As a Board Development and Executive Search firm, Fidelio has a clear focus:
1. Understanding the diversity of skills and experience required at the corporate top table to successfully navigate change and complexity;
2. Ensuring our clients have access to that diversity of skills and experience.
The High Street is a crucible of change and complexity. This provides a major challenge for anyone sitting on the Board or Executive Committee of a retailer. How to keep pace with change in the High Street today and secure advantage for tomorrow?
These questions are critical for all companies with an interest in the High Street. We were therefore recently delighted to welcome Peter Williams, Chairman of Boohoo.com plc and former CEO of Selfridges, to speak at a Fidelio Board Breakfast. His topic was ‘the Future of the High Street’.
And who better to address this topic than Peter given his executive experience as former CFO and CEO of Selfridges, as well as his extensive Non-Executive experience? Current Board roles include Chairman of Boohoo.com, Chairman of Mister Spex and Senior Independent Director Rightmove; previous Board roles include Senior Independent Director ASOS, as well as Board Member of Jaeger and Cineworld Group.
To aid our discussion we were also joined by Non-Executive and Executive Directors from a range of sectors including financial services, online and traditional retailers, publishing, pharmaceuticals, telecommunications and real estate.
Staying Ahead in the High Street
Following Fidelio tradition, we addressed three questions to Peter Williams:
1. Why does the High Street hold such fascination? Why is it important?
2. What is the future of the High Street?
3. What are the implications for Board composition?
Peter’s answers and our subsequent debate were broad ranging and multifaceted. Clear light was shed on the diversity of Board skills and experience needed to stay ahead in the High Street.
1. Why is the High Street important?
Peter shared his passion and enthusiasm for the High Street.
The High Street matters. It is a microcosm of society – how we shop, what we like to buy and how we like to buy it. It’s a complex picture. Technology has created convenience but has not made the High Street redundant. As a species we are clubbable and we like physical things.
Younger buyers are still attracted by destination locations. Increasingly, all buyers are purchasing through a range of channels, in a variety of combinations. Traditionally, shopping has been perceived as a female pastime. Our guests argued this is changing.
Based on his online and traditional retail experience, as well his real estate experience, Peter concluded that a key attraction of the High Street is the pace of change. Ability to thrive in fast moving environment is essential for today’s retail Board director.
2. What is the ‘Future of the High Street’?
Setting the scene, Peter spoke of the dramatic change in the UK High Street in recent years.
Less than 20 years ago, national coverage could only be achieved through 250 plus physical outlets. Today with the internet, national coverage can be achieved with 100 or even fewer stores. Moreover, the nature of those outlets continues to change with, for example, a proliferation of urban convenience stores in the supermarket sector. Managing the property portfolio has traditionally been key to retail success; the challenge of managing a legacy portfolio is only going to increase. As our real estate guests confirmed, the High Street is far from dead, although it does depend where the High Street is:
- The top 100 locations in the UK flourish as retail destinations, whether this be the High Street in the form of Oxford Street or Regent Street or shopping destinations such as The Trafford Centre or Bicester Village.
- Affluent market towns are showing a propensity for re-invention. This includes moving away from mass retailers to a proliferation of local outlets frequently serving food and drink.
But less affluent parts of the country are seeing ongoing decline of the High Street. Local government has to play a part in any rejuvenation. Rents must come down to encourage entrepreneurs in this space. Without collaboration and innovation, the stark contrast in High Streets across the UK will increase – a visible indicator of rising inequality.
At one level the regional experience of shopping in the High Street is becoming more differentiated. At another we can all now buy goods from pretty much anywhere globally online. While this represents an obvious threat to the traditional retail outlets, the phenomenon of online retail has also heightened the importance of brand and trust.
Trust is all the more crucial when the transaction is entirely online. But, whether in the High Street or on the internet, our guests argued that consumers will increasingly be attracted by brands that represent value, reliability and integrity on ethical issues, including sourcing. The obvious example of John Lewis was cited in the UK.
The future of the High Street will not be linear. A senior publisher at our breakfast table outlined how digital distribution and the advent of the kindle threatened to destroy publishing in the same way that streaming had decimated the music industry. Yes, enormous disruption has hit the book industry largely driven by Amazon and the Kindle. But potentially we are seeing the renaissance of the bookshop which has become a destination of interest on many a High Street. And curiously we are also seeing that the enthusiasm for e-books is slowing.
Peter was upbeat about the future of the High Street. In the UK we are at the forefront of online shopping. Smart retailers will also turn this to advantage, using the halo effect of highly attractive physical retail space to drive sales through multiple channels. We can expect further innovation to follow. The High Street has the potential to be a growth engine bringing together exciting brands and rapidly evolving distribution models. The speed of change will only pick up.
3. What does this mean for Board composition?
Clearly retail Boards needs to adapt to the new High Street. Peter addressed the skills and experience that will provide competitive edge.
For all Boards, in the retail sector and beyond, an understanding of the digital opportunity and the digital threat has become essential. Peter recounted how 10 years ago, for too many retailers, IT would only crop up on the Board agenda with a presentation from the Head of IT. Today, digital awareness in the Board room is paramount. Peter flagged the risk of delegating digital thinking to a sole Board member or sub-committee. Regardless of age and experience, ‘digital’ should be a language and priority for the entire Board.
What attracted Peter to retail is its fast changing pace. And the willingness to embrace change and even disruption is clearly an invaluable attribute in the retail Boardroom. Shopping habits, distribution channels and supply chains are far from fixed; it’s a highly effective Board that can navigate radical change.
Rather modestly, Peter downplayed the value of retail experience. Clearly his ability to contribute effectively to Boards across a range of sectors is at least partially based on his deep understanding of retail. But there is another aspect here. Particularly for online retailers when growth comes, it can come very quickly. The Board must possess the ability to oversee very high levels of growth and to ensure that the show goes on. This has two aspects:
- Strong growth requires high-quality execution. While the Board is not delivering that execution, a firm understanding of what it takes to execute well in the retail sector is essential in the Boardroom.
- Fast growing businesses need to scale and the Board must know how to do this. The ability, or inability, to scale has been highlighted as a major challenge for UK companies, including by entrepreneurs such as Sherry Coutu. Peter also underscored the importance of scaling and Boards clearly need the technical understanding of how this happens.
We have previously argued that Boards sit where interests collide. And this is also true of retail Boards. On the one hand retail is highly price sensitive and across many segments of the market there is a very real downward pressure on price. This coincides with the recent introduction of the living wage in the UK and the Boards of large retailers are constantly walking a careful path between customer demands on price and society’s desire for sustainability.
In this context, our guests were also concerned about the invisibility of the true costs of digital retail and what the internet is doing to the real value of a purchased item. Customers may erroneously think that an item bought online should be very substantially cheaper than the same item bought in a shop. There are still overheads and distribution costs. In the fast-moving competitive environment of the High Street, Boards must very obviously also take ethical responsibility for the supply chain and employment standards.
What Next?
Fidelio’s Board Breakfast ‘The Future of the High Street’ drew upon the experience of Peter Williams, our guest speaker; the insights of Directors across a range of sectors; and Fidelio’s track record in Board Search and Development.
Our debate highlighted the importance of diverse skills and experience at the top table for any company with an ambition to remain relevant in ‘The Future of the High Street’.
To learn more about how Fidelio can meet your company’s Executive Search and Board composition requirements to ensure your company has the diversity of skills and experience needed within the top team to navigate change and complexity, please contact Gillian Karran-Cumberlege or Mark Cumberlege, alternatively call + 44 (0) 20 7759 2200.