Podcast: Don Williams, Partner, Retail Sector at KPMG
October 18, 2022 •Sophie Colquhoun
This week on the Industry Leaders podcast we go behind the headline statistics with Don Williams, Partner of the Retail Sector at KPMG.
Amidst a challenging UK economy and bad news seemingly at every turn, Don shares with us the data to give the context behind the news headlines, predictions and trends for Peak and Christmas, and why he remains optimistic.
Plus, there's actionable tips every retailer should listen to including understanding your customer on a deeper level, where to start with sustainability and how to speak to consumers about it, and why you need to be surrounded by people who can drive change.
There are so many valuable and interesting insights in this episode that really help to untangle the overwhelm felt by many retailers at the moment, listen below!
Or, if you prefer you can read the full episode below:
We have a slightly different show in store for you today. As you know by now, on this podcast we speak to leaders from all over the retail industry to get their perspective on what’s happening in retail in real time and today I’m delighted to be joined on the show by Don Williams, former Olympian and now partner at KPMG. Don is an expert in the retail sector with a particular focus on supply chain, international expansion, online and digital transformation and also harnessing data to build businesses for the future. So, in short, it’s all the stuff that a proactive and dynamic brand needs to be thinking about. Don it is great to have you on the show. How are you?
Don Williams: I’m great thank you very much and thank you for inviting me.
Sorcha O’Boyle: Oh, we’re delighted to have you here and it’s really my pleasure. So, I’m going to be, less nice than I usually am, I’m going to jump in at the deep end. There’s a feeling I think that the global economy is kind of licking its wounds after Covid, the start of the war in Ukraine, the supply chain issues that we all know so much about. In June, consumer confidence fell to the lowest level on record. I would love to hear your take on what’s coming down the line and really are customers right to be so pessimistic.
Don Williams: Well, you’re right, aren’t you? I think at an individual level we’re feeling a bit nervous about things. The media sentiment is pretty negative all the time and I think it’s probably worth just deconstructing it a little bit in terms of maybe thinking about the macroeconomic environment what we think is going to happen and then delving a bit into what the data from the retailers are telling us because we’ve pulled the data together for the BRC, the British Retail Consortium. And so that gives us a read on a monthly basis about what’s happening, and I do think to understand what’s happening and therefore where the opportunities might lie it’s worth getting a little bit lower than and more granular than just the headline figures which I’m going to start with in terms of a macroeconomic environment. So we’ve just rereleased our macroeconomic forecast for this year and next year and it doesn’t make great reading quite frankly. It’s okay for this year in terms of consumer spending. We expect that to be relatively buoyant so 3.6% up on 2021, which means that we’re spending more this year than we were last year. However, what we’ve got to remember is that there’s quite a significant inflation uplift in there. So that means that actually the volume of stuff that we’re going to buy is less than it would have been less year, because our pound in our pocket is actually going less far. And I think if we go, just kind of a little bit further back actually there is less pounds in our pocket because we loss some to the National Insurance hike and the tax rate hike and then those less pounds in our pocket go less far because the inflation starts to bite. We think that inflation will continue to be higher for longer, it’s not great, so we think that next year it will be around about 8% on average. But it will start to come down at that point because you get an annualised impact of the big electricity price rises and the gas price rises. So you’ve got a forecast for 2023 which looks a little bit ugly quite frankly because we do think there’s going to be a reduction in consumer spend overall and we do know that the impact of the inflationary pressures is going to be felt more keenly by certain segments of society than by others. So, the lower paid or the lower income households in our country spend more, a greater proportion of their income on food and on electricity and on gas and heating, than the wealthier or higher income households. So those lower income households are going to be disproportionally hit by this increase in food prices which have gone up about 10% this year already and definitely by the heating bit. So that causes some challenge. There is some good news I think within those within the data points which is the unemployment rate is historically, incredibly low and we don’t expect it to suddenly jump up. So, for those of us old enough to remember back into the sort of 80’s and to the point of very high unemployment rates, we don’t expect that to recur, and I think that causes a challenge for us as business leaders because actually there’s still some challenges in terms of getting the right people with the right skills into our businesses. And so that challenge I think remains despite the fact that as a consumer we feel a little bit nervous about the future. The other bit I think that’s interesting is about interest rates. We do expect them to climb again. So, we expect next year for it to get to by about 2.75%. We do expect after 2023 for interest rates to start to fall again because we think inflation will start to come back under control. But if you, my worry about that was that you went from historically really, really, low interest rates and when you push them up by 2.5% from 0.25%, that could have a very disproportionate impact on those people who have mortgages in this country. And therefore, and for many if you’ve a mortgage that’s light, for your largest cash outgoing, notwithstanding the price increases in electricity and gas. Interesting actually when you look at mortgage rates, they’re actually not that many