Too little, too late for fallen giants?

‘A successful manager of decline’: it’s not exactly what you had in mind for your corporate epitaph. No, what you wanted was something more heroic: ‘the man (or woman) who turned around a high street brand’, ‘company saviour’, or simply ‘agent of change’.

Yet these fulsome epithets are proving surprisingly difficult to earn for a series of talented, dynamic executives who have thrown themselves, body and soul, into the rescue of such ailing high street names as Marks & Spencer, WH Smith, Boots and Sainsbury’s – whose sales figures stubbornly refuse to move in the right direction. Which raises the agonising question: are these brands ultimately beyond repair, however capable their would-be saviours?

It’s worth grouping them together because their corporate pathology has an interesting commonality. All began, under over-confident paternalistic leadership, by disguising the seeds of their eventual decline in a period of expansion. Call it diversification if you like, but the embarkation of Sainsbury’s and Boots into DIY; WH Smith’s move into Waterstone’s and Paperchase; and M&S’ ill-considered global expansion all distracted the attention of senior management from the more mundane issue of like-for-like sales in their core operations.

Once the evidence of failure became unmistakable, retribution was severe. Acquisitions were rapidly divested; corporate efficiencies were sought (most frequently in the over-ripe head count). Most importantly, however, new management teams, brought in from outside and therefore untainted by the culture of failure, were persuaded to embark on a series of radical departures. With Sainsbury’s we had a lurch towards everyday low pricing (the John Cleese era); with Boots, beauty parlours and eye clinics; with M&S, a determined attempt to get hip with a younger audience via a bewildering variety of sub-brands; with WH Smith… all right, we’re still waiting.

The point about these initiatives is they have failed and the (in some cases) third-generation management which has had to rectify them have had to return to much more conservative policies, seemingly with correspondingly modest results in view. At Boots, Asda whiz-kid Richard Baker has done away with the fripperies and is earnestly trying to get back to basics. At WH Smith, Argos prodigy Kate Swann (who admittedly had an unpropitious start with the would-be Permira bid) has unveiled a surprisingly low-key reform programme, at M&S we can expect a long, slow grind for Stuart Rose and his team.

And at Sainsbury’s we have (ex-Asda, ex-M&S) Justin King’s response to two generations of strategic blunders, under the Dino Adriano and Peter Davis regimes. Davis (ex-Pru, but fundamentally an old Sainsbury’s hand) rectified the EVDLP folly (a hostage to Tesco’s and Asda’s deeper pockets) and put Sainsbury’s back on the premium quality track, but then introduced a &£3bn logistics folly all of his own. It should be remembered that, within this fraternity, Sainsbury’s has been in crisis longest (since 1995) and that investors’ patience is correspondingly the most threadbare: further strategic adventures are inadvisable. Even so, ‘getting the basics right’ is distinctly unoriginal, consisting of better product availability, keener pricing, sub-brand simplification, and more customer service.

Nothing wrong with that, of course: it’s common sense and proof furthermore of that unexciting adage, retail is detail. But is it enough? That’s a different question.

Stuart Smith, Editor

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