Upside Down Management and the High Street After the Pandemic

David Scheeres David.Scheeres@aspen-waite.co.uk

There is no doubt that the Covid-19 Pandemic or at least the lockdowns or quarantines enforced globally by central governments has accelerated a change in consumer habits that was rapidly happening anyway.

I have a lot of time for Sir John Timpson, the owner of the shoe repair firm Timpson’s because he is both a traditionalist and yet disruptive. His success has been brought about by recognising change but amalgamating them with great customer service, staff ownership of values and an appreciation of their customers who keep them employed. His foresight in acknowledging the demise of the high street led him to a path in which he “piggy backed” traffic into his shops by launching a new campaign to follow the new location of his customers. Where was that? At the supermarkets of course! The supermarkets provide a “one stop shop” for many things and the demise of the high street was largely brought about by supermarkets with easy parking, fuel stations and loss leading products to attract consumers. Coupled with an advance in the accessibility and choice of online shopping, the high street began to lose its appeal. Sir John recognised this and opened forty branches at supermarkets and expanded services to include dry cleaning, tailoring operations and other repairs.

We’ll move on later to the future of the High Street but first I will review Timpson’s philosophy and fundamental business model. The business model is called upside down management, coined by Sir John many years ago. In fact, he wrote a book called “Upside Down Management” that I would recommend.

What drove Timpson to Upside Down Management was the realisation that the only means to successfully compete with a well-capitalised competitor in a shrinking market was superior customer service. To get there, he theorised that he had to “give branch managers authority and trust them to get on with it.”

In essence, customers come first, staff second and management last!

Timpson carries out no marketing, advertising or public relations, hires no management consultants and has no budgets and yet has a turnover and profitability that is the envy of many, and make no mistake, Timpson understands that turnover is vanity and profit is sanity!

Upside Down Management is based on the following basic principles:

1 2 3 4 5

All colleagues have the freedom to do their jobs the way they choose Every bosses job is to help his or her team No KPIs, no boxes to tick Bosses don’t issue orders Head Office is a helpline – it does not run the dayto-day business

Timpson’s Philosophies are based on respect and kindness and are that;

• They believe in employee empowerment. • When you loosen the reins, the good people stand out. • Bail out early, if you make a mistake.

• They recruit on personality using a basic Mr. Men style scoring sheet. Graphic images. Simple, yet effective. • They always have a pipeline of potential recruits. They send monthly newsletters to these people to keep them warm. • They give every member of staff their birthday off. • They have many employee benefits, such as a wedding car the staff can use, a hardship fund which people can draw from, holiday homes for staff and a dream come true fund. • All employees in the retail chain participate in profit share. The basic calculation was calculated by adding up the wages of people in the shop that week and multiplying it by 4.5. After that figure is achieved, then all staff get 15% bonus of the over-achievement.

• Any employee can give up to £500 compensation to any customer on the spot, in the interest of customer service.

What’s evident is that the Timpson business model is a big success for them. Their small stores, low cost, profit share business models rely on a huge amount of employee trust. They reward that trust with some fantastic employee benefits, a list that very few businesses could compete with. In essence, the role model is kindness and mutual respect which falls nicely into the camp of the “Aspen

Waite Way”.

Sir John Timpson chaired the 2018 High Street report and warned that UK retail would not return to the high streets that existed ten or twenty years previously. On the other hand, the report made the call for money to be granted to local authorities to rejuvenate their town centres and in the October budget initially announced a £675 million Future High Streets Fund launched on Boxing Day the same year. At the same time, the government said that funds would be used by local councils across the UK to transform the high streets into community hubs, aiming to reduce the reliance on retail following a year in which high street receipts fell again and after a challenging year. Of course, at this stage there was no thought of a pandemic and the demise of so many retailers that relied on face-toface contact with their customers.

At the time Sir John said

“By helping our towns create their own individual community hub, I believe we will have vibrant town centres to provide a much-needed place for face-to-

face contact in the digital age”. In 2019, the High Streets Task Force – chaired by Timpson – was formed to support local leaders in revitalising high streets. It comprised of experts who provided tailored guidance and advice to local authorities seeking to breathe new life into their local town centres. By the end of the year, the government announced the first fourteen high streets that would receive £1 billion to help improve the UK’s retail sector. The fourteen locations would each receive up to £25 million worth of training, face-to-face support and access to research to give small business owners an edge.

High Streets Minister Jake Berry MP described the task force as a way for the UK’s high streets to “evolve successfully” and

“meet the needs of their local community”.