people or households in the country own a house with a mortgage or a loan. Only 28% of the UK own a house with a mortgage or a loan and I thought that was going to be much, much, higher and if you then add on to the fact that of that 28% people who have a home owned with a mortgage, half of those people have a fixed rate mortgage for five years. So actually, they’re protected from the interest rate rises so there is less, there are less people in our country that are having a mortgage and even if they’ve got a mortgage over half of them are protected with an interest rate rise so it doesn’t bite into cash outgoings. Unfortunately, that’s not great news for the other half of the 28% who do have a mortgage of which about 17% of them have it on a floating rate, interest rate. And that again starts to eat into our disposable income, and we start to go, “Actually this is going to be quite tough.” In the immediate, it is at the moment from our trading numbers we can see that most of the UK has decided that if they’re going to have a holiday this year and as a number of retailers said to me and other commentators said, “When was the last time you went on holiday without something new in your luggage?” So that’s been relatively ok. I sense that September/October might be a little bit more challenged but equally I don’t think I can ever remember a time when the great British public didn’t have a Christmas. So actually, my concern from a customer spend point view starts to come in January, February, March of next year, I have more concern over that than I do over the near-term bit. And then I think it’s worth us digging down into what the retail sales data is telling us. So, it’s been relatively robust, but you’ve got to dig a little. So, we’ve had positive numbers all the way through it was 1.6% for July but remembering what I said about the fact that value number, so actually the volume of stuff bought would have fallen and that’s when you’d have to get down into the categories. So, footwear, clothing, accessories all had really challenging two years over Covid. They have started to get to re-bounce back and all the way through this year they’ve been up in the top performing categories. We’ve started to go back and spend a bit more. All those categories that did really well out of Covid, the big-ticket items, furniture, home furnishings, homeware, technology have all had quite a challenging last few months and I suspect that continues to be so going forwards as well. Both because we have less money in our pocket to spend but we also, and those big-ticket items I think got buoyed up through Covid and therefore there’s not a repurchase cycle of quite the same velocity as there is in some of those more disposable if you like, categories. So there is some challenges around the categories that you need to think your way around on quite a granular basis which is so, “What category do I sit in?” and then secondly “What’s the demographic of the customer that I have and how likely is it that this crash, this reduction in available spend hits my customer base either disproportionally harder or actually they’re probably a little more protected and if that’s the case then how do I help them to make sure that they’re spending with me and not with somebody else.” Because I think what we’re also seeing in the data is divergence and performance within category. So, it is possible and actually all the history tells us that as well, that you can be a winner in times of difficult times for your consumer if you really understand who she and he is and understanding exactly how you can help her or him to satisfy their needs and their demands and their requirements in the right way at the right time. So, it’s you start with it’s really dismal outside and surely the UK media needs to find a different word for the word chaos because it’s applying it to everything at the moment and it all feels very dark. And yet I still think I’m a born optimist at heart. I do think there is opportunity in these times, and I think there are echoes of the past that we can look back to. I’m not saying that we will always, you know, history doesn’t always repeat itself but they’re definite echoes. Previously we’ve seen in difficult times people would go to value and to discount and also trade up in terms of buy once, buy well. And we’ve definitely seen businesses grow during these challenging times because they’ve really understood their customer at quite a granular level and found a way to organise themselves so that they can make money and they can make in-roads and they can grow into this market. So, I do think there’s real opportunity there. Personally I also think that it will be helpful because I suspect there will also will be a period of creative destruction which sounds very callous but actually if we think back to 2008 and the general financial crisis, we didn’t really have a period of creative destruction from a, yes we’ve had brands go out of business, but not necessarily at the sort of volume in terms of the numbers or really those that particularly surprised us at any point, I don’t think, to the same extent. So, they can be, and we do need a period of that so that businesses, strong businesses which have strong balance sheets and can invest in the things that they need to invest in to satisfy the customers that they want to attract, those businesses need to survive and thrive and to do so you actually need to do a bit of weeding and it is unfortunately like gardening and that is really sad for some of those brands and it’s really sad for some of the people and the people who work in those brands but you know, I do remember someone saying, “Oh Woolworths, it’s awful it’s gone bust.” And I was like, “But when was the last time you went into it?” And the person said, “Well I didn’t go into it apart from to go to the Pick and Mix sweets, to sort of pick them up, lick them and put them back in the box, which of course you could never do during Covid times now could you? But they’ve, so that, we’ve sort of looked back a little bit on some of these brands and go, “Actually we never used them because they weren’t giving us what we wanted as, to as a customer,” so. I think there will be a period of opportunity in that respect as well.
