A couple of thousand years ago a Greek philosopher named Heraclitus was quoted as saying, “the only constant in life is change.” He was right then, and he is right now.
Change is an inevitable and important part of life. And yet, as society and culture has evolved over the last few centuries there is a new constant in modern life – certainly in modern business life – and that is the importance of knowing your customer and your client. Never will this be more critical than in the post-pandemic age.
Covid-19 sparked and accelerated several trends affecting businesses in retail, hospitality, entertainment and more. According to the Office for National Statistics, the economy saw a record 20.3% slump in April 2020, when lockdown curbs were tightest, while The Centre for Retail Research reported that more than 176,000 retail jobs disappeared in 2020. Meanwhile, several household-name retailers either disappeared partially from our high streets, such as John Lewis, or disappeared entirely, as did Topshop. It is this last example that I want to dwell on for a moment.
Topshop and Topman were era-defining brands for many millennials. Their collaborations with figures like Kate Moss launched a new way of celebrities working with brands, while the famous flagship store in London was a place of weekend pilgrimage. Sitting at the corner of the world-famous Oxford Circus, it felt like a cornerstone of British retail; infallible. Yet, fail it did. On 30 November 2020, Arcadia Group went into administration, taking Topshop with it, and on 1 February 2021, it was acquired by online-only rival, ASOS. All 70 of the brand’s physical stores were shut, and the famous London flagship was put on the market for £420 million.
Much has been written over the last few years about the rise in online retail and its knock-on effect on physical retail, so one might assume that Topshop was a victim of this migration to clicks over bricks. However, if that was the case, then how can you explain the opening of new flagship stores by Hugo Boss and Mango on Oxford Street around the same time that Topshop lowered its shutters? The challenges facing physical retailers are not to be underestimated, but I would argue that Topshop’s struggle with online shopping is not the cause of its demise but rather a symptom of its bigger root problem: it was out of touch with its customer. As Harper’s Bazaar wrote in late 2020: “As we grew older, Topshop didn’t.” Topshop forgot who its customer was, and it cost it its business.
Even if you wanted to put this down to cultural headwinds and macro-economics, then what about the debacle that was the European Super League in early 2021? I cannot think of a better example of rooms of intelligent and well-paid individuals getting so consumed by the numbers that they missed the bigger picture and the lifeblood of football: the fans. It took just days for the plans to fall apart, with a spokesperson for JP Morgan Chase – the US bank that had agreed a £2.8 billion funding package for the plan, which would have seen 15 European teams given permanent places in an annual competition – admitting that they had, “misjudged how this deal would be viewed by the wider football community… We will learn from this.” Let us hope that they do.
Whether in the throes of a pandemic, the thrill of the boom or the turmoil of the bust, the core principle of a successful business does not change; understand what the customer wants and provide it. The bifurcation of retail has been largely driven by the brands that have kept the needs of the customer at their heart, have evolved to meet their needs, and have not been frightened to make changes that would mean deviating from a tried-and-tested but tired formula.
Take the changing fortunes of Prezzo as an example. Italian casual dining has been a hugely saturated market for years and, lacking a keen understanding of its customer, Prezzo was struggling when it underwent a CVA in 2018. However, under the leadership of Karen Jones it went from strength to strength. You could not ask for a more experienced or insightful leader in the casual dining sector than Karen, and she brought with her a new laser focus on the customer experience. This investment in the customer experience led to a huge improvement in sales pre-pandemic and strong trading in the periods between lockdowns. It will no doubt continue to pay off in the years ahead.
Change can feel challenging, but it can also bring great opportunity and it is essential to move with the appetite and needs of your customer and client. For example, one of our investee companies, AllBright, has had tremendous success as a network for women. With a mission to connect women of all ages and stages with the tools, knowledge, and inspiration that they need to supercharge their careers, the brand has been hugely popular with their target demographic and has broken into new markets since it opened its first club in London on International Women’s Day in March 2018.
The rest of this editorial will be published at a later date.