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“Twenty years ago I was driving boxes to the post office in my Chevy Blazer and dreaming of a forklift,” says Jeff Bezos in his most recent letter to shareholders. A blink later and he points out that the company has grown from 30,000 employees in 2010 to 230,000 now. But his ambition is the same. “We want to be a large company that’s also an invention machine. We want to combine the extraordinary customer-serving capabilities that are enabled by size with the speed of movement, nimbleness and risk-acceptance mentality that is normally associated with entrepreneurial start-ups.” Amazon is great at disruption because of its customers focus and the fact that the internet means it needs none (or very few) people between its warehouses and the shopper. The threat of Prime, its membership service, is the biggest challenge facing the UK retail market and the wholesale market by extension. It is both a direct threat and an indirect threat in that is inspiring countless numbers of othe...

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Ben Thompson's Stratechery site is a constant source of inspiration. Last week he was tackling the development of Amazon and speculating that it could sell lots of products at a loss by adopting a Costco model. "Consider Costco: last year the wholesale retailer had net income of $2.3 billion on sales of $114 billion to its over 81 million members; the total sum of membership fees was $2.5 billion," he wrote. "In other words, Costco’s 11% gross margin didn’t even quite cover the cost of running the business; the difference, along with all of the profit, came from a “tax” levied on Costco customers." For retailers in the UK unhappy with paying a "tax" to news wholesalers to get their newspapers and magazines, this makes uncomfortable reading. The UK's regulators, now the competition commission, have gamed the system so two companies can make a profit out of "carriage service charges" for wholesaling newspapers and magazines in exclu...

Poetry grabs life by the throat, David Adams says near the start of Well Versed , his collection of interconnected essays on the things that modern businesspeople should pay attention to in order to be successful. He borrows the phrase from Robert Frost in part explanation for his journey from accountant to stockbroker to chief executive to business coach. Unlike most business books that sell a single idea or success story, the strength of Adams’ book is its refusal to tell you what to do. “Alice in Through the Looking Glass …reaches a crossroads and doesn’t know which way to go. Looking up she sees the Cheshire Cat grinning. ‘Please sir which way should I go?’ ‘Where do you want to get to?’ asks the cat. ‘I don’t really mind,’ says Alice. ‘Well then it doesn’t really matter which way you go.’ How many businesses and particularly business meetings are conducted with the same ethos?” Adams challenges. Without clear and unequivocal goals businesses will never achieve either what ...

“To really excite and delight customers there has to be something unique and special about what you deliver,” writes John Hoerner at the end of How To Sell: Recipes For Retail , his brilliant book on everything he has learned in a stellar 50 year retail career. Put this book on your Christmas list. Hired from the US in 1987 to run Debenhams Hoerner was so successful he ended up running the Arcadia group until he retired in 2000. A year later Tesco recruited him to develop its clothing business. This book is organised as a series of recipes for success. He argues that his lessons will work for any retail business and I think he is correct. While convenience stores are not in the business of markdowns or as exposed to not buying the latest fashion must-haves, they still have to get the basics right and then find the magic ingredient that makes their shop special. “When you get it right for customers, almost EVERYTHING ELSE works…when you don’t get it right for customers, almost N...

Start With Why is a TED talk by Simon Sinek that has been watched more than 24.8 million times. Plus a further 701,000 views on YouTube. It takes 18 minutes to watch and is inspiring. There is also the book , advertised as a global bestseller. It will take you four to six hours to read and I recommend that you take longer than this. While the talk is brilliant and the book seems to say not much more across its 200 pages, the benefit of spending time with Sinek’s ideas comes from challenging how well you can answer the question: “Well why should I do business with you?” The first part of the book is all about business as usual. The manipulations that companies use to keep customers - price, promotions, fear, aspirations, peer pressure, and novelty (a.k.a. innovation) - are all entertainingly eviscerated. “Price always costs something. The question is, how much are you willing to pay for the money you make?” Sinek prompts. Manipulations are perfectly valid strategy for drivin...

My local council, South Oxfordshire, asked me to complete a survey on Sunday trading as a local resident. The deadline is next week. The first question was about the current arrangements and what I thought. There were five options: large shops shouldn’t open six hours is already too long current restrictions are about right large shops should be allowed open for longer no restrictions. My answer was the current restrictions are about right. The next question was about what would happen if the council allowed large stores to open for longer. The menu included 10 options and a space for other. The options were that it would: encourage me to shop more in my local town give me more flexibility impact on my religious or cultural beliefs have a positive impact on my business have a negative impact on my business increase footfall to my business reduce footfall to my business provide more employment opportunities open to me in the local area mean that I need to...