Sorcha O’Boyle: And I loved to hear your take in a view if you have a brand who’s like that who is quite dynamic and wants to adapt and change. What are the big, you know, say two or three trends that you see coming down the line whether it’s in terms of data or expansion. What kind of actionable advice would you give to the CEO or a board of say a footwear brand whose kind of looking into maybe slightly tough times?
Don Williams: It’s really interesting. So, I think about the things we’re really talking to our clients about and helping them with. One is clearly around cost and efficiency, and we believe that there is a need to think about how can I take somewhere between 20% and 25% of the cost of my business, out of my business. And I think there is a relatively structured approach to doing that. So, our approach is to start very tactically. We’ve got 160 odd hypothesis of areas where quite clearly when we talk to clients some of them will have pulled levers they would have pulled. Some of them will provoke a thought of a lever they didn’t even knew was there, but they can pull. Generally speaking, we end up with sort of 30 to 50 of those 160 being applicable, relatively easy to do and generally we get to sort of 5% to 8%-ish of savings. And then there’s a second bucket which is a bit more structural. So, what we find is that people look at costs horizontally, vertically rather than horizontally so not how the business actually fits together. When you start to do that, then there’s a point where you can start to invest a little bit more to achieve those cost savings. So, they come through over a period of time, but you do have to invest to get hold of them and again that starts to go into that sort of 5% to 10% of cost savings and then in your last bucket there is the sort of fundamental reengineering of your business really thinking about what we sell to whom, where and how and going, “We need to shift this completely.” So, I think there is a very structured, very thoughtful and very challenging approach to the underlying cost of doing business through all of the important buckets. People, technology, property, all of the process stuff. So, I think costs, the cost of doing business is one area that needs to be tackled. With that, what would I have to do to be able to take 10% out? What would have to be true if it was 20%? So that you’re prepared for that, and you can start to think about whether that’s the appropriate way to do things rather than to continue to do the things you’ve already done. So that’s the first bit. The second bit I think and partly this is driven by the situation that we’ve had through Covid which is and through the Brexit disturbance is to look in a very granular basis at where your supply chain fits together. Literally follow a product from design, all the way through and into a customer’s hands and understand exactly where the levers are and where the dependencies are and whether you can re-shift and reengineer that both to achieve greater agility and flexibility, so you can turn it off and on more quickly, and you can achieve a cost base. So it varies, for instance if I looked at one end of this we are speaking to a number of clients who I think, retailers who have satisfied a European customer all the way through the last two or three years post Brexit and through Covid and just delivered product into Europe and are now going, actually when I look at that I’m not making any money out of it because all I’ve done is just continued to do what I’ve already done and now I’ve got to look again to go, “How do I build a profitable business model into Europe? What does that mean? Does that mean I have to have a warehouse over there? Does that mean I have to split deliver into the UK and into wherever it might be in Europe? Where would I site it given the location of all my customers to get the greatest reduction in terms of actual supply chain, the distance cost and also where’s the most effective place in terms of rental or for warehouse and do I, do I do it myself? Do I outsource it? How expensive are the people in Poland, compared to Germany, compared to France? What are the dynamics around the cost price of doing that?” And then you have to start to overlay the regulatory side as well so that’s VAT, duty, the governance piece. So I think at a very granular level that’s another area where, where people can, where we would really encourage people to look very carefully at, because that starts to address how can I be more responsive as a business and also deliver the best quality service that they, at a, at the best quality price or cost of doing so and that whole cycle including there’s a certain cycle is a real challenge for most retailers and specifically when you start to cross borders which you will do because for most of our retailers in the UK some element of product will have been created and manufactured overseas before it got here even if it’s the source of the product coming into the UK. So, I think those are two very specific bits and then we’d probably start to explore some of the other areas as well, because I think there is, I think understanding your customer and how he or she is thinking, what’s going through their mind, how you can, how can you track them effectively and cost effectively and also how can you start to get slightly ahead of them, personalise that service? At one level it might be if you thought about furniture for instance with and I think this is true actually of most retailers. I think we’ve got to move from ‘just in time’ stock levels to ‘just in case’ stock levels and if you do that clearly you have a working capital impact, but I think there is a proposition for some larger ticket items that actually, they having stock available is helping us as consumers to buy. So, if you go in to buy a bed and you have to wait two and half months, three months for the bed to arrive and the business around the corner has another bed and you only have to wait a couple of weeks, that availability can drive conversion. Now quite clearly that’s an optimal conversation, isn’t it? Because you can’t have too much stock, total availability, but you are I think, I think we’re moving into a place where we’re going to look, where people are going to look at sell through, so how much stock can I get through and sell at full price? And I’d be a bit happier with ‘stock outs’, not having the stock available rather than chasing having no stock outs and making sure I’ve got total stock availability at all times and if I have to clear it at the back end of the season I will do.
