We all know that the retail sector is having a hard time – you cannot open a newspaper without reading about yet another merchant bringing the shutters down for the final time or at best reducing the size of its portfolio of stores.
Little good news for retail in the newspapers.
But just think how bad things would be if retailers were as far behind the times as businesses in the leisure industry – where there has been only a minor understanding of the environments in which they trade. This has in turn led to many operational deficiencies including the limited adoption of digital technologies.
Retailers are arguably light years ahead of their leisure and hospitality counterparts. They are adapting their business models to the inevitable multi-channel future and have for many years recognised the value of employing people in a trading function whose role encompasses the management of both margins and sales.
In contrast, the hospitality industry does not have a widely recognised role that ties these two crucial elements together. Typically the operations people look after sales and service while the margins end of things is handled by marketing.
It’s a rather perverse situation because retailers have long since recognised the need for having trading directors, and also increasingly in this multi-channel world, e-commerce directors who are specially focused on making money on the assets within the business.
They are tasked with continuously looking at ways in which they can be smarter with how they squeeze more sales and profitability from their businesses. Nobody has really thought about implementing this trading-mentality approach in hospitality.
The industry tends to still operate within silos whereby you let hoteliers do their job and let publicans do their job – and within large multi-discipline groups it is fair to say that the rule is that ‘never the twain shall meet’.
But finally the industry is beginning to look at the retail sector and admit that they do a much better job and that there is therefore something there that the hospitality industry can learn from.
Whitbread: Has smelt the coffee.
Take Whitbread and its Restaurants division. It is taking a progressive approach by identifying the need to have a specialist trader on its board and allowing this individual to operate beyond a single brand/service/environment within the business.
The company’s managing director spotted the potential to add real value by having a specialist trader focused on pulling operations, HR, marketing, and finance together and driving meaningful money-making strategies.
For example, this could be about stocking regional beers in different clusters of Whitbread’s pubs. This would impact on various parts of the business and it would be up to the trader to bring together these unconnected disciplines and deliver the initiative as a profitable ongoing activity.
Whitbread is also adapting other parts of its business to take into account the fundamental changes taking place around it in the wider world. Like the retail industry it is coming to terms with the impact that digital technologies are having on businesses in all sectors.
It has seen the likes of Jessops react to these changes by skilling-up through its recent recruitment of a trading director to its board who brings significant digital skills from his previous role at The Carphone Warehouse.
Whitbread’s Premier Inn division is taking similar steps by boosting its digital capabilities by appointing a new marketing director from Lastminute.com who brings broad-based marketing expertise including brand, consumer and digital skills.
The company has recognised that a greater percentage of its sales are accruing through its website and that this is only likely to grow over time – and it has chosen to do something pro-active about it.
Let’s see if other operators in the leisure and hospitality industry final wise up to the big-time threats and challenges out there and follow suit in changing their models to operate in today’s and tomorrow’s worlds rather than that of yesteryear.
Sponsored column by Nigel Sapsed, director of executive search specialist Sapsed Stevens