“Cheaper than an M&S prawn sandwich”
For every retail success story there is often one of unmitigated disaster. On the day when Sports Direct founder Mike Ashley motivates his workforce by telling the BBC that he commutes to work by helicopter, here are a few examples of some of the worst retail blunders.
- Never underestimate the power of social media
In the run up to Christmas peak trading 2014 Sainsbury’s launched a staff incentive scheme known as ‘the 50 pence challenge’ the idea being to get every customer to spend 50p more on each shopping trip. The poster was for internal use only however in one store it was posted in the window. A photograph of the poster was tweeted and social media went wild with rival Lidl launching its own 50 pence challenge “Let’s encourage every one of our lovely customers to save as many 50ps as possible,” it said. Ouch.
Photo: Chris Dodd
- We all love a bargain
Promotions are a key part of any retailer’s marketing armoury however one such run by Hoover cost the company at least £20m and caused huge embarrassment to its brand. Under the offer, anyone purchasing a Hoover product costing more than £100 was eligible for two free return air tickets to Europe or the US. Any customers buying the cheapest qualifying product, priced at £119, could receive two tickets to New York. Well, this proved irresistible to many – the upshot being that an estimated 100,000 people applied for the flights. The marketing blunder cost three top Hoover executives their jobs. Suck it up guys.
- Stick to what you know
In 2008 US electricals giant Best Buy signalled its intent to penetrate the UK market with up to 200 big box stores across the country going head to head with the Currys / PC World brands. On the face of things, it looked compelling but just 18 months and only 11 store openings later it was making a hasty retreat. The timing couldn’t have been worse in the economic downturn in the UK and at the time big box out of town locations weren’t the thing to have. Best Buy simply couldn’t adapt to a different strategy, Currys PC World continues to flourish whilst Best Buy is but a distant memory. A lesson for a certain Australian DIY chain perhaps?
- Keep it under lock and key
Maintaining the integrity and security of personal data is one of the biggest issues for retailers right now and one of the biggest concerns affecting consumer confidence. Not surprising when you look at some of history’s cyber disasters. The largest and most infamous? That award has to go to Target, the US retail giant. In the days prior to Thanksgiving 2013, someone installed malware in Target’s security and payments system designed to steal every credit card used at the company’s 1,797 U.S. stores. At the critical moment—when the Christmas gifts had been scanned and bagged and the cashier asked for a swipe—the malware would step in, capture the shopper’s credit card number, and store it on a Target server commandeered by the hackers. The result? Over 90 lawsuits, 46% drop in operating profit and Target Executives forced to testify to Congress.
- “Doing a Ratner”
Any list such as this cannot be complete without the blunder to end all blunders. Whilst I’m sure most have heard it before, it is still worth repeating as a lesson to every retailer.
Gerald Ratner, founder and CEO of Ratners jewellers wiped £500 million from the value of his business with one speech to the IoD in 1991. During it he said: “We also do cut-glass sherry decanters complete with six glasses on a silver-plated tray that your butler can serve you drinks on, all for £4.95. People say, ‘How can you sell this for such a low price?’ I say, because it’s total crap.”
And whilst he had his own brand on the floor, he gave it a kicking just for good measure, adding that his stores’ earrings were “cheaper than an M&S prawn sandwich but probably wouldn’t last as long”.
Good night Gerald.
Andrew Busby is a retail sales consultant and founder of The Retail Advisory Board