Two UK high-street stalwarts have shared their lessons learned from coping with the COVID-19 pandemic and offered tips for retailers on how to stay in business in the face of such a rapid digital shift.
John Lewis has not escaped unscathed during the pandemic. The retailer, which runs 35 department stores, 300-plus Waitrose supermarkets and two transactional websites, faced a backlash last month after announcing the closure of eight John Lewis stores. The company was also recently described as a “furniture nightmare” by the British Prime Minister’s latest girlfriend, Carrie Symonds, although that led to a wave of public support and an ill-fated opposition political photo stunt.
Speaking at the recent Nimbus Ninety Chief Disruptor Event, Andrew Murphy, Group Operations Director at John Lewis Partnership, shed light on how the retailer adapted for the COVID world, and the reasons behind some of its key decisions. His main takeaway from running the business during the past 13 months has been the misconception that organizations only need to be flexible in a specific area of their operations:
Businesses that have moved from being single-channel bricks and mortar retail, and have opened up and scaled websites, typically were seeing that flexibility as being a toggle between the physical space and online. That has and remains a very important area, but it misses the point – and the pandemic exposes that - which is, if you aren't effectively agile and flexible in your core, you can't ever specify well enough or foresee enough of the future to pick the areas in which that flex is required.
Building for that type of resilience, that always-on flexibility that is in the core operations, people and infrastructure - that's a hell of a lot easier to say than it is to actually do.
Prescription for success
Boots hasn’t faced a public grilling akin to John Lewis during the pandemic, no doubt helped by its position as a health store and pharmacy. This meant its 2,490 stores across the UK and Republic of Ireland were able to stay open and support local communities and the NHS during the crisis.
While the retailer was already underway on its digital transformation journey, Covid saw the firm refocus its priorities on becoming more agile. Its online business had been nearing capacity even pre-Covid, leading the firm to take measures like extending next-day delivery to several days to avoid disappointing its customers.
Boots, which is part of the US-based Walgreens Boots Alliance, introduced robots into its e-commerce fulfilment in late 2018, which have proven invaluable, particularly given Covid, according to Shane McArdle, CFO and Director of Finance at Boots Ireland. The robots allowed Boots to scale its e-fulfilment significantly during a period when not only was demand going through the roof, but also the need for social distancing in every work environment:
COVID really supercharged our digital transformation program. We're a traditional legacy organization, and our ability to respond quickly on a scale was very much tested. We were able to scale up that particular business operation to add many more robots and allow that social distancing.
With the global pandemic, we wanted to make sure that Boots were one of the reasons the NHS was still standing once this thing is over. Our ability to stand up the testing and vaccination sites practically overnight has been a big learning. What we have found is, as a traditional organization with a typically build-it mentality, we didn't have the capacity, time nor scale to be able to do that. So partnerships was a big play for us.
Boots partnered with online doctor service Doctor Care Anywhere and used its template of an ideal patient journey; it also launched Health Hub, a boots.com service offering access to physical pharmacy services, via a partnership with Livi. McArdle explained:
All of those things have helped us recognize we can't just do it ourselves, it’s really about partnering because ultimately we can get more quality services faster to everybody that needs them.
Investment patterns have shifted more towards digital during this period, as the pandemic has led to far fewer people who are afraid or unable to go online. McArdle said that as the “digital illiterate” cohort is now practically non-existent, new offerings like online doctors and pharmacy consultations, and digitized prescription-ordering services are the focus areas.
At John Lewis, investment has also been much easier to come by for any projects involving digital. Murphy explained:
Every business case for any form of automation or digitization that existed before February last year has just got significantly stronger. I've seen probably a third of the business cases that were on my desk in the pending file have moved into viability simply as a result of what's happened in the last 12 months.”
There has also been a mindset shift around areas the retailer would have previously categorized as offline-only: consultations for nursery advice, fashion, beauty and home were all seen as lacking a compelling reason to digitize. However, they have now all been digitized, and seen significant adoption and very high Net Promoter Scores from customers. Murphy added:
In 15 years of trading online, whenever we thought that something couldn't be made successful online, online and the customer have always proved us wrong.”
Waterfall out, agile in
A common theme for both retailers over the last year has been a shift away from the sequential waterfall methodology to agile project management. According to McArdle, waterfall is much less suitable in these times compared to the more reflective and iterative agile approach:
While its current application is around innovation and development, retailers and pretty much every business need to look at those agile principles and apply them across the business model. Each function operating in an agile way, let's stop and check and see where we are, are we still going in the right direction. All retailers will want to get that agility under their belt because ultimately for those that don't, they risk becoming outdated or left behind.
