The smarter they are the faster they grow

In assessing the entrants for our 2005 TOWER SYSTEMS FAST 3 AWARDS I reckon we’re able to prove that the smarter independent retailers are in running their businesses the faster they grow and the more they grow. By smarter I mean how much they use the technology to understand and drive their business. Of course, this is an indicator of greater business acumen and entrepreneurship. However, the extent of use of technology is easy to measure by looking at the quality of data and how it is managed within the structure of the software.

A learning for us from this process comes from the different ways people embrace our point of sale and business management technology. And from the learnings will flow changes in the way we drive the use of our technology.

To have some users of our software, of several years standing, express that they did not know they could do even some basic reporting with our system came as a shock -given the messages in our training, our newsletters and through other forums of communication with our client base.

We’re finding some people who put in the technology because they think they have to but without an understanding that like any tool they have to drive it.

Okay so that’s not a huge surprise.

What is a surprise is that the FAST 3 AWARDS are shaking some of these people out of the trees. And that’s great! It’s an unintended consequence of the awards and we’re enjoying the engagement.

Pharmacists fighting back across the counter

Pharmacy customers are being given a flyer with their purchase which outlines their case against the Woolworths push to have pharmacies operating within their supermarkets.

Of course any battle like this is about perception and perception is built by spin. While pharmacists have been slow to mount their case, this flyer serves the purpose well.

The flyer notes that Woolworths is a big seller of cigarettes and then asks how committed the company is to public health. It then notes that treating smoke related illnesses costs 20 billion dollars a year.

Hmmm.

In another win for pharmacists the flyer says that Woolworths claims that it will sell medicines cheaper. The Pharmacists claim that 60% of all pharmacy sold medicines are “fixed in place ” by government. [While I note this is a win to the pharmacists their claim is spin since they have a dispensing fee which they can adjust. They would have been better served being clearer in their claim.]

For me this is a matter of how big the government wants big business to get. The answer to that ought to be not much bigger – particularly in the case of Woolworths and Coles/Myer. Their dominance in retail is a barrier to new entrants and a barrier to new suppliers.

Keeping the current pharmacy arrangements in place keeps them in check.

The challenges of social responsibility and whether we can afford it

While the residents of Maleny in Queensland continue to protest against Woolworths moving into their town and Tasmanian farmers continue their tractor trek to Canberra protesting the McDonalds decision which is expected to see half their potato requirements imported, matters of local interest versus globalisation continue to get media coverage.

It is easy to see the reports and get into a lather about the decisions by the suits in their head offices to move in on a small town or to cut the contracts with Australian farmers. It is another thing altogether to respond personally. By respond, I mean looking at each purchase and making sure it is in the best interests of Australia environmentally, culturally and economically. That is an extremely hard road to travel.

On the one hand I write here often about the importance of small business for carrying forward the culture of a town or country, our role in living and employing locally, our focus on eschewing the one size fits all clone mentality. On the other hand, when I consider the day to day decisions of this and other small businesses, I soon see that I am not doing enough in practicing what I preach.

This is our social responsibility. To be true to ourselves not only in calling for others to treat our independently owned small businesses in a certain way but to operate ourselves in that way in every decision we take. This means the stock we purchase, our employment policies, recycling and community support.

It is easy to present publicly as socially responsible. It is another thing altogether to live that way through every decision.

We’re going to experiment here and appoint someone within our company to consider our social responsibility. They will review each area of our business and recommend what we can do to become a better Australian citizen. We’ll then cost this and see how sustainable taking that approach is.

Clone towns

An excellent article, Attack of the clone towns, at bbc.co.uk on the clonisation of High Street UK.

While there is healthy debate in the UK about clonisation, there seems to be little media attention here in Australia. Yet the changes are taking place, even in the small towns.

With every independent retail business closure a town or city loses a piece of local culture. It also loses choice and an independent voice.

The Federal Government ought to use its resources to research the social and economic impact of clone retailers. It’s time we found out the cost of this ‘progress’ and who the key beneficiaries are.

There was a time when we greeted the giant US retail chains as they established themselves here. We saw their arrival as a marker of progress.

The cloning of Australia and the obligation of business

The Lion King is coming to Melbourne. It opens this Thursday. Yipee!

I bet that in one night the Lion King will do more in ticket sales than all new Australian Musicals will have done a year.

