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Which Retailers and Food Service Operators Will Win In 2018 And Beyond?

February 28, 2020

The customer of today scarcely resembles the customer of 1998, and yet many retailers are still operating as if we are still in 20th century. Customers today have more choices than ever, have changing tastes, and demand a total value proposition that is much different than it was just a few years ago. Organizations competing for the food and retail dollar will have to be better, smarter, faster, and more creative than ever before. Operators we’ve studied that significantly outperform their peers, without exception, exhibit strong leadership in these nine disciplines.

1.Unified Leadership: Every high performing retailer we’ve studied has a cohesive, unified leadership team, in which each member understands they own the challenges of the entire organization, and not just their own departmental challenges. A high-performing team is one in which trust, healthy debate, shared vision, accountability, and results orientation exists. Most leadership teams are not teams at all, rather a collection of individuals who often compete for position, airtime, and resources. Transforming a group of talented individuals into a unified team takes work process, patience, and commitment. The results are well worth the effort. Retail and food service organizations in which the marketers, accountants and operators have competing priorities are missing huge opportunities to get everyone on the boat rowing in the same direction.

2. Purpose: Harnessing the power of purpose, inspiring stakeholders & delivering exceptional returns. Less than 5% of organizations overall operate with a clear sense of purpose. TPL companies like QuikTrip, Panera Bread, Arby’s, Wegman’s, and Nordstrom engage their workforces, especially millennials, with a purpose greater than just making money. The workforce of today is not driven by the same things that drove baby boomers. Today’s up and coming leaders want to work for companies that are committed to a clear purpose that somehow makes the world a better place. Purpose driven organizations outperform their peers. The data is irrefutable.

3. Hiring: Using disciplined hiring practices to assess cultural fit and the ability and drive to deliver exceptional results. Hiring practices worldwide at every level are broken. Following proven, time and battle-tested hiring processes at every level ensure screening out B and C players in favor of A players, which aligns the right candidates around cultural fit, personal and professional attributes, and performance expectations. QuikTrip, the world’s best run C-Store operator, built an employment brand that compels 100 people to apply for everyone they hire. They then screen for employees who want to work hard, win, and assimilate in to the QT culture.

4. Stakeholder Engagement: Fulfilled, collaborative employees, providers, and shareholders who are committed to the company’s objectives. According to Gallup, the American and Global, workforces are 70% and 90% disengaged, respectively. Providers are viewed as necessary evils and shareholders are only interested in short-term returns. The best performing organizations in the world have a vast majority of all their employees working hard toward the organization’s objectives. The right values, vision, mission, strategy, and big, hairy audacious goals are necessary for workforce engagement. The best also treat their shareholders, suppliers, and providers as partners.

5. Clarity: Stakeholders understand the company’s strategy, know where the organization is going, how it will get there, and their role in making it happen. Clarity is necessary to perform at optimal levels. In organizations with great clarity, communications are delivered so that constituents believe that their leaders know where they are going, believe what they are saying and are connecting effectively with their needs and desires. Exceptional CEOs like Blake Nordstrom, Chet Cadieux, Paul Brown and Colleen Wegman are communicators extraordinaire. Spending as much as 40% of their time in stores and corporate departments, they deliver clarity that adds a sense of calm and direction to an otherwise frenetic workplace. The emphasis on hiring must be cultural alignment and specific performance expectations.

6. Customer Focus: Relentless customer commitment, anticipating their needs and creating raving fans. Optimal performance requires an unyielding focus on customers. It’s not necessarily just about what you sell, but what you stand for. Strategies that don’t begin with the customer in mind tend to underperform. Those that lose sight of the customer will likely cease to exist. Gap Inc. is dramatically expanding its Old Navy format while trimming back its fleet of Gap and Banana Republic stores, in response to customer demand and/or lack thereof. Beyond store format, selection and so forth, is the seemingly lost art of great customer service. Only a few get this right. Ask a few customers why they shop with you. Better yet, ask a few of your competitor’s customers why they don’t.

7. Measurement:Financial performance, leadership effectiveness, employee engagement and customer delight. Maximizing profitability requires more than reading financial statements, which are largely backward looking. Measuring what matters requires measuring all the critical elements of TPL organizations. The quantitative bias promoted by modern day business methods and schools often misses the most important metrics. Food industry, retail, and foodservice operators who only measure what they teach you in business school are missing the gold. To have a meaningful dashboard from which to run your business, you must measure culture, including the disciplines listed in this piece.

8. Cost: Remove it where the customer can’t feel it. TPL organizations remove as much cost as possible, being very careful not to affect the customer experience. Southwest Airlines, H-E-B, QuickTrip and Koch Industries do it extremely well, by removing costs from supply chain, building costs, and employee turnover. Top performing companies do not take cost out of the business by removing service and benefits from customers and stakeholders. H-E-B has probably done more to remove unnecessary costs from its supply chain than any other of its competitors, which is why they own most of their markets. It’s also why they can come very close to Walmart pricing and still provide a stellar customer experience.

9. Awareness: Healthy Paranoia, never take success for granted, always push for improvement. 88% of the Fortune 500 companies in 1955 are extinct. Arrogance, inaction, and unawareness are three of the biggest killers of modern day businesses. Once an organization’s leaders think they’ve arrived, they’ve begun their decline. Iconic brands such as Sears, Kmart, Dominic’s, Randall’s, Marsh Supermarkets, Stop-n-Go, and Bennigan’s are either gone or nearly gone. Global business is moving and changing at a dizzying rate and all who don’t pay close attention run the risk of extinction.