Sorcha O’Boyle: That’s a really interesting point actually because I had Georgia Metcalfe who is the founder of The French Bedroom who make, you know, really beautiful French style bedroom furniture and other things as well and that was something that she kind of came up against was really severe stock issues and supply issues and kind of solved it herself by actually making phone calls as a CEO to effected customers and things like that, which for her worked really well and she didn’t, I don’t think she lost any customers from it. But I’d be interested to hear what you think about, you know, like how accepting do you think customers are going to be now of supply chain problems? We’ve been dealing with them for, you know, since the start of Covid really. Are people getting a bit sick of them? How much understanding do you think customers are going to have for retailers?
Don Williams: It’s a great question actually because when we did some customer research at the start of Covid. We were really lovely people at the start of Covid.
Sorcha O’Boyle: Yeah. Exactly.
Don Williams: As we were out clapping our carers, we were wonderfully supportive of our neighbours, we were very forgiving of our retailers who were trying to work out how they could get product to us and that and it was, and the weather was lovely wasn’t it? So, April to May of that first Covid period was fantastic, and we were lovely, lovely people and we converted to our selfish selves by about July.
Sorcha O’Boyle: Yeah. Exactly.
Don Williams: And we became utterly unforgiving of slow delivery, poor delivery. So, I think that unfortunately, although I’d like to think we’re all lovely people really at heart, we’re pretty unforgiving when it comes to supply chain issues and that they need to be solved for us and it is important that we get clear and honest information about when something will be available, so we can then make a decision ourselves. And that’s when I go back to that bit is, if a, one bed retailer says to me “You can have it in two weeks,” and it is two weeks, that’s fine because I can make that decision. If it’s two weeks and it goes to three and to four and to five and to six, that’s going to be worth for me removing my order. That turns me, I sense, into a bit of a brand terrorist as well.
Sorcha O’Boyle: Yes. The twitter, twitter, tirade might be coming.
Don Williams: So, I think we’re quite impatient unfortunately and I haven’t found a piece of the core curriculum in the UK that teaches patience.
Sorcha O’Boyle: No, no unfortunately not.
Don Williams: So, I’d love to say, “Yeah, no they’ll be very forgiving”, but I just don’t think we are.
Sorcha O’Boyle: Yeah, yeah. And bearing that in mind I mean everybody talks about building the customers into the front office, the middle office and the back office. How can you actually practically do that. I think it’s one of those things that gets talked about a lot and there’s loads of buzz words flying around. But kind of actionable strategies to actually do it, I’m not sure how many of them, people actually get to hear.
Don Williams: It’s a great question. So, one of the things we found right at the beginning of the Covid crisis was, in terms of understanding your customer, was from a grocery perspective if you think about it. It was most Grocers would well, may know the name of their customer, they would know where they lived, and they would know their purchase history. But that is not enough detail to be able to prioritise an online delivery shop to someone who is vulnerable. So just knowing name, address and purchase history is not granular enough. Equally I think where we’ve worked with predominantly store based retailers where they’ve grown from. When they’ve looked at the way in which they’ve constructed themselves actually right at the core they don’t really need to know who I am, where I live, because all they had to do was open the store in the right place and enough of me would walk past and walk in and that was enough. I do think that the catalogue-based retailers, those that started with a catalogue and those who started digital first have an advantage, because they have built-, you can’t send a catalogue to someone if you don’t know their name and their address. So, there is a design piece inside a business that thinks about me as an individual because they’ve got to send me something to stimulate my purchase, so they have to know who I am. If that makes sense, so I think at a very high level do you know who your customers are by name and address that’s, that’s the first bit and also my digital footprint. We might come back to the digital piece of this as well because I do, I think that’s worth just exploring and stuff what that shift has happened and what we think might happen going forwards because overtly I don’t think the future is totally digital and nor do I think that the future is totally physical retail. There’s a blend in between I think is the perfect bit and I think we can start to see digital brands starting to open physical stores and vice versa.
Sorcha O’Boyle: Yeah. Yeah.
