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48 RS February - March 2013
NO NEWS LIKE BAD NEWS
The latest episode of the M&S witch hunt doesn’t disappoint.
No retail operator of this size can expect to turn a profit on
one store, particularly when taking into account the set-up
costs of a business that is preparing for a wider roll-out in
market. Whilst Paris may well be a figure head market, rather
than a decisive cash cow, it cannot be argued that M&S’s
broader international strategy is established, growing and
profitable. Picking on one Paris store is unrepresentative and
ill considered commentary.
Elsewhere, M&S has a blend of wholly owned, joint venture
and franchise stores, and this blend is demonstrable of a
business that has long understood market maturity. Again,
whilst Paris stands out as being wholly owned, other markets’
ownership status is down to the reliability and maturity of
income, so less mature are franchised and more mature are
JV or wholly owned.
What is not reported on is the massive change that is well
under way at Waterside, integrating the modern business
approaches of the international business into the more
established UK infrastructure. This is driving radical changes
in how M&S, as a global business, does business. This will take
time to flush through, but I believe this management initiative
will bare fruit, providing the market gives it time and is not
swayed in the meantime by commentary such as this.
Tristan Rogers, CEO, ConcretePlatform
PUTTING MOBILE TO THE TEST
The shift from desktop to mobile clearly requires a different
approach to content creation: most organisations recognise
that a standard website is never going to work for small
format mobile devices, and that consumers are typically looking
for different products, services and experiences during
a mobile interaction. Consumers are not going to be making
mortgage or credit card applications via the mobile; nor are
they likely to browse holiday destinations on a small screen;
they are, however, likely to order flowers or book theatre
tickets.
Organisations need to understand how users want to interact
with the business via mobile – and having made a basic
hypothesis, multivariate testing plays a critical role in justifying
the strategy. At the most basic level, an organisation can
test the importance of a mobile optimised site: sending 50
per cent of users to a dedicated mobile site and the other
50 per cent to the traditional website will provide a clear
measure of conversion rates – and typically confirm that an
optimised model is more successful. Similarly, testing can help
to refine ideas and provide insight into the way customers are
interacting, enabling the organisation to build a business case
and prioritise key areas of activity.
Indeed, with the continuing evolution of mobile usage –
from the rapid adoption of tablets to the arrival of 4G – the
way users interact will continue to change. It is, therefore,
important to keep measuring: the mobile strategy cannot be
set in stone. As the market matures, so must the strategy
and the way content is delivered.
By taking a structured approach to testing, organisations
can not only deliver the best user experience but also confidently
begin to explore the added benefits and flexibility the
mobile offers to gain stronger interactions with customers
and tap into that pent up demand for mobile services.
Tim Burge, director, Maxymiser
NEVER WRITE OFF APPLE
Before we write Apple off with premature assessments,
we need to appreciate that its so-called disappointing
performance is still extraordinary by many measures, and
that it has the capabilities to keep winning in its markets,
which it may yet redefine with more blockbuster products.
Apple is thought by many to have posted poor results,
but this would be a rushed assessment. Apple’s revenues
continued growing at a fast pace, with an 18 per cent rise
over the previous year.
Profits were $13.1 billion, same as the previous year. Gross
margin fell to 38.6 per cent compared to 44.7 per cent yearon-year,
but Apple had prepared the market about the lower
margin and actually delivered above its own guidance.
Lower margins would be expected given Apple’s rising
sales in emerging economies, introduction of iPad mini and
appearance of more competing products that are much
cheaper. The 38.6 per cent margins in the markets where
Apple operates are still extraordinary.
The main issue for the medium and long term is whether
Apple has sustained its innovative capabilities, which seems
likely given that it’s part of the company’s DNA. But the proof
will be in the pudding, and we’ll know over the next 12-18
months. What many forget though is Apple’s safety net of
$137 billion cash and liquid assets. Apple could easily buy any
new technologies that appear to pose a threat to it, that
offer synergies to its own offerings, or that can open up new
markets for it. Stock markets react, and sometimes overreact,
but what matters is the big picture and Apple seems to be on
a solid footing by that measure.
Loizos Heracleous, professor of strategy, Warwick Business
School
Letters to the Editor should be emailed to: karen.moss@retail-systems.com