Peter John­son

How Cot­ton On have built ethics into busi­ness

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Those who seek out a ca­reer in IT and bank­ing are not usu­ally des­tined to wind up in re­tail. How­ever, the bank­ing sec­tor of­fers sur­pris­ingly good foun­da­tions when a ca­reer in re­tail presents it­self, in­clud­ing an un­der­stand­ing of the way sys­tems and pro­cesses can ben­e­fit an or­gan­i­sa­tion.

“Bank­ing re­quires struc­ture; or­gan­ised pro­cesses that are clear, mea­sur­able and at­trac­tive to an­a­lyt­i­cal peo­ple,” says Cot­ton On Group CEO Peter John­son. “When I moved from bank­ing to re­tail, there were pro­cesses and sys­tems that had been around for a while but had at­tracted more en­trepreneurs, mer­chants and cre­ative peo­ple. I found there was less de­mand for an an­a­lyt­i­cal ap­proach. I found that there was no need to suf­fo­cate the busi­ness with process. The process and sys­tems are ac­tu­ally there to sup­port the busi­ness. They shouldn’t dic­tate what you do, but they should sup­port you to do things bet­ter.”

In brief Peter be­lieves that un­like in some bank­ing cir­cles, the sys­tems in re­tail don’t drive busi­ness, the peo­ple and cus­tomers do.

Un­der this phi­los­o­phy, The Cot­ton On Group has en­joyed store foot­print growth from 50 Aus­tralian Cot­ton On stores in 2004, to over 1,300 stores and eight brands, op­er­at­ing in 17 coun­tries, sup­ported by a global work­force in ex­cess of 19,000 peo­ple.

Peter’s vi­sion is to en­sure the Cot­ton On Group con­tin­ues to grow as a re­tail mar­ket leader, while stay­ing true to its Aus­tralian her­itage and the en­tre­pre­neur­ial spirit that has seen the com­pany en­joy ex­po­nen­tial ex­pan­sion in re­cent years. Peter sees this growth as en­abling per­sonal and pro­fes­sional de­vel­op­ment op­por­tu­ni­ties for the global work­force and the abil­ity to con­tinue to make pos­i­tive con­tri­bu­tions in the com­mu­ni­ties in which the Group op­er­ates.

Nur­ture and na­ture

Peo­ple are im­por­tant. The Group’s lead­ers firmly be­lieve they are the foun­da­tion of suc­cess, par­tic­u­larly those with energy.

“I en­joy work­ing with en­er­getic, pas­sion­ate peo­ple who love what they do,” Peter says. “They get up ev­ery day en­joy­ing life be­cause they know they work in a tan­gi­ble, tac­tile busi­ness. The re­sults of their work are im­me­di­ately ap­par­ent. The ac­tions we take around change take days not weeks. It the type of en­vi­ron­ment that at­tracts peo­ple with energy and cre­ates its own energy.

Energy is in­fec­tious. Peter has it in abun­dance. It was ev­i­dent in his roles with Sports­girl, Jean West and Coun­try Road and it pro­vided the per­fect fit for the Cot­ton On Group, who con­sid­ers it­self a fast mov­ing, fast paced or­gan­i­sa­tion in tune with the chang­ing de­mands of the global con­sumer.

“Suc­cess in re­tail is un­der­stand­ing the cus­tomer,” Peter says.

The growth of so­cial media and the op­por­tu­ni­ties cus­tomers have to see what peo­ple are wear­ing around the world, means re­tail­ers must lis­ten to what cus­tomers are say­ing.

“This is an age in which fash­ion is ac­ces­si­ble to ev­ery­one. We take pride in lis­ten­ing to the cus­tomers and learn­ing about what they have seen and want. We then move fast to get that to them. When we see trends on so­cial net­work­ing sites, our ver­ti­cal in­te­gra­tion and great peo­ple work­ing on sup­ply chain strate­gies helps us quickly get these prod­ucts to store.”

