Retail Insider held its latest Breakfast Event this week with Peter Williams, chairman of Boohoo.com and Alan White, chairman of Hotter Shoes, who discussed the issue of bringing a digital mindset to retail businesses.
Senior executives from Tesco, Sweaty Betty, Wyevale Garden Centres, Cook and Muddy Boots were among those who heard how they both recognise the challenges involved.
Williams told the attendees gathered at The Delaunay in central London that boards are inevitably made up of the over 50-year-old’s who make all the decisions and retailers need to have more 30-40-year-old’s represented on their boards.
“Talking about digital should not be item 12 on the list of things discussed by the board of bricks and mortar retailers,” he says, adding that it requires a CEO to champion digital and ensure it gets heard around the table.
White agrees there is clearly value in bringing on-board digital expertise but any initiatives they undertake have to be grounded in the land of making money.
“You need digital champions with all guns blazing who talk ‘bells and whistles’ but fundamentally where do they make money? There has to be a commercial question, he says.
Williams says pure-plays start from a massively beneficial position of having a “clean page” with no legacy infrastructure to hold them back. But he says there is still the issue faced by many that they might have managed to raise large amounts of funding but they still have not been profitable.
Over the next five years he foresees some failures among these businesses: “If they’ve got to £100 million of sales but are not making money then I’d say they are not going to make it.”
This contrasts with Asos (where Williams was on the board for eight years) that was making £1 million of profit on £30 million of sales in 2006 when he was first introduced to the company.
Although traditional retailers face challenges both White and Williams believe they are adapting gradually – partly because they have to – and point to success story John Lewis that like Next has “joined up” its channels and now has a “massive opportunity”. This includes trading overseas where online gives it a route into new markets.
Such organisations are benefiting from having stores that give them a multi-channel dimension and this is why White was behind the opening of stores when at N.Brown (where he was CEO for 11 years).
Williams revealed that Nick Robertson, CEO of Asos, had been keen to open a fashion emporium to showcase the company’s products but this was never pursued as the conclusion was: “Why look at individual stores when you can look at new countries instead.”
What the pure-plays have been able to benefit from is bringing innovation to the sector but White suggests that even the big paradigm-shifting companies like Facebook and Google ultimately end up having to acquire the newest innovators like Whatsapp and YouTube because “very few major innovations come from major corporations”.
This is a sobering thought for all organisations of a certain size but it also suggests that even the disruptive companies of today like Facebook and Amazon will be rocked by the disruptive organisations of tomorrow.
Retail Insider would very much like to thank Peter Williams and Alan White as well as the sponsors CBX Software, K3 Retail and Bond Dickinson. Without their much appreciated support this event would not have been possible.