Bernie Brooks, CEO of Myer, believes that the ability to sustain the rate of growth experienced over the past two years in current market expectations is the biggest challenge facing the future of the retail industry.
“Retail over the last couple of years has seen fantastic growth in Ebit margins but the ability to sustain that is going to be an incredible challenge. We’ve seen market expectations of department stores of 10-13 per cent Ebit margins and supermarkets at three to six per cent Ebit margins,” commented Brooks when speaking at a recent meeting of the World Retail Congress Advisory Board.
“Also, how do you innovate in the market with so many retailers now being the same? It’s very hard to establish a point of differentiation, whether that be in the offer you have, the people you have, the technology you use as supply chain, the infrastructure or the customer offer. It’s a challenge.”
Brooks was among a number of retail leaders, including Ian Cheshire (CEO, B&Q) and Andrew Jennings (managing director retail, Woolworths SA), who met with the World Retail Congress program director to establish the key issues to be discussed when the congress convenes at the CCIB in Barcelona next April.
Aside from the importance of retaining quality people as one of the primary drivers behind a successful business, Brooks added: “The other challenge is to be relevant to the consumer that is multi-faceted and changing so much by the day in what they buy, how they purchase and how they use the item that it becomes a challenge to be consumer led in your thought process.”
Another topic to be discussed at the congress will be the fundamental characteristics of a successful retailer in the future.
“Supply chain and IT and the interface between both are becoming a norm rather than a common denominator for success. I think you’ve got to have an effective, fast supply chain,” said Brooks.
“The ability to approach the all encompassing area of sustainability of the triple bottom line is going to be an ever increasing challenge, as is to make your people better and more consumer led than other people. So again it’s the consumer led aspect and the ability to cater for an associated demographic that’s quite different than what it was over the last few years.”