Don Williams: But we’ll come back to that. So, I think there is this bit about thinking about the customer and knowing who he or she is, where she lives and then starting to get some more data about them, about the type of life that they’re living and where they are in their lives and what for instance life events are going to happen where you can get in there live and help solve a problem for them because you know that problems coming up. There is a brilliant financial services business in the states which is one sort of customer centricity type on customer service excellence. Sort of applaud it for years and years which is based around servicemen and totally about servicemen. Initially actually they were the first to do photograph cheques. About this because they realised that if you had your serviceman servicing, operating in Afghanistan there weren’t a lot of High Street banks where they could cash cheques in, so you have to find a different solution around it. The things that they have done is, when you’re a US serviceman unfortunately you have, some of them will lose their lives. So, they’ve solved the problem of death for the family. By which I mean if you die in the UK, and you have a bank you can probably go to the bank and get standing orders and direct debits closed but that’s it. But there’s a whole bunch of other stuff that needs to be done from funerals to sorting out the will and probate. They sort that because it’s a life event. The other thing that happens with servicemen in the States is they move from base to base and generally when they move, they don’t take their cars with them so they buy a lot of cars and so they have solved the whole process of buying a car from finding it, negotiating the price, insuring it. I think that the time limit from start of that process to end is about three hours. Because they’ve thought about the whole of that customer journey and all the things you have to do along the way and solved the problem for you. I think that’s quite interesting 00:34:07. The other bit I think is interesting is that most of our retail clients start with profitability metrics based around product and place, as in channel, and then they get to customer. I suspect that will flip on its head and people will start to think about profitability metrics by customer, then by product and then by channel because it becomes channel agnostic and I think when then if you start to talk to some of the digital first retailers you start to talk to them about customer acquisition costs, lifetime value of a customer. The fact that they have captured that by 00:34:51 and they understand it in a granular level those customer profitability metrics and transaction metrics and the frequency and the 00:35:02 of them they are second nature to those businesses. By the way I do think there’s a bit of a challenge around board room tables around both technology in its own right but also digital marketing and how that works, deeply works in its own right. So if, I’ve not found a CIO or a CTO who is a Chair or an NED and I have yet to find one who is a CEO either and that means that when the IT Director is asking for a load of money to do something that pretty much every Chair and CEO’s ever said to me, “I need to avoid IT replacements and I need to avoid a supply chain at a big warehouse strategy, because both of those are career limiting.” If you have a CTO asking for a load of money to do something that’s quite risky and a CEO who doesn’t necessarily come from that background, they don’t the language or they’re not confident to be able to challenge and support and to drive a better outcome for themselves. And then they look around the boardroom table and can’t find the CIO’s CTO’s a NED or a Chair, so they haven’t got that much support around them. And I suspect, although we’ve got a few more CEO’s who’ve come out of the digital marketing background, again that is not a second, that is not a core competence around the boardroom table so we can sometimes, we lose stuff in translation and we don’t have the armament in terms of the knowledge, experience and language to be able to test and challenge and course correct as we might do from say a product category or from a store opening strategy because that’s, that’s or even store operations, how do we operate inside store. That competence is around the boardroom table because it's always been there. So, I think looking around your boardroom table to see where that experience and expertise is, either inside your business, so you’ve got support and knowledge to drive that type of change or outside your business that you can bring in so you can have that mirror, you can have that intelligence that supports you to make much clearer and better decisions that than help you to start to drive the metrics to start. Who’s my customer? How much is she worth to me? How much did I have to pay to get her or him? And how do I keep the cadence of her spend with me? And how can I help her to be so delighted about what she does with me, or he does with me, that it’s going to go back to the sort of 1840’s and they’re going to tell everybody that the local butchers got great pheasant in today. So, I hope that helps with some thoughts around that as well.
Sorcha O’Boyle: Yeah, no it absolutely does, and I think it’s interesting as well that the CMO traditionally has the shortest tenure of any board member generally speaking which is probably another inditement of people just not understanding the terminology and not understanding the fundamentals of digital marketing often.
Don Williams: I think if you go back to that bit, I said about challenging in employment we’re not, we haven’t produced enough people who have that sort of arithmetic type, scientific type mind. So, either technology or in the digital marketing space, which is super helpful. I understand there’s some creative 00:38:34 but it’s quite structured logical, technical and we haven’t produced enough and therefore there is a challenge, there is more demand for those people than there are those people around and the discipline is still relatively young. So, I remember speaking to someone about five years off the internet first started and they said, “Oh I’d liked somebody with ten years’ worth of online experience”. I was like, “Well it only got created five years, I mean they don’t exist.” And we’ve got a bit of that so I do wonder whether or not some of what we’ve got to do is look at our bright young people who are probably a little bit, we think, too young for that opportunity and find a way to promote them give them the opportunity to fly because we’re going to get a more cost effective solution, they’re going to learn more quickly and we need to structure some support and training and coaching around them to be the best people they can be and it’s important to help them to, you know, because they’re going to fall over here and there but that’s part of this environment. It’s a test and learn bit. It’s fail often; fail quickly; fail better next time. Because you will progress and feel confident doing it. Can we find a way actually rather than just looking for the really expensive unicorn who’s flitted from place to place at a very senior level. Are we better off actually looking down into our business and going, “That’s a brilliant talent in there. Let’s promote them, let’s give them the opportunity and let’s find a way to support them to accelerate their careers along the way. Because we might, we’ll get a better outcome, I suspect. We’ll get greater loyalty I suspect from our employees and great commitment from them, and I suspect it will be cheaper.”
