I like watching Under Cover Boss because apart from it being interesting on many levels, it never fails to highlight how businesses cannot be run solely from either the balance sheet alone or from the ivory towers of a head office, despite claims of the best management reporting and a transparent, open and communicative culture.
I recently watched an episode which featured a company called Pet’s Corner who I’d actually not heard of before. However, it transpires that they’re a pet shop chain with 89 stores currently, mostly across Southern England and the Midlands. They’ve grown mostly by acquiring smaller pet shops and then rebranding them to look and feel like the Pets Corner corporate brand.
Overall the business is looking to expand significantly by opening a new store every month, albeit having been in the red for the last 2 years. As a way of trying to return the business into the black, they decided to significantly cut staff costs based purely on the balance sheet numbers alone in addition to the fact that sales figures overall were down with no signs of growth. Hence the reason for going undercover.
The board wanted to know that when they scaled, they weren’t just going to scale up their current problems into their news stores increasing their financial issues. They wanted to understand and fix any current issues first to ensure that they had the best chance of scaling successfully. Within the first day of the Product Development Manager, Steve Charma going undercover, it was quite clear what was wrong. In the first store that he visited, the impact of the staff cuts were clear. There was one staff member alone responsible for a thousand foot plus store. That one staff member, stocked shelves, served customers, unpacked deliveries and answered queries but more interestingly, had to shut the shop to go to the toilet and at lunch time. The result was missed sales opportunities and customers left to wait longer than desired. In addition, the manager’s position had been vacant for 3-4 months and the shop signage was failing to draw footfall from the Tesco store next door.
None of the impact of these issues could have, or would have been determined from the view from head office alone or from management reporting. Further stores visited highlighted stockroom and stock storage issues, damaged products, empty shelves and further lost sales opportunities, none of which were visible from head office and despite the fact that the company spent £100,000 per year on mystery shopping.
One store however, was bucking the trend. The in store team had taken the initiative and had been running a Pets day where customers could bring in their exotic pets and discover other rare animals and exotic breads. Steve Charma was initially not happy due to the fact that head office didn’t know this was going on and they hadn’t been consulted. He was more concerned about brand standards and health and safety issues.
However, when sales at the half way point in the day were 10% up on the store average, his view quickly changed. A lack of management and leadership, shortfalls in sales training, staffing levels and product storage issues were the barriers to scaling. Ironically all of which had been initiated by head office without consultation, consideration or even observation with the ‘troops on the ground’.
Despite that, they staff were mostly doing a great job, delivering good customer service and in some instances, taking the initiative to increase sales and the customer experience. Overall quite an eye opening experience for the board who at the end of the programme, committed to significant changes. However for me there was a key takeaway which in hindsight is so obvious, but still so frequently overlooked.
MBWA as management guru Tom Peters called it. Management by walking around. You can plan all you like in the board room but without consulting staff and understanding the impact on customers, the best intended plans will fall short. You can cut costs on the balance sheet, but without consulting staff and considering the impact on customers, isolated decisions made on paper without intelligence from the ground, can and will have the opposite effect to what’s intended. Such is the value in engaging both staff and customers regularly on future decisions and plans, in addition to key decision makers getting out and about regularly to see where the real business operates, which isn’t in the boardroom or on the balance sheet.