needs should define what courses are made available rather than the other way round? It seemed that CPD had become a box ticking exercise. There was no mentoring and no thought as to how people could develop in the workplace. Small wonder the site was failing!

I have had the good fortune to work with and for some exceptional people. My partners at JEM, Jane and Erica, are amongst them as are the likes of Martin Fletcher, now working with my erstwhile colleagues at Teva, and David Smart, currently being tall, dark and haggard in his native Scotland.

These are very different people but in addition to being very good at what they do they have three other things in common: they respect and value you for what you are good at; they challenge you to add to what you are good at by learning and practicing new skills; and they treat failure constructively, with understanding and support. What more can you ask?

My balance on this soap box is getting a little precarious. I freely admit that I'm no saint and that I can get it wrong like anyone else. I can, and do, misread situations, misunderstand motivation and misjudge people with the best of them. I am also highly goal oriented and can be demanding and difficult to live wth when that goal is put at risk (or so I am told!)

That said, I feel my greatest achievements have been the achievement of others and my role in providing what support I could to the likes of Steven Allen and Kris Read is the thing that keeps getting me out of bed in the morning.

Well, that and the need to pay the mortgage!

Written by Mike Gamble: Director JEM Retail Consultants

Does Your Distribution Operation Have The X-Factor?

Over the last 7 years I have been asked to consult over a number of ailing distribution centre operations that required a variety of different solutions. Here are some ideas as to how to recognise if your DC is in need of some TLC.

 

Not surprisingly I have never been asked to get involved with a Distribution Centre operation that already had a reputation for being well run, highly productive and consistently providing an excellent level of service. Here are 5 questions to ask to establish what is wrong and suggest some ideas as to what can be done about it.

What are your first impressions?

You generally know within 30 seconds of walking through the door whether or not the building is well maintained and if the team take a pride in their environment. In truth businesses may have to take the lead here. 5 "S" initiatives can achieve a lot but I have worked in DC's that have suffered from years of neglect. If the roof leaks like a sieve and the welfare areas are woeful there is a limit as to what you can expect from people.

The second thing indicated at first glance is the attitude to work. As my colleagues John Wilde and Peter Woodward (Productivity Solutions Limited) explain performance is the outcome of pace, utilisation and method. People obviously shouldn't be running around but neither should they be standing about and a certain amount of hustle should be obvious. If it isn't then looking at the resource level and how it is used is a high priority. If you're not sure then benchmark with a Rated Activity Sample (RAS). I'm sure John would be happy to help!

How do the team plan their activities and communicate with the rest of the organisation?

Generally speaking warehousing and distribution is a people business. However sophisticated your system platform work still gets done because there is ultimately a pair of hands doing it. This makes resource planning a key activity to support both service and productivity and planning depends on information. If there isn't a strong relationship in place between the DC team and the more commercial parts of the Company this isn't going to work.

What does "good" look like?

Recognising good performance is as key to motivation as identifying under achievement is to continuous improvement but this means that the team must have an understanding as to what is important (and why it is important) that is endorsed by key stakeholders. There must also be a robust way of measuring it otherwise "performance" becomes very subjective and key performance indicators fall into disrepute. I asked this question of a team I worked with recently and was told that they knew they were doing well when their Director didn't shout at them. Strangely they didn't find the avoidance of pain particularly motivating especially as they had no clear understanding from one week to the next what was expected of them.

Are costs properly understood and reported?

DC wage costs fall into 4 main types: Direct; Indirect; Consumables; and Facilities. The last two of these are usually pretty clear but I am constantly amazed about the reporting of wage costs and the lack of understanding of these two very different things. "Direct" costs are variable and flex to volume as they pay for the people actually doing the work. More work, more cost (the opposite should also be true but, sadly, sometimes isn't). That is why the only way to properly understand this spend is in the form of a cost per item / unit. "Indirect" costs are fixed and consequently should be understood as a cash spend.

I am always infuriated when FD's castigate hard working DC teams for overspending (in cash terms) on direct costs when volumes are higher than forecast. What did they expect to happen? When the team have worked their socks off to achieve a great service level at a cost per item at or below budget despite having a highly inaccurate forecast, do these people have any idea how demotivating it is to then be asked to justify this "overspend"? I could rant for some time on this topic but it would become boring!

One final word on costs: I have never really understood why people tell me that achieving a higher level of service will cost more money. Generally speaking the opposite is true as eliminating waste (look for departments that start with "Re" or "Mis") is a prerequisite for both efficiency and service. Do things once and do them right and you won't have much to worry about.

Do the team always say "Yes"?

This is a big red flag for me. I have a very clear understanding that warehousing and distribution is a service industry but having a "can do" culture has become almost a macho thing in some operations. Part of the "service" we provide should be to point out when things don't make sense and will ultimately result in either an unacceptable level of cost or, worse, damaging the reputation of the business by providing poor customer service. This doesn't mean being negative but we need to recognise how, and when, to negotiate. Separating interest from position is also key as frequently what the business wants to achieve can be done but the way they have asked you to do it ought not to be attempted.

Is that all there is to it?

In a word "No". I could talk at length about organisation structures, value added process design, and space utilisation amongst other things but a) my colleague Jane told me to be brief and I do as I'm told (most of the time) and b) you wouldn't really expect me to put the experience gained over nearly 30 years into a blog would you?

Written by Mike Gamble: Director JEM Retail Consultants

Who Did and Didn't do Well Over Christmas (and Why)

In Retail Winners and Losers in 2014 I made some predictions as to who would do well, and less well, this year. How are these looking in the aftermath of the critical Christmas and New Year trading period?