I don’t begrudge Disney and the folks behind the Lion King their success. Good luck to them. However, it puzzles my why we are so prepared to receive such blended and culturally neutered material when our country is rich with new musicals which give breath to Australian stories and Australian voices.

The cultural cringe is alive and well and opening in a theatre in Melbourne this week, fresh from a sell out long season in Sydney.

The Lion King to me represents another form of the clonisation of the world – a world where we want to see logos everywhere rather than business shingles we have not seen before. Logos represent less risk to investors so it is logos (like the Lion King) which win out. And success begets success.

Theatrical producers and investors have an obligation to tell Australian stories in Australian voices. No, hang on, they have an obligation to ensure maximum return. Well given the worldwide might of Disney and their ilk, The Lion King was always going to be a juggernaut here.

If producers will not accept a social obligation to support local productions then who will? Is this something the government could assist with – in the interests of keeping Australia Australia? I guess the Free Trade Agreement would have something to say about that.

The risk for us with these massive import musicals (and TV shows and rock bands etc) is that our voice fades further with the arrival of each one and soon we forget what it is to be Australian. Our malls look like American malls. Our food tastes like American food. Our TV is their TV. Our stories are their stories. We’re cloned.

And we wake up, look in the mirror and don’t recognise ourselves anymore.

Companies need to serve their community above shareholders

I enjoy the process of recruiting frustrating and time consuming as it is. With each new candidate you are faced with not only the dilemmas you might expect but also the opportunity to make someone’s life better and the opportunity to enhance the culture of the business.

With each hiring decision there are factors beyond the bottom line impact on the business which I weigh up. In a much bigger company, a public corporation for example, these considerations are less likely to be a factor.

I enjoy the risk of recruitment. Interviews are a conversation and more about interaction rather than seeing if a candidate can answer a preset list of questions and achieve the required score on a psych test.

I enjoy the social and emotional changes new people bring to my small software company. I enjoy the opportunity of giving someone a break. I enjoy the challenges which arrive with fresh ideas. Part of what I look for is social balance. As long as you hire people who have a capacity to learn, actual skill level is not always the more important factor.

No amount of legislation or regulation can force a business to consider these things when hiring new people.

The community relies on recruitment with an eye to social obligation even more so than profit motive.

I suggest that it is small business employers who are more likely to live by that social obligation than their corporate competitors.

Independent retailers versus corporation retailers, the profit motive versus the personal connect

Besides the obvious differences of size (buying power, advertising power, network-wide range control etc.) corporation retailers are different to independent retailers in one key aspect.

Corporation retailers have a legal obligation to maximize shareholder return whereas independent retailers, those wholly owned by an individual or a family, have obligations to themselves which often are not related to a profit at all costs mentality.

While both corporation and independent retailers have to operate within the laws of the lad there is no obligation on them to serve the community, respect culture or add value in any other way. Indeed, one could reasonably argue that non profit focused efforts of corporation retailers are outside the obligation they have to shareholders.

These giant corporate chains do not and cannot have the same community connect, the same soul, of an independent retailer. Whereas one beats with an artificial heart akin to a factory and is driven by dollars, the other beats with a heart of living cells and is fuelled by blood.

The more our shopping malls and high streets are inhabited by national and international corporate stores the weaker our Australian voice and culture.

This is the risk our small country faces. This is the damage done by the government embracing competition so wholeheartedly.

Whereas a pharmacist will know his/her customers and often offer personal assistance or some additional service, a pharmacist behind the counter in a giant supermarket is less likely to. Everything the pharmacist in a supermarket does must be about profit whereas in the local independently owned pharmacy it is more likely to be about care for the customer.

I accept that in every business there is a profit motive. However, in an independent retail business there is also an unmistakable human factor which provides for a personal connect and decisions based on emotional factors. The person making the decisions, the owner of the business, accepts personal responsibility whereas in the corporate retail business personal accountability is less of a factor is existent at all.

Ignorant commentary in the Daily Telegraph shows bias against independent retailers

Sue Dunlevy in yesterday’s Daily Telegraph wrote a piece calling on the Federal Government to break the exclusivity pharmacists have over dispending medication. In Chemist monopoly dispenses bitter pill, Dunlevy aggressively and ignorantly dumps on Australia’s small business pharmacists.