Sorcha O’Boyle: Yes, and you won’t end up like Woolworths, ideally.
Don Williams: Right, exactly.
Sorcha O’Boyle: Just to jump back I think into what you were talking a little bit earlier about the digital and physical future. That is something I find really interesting because so many ecommerce brands or brands that started off as ecommerce only, are now opening up pop up shops, or small shops or, you know, and the focus always for those founders who we speak to is about meeting the customer, talking to the customer, hearing from the customer, and getting that kind of immediate feedback and engagement with them. I’d love to hear your thoughts about what the split is going to be like? What the customers going to want from a brand in the next five to ten years? What the High Street is going to look like? Just the small questions like that, into the future.
Don Williams: What’s happened over Covid is we’ve had what I would call in my language a locked-in step up in online activity. At two levels. One is we’re much more comfortable using digital methods of payment than we ever were before, so that’s broken a bit of a barrier and that includes the amount of time we’re tapping and going in a physical store as much as it does online. But if we look at food it’s gone from sort of 5% penetration rate to 10%. If we look at non-food it’s gone from 20% to 40%. So, sort of doubled. The growth of those increases is slowing dramatically and in fact coming back a bit, but you would expect that. But I do think we’ve got a locked-in step up. What I don’t think is we’re got an 00:42:09 rise so that that 40% in non-food categories goes to 60 to 80 to 90. That’s doesn’t feel like that’s right and I also don’t think we’ve got a place where we suddenly go back to pre-covid norms and it’s goes back to 20. So, it feels to me that in that 35% to 40% dependant on category and I think it is category dependent but around 40%, you’re about there then, you’re probably about on the mark and I don’t necessarily see a massive shift to that you know upwards of that. I don’t, we’re not in the place that says, “Oh it’s going to be 60% online by 2025,” that’s not what we see, and I do think it is different by category and by the way when because of the food bit we over index on online penetration in the UK because we’re quite high because it’s relatively easier to deliver an online food delivery in the UK than it is in the Canadian Prairies. Yeah, because we are, we’ve got a weight of population relatively close to each other. So that’s the sort of overview if you like in terms we’re in and in that by they way that means that nine out of ten grocery purchases are made in store. And that also means that six out of ten non-food categories are made in store. What I don’t know because I don’t have the data for is of the four out of ten or the six out of ten, so four out of ten transacted online or six out of ten transacted in store each of those, which customers went to which channels on the way to making the final transaction. And I suspect, most of my, I don’t think I’m that unusual, it will probably combine a lot of them as in both an online and an offline channel and often more than one digital channel.
Sorcha O’Boyle: Yes.
Don Williams: And often because I can’t make a decision on my app myself, it will be informed by close friends who advocate. And I’m not sure I see that changing very much quite frankly which is why I think there is this wonderful opportunity to blend both the online and offline and then start to think about my spend as a customer point of view, my profitability over lifetime. The bit that’s really difficult I think online, and I don’t think it’s just because I am what I think Charles Archer would call a 00:44:54 digital immigrant rather than a digital native who grew up with the thing is, I do think discovery is more difficult online. So, if I put ‘little black dress’ into a search engine I get inundated and what I choose to wear at the weekend is my business clearly, but you get inundated with choice and actually what you do I think want help with is curated choice. And some brands can do that online and clearly some of that advocacy helps us with curated choice doesn’t it? Because our friends help us to curate that. But you don’t stumble across much on the internet. You do stumble across stuff physically and I think that’s a, I think people are genuinely at their core a little bit curious and a bit open for that and I think we also like being told stories and we like understanding the heritage of product and where it’s come from and I think that becomes increasingly important and those telling stories and introducing that story behind the brand and the products comes to live much more richly with the human being in the store than it does on an online video for many people. And I think that feels to me where you get some quite interesting places in your store, in your store environment, when you’re allowing people to discover and to experience and to explore and to play.
Sorcha O’Boyle: Yep absolutely. I think the, there are so many more opportunities for the old surprise and delight in a store and I think one of the biggest thing maybe that gets a little bit overlooked is the training of staff in store, maybe it doesn’t get talked about enough. Because like you said, they are, they’re such great ambassadors in there I think that Whittard of Chelsea do it brilliantly, you know, when they have you come in and you have your samples and they can tell you the story of the tea or the coffee or the hot chocolate or whatever it is and yeah it really, it builds, you know, it creates a memory and it creates an emotional attachment I think.
Don Williams: Right and it brings it to life. The other bit there is your staff are really important to the capturing that customer, aren’t they?
Sorcha O’Boyle: Yes.
