You pay a price for not keeping it simple
THE KISS principle – keep it simple, stupid – was the acronym of the US military in the 1960s. You need to design things so that they can be fixed in battle conditions. You need simple maintenance procedures. And you need kit that is appropriate for the job that has to be done.
Now apply this to retailing. There are a few famous catchphrases, such as James Gulliver’s “retail is detail”, and Jack Cohen’s “pile it high, sell it cheap”.
The latter defined Tesco and was the title of Slasher Jack’s biography. John Sainsbury, Lord Sainsbury of Preston Candover, was also relentless in his attention to detail, and it was his intuitive genius that took Sainsbury’s sales from £150 million (R2.57 billion) to £9bn over the 23 years he ran the company.
But then neither Tesco, nor Sainsbury’s, nor indeed Marks & Spencer, remembered the need to keep things simple.
Tesco stumbled around, buying things it did not know how to run, starting businesses in the US it had to close, and so on.
Sainsbury’s has just produced some decent enough results but has all sorts of problems with its online business.
M&S is simplifying its business, getting rid of things it is not great at. But while its food is wonderful, as always, it has not cracked its core business of women’s clothes. Now contrast this with Alibaba and Amazon. Alibaba is the world’s largest retailer, with a current market value of £279bn. Amazon is number two at £193bn. And Tesco? Well, it is worth £14bn; Sainsbury’s and M&S both around £5bn. We think of the UK’s great retailers as giants. They are tiny by world standards.
What Jack Ma and Jeff Bezos have is focus. Jack Ma, who I have met, has that ability to mesmerise an audience by talking very simply about helping people live their dreams.
I have not met Jeff Bezos, but it is easy to catch the simplicity of his pitch. He says he has three principles that have guided him over the past 18 years: “Put the customer first. Invent. And be patient.”
A tidal wave of change is washing over retailing. I can understand that it is easier to create an entirely new retailing model, as have Alibaba and Amazon, than to modify and adapt an old one.
Ten years ago Tesco was the world’s third-largest retailer, behind Wal-Mart of the US and France’s Carrefour.
Carrefour is now worth about £15bn, more or less the same as Tesco, but WalMart is worth £176bn. So Wal-Mart has fought back and kept growing. The UK retailers haven’t. They haven’t kept it simple, have they? – Daily Mail
Alibaba is the world’s largest retailer, with a current market value of £279bn. Amazon is number two at £193bn.