Dunlevy claims the government “is too scared to take on one of the most privileged and protected groups of people in Australia – pharmacy owners.” She then links the pharmacy decision with the government changes on industrial relations in writing: “At the same time as it prepares to wind back workers’ conditions and flog off Telstra in the name of economic efficiency, it will continue to entrench the monopoly of a small number of wealthy pharmacy owners by maintaining rules that shut out competition from supermarket chains like Woolworths, or even rival pharmacists.”

I’d love to see Dunlevy’s notes as to her research for these and other claims just as I would like to see where the idea for the piece came from.

Dunlevy says that breaking the pharmacists monopoly could save the economy $500 million. At least she lets us know that her source for this is a study commissioned by the giant Woolworths group who desperately want to get pharmacies into supermarkets. Dunlevy seems to think that taking the dispensing of prescriptions from a trusted and respected small business channel and putting it into supermarkets will, in additional to saving money, benefit the community in other ways.

While there is an attempt to provide balance in the article, it’s poorly executed and the reader can easily see the agenda Dunlevy has. There is no consideration given to the community value of pharmacies, the working conditions pharmacists offer over Woolworths and their ilk nor the cultural and social value independent small businesses offer over the giant corporations.

Our two main retailers in the country, Coles and Woolworths wield too much market power as it is. The Woolworths mission is all about getting customers to stay in their shops for longer because that extra time is worth real money in terms of impulse buys.

Woolworths is not fair when it comes to prices. Their Big W group claims low prices every day. In many categories this is not true with independent retailers beating like for like. But since independents don’t have a matching advertising budget it’s a challenge to get that message out.

The telegraph has a responsibility for balanced coverage. This piece by Dunlevy yesterday is not balanced and pushes the Woolworths line well.

Woolworth, in my view, is a clone retailer. They are bad for our country as they stifle our own voice. They have a limited range. Their size is a barrier to new products getting to market. Independent retailers carry our stories and aspects of our culture forward. To open the prescription marketplace will see pharmacies close and or community will be the lesser for that.

The government has an obligation to support small independent retailers not only to ensure the big two don’t get bigger but also to preserve the businesses which preserve more of this country.

Newspapers are conflicted in this matter because of their reliance on companies like Woolworths for advertising dollars. They need to be especially careful to ensure that their stories on the Woolworths push are balanced.

Maleny protests about Woolworths have a broad base of support

The protests at Maleny by some local residents and others have generated significant national coverage including this report on the 7.30 Report current affairs TV show on the ABC.

While the residents are fighting to keep their town their town and local business owners are fighting for their businesses, I’d bet that there are plenty of executive in the offices of major suppliers quietly urging the protests on.

Woolworths is a giant as is Coles. Between them they control retail in this country through their supermarket and general merchandise stores.

Each point of growth they achieve is further control they can exert against their suppliers.

Suppliers need a healthy mix between independent and national chain stores.

It seems to me that these concerned suppliers, small businesses and concerned individuals could form a loose backroom alliance to help stop the march of these giants. For example, suppliers could fund skilled advisors to help develop and execute campaigns against Woolworths and Coles in the areas of:

  • Pharmacy integration with supermarkets.
  • Majors moving into towns and drawing other national chains with them and clonising high street.
  • Educating consumers about how the majors exert control on range.
  • Researching real price/service differential between major chains and independent retailers .
  • Funding an awareness campaign about the cultural relevance and importance of independent retailers.
  • .

    Buy Australian?

    Tasmanian farmers continue on their journey to Canberra to protest McDonald’s move to source more potatoes from a company which is expected to source them from New Zealand. The ABC has the best on going coverage of this story.

    It’s easy to support the farmers and call on McDonalds to reverse their decision. The challenge is how far do we go? The allied push by farmers and those associated with to have supermarkets and other outlets clearly label the country of origin of product is a good step. However, what about our own decisions? Do we spend more on a pack of photocopy paper from Australia as opposed to imported paper which sells for 30% less? There has to be an economic reason for spending more and the photocopy paper example is complex.

    I can’t help but think that governments can play a role here. Certainly on the labeling front. But also in terms of promoting local. gee if they spent as much on that as they do promoting political (policy) initiatives such as health and industrial relations changes maybe more consumers would vote with their pocket book.