Don Williams: Because if they don’t, if you make a transaction you’ve got to know it’s not transaction 100,967 of that day at £18.99, you need to know it’s the winnings and you need to know that it’s attached to my customer record and then you can start to reward and play with me as well at that point, can’t you? And build the loyalty bit as well. So, I and that opportunity, that moment of truth is created by your store staff at till side.
Sorcha O’Boyle: Absolutely, absolutely.
Don Williams: Which I think also goes back to right at the start we talked about trying to strip out inefficiencies. Looking at how what percentage of time your store staff can spend in front of customers on a shop floor helping them solving the problems, telling them the story, getting the customers enthusiasm up. What percentage of their time is spent there and what percentage of time is spent at the software of choice for most retailers, which is Excel, sitting in the back office 00:48:30. Because if you can take any of those manual processes away from your store staff so they can spend more time in front of customers, then that will pay you absolutely massive dividends.
Sorcha O’Boyle: Absolutely. And just I’m going to bring us back a little while to Christmas, Christmas coming up and I know we were saying 2023 is going to be tough but I would love to hear from you, what would you advise retailers to do as they’re prepping for peak of this year. What do you think it’s going to look like? Is it going to start earlier? Is it going to start later? What are your big piece of advice?
Don Williams: Unfortunately, we, or fortunately depending on which way you look at that, we imported Black Friday so it will probably start for most thinking about what Black Friday looks like. For most my sense is you need to participate or show that you’re participating. I’m an advocate of narrow and shallow by which I mean it shouldn’t be blanket across everything and it doesn’t need to be that deep, but you need to participate to stimulate the thought process. I don’t think that I can see as much evidence that says it increased overall spend at Christmas all I think is it’s brought it forward a little bit. I think there was a point probably four, five, six years ago when we had some real supply chain challenges over Christmas and the impact of the following Christmas was, we bought earlier, because we were nervous about buying online and it never getting there or if it did it was sort of thrown over the fence to one of the neighbours supposedly. And so, I think there was some nervousness around that. I do think there will be an element of that this year because of some of the supply chain challenges. So, availability becomes important so ensuring you’ve got the stock that you need in the country, especially if it’s seasonal stock, I would be hedging to get that in earlier rather than later and I’d suffer a working capital consequence for ensuring that, you know, it’s quite difficult as far as I kind of understand to sell a Christmas stocking in January.
Sorcha O’Boyle: Yeah, sales quite low.
Don Williams: So, my risk I think of having it arrive in October is great, is a better opportunity for me than having it arrive in January. So earlier than later, make sure it’s available and be honest to customers about delivery times as well. Online cut off insuring that you try and get as many of them into stores as possible even if it’s reserve and collect. Because again, I do think we’ve seen enough evidence to say that if you can get a customer into your store, they’re probably likely to leave your store with one extra product at least. I do think it will come. The other thing the reason why I think it will be spread a little bit more is, not that I by the way I think the UK Curriculum teaches family budgeting as a core subject either, by the way, but I do think if you’re in a position where you don’t have that much money and you’re trying to eek it out that you’re likely to try and eek it out by spreading it over a longer period. But I think we will have a Christmas. But I just do think that the great British public it is a basic human right to have a Christmas and children get presents at Christmas. It makes the parents feel good, it’s makes the kids feel good, it makes their families feel good, it makes your friends feel good and it makes you feel good giving them. So, I don’t think that we’re going to have no Christmas.
Sorcha O’Boyle: Good.
Don Williams: Does that help?
Sorcha O’Boyle: It does help, and I know it feels silly to be talking about Christmas in August, but I actually don’t think you can start prepping for peak too soon at all.
Don Williams: I’ll get back to that point is how long does it take you to get a container from China to here?
Sorcha O’Boyle: Yeah, exactly.
Don Williams: So, a while I think is the answer.
Sorcha O’Boyle: A long time.
Don Williams: Yeah, and that it might be worth touching on that in terms of the costs of freight which has dramatically increased so went from a two, two and a half thousand dollars of container to twenty thousands at 00:53:01 during the peak of the supply chain problems. It’s come down a bit since, it is not going back to two and half, three thousand dollars of container. So, it might get to just about five figures, nine and half, eight and a half ten, but it’s not going back to two and a half. So, if you are building your business model around a container from, that is at back to three and half, four, five, I’m sorry I don’t, we just don’t believe that’s going to be the case.
Sorcha O’Boyle: Yeah.
Don Williams: Sorry.
Sorcha O’Boyle: Sorry to end on a downer on that one.
Don Williams: That goes back into that opportunity and your supply chain doesn’t it.
Sorcha O’Boyle: Yes.
