Time to call in the experts, oh boy!!!
Let’s get straight to it. This is a blog by a consumer research expert – I don’t often blow my own trumpet, so give me my millisecond in the sun. You read this for my expertise and slightly quirky analysis of what’s going on in the world of your consumers. So way back last April, when I told you that customers like to see themselves reflected in the businesses they use, why didn’t you listen?
Yes Mike Ashley, I’m talking to you! I bet you wish you’d paid more attention now. I’m guessing you’ve learnt that not all publicity is good publicity…
Back in 2013, Sports Direct were at the centre of the zero-hours contract storm, with unions and the media up in arms about the way that its workers were being treated. 90% of the company’s 20,000 strong workforce were on low-hours contracts with no entitlement to holiday or sick pay. The visible outrage over their employment policy finally drifted out of sight and I think Mr Ashley thought he’d gotten away with it. But the thing with the media is that when they go quiet, they’re usually busy digging – and you have to hope they’re not digging on your turf!!!
Bad news, Mike!!!
At the start of December last year, The Guardian published an exposé of what really goes on in the Sports Direct’s warehouse – and it didn’t make for happy reading. Enjoying the contrast between Ashley’s standing as one of Britain’s richest men and the pittance he begrudgingly gives his staff, journalists revealed that workers are required to go through searches at the end of each shift – and this time goes as unpaid. They’re also deducted money for being even a minute late for a shift. This all means that staff are essentially paid below the minimum wage and saves the company millions of pounds each year. The Guardian also delighted in recounting a culture of fear that included parents not daring to stay at home to care for sick children. I think you get the picture – and it’s not a pretty one!
Within a week, the Institute of Directors called Sports Direct a ‘scar on British business’ and MPs then jumped onto this fresh train of outrage and announced that they’d be calling Ashley in to answer questions about his business practices. What happened next? £400 million was wiped off the company, with the value of Sports Direct shares falling by 11%. Ouch!
Thank heavens for Christmas sales!
Err, not quite. Last week, Ashley issues a profits warning, saying that “unseasonal weather over the Christmas period” meant that annual profits would be £40 million lower than predicted. Unseasonal weather? Nothing to do with all that bad publicity about how you treat your workers then?
As Sports Direct aren’t known for winter coats, gloves or scarves, I’m not sure anyone bought into their excuses – especially as rivals JD Sports managed to upgrade its profit expectations by £10 million. And there’s the other key factor – big brands prefer to do business with Peter Cowgill’s team at JD Sports, leaving Sports Direct with poorer quality stock at not much cheaper prices. Remember the modern consumer’s mantra of “quality and value”? It’s no wonder they’re not giving Mr Ashley their hard-earned readies anymore.
It’s a lesson for us all.
I’ve been around long enough to know that you rarely get ahead in business by being a soft, fluffy bunny kind of person – you need a bit of a cold, calculating head to do well – but you have to choose your battles with care. If you always remember that consumers like to see themselves reflected in the businesses they use you won’t go far wrong – you just need to get to know your customers better.
So who is your target market? What’s important to your customers – and how can you show them that it’s important to you too? There are as many different priorities as there are people so you need to play the numbers game too – pick which market you’re going to concentrate on. See, there’s more to this consumer research than you thought – and there’s a lot to get wrong.
Make life simple for yourself – you’ve got enough on your mind as it is. Just get in touch and let me and my team of consumer research consultants do what we do best – finding out how your market really sees your business, discovering what they want more of and uncovering things they want to see less. And when you’re ready to own up to your mistakes Mike, you know where I am!!!