As quickly as one prod­uct may sur­face, another can fall by the way­side. Good re­tail­ers are lis­ten­ing at both ends of the spec­trum: to what cus­tomers want and what they don’t want. If there is no re­sponse to a prod­uct, or the re­sponse is wan­ing the strate­gies change. Peter be­lieves that this agility would be un­likely to oc­cur if there wasn’t a strong team in place.

“We have a belief in our peo­ple. They are cre­at­ing big dreams and we want to add to that. We en­cour­age in­no­va­tion and chal­lenge peo­ple to get the best of them­selves. Get­ting the right peo­ple is the key to sus­tained growth. It is the pil­lar by which all suc­cess is built.”

Cot­ton on to the right be­hav­iours

To en­cour­age suc­cess and in­no­va­tion, the Cot­ton On Group looks af­ter its staff. There are open com­mu­ni­ca­tion chan­nels for all four re­gional hubs across the globe, there is a café that pro­vides healthy meals, a ded­i­cated Health and Well­be­ing team and a tai­lored $30mil­lion ed­u­ca­tion plat­form, COG Uni, pro­vided in con­junc­tion

with Deakin Univer­sity, that teaches lead­er­ship de­vel­op­ment, cul­ture and busi­ness val­ues. Ev­ery­one who joins head of­fice is trained around ethics and stan­dards for busi­ness. Ev­ery­thing is geared to­wards trans­fer­ring pos­i­tive be­hav­iours.

Be­havioural trans­fer­ence is im­por­tant when you are man­ag­ing 1300 stores glob­ally, in­clud­ing eight brands in 17 coun­tries and you have plans to roll out fur­ther growth.

“We are a truly global busi­ness,” Peter says. “We have big plans to con­tinue our growth and we have a good track record in get­ting into new mar­kets and grow­ing quickly. We now have two stores in Brazil with the vi­sion to open more. Our most re­cent growth mar­ket is South Africa. Three years ago we had a hand­ful of stores and now we have over 100. We want to build the foot­print wher­ever we think the brand can be suc­cess­ful.”

Tak­ing on the com­pe­ti­tion

The energy that flows through the Cot­ton On Group team has de­liv­ered growth north of 20 per cent year on year for the last six years. Peter says the Group has the in­fra­struc­ture and the sys­tems to con­tinue the ex­pan­sion de­spite more and more com­pe­ti­tion com­ing into the mar­ket.

In fact, the Cot­ton On Group wel­comes the com­pe­ti­tion.

“We have never shied away from com­pe­ti­tion. Some of the big re­tail­ers that have come to Aus­tralia have stim­u­lated re­tail and cre­ated fur­ther in­ter­est among con­sumers. We have seen that stim­u­la­tion re­flected in our traf­fic, which is up in num­bers.”

That there are now more com­peti­tors only means that ex­ist­ing re­tail­ers should be con­stantly on their game.

“You can never sit still in re­tail. Cus­tomers move quickly and com­peti­tors move quickly and you have to be nim­ble. I do be­lieve that the more va­ri­ety then the bet­ter it is for the sec­tor.”

The Cot­ton On Group has been ready for some time for for­eign com­pa­nies com­ing into Aus­tralia. When the Group ex­panded into Sin­ga­pore in 2007 that is when they were first con­fronted by most of these play­ers. It meant when they started open­ing stores in Aus­tralia, they were ready.

“Our strate­gies were formed on in­ter­na­tional mar­kets to be able to com­pete with over­seas re­tail­ers, so we are com­fort­able with how things are go­ing. We don’t get too in­volved in macro con­di­tions; we con­trol what we can con­trol. There are new play­ers in the mar­ket and there will be changes and cus­tomers will shift. That’s a healthy view of com­pe­ti­tion. We have em­ployed nim­ble, fast, di­rect strate­gies. The fact is that to­day, no mat­ter where you trade, you need to be at a global stan­dard.”

Global ethics

The Cot­ton On Foun­da­tion is the DNA that runs through this 23-year-old busi­ness. Since start­ing in 2007, over $35 mil­lion has been raised in an ef­fort to cre­ate 20,000 ed­u­ca­tional places in South­ern Uganda by 2020. The Cot­ton On Group doesn’t be­lieve in cut­ting cheques – they much rather roll up their sleeves and get on with the work them­selves, de­liv­er­ing in­fra­struc­ture, ed­u­ca­tion, healthcare and sus­tain­abil­ity pro­grams aimed at em­pow­er­ing lo­cal com­mu­ni­ties and fos­ter­ing long term change.

