MBS Inspiration
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The MBS Group
is one of the world’s leading executive search firms operating exclusively in Retail, Consumer and relevant technologies, and the most successful sector-specialist firm in the UK
Almost is not good enough
With a highly successful career spanning leadership roles at Woolworths South Africa, Saks Fifth Avenue in New York, Holt Renfrew in Canada, and Harrods and House of Fraser in the UK, Andrew Jennings has a hard-earned reputation as a leader in the international retail industry. Earlier this year, he took charge of Karstadt, Germany’s leading department store, in what many consider one of the biggest turnaround challenges in European retailing.
On a brisk autumn morning, a group of CEOs gathered in London’s Landmark Hotel for a private breakfast organized by The MBS Group. We were keen to hear from Andrew about his experience as a CEO at a time when positivity and dynamism need to be tempered with pragmatism.
First came an honest acknowledgement of where retail is today, and Andrew painted a picture of a changing world, with a tough economy and increased polarisation – a market where fast-fashion and luxury are growing while the mid-market dwindles. What’s more, many retailers continue to struggle with the tension between in-store and online as they try to adapt to consumer demands.
In this context, retailers must focus on what’s important: the customer, innovation and differentiation. “It is about going beyond the norm to excel in all those areas. It is also about inspiring and developing your people. You need to put them at the heart of the business and give them the opportunity to learn first hand the new skills they need to learn.”
Andrew summarises his vision as ‘almost is not good enough’. It epitomises a constant drive to excel and be better than the rest – a mantra that is driving the current changes at Karstadt.
An iconic business in Germany, Karstadt is a 4bn Euro company that encompasses a premium division, department stores and is also Germany’s biggest sports retailer. Its strong brand heritage became apparent when over 1.5 million people signed a petition to save the business when it went into insolvency two years ago.
“This is a powerful example of brand loyalty on the part of our customers. However, despite the overwhelming support for the brand, it quickly became apparent to me that the business as a whole was consistently inconsistent. In some ways, the successive management changes in recent years had made the organisation lose sight of what it is to be a retailer.”
Andrew’s strategy to revive Karstadt is based around four clear calls to action: modernise the business to attract the younger consumer, differentiate through better and more innovative products, sharpen processes and procedures, and simplify them so that his team can focus their time on what really matters.
“These are not new ideas; some of them were around well before my time. The difference now is that we are focusing on making them happen. You can call it ruthless implementation, ruthless execution if you like. ”
As we opened up the discussion, one question particularly resonated with the retailers in the room. When staging such a turnaround, how do you balance the need to modernise the traditional store with the massive growth of online channels?
“Well, the truth is you have to do both. When you are confronted with a challenge of this nature, you first need to focus on what is core to the business. For us, the heart of the business is the buying – the merchandising and how it is presented. It is the crucial success factor. Then we have the stores, you could call them the soul of the business, and as such they are extremely important; and finally, there is marketing, the glue that binds the buying and selling together, and ensures that everything we do fits in with what Karstadt stands for. Alongside all of that, you need to develop online and multi-channel – it is such a big area of growth and it is moving at such speed that you cannot possibly leave it behind.”
And after so many management changes how has Andrew managed to convince its team that he is there to see it all through? “The business was in need of someone who ‘spoke retail’. I don’t speak much German but I speak retail, and I think this deep understanding of the sector has been welcome.”
This last point led onto a discussion about culture change and how to manage it. “For me it is about winning the hearts and minds of the people both at the top and at the bottom of the organisation, so that they truly believe in what we are trying to achieve. You need to break down the barriers of formality and start nurturing relationships and trust.”
His views were complemented by those of a CEO of a global retailer, who described how at a time of strategic change, they nurtured their global management team by creating a community that not only encouraged learning and networking, but also accountability.
Many turnaround stories are about optimisation, but Andrew’s one for Karstadt is about injecting life into the business through a careful combination of excitement, change and opportunity. “When a company is coming back from insolvency and morale is low, you need to create an environment where people see the opportunity and want to change,” he says.
Ultimately, we all agreed, it comes down to leadership. It’s about having a vision, a clear direction and a certain degree of single-mindedness to see it through. Inevitably, perhaps, we touched on the figure of Steve Jobs, who turned Apple from a computer company into the most successful retailer in the world, yet still refused to let Flash Player run on its devices, allegedly due to a difference of opinion with the founder of Adobe some years back.
As we reflected on Jobs’ strength of character, Moira asked Andrew one final question: with such a challenge in front of him, does he ever fell unmotivated or disillusioned? “It can be hard at times, but the opportunity ahead of us is so great that I feel exhilarated.” We could all certainly see the spark in his eyes.
Category:
Event: Panel debate
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