    Consumers don’t know why they should buy Australian, especially when it costs more. The message needs to be simple and it needs to illustrate an economic imperative of purchasing product, especially produce, from another country. That campaign might help people also understand the implications of the McDonalds decision.

    Freeways hurt independent retailers

    We have been analysing shopping basket data for many of our clients, to try and develop current benchmark data for their channel. We’ve poured millions of baskets worth of data into the study to find out what sells with what and through which type of business.

    The results are staggering.

    For their highest selling product category more than 70% of sales include this item only.

    Their highest traffic generator is sold alone more than 70% of the time. Looking back one and two years ago the sold alone percentage was not as high. Over time and as a result of more of the chains getting into the space traditionally occupied by this independent retailer channel, they have become more convenience destinations. Consumers come in to pick up the item rather than to shop the shop.

    Okay, that’s business. It’s also a challenge. To them and to us. We’re working on strategies within our software to help the up sell without them having to ask for it across the counter. We’re focused on systemising the up sell through business practices and strategies using our technology so that they can reduce the sold along percentage and improve the efficiency of the business.

    We have to tear down the freeways and get consumers meandering the aisles again. That means independents need to focus more on making themselves the brand.

    Gaslight Music closes, Melbourne loses an icon, the world loses an independent business

    For years Gaslight Music on Bourke Street in Melbourne was the place to shop for music. They had a great range and very knowledgeable staff. Last week they closed as the burden of slow sales and tougher competition took their toll.

    Gaslight did more than sell music. They introduces people to music. They led music lovers into a broadening of their music interests. They sold genres. They gave local bands a go. They carried a cultural baton which now falls to the ground. Virgin, HMS, Sanity and the other clone stores don’t know about the cultural baton let alone how to pass it on. Their interest is in music which sells, music on the radio, as opposed to music with deeper roots, carrying blood and full of emotion.

    It was good to spend an hour browsing the Gaslight racks every so often looking for CDs you couldn’t find elsewhere. It was great to wander their aisles, taking in the diverse patrons sharing the space with you. A more diverse crowd in Melbourne you could not find.

    While the death of Gaslight was covered in a story in The Age, it received little attention elsewhere. Do we care about iconic independent businesses closing? It would seem not. Does this mean the clones have won? I hope not.

    We need stores like Gaslight, in all retail fields. Clone stores, chain stores, mean less choice. Less choice means a dilution of our culture and that’s good for no one except the shareholders in the clone store businesses.

    Is Roger Corbett a danger to Australian society?

    Roger Corbett heads the massive Woolworths company/army. Yesterday they made their move on the town of Maleny in Queensland. A street full of small businesses is at risk from the move. If any one of them closes a small piece of local culture closes with it. Woolworths and companies like it do nothing for the culture of a town or the country.

    In years to come I suspect sociologists will look at giant clone businesses like Woolworths as as bad for our community as the fast food giants like McDonalds have been assessed in recent years in terms of diet. In my view they take more than they give.

    Woolworths are pursuing pharmacies for their supermarkets so there is another small and independent business channel at risk.

    I understand that Corbett needs the growth which comes from moving into towns like Maleny for his share price to rise. His obligation is to his shareholders and not the society in which his business operates.

    Of course consumers will shop at Woolworths. Their advertising pitch will make people believe that they are getting a better deal. I’d argue that the volume of their advertising suggests that the deal is not that great.

    I have a retail business where we carry a category of stationery product where our everyday prices are between 10% and 20% less that Big W. We’re also cheaper than the Coles Officeworks group as well as the government owned Australia Post.

    The difference is that we do not have their advertising budget so we cannot tell the world we are cheaper.

    So here is Corbett allowing his company to beat its chest that they want to get prescriptions sold from his supermarkets because they will be cheaper yet in this common stationery area even their best deal is not better than my small business can do.

    In addition to beating Woolworths on price, my store offers a far superior customer experience, better product knowledge and a local connect.

    If Woolworths continue their push small businesses will have to close and at some point down the track experts in such things will be able to tell us what we have lost as a result of their closing.

    The war being waged by Woolworths against independent small businesses makes Roger Corbett a dangerous man (in terms of our culture) in my view.