Department stores John Lewis and House of Fraser have emerged as two of the biggest retail winners this Christmas, but the fact that John Lewis saw its sales growth halve and House of Fraser's success came after heavy discounting showed that there is still a chill in the air even for those who appear to be doing well. Who is wrapped up warm and who is catching a cold?

NEXT: Sales up 12% on last year for the period from 1 November to 24 December. Britain's second largest clothing retailer reported sales "significantly ahead of expectations" in the run up to Christmas. The Company raised its pre-tax profit forecast for 2013 to £684 - £700m and announced a special dividend of 50p per share. Shareholders showed their appreciation by sending the share value up 10%.

The retailer has cleverly benefited from a series of self-help measures that offset any impact of the heavy discounting and reduced footfall so bemoaned by struggling rivals. They have a consistent offer with good size availability and great delivery options. A retailer that is trusted on product, quality and its management of multi-channel (I won't give my views on the product itself, apart from observing that M&S used to stock this sort of merchandise in the days when it sold clothing well). Chief Executive Lord Wolfson said that they also saw a rise in shoppers leaving their on-line sales until the last minute as confidence grew in the next-day delivery service.

John Lewis: a 7% rise in like-for-like sales in the 5 weeks to 28 December. JL was boosted by a 22.6% increase in on-line sales bringing it to almost a third of total sales over this period, but sales in stores were also up by 1.2% as shoppers snapped up last minute presents on the high street.

Shoppers have a comfortable and welcoming environment and are served (in the main) by enthusiastic and well-informed assistants. I'd be interested to know the profit number year on year as clothing is now highly dominated by Brands who discounted from early December. I was also faced with waiting 10 working days to have 2 in stock items delivered. Why? I went to AO.com and had them delivered next day. John Lewis cannot trade on reputation alone. From now on the customer must be King and established supply chains must develop or adapt or the story may well be different next Christmas. (Still think the advert was worth the cost?)

House of Fraser: Like-for-like sales for the 3 weeks to 28 December were up 7.3% with on-line sales up 57.7%. Apparently this surge in on-line sales helped HoF to have its best ever Christmas trading period, although having used the website I have to say I am amazed at this!

The store environments have improved (unlike Debenhams) and if only they did not discount so often I'm sure that more aspirational brands would stay with them. My view would be "decide who you are and stick with it". Prestigious brands do not need to discount and currently being in House of Fraser is not seen as a good option to sell through.

Debenhams: Underlying sales rose by 0.1% in the 17 weeks to 28 December despite a 27% rise in sales on-line. Gross profit margin fell by up to 1%.

We were warned that pre-tax first half profits would be 26% down on last year at £85m after hopes for a late surge in December were dashed.

My prediction last October was that Debenhams would fail in 2014 and if their current strategy of discounting continues then Debenhams will not survive as there is no point to it any more. This strategy always had a limited shelf-life and they are now neither mid-market or value.

Very odd that the CFO was chosen to fall on the proverbial sword. That seems more than unfair when a change of strategy led from the top is surely the only way forwards, although perhaps the CFO was behind the (grasping at straws) tactic of demanding that its suppliers pay a 2.5% discount just 8 days before Christmas.

It seems it's been good news for all those clothing brands with great, distinctive product who held their nerve on discounting. Next, Fat Face, Boux Avenue, JLP own brand, Zara, Reiss, Jigsaw, and Ted Baker.

Retailers can't directly affect confidence in the economy but if you have a great product and manage stock well then you are much more in charge of your own destiny. Those that really understand their customers and put their needs first will win in 2014.

Written by Erica Vilkauls: Director JEM Retail Consultants

A Promise Kept

On the first day of 2014 I lined up with over 400 other people to keep a promise I made to myself over 6 months ago by taking part in my first 10k for almost 4 years. But could I finish?

New Year's Day on the seafront at Cleethorpes. Cold, wet, windy. Mildly hungover and wearing shorts I have just one thought going through my mind "am I completely insane?"

Actually I was there to fulfil an objective I set myself around May of last year after discovering I had become so unfit I couldn't jog the quarter mile to my local pub (a route, as you might have guessed, that is extremely familiar to me). Totally disgusted with this I set myself the objective of getting fit enough to participate in 10k events again by the end of the year.

This has not been entirely plain sailing. Somehow nearly 4 years have elapsed since the last time I was running on a regular basis and starting again has been a painful experience. Despite taking things very gradually I have gone through a back problem as well as straining various leg muscles and I was about to answer the question "Was it all worthwhile?"

Well I'm happy to say it has been as I managed to get round the 10k course without stopping. At over 63 minutes I was pretty slow and finishing 386 out of the 433 finishers is probably not something to normally be proud of, but for me it was. After all, I can now get to the pub much more quickly!

As I have found before there was a great sense of camaraderie amongst those taking part. People you have never met before chat freely and everyone is very encouraging of each other whatever their level of ability. There always seems to be a mutually supportive atmosphere of participating in a shared experience at these events.

The Romans began each year by making promises to the God Janus, after whom January is named. Well, in the year I turn 50, my New Year's Resolution is to try and take part in a 10k event every month. My next one is in Dewsbury in early February. Perhaps I can break the 60 minute barrier!

More immediately I am subjecting myself to the Dryathlon again this year. 31 days without an alcoholic drink. This may be more painful than the running!

Written by Mike Gamble: Director JEM Retail Consultants.