Don Williams: And we literally haven’t spoken about the important of ESG and trust and integrity in brands. So, which I think becomes increasingly important not just because of regulatory and pressure but I think customers are demanding it more and more and they want those stories, and they like to be attached to something that makes them feel good. I don’t think they’re going to pay more for it by the way and I do accept because I’ve got a 25-year-old daughter, that was a customer says and what a customer does are two different things. So, I get my daughter saying, “Fast fashion’s killing the planet something needs to be done about it,” and two and a half minutes later she’ll be shopping on a fast fashion website. So, I do have, I have an eco-warrior of a son, yet I can’t get him to turn his lights off in a bedroom. So, I’ve got, I do understand the disconnect that’s between what people say and what people do but increasingly we’re seeing in our customer service that people are saying this is important to them and that they will make purchasing decisions on the basis of trust, integrity and ESG credentials. What I don’t think, I can see any evidence that, and by the way I’ll pay 10%, 20%, 30% more because that brand has that credential. So, I do think that becomes an increasingly important lens to put, for retailers to put on their business and by the way I do think that there are some wins when you do that. So.
Sorcha O’Boyle: Oh, definitely I think-.
Don Williams: If you’ve also always, always, and always wrapped your product in 15 layers of plastic do you really need to do that or is that in fact not a requirement? So, it saves you on the ESG bit but actually saves you cost as well.
Sorcha O’Boyle: Absolutely and I do think that sustainability is kind of, you know, it is becoming that fourth pillar in price, quality, convenience. I think it is definitely there and I think also consumers are conscious of green washing as well. They don’t want just a green sticker stuck on something and said this is eco. They’re smarter than that.
Don Williams: I think you’re spot on right. What we do find when we speak to people actually is that one that they’ve never really audited as in looked at everything they do with an ESG lens and actually they’ll be doing a lot, lot more than they think they are. They just never thought about it like that and because of that they’ve never captured it in one place and because they’ve never captured it in one place they can’t tell a consistent story [T/O 0:56:11] about what they’re choosing to do and then you get to a problem with the fact that I think everybody’s a little nervous about the fact that you’re going to be able to find a story somewhere that says, “You’re not as good as you should be”. And I think that’s okay especially if you’ve set your stall out with all the evidence and stuff you are going to do. I also think it’s impossible to be perfect in this. This is a journey that continues and continues and continues and therefore I think you have to make conscious choices about, conscious and informed choices about where is your biggest impact on an ESG, impact bit, and where can you have your biggest impact on your biggest impact? And then you tell your customers in an informed way that you are choosing to try and have your biggest impact on your biggest impact and the fact that you’re not dealing with something else that has a lesser impact it’s not that you don’t know it doesn’t exist it’s just if you try and do it all you’re never going to win. So, you’re going to have the biggest impact on your biggest impact and that’s a bigger win than trying to do absolutely everything and then succeeding at nothing.
Sorcha O’Boyle: I agree absolutely, pick your battles. Yeah, pick the things you can be brilliant at and pick the things you can be good at.
Don Williams: Absolutely right. And be able to tell the story and be proud of the fact and allow your customers to be proud of the fact that you have picked your battle and you are winning and you’re progressing.
Sorcha O’Boyle: Sound advice. I think that’s a more positive way to end it than where we were five minutes ago.
Don Williams: After, I, as I said to you right at the start, I think I am, I’m a born optimist but I think there’s real opportunity in situations like this where there is disturbance and there is difficulty and there is challenge. It really allows businesses to, certain businesses and certain business owners and certain employees to really stand up and make a significant difference. You don’t really get that opportunity quite as easily if there isn’t disturbance.
Sorcha O’Boyle: Okay.
Don Williams: So, I think there’s real opportunity in this market and in the market we’re about to go through which I think will certainly last us through 2023 and probably into a bit of 2024.
Sorcha O’Boyle: Okay, well we might have to get you back at this time in 2023 and see how we’re doing.
Don Williams: What and mark my score card?
Sorcha O’Boyle: Yeah, exactly yeah, you’re homework. Listen Don it was great to chat to you, thank you so much for coming on the podcast.
Don Williams: Pleasure, it’s a total privilege thank you very much indeed for having me and hopefully it was helpful.
Sorcha O’Boyle: Oh, hugely helpful. I think, genuinely I do feel that anyone listening to it will have learned quite a lot that they wouldn’t have picked up or maybe they wouldn’t have heard in that way before. So, thank you. That was Don Williams of KPMG my huge thanks to Don for coming on the pod and for sharing his insight which I hope you found useful. If you’d like to hear more stories and learnings from retail leaders from all across the sector, check out our previous episodes wherever you get your podcasts. That’s it for this week. So, from me Sorcha O’Boyle and all of us at More2, take care and we’ll see you soon.