You pay a price for not keep­ing it sim­ple

The Star Early Edition - - OPINION & ANALYSIS - Hamish McRae

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.

Prob­lems

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.”

Change

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.

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