Before the pandemic, John Lewis was split 50/50 between agile and waterfall; during the pandemic, that became more like 90/10. While it won’t swing back to the original half and half, the retailer won’t be able to keep it at such a high proportion of agile delivery, due to the prevalence of legacy systems and platforms that need to adapt to become extensible platforms of shared services. Murphy said:
This is what we need now as an organization if we're going to pursue our ambition as quickly and as adeptly as we'd like to.
One big barrier to John Lewis’ ambitions is the ready supply of talent available to join its business or come up through the ranks with the necessary experience, mindset and skill:
If your workforce, made up of in our case 80,000 individuals, aren’t agile in and of themselves in their mindset, there really is no prospect of the organization as a whole sustaining mass agility.
The chances of your organization, if you're more than a 20-year-old organization, having navigated to this point with the right mix of these skills is basically nil. You're going to have to start by changing yourself. In some cases that will be mindset shift and personal development, and in others it does have to be bringing in new talent. It’s tempting to believe that you can evolve organically from where you are as a leadership group to where you want to be, but the truth is even if you could, you wouldn’t get there fast enough.
Don’t fear failure
Part of this mindset shift is the approach to failure. Agile needs to be a culture, McArdle advised, it's not a project or something that can be fixed over the next year:
The regular iterations to the environment and seeing that the destination is still relevant are really important. Ultimately it's about failing fast, failing cheap, developing minimum viable products.
This requires a redefining of what failure and success are: trying something new as part of striving for the ideal solution shouldn’t be classed as failure. As agile becomes more commonplace within organizations, its iterative nature should mean failure is a lot less severe. McArdle explained:
We can try something out and if it doesn't work, we haven't gone down the road that we've spent millions and millions of pounds on that investment. We might have spent a couple of hundred grand, but it’s a couple of hundred grand that will tweak the ship to bring us ultimately to that right solution.
However, there is a danger in making statements like ‘failure is a great outcome’ or ‘let's all be comfortable with failure’. Murphy has heard many executives utter those words over the years, yet have no idea how to live by them.
More important is being clear with individuals and teams about what the acceptable terms of failure would look like and not implying that suddenly all forms of failure are acceptable or any form of incompetence would be welcomed. Leaders who are comfortable shining a light on not only their organization’s successes, but also the challenges and failures, are also vital.
The customer isn’t always right?
Where the two retailers differed in opinion was their attitude to physical stores and customer feedback.
The fact there’s a Boots store within 10 minutes of 90 % of the UK population is something the retailer is proud of, and it doesn’t see those numbers changing dramatically. McArdle is of the firm belief that the physical store is still very much part of the business, and Boots’ customer experience teams already have the skills needed to service all the channels:
With that omni-channel offering, there has to be an ability to seamlessly turn up for your customers. Patients and customers have been in various levels of lockdown for the last year, so that balance of online and in-person customer experience will be vital. Some different skill sets or upskilling are required, but it shouldn't change things dramatically.
Murphy has a different, slightly more controversial view, noting that retailers are now serving a whole new set of customers who until recently were digitally naïve but have been forced to engage in digital channels over the last year, and who haven't yet got used to this emerging new reality. At inflection points like these, Murphy advises channelling Henry Ford and his alleged ‘faster horses’ quip:
Despite the fact we're all being trained to find the data for every insight and to support every action, at an inflection point like this, you have to be very careful of asking the customer what it is they want, because in truth, they don't know.
“The challenge for retailers is to redefine what the store will be valued for by the customer, and then see if you believe you can align that to the value it will create within your overall ecosystem. The biggest way to end up on the wrong end of that is to be seduced by what the customer may use you for, but actually not have an operating model that allows you to create value out of that. The fool’s trap would be purely to follow the customer without actually forcing yourself to do the more difficult work of what's the total customer journey possibility here and how do we monetize that?
I would imagine across boardrooms of retailers in the UK, that's the kind of head scratcher that’s going on at the moment.
It’s no surprise that John Lewis is keen to play up the notion that customers don’t really know what they want. The retailer is facing intense pressure to keep its department stores open, from petitions and vigils to customers plastering the Sheffield store’s shopfront with thousands of heart-shaped messages in an outpouring of love and grief.
Henry Ford might not actually have said his famous horses quote, but he did say this: “If there is any one secret of success, it lies in the ability to get the other person’s point of view and see things from that person’s angle as well as from your own.”
It may not fit John Lewis’ current strategy quite as well as the ‘faster horses’ quip, but it’s still a message that retailers would do well to keep in mind when weighing up business value versus retaining customer loyalty.