“We give back to the com­mu­nity and our cus­tomers ap­pre­ci­ate that,” Peter says. “Com­mu­nity de­vel­op­ment cre­ates en­gage­ment with our brand, whilst staff de­velop skills work­ing within say an African com­mu­nity, that they wouldn’t

achieve else­where.

“I be­lieve that as long as we keep ask­ing what is the right thing to do, the cus­tomer will see and re­spect that.”

The sup­plier re­la­tion­ship

Like many of the best busi­nesses, the Cot­ton On Group treats their sup­pli­ers as part of the busi­ness. Sup­pli­ers are in­vited in and there is no fa­cil­i­ta­tion by a mid­dle­man; it is the sup­plier and the Group do­ing busi­ness to­gether.

“We go to Bangladesh and China and take a dozen of the team and talk with our sup­pli­ers about the busi­ness. We share strate­gies. We meet peo­ple and help them un­der­stand the cul­ture. We want them to feel like they are a part of the team.”

Peter sees his sup­pli­ers as crit­i­cal to the busi­ness and as long-term part­ners.

“Some sup­pli­ers started with us 15 years ago; they have come with us on the jour­ney and they have gone through the same growth rates we have. We need to add sup­pli­ers to ex­pand, how­ever we treat the new sup­pli­ers as we would our old part­ners be­cause we want to build strong, last­ing re­la­tion­ships.”

Even those sup­pli­ers who are thus far only fill­ing half a dozen or­ders are treated equally to the busi­nesses that are fill­ing thou­sands, this is be­cause Peter sees them as po­ten­tial top 10 sup­pli­ers.

“We don’t want to con­sol­i­date into a smaller num­ber be­cause each sup­plier plays a dif­fer­ent role, and even the small or­der plays just as im­por­tant role as the large one. The bot­tom 20 per cent of sup­pli­ers in vol­ume may be the fu­ture star.”

Strate­gies for the fu­ture

The Cot­ton On Group is look­ing to the fu­ture in a sim­i­lar way it has grown in the past. The plan is to grow to about 2000 stores through or­ganic growth of its brands into new and ex­ist­ing mar­kets, cou­pled with main­tain­ing a keen eye on brand ex­pan­sion op­por­tu­ni­ties and cat­e­gory ex­ten­sions.

For in­stance Supre was ac­quired to at­tract a younger de­mo­graphic.

“Our brands are tar­geted at cer­tain de­mo­graph­ics. One strat­egy is to keep selling more to loyal cus­tomers, whilst some brands have evolved into ex­tra cat­e­gories. Another growth strat­egy is to look for dif­fer­ent cat­e­gories. Supre was a slightly younger fe­male de­mo­graphic that we thought we could take to a few other coun­tries around the world.

There is also a strong e-com­merce plan that will fully com­ple­ment the bricks and mor­tar stores at home and abroad.

“There are still plenty of op­por­tuni- ties for less ma­ture brands to flour­ish and for growth with these brands in the bur­geon­ing re­gions such South Africa and Brazil,” Peter says.

As a pro­gres­sive and col­lab­o­ra­tive leader, Peter has over­seen enor­mous growth and suc­cess with the Cot­ton On Group and the num­bers speak for them­selves. How­ever what re­ally stands out is the col­lab­o­ra­tion be­tween staff, com­mu­nity, cus­tomers and sup­pli­ers that pulls all the pieces to­gether and gives con­fi­dence to the Group’s growth am­bi­tions.

Cot­ton On’s busi­ness prow­ess and strate­gic vi­sion is com­ple­mented by re­tail-cen­tric tech­nol­ogy from Re­tail Di­rec­tions. The Just Group, For­ever New and The Body Shop also rely on our plat­form and its end-to-end om­nichan­nel ca­pa­bil­i­ties An­drew Gorecki, MD of Re­tail Di­rec­tions.

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