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Are you 'Malcolm in the Middle'?

I recently was a guest of the retail specialist Greater Group at a breakfast where Peter Birtles from the Super Retail Group spoke (Super Cheap Auto and Rebel Sport are two of their brands). Peter is clearly a very focused retailer with an impressive track record of significant growth.

He highlighted what is increasingly seen as a large challenge for most businesses – what he described as being ‘stuck in the middle ground’.  He sees a real polarisation of the market with scale on one hand and niche at the other. Increasingly these opposite ends of the spectrum are where the profit pools of the future will lie (if not already for many).

Being 'Malcolm in the Middle' with no clear distinctive position or strength will see you squeezed. Many retailers have learnt this the hard way. Think Fletcher Jones and department stores. But it's not just in retail - professional services, finance, manufacturing; they all have their own version of this scale vs. niche dichotomy.

He covered a wide range of topics about what drove their business, and where he believes they have been successful. How they frame the choices they make, provide focus to what they do and how they do it was particularly insightful.

Their purpose is built around enhancing their customers’ leisure time across three key categories - outdoor, sport and auto accessories. This acts as a clear view on where they focus - helping them decided what categories they compete in, and the capabilities and assets they need. Despite many unsolicited offers to buy new retail businesses they have used this as a filter and invariably rejected new customer segments, as well as new categories, that don't fit their purpose, and I imagine their core capabilities.

Effective strategy is as much about what you will do as it is about being clear on where you will not play. Super Retail Group’s approach fits well with the 5 Questions model that you can use to challenge and refine your strategic choices. Read more here.

Differentiation for their business, interestingly, is not just based on what they sell. In Peter's view what is critical is building an emotional connection beyond product and price. Yes Peter, an accountant by trade, realises the importance of holistically building brands!

My final take away was how the Super Retail Group view people as the foundation of their businesses and not just a cost to be minimised. For them their staff need to buy into the vision and direction of the brands if they are going to make headway. The link between people and performance was made really obvious with their purchase of Rebel Sport. Purchased from private equity, where staff engagement was critically low (and not seen as an important driver of performance amazingly), they materially lifted staff engagement and improved sales followed in pretty short order.

Peter believes that brand and culture are the only sustainable competitive advantages for their businesses.

A great case study in how focusing on a clear market position, a differentiated customer offer and real staff engagement can sustainably build and grow a business.

17 June Update:  Super Retail Group have issued a trading update where they indicate sales are softer due to consumer confidence.  Interestingly they still expect net profit after tax to be up 5% on last year (which was 23% up on previous year) so some resilience showing in difficult market conditions.

by James Atkins, Vantage Strategy & Marketing

This article is linked to James' Google+ profile

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