We sat there for three and a half hours and listened to them talk about the structure of the company and the sale and everything. And I looked over at Jerry Murphy, who is a very, very, very bright guy, and I said, ‘I really don’t understand anything. Am I missing something?’ Jerry says, ‘No. I’m not sure I follow what they’re talking about either.” So this goes on for three hours-and that is a long time for my dad-until the chairman looks at Dad and says, “Well, Alex, what do you think? Are you interested? You think we can pull this deal together?’ And Dad says, ‘I have one question. I asked that question three hours ago and I’ll ask it again: Does this company make money or not? I’m talking about real, green bucks.’ Nobody in whole room would answer. So Dad gets up and says, ‘When you can answer that question, give me a call; I might be interested.’ And we walked out. This story is told by Dean Spanos, son of billionaire Alex Spanos and it is the sort of gold dust that ma...

Pay Unfairly is chapter 10 of Laszlo Bock’s Work Rules! Ever provocative this book shares the thinking behind Google’s people strategy. What is remarkable is that it is 24 times harder to get a job at Google than to get a place at Harvard University. And three million people a year apply for jobs there. Bock is Google’s senior vice president of people operations. The most important rule is to hire great people and people who are better at your job than you are. He devotes two chapters to this subject. Later on we get to the Pay Unfairly chapter where Bock offers four pieces of advice: -          Swallow hard and pay unfairly. Have wide variations in pay the reflect the power law distribution of performance -          Celebrate accomplishment not compensation -          Make it easy to spread the love -          Rew...

There is a correlation between the number of storks’ nests found on Danish houses and the number of children born in those houses, economist Tim Harford wrote in the FT last month. “Could the old story about babies being delivered by storks really be true,” he asked. “No. Larger houses have more room both for children and for storks.” The correlation does not cause the outcome. This distinction is usefully made at a time when retailers in the UK are wrestling with the thorny questions of the benefit of footfall drivers, including the controversial PayPoint service. Is it that users of PayPoint spend more because the service is available in store or is it that PayPoint is convenient to shoppers who were planning to spend more anyway? Surely PayPoint seeks to be located in stores which have the correct location more than those stores with the right locations seek to have PayPoint in their stores. Resolving this distinction is always likely to be determined in favour of wh...

What to make of all these price-match guarantees in the supermarkets? A profit guarantee for the shops offering them, suggests the Economist . In a column last month it says price guarantees were a way of stopping a price war rather than participating in one. This is because when a newcomer offers lower prices it is trying to win your customers. If you promise your customers that you will match these prices then they will stay with you. The newcomer then has to give the price cuts to its existing customers without winning new ones and loses money. In real life it is not as simple as that. However, the Economist says that most consumers believe that price-matching signals genuinely lower prices. The consumer is wrong as it is more expensive supermarkets that are offering to match each other’s prices. The lower prices are at Aldi and Lidl. The response of wholesalers and consumer packaged goods suppliers is to price mark product for independent shops to signal value. There are ...

The answer to every strategic question is “it depends”. The trick is knowing what it depends on. If the answer to a question isn’t “it depends” then it’s not a strategic question. This is Mazzeo’s Law, a business school rule that its author and two fellow professors tested out on independent businesses across the USA in a series of road trips. Their book, The Roadside MBA , aims to provide real world lessons for entrepreneurs, start-ups and small businesses. Michael Mazzeo, Paul Oyer and Scott Schaeffer write up visits to 45 small businesses to provide lessons across 10 subject areas ranging from hiring staff to battling the big boys. The businesses range from a fitness centre for older women to a company that makes air socks and everything in between. The book’s strength is that it is a collection of the wisdom of people just like you, running a small business and making a profit. In Reno, Nevada, they visit Christine Kelly, owner of Sundance Books and Music. How do you comp...

The Financial Times was quick to praise David Cameron for his support of moves to introduce plain packaging of tobacco. “This law - likely to be passed by MPs in a free vote – will be the most significant step in years to boost public health in Britain. It is welcome,” it thunders. This is a remarkable claim. Even supporters for the measure admit the evidence is marginal and the impact expected to be small