All looked promising until the UK declared a lockdown on 23rd March to control the pandemic, and while it seems to have helped the public health crisis, it took a huge toll on the economy.

In the retail sector alone, it has been reported that at least 24,348 jobs were lost in the first half of the year, according to the Centre for Retail Research. We have seen the closure of many retail “household names” and others struggling to survive as ecommerce accelerated its significance in a market in which the consumer still wanted to consume but was unable to do this as easily in a conventional manner because non-essential shops were closed. Where does this leave the high street as retailers have to innovate to cope with a paradigm culture shift?

I believe in the resilience of trade and also community. Upside down management advocates kindness, respect and service. The fundamental tenant of good service is respect, communication and understanding people’s needs. I believe that the high street will evolve to become the social hub of the community as hypothesised by Sir John and there will always be a space for specialist and artisan retailing.

Why?

This is simple to answer and is possibly one of the reasons for the huge emerging coffee shop culture. Who traditionally spends most time shopping and is the most important consumer in society? Women. Before you accuse me of sexism, the logic of the argument is severalfold. It is a myth that women spend more than men, in actual fact there is more or less financial parity, but women usually buy for their children, dictate fashion, choose what their partners wear and eat, and usually perform multi tasks between employment and running a home. They are also far more communicative than most men and interact socially in a more gregarious manner and this has helped to kick start the café culture. I won’t drift into disposable fashion and life cycle analysis which does influence buying as that is an environmental issue for another day.

According to several studies, women buy twice as much as men and therein lays the need for choice. It would be stereotypical to say that men shop to buy and women buy to shop and the male focus is on parking and expediency unless of course the object of purchase is driven by luxury such as a hobby or immediate necessity. What I would say though is that shopping and the need to engage with others is more social than can be provided by an online experience.

I suspect we will see smaller high streets with more residential use serviced by smaller specialist shops and a café culture fuelled by the simple human desire to engage. Much like Johnson’s coffee shops in the 18th Century where people congregated to debate the issues of the day, the need for face-to-face communication and shared experiences will ultimately drive the crowds to the high street. There will always be a percentage of goods that are chosen by the physical senses and choice can be influenced by advice which artificial intelligence is a long way away from replicating. Can a website or review say

“you don’t look good in that”,

I doubt it. I believe the emerging café culture will engender the growth of satellite retailers.

In 1997, I established possibly the first internet art gallery called the Network Gallery. A mentor was Michael Noakes who was a world-renowned portrait painter who had painted more Prime Ministers, Royalty and personages of note than any other living artist at the time. Michael was a member of the Royal Society of Portrait Painters, president of the Royal Institute of Oil Painters and a director of the Federation of British Artists. Michael had the most fantastic sense of humour and despite being a traditionalist, injected humour and innovation into many of his paintings, such as multiple limbs to denote movement!

The art world model is that galleries feature artists who are paid when the work is sold with the bulk of the sale proceeds normally retained by the gallery to pay for overheads, the main one being property. The size of an exhibition and the number of works exhibited is limited by the physical space of the gallery. My premise was that an Internet Gallery could exhibit hundreds of artists as there was no limitation of physical space and as overheads were low, it could pay the artists larger commissions and “corner the market”. Michael Noakes and other prominent artists agreed and the business was launched with my new 1.75 MP digital camera and dial up Internet!

Despite the illustrious patronage, the venture failed dismally as it was too radical and premature. A survey of art buyers was undertaken including some who had bought from the gallery artists previously and the consensus of opinion was that there was a distrust of buying something of significant value that could not be physically touched and were the images true to life and was there really only one example of the work extant? Broadband speeds, digital photography and perception has changed remarkably over the past two decades. In December 2020, Statista stated that online art sales will reach 9.32 billion US dollars by 2024 and the current value is estimated at 4.5 billion US Dollars yet comparably the global art market is valued at 64 billion dollars. These statistics were prepared during a global lockdown when the impact of online retailing was fully appreciated, so what does this mean if online sales are estimated to be less than 10% of the global market?

I would hypothesise that there is more to consumer demand than simply need or want and that we are social animals who like advice and approbation, and the act of acquisition also serves social purposes.

To revisit the Timpson philosophy, customers come first, be kind, respectful and attend to their needs and they will come back. In essence, this is the Aspen Waite Way and why we launched the “Friends Programme” at the beginning of lockdown last year. There is more to living than money.