    Finding better coffee in the US

    Delocator is a clever website helping you find an alternative to Starbucks in the US. You enter a zip code and up comes a list of independent coffee houses. What a great way to help people find decent coffee and preserve real culture? We could use this for Australia so we can navigate our way around Gloria Jeans, Starbucks and the other clone chains offering mediocre coffee.

    Attack of the clones and chips. Vale Let It Be Records, Minneapolis.

    Every city has, or had, one – an independent music store which influenced local music. It was the place you went when you cared about depth of range and about the shopping experience. It was the place you went looking for product because it existed and not because some suit in a far office decreed it was worth of shelf space. It was the space you went because of the community which shopped there, the flyers at the door, the notices on the wall but most of all because of the range.

    Clone music stores, with less range, poorer service and no community connect are replacing these stores. Aided and abetted by music downloads from places like Apple’s iTunes store.

    The latest independent music store to fall is Let It Be Records in Minneapolis. This store from Pulse tells it like it is.

    Not much more to say really other than to observe that whereas we have people who will protest to have a forest or a building preserved for future generations, we are letting these bearers of culture and community be shuttered without a second thought.

    Independent anything, music stores, book shops, newsagents, butchers, bakers, greengrocers, dry cleaners, pharmacies – they ought to be protected as if they are a rainforest. We will care when it is too late I suspect.

    I’ve been to Let It Be Records. The world is lesser for its passing.

    Here in Melbourne our own once iconic Gaslight Records is on the critical list.

    Vertical is the flavour of the month

    Having scorched their respective traditional patches, Microsoft, Intuit and others are getting mroe heavily involved in the vertical markets occupied by companies like mine. Here’s another story from the folks at Microsoft Watch about their moves.

    Yeah it’s a free market and the customer will decide. Free does not equal fair or balanced. Not when you consider marketing dollars.

    ACCC announcement supports independent supermarkets and small business generally

    Good to see the ACCC annnouncement July 4 of a charter to promote competitive sales of independent supermarkets. This has been long overdue. According to the ACCC announcement: Under the Charter, Metcash, Woolworths and Coles will not be able to limit the ability of independent supermarket retailers to seek alternative purchasers for their stores. They will also have to provide independent supermarket owners with written notice of this fact when making an offer to purchase a store.

    The new charter will make it easier for independents to look for other bids for their businesses when they wish to sell. Supporters of the charter, such as Senator Ron Boswell, say this will help independent supermarket owners. He is quoted at SupplyChain review.

    Anything which helps independent small business compete against big business has to be good.

    On the road again, another reason why small business should ignore the affections of Microsoft

    We have just set the dates for sixteen city tour to meet with our customers. At these sessions we’ll provide free training, answer support questions, preview forthcoming updates and listen to suggestions.

    The sessions are highly interactive and always well attended.

    By the end of this series and the usual supplemental series for more regional areas we will have met with more than 50% of our customer base.

    We do this twice a year.

    We usually have three or four of our people in attendance from me (owner of the business), our software development manager (the God who decides update content) and two of our support experts.

    It’s a grueling schedule yet crucial to our success over the last twenty-four years. We learn plenty from our customers – even those who have been with us for many years. We also get to answer questions which might be too complex for a telephone conversation. But most important is the human contact. We get a sense of where’re we at with these folks and that feedback can help us tweak how we move forward.

    Microsoft does not have such regular face to face and personal contact with its small business customers. Of course not! They have hundreds of millions of customers. How foolish of me to even suggest it.

    Well given that Microsoft is now in my patch and offering small business point of sale solutions and doing so with slick and expensive adver5tising which I cannot match, it is appropriate to compare.

    If Microsoft is serious about serving small business it needs to do so on terms and in a way which is sensitive to small business needs. Not just software needs but also contact needs and the opportunity for face to face human contact.

    If Microsoft wants to compete with companies like mine it should be matching the kind of services we are offering. By doing this Microsoft would demonstrate its commitment to the small business marketplace beyond getting the sale. Each sale we make is a long term relationship and it needs to be treated with respect and care.

    I get great personal joy from meeting with our customers – every time I learn and every time our product/service offering improves as a result.

    The Micrsoft conveyor belt approach to business will win customers with the warm fuzzy and expensive advertising. It will not, unless they change, deliver the depth of relationship and business benefits companies like mine offer.

    Small businesses should stick together and support each other and cut companies the size of Microsoft out of our purchase decisions as much as possible.