How Cotton On have built ethics into business
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.”
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
“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.