“Offense, Defense, Defense.” That’s the way I’ve come to describe the challenge of leading multi-unit operations at the highest levels. If you’re the VP of Store Operations of a retail system, the value you bring to your company is defined by how you mobilize the company’s resources in three main areas. The first area keeps your company on offense, while the two defensive areas involve how you lead your company through issues that are mainly out of your control. The “Offense, Defense, Defense” model breaks down multi-unit leadership into Strategic Initiatives, Competitive Action, and “The Crisis.”
As the management guru Peter Drucker said, “The most successful way to manage change is to create it.”
Of course, Strategic Initiatives mean you’re on offense. These actions can be planned for, budgeted, managed on your timetable, and aimed toward the objectives you set. Strategic Initiatives can be small or they can be massive, but typically to be strategic it means some form of investment across a large portion of your stores. In general, the more time you’re leading your team to play offense, the more successful you’ll be.
My favorite recent example of a strategic retail initiative is Kroger’s new approach to beer, wine, and liquor sales in their grocery stores. Kroger, which has over 2,600 stores and is the largest supermarket chain in the United States, wants to be more nimble. For decades, slotting of alcohol on supermarket shelves has been influenced and largely decided on by the largest alcohol producers. This produces a product mix that changes slowly store to store, and season to season. Instead, Kroger wants a third party distributor to design and control how much each alcohol product gets in their stores. The kicker is that Kroger wants the InBev and Diego PLC’s of the world to pay this distributor to do it. It will be interesting to see how it plays out and what financial benefits these changes bring to Kroger stores.
A competent commander should always be asking the proverbial, “What if the enemy attacks at night?” However, even if you’re able to guess the type of upcoming event, when you’re on defense, the timing almost never works to your advantage. In these areas, your leadership is defined by the speed at which you’re able to marshal resources to respond across the affected stores.
The need to respond to competitive actions is a natural and expected part of any retail system. Store managers using local marketing tactics can often handle a competitor’s pricing and promotion actions. Where your leadership at the corporate level is important are those competitive actions that require a change to the overall system. Sometimes these efforts are as large an investment as a strategic initiative, but they are happening in response to competition.
A current example of a competitive response is J.C. Penney’s launch of its first “fast fashion” brand, “Belle + Sky.” Along with other traditional department stores, Penney’s has suffered from the onslaught of fast fashion brands such as H&M, Zara, and Forever21. Built into these companies’ business models is the combination of fast design and short-run, fast inventory turnover. The combination means these brands adapt to (and end up driving) changing consumer tastes. Because new types of product land in-store more frequently, shoppers come back more often, creating a virtuous circle of unit economics for these systems. With the launch of the new line, J.C. Penney hopes it can pull back some of that lost business into its stores.
For any single company, the need to lead through “the Crisis” is hopefully a rare and uncommon occurrence. But companies in crisis are all around us. Just recently, Chipotle Mexican Grill faced an E. coli outbreak that sickened 39 people and shut down all 43 of its locations in Oregon and Washington. Walgreen’s pulled back from 41 wellness centers in their pharmacies when their partner company, Theranos was the focus of a federal inspection. This week the Sports Authority filed for Chapter 11 bankruptcy protection and may close 140 of its stores.
What major activities are you currently driving across your stores? Are you currently playing offense or defense (or some of both)? The good news is that either way, the answer to retail leadership challenges is the same, Action!
Interested in taking action with Square Root? Contact us to learn more about our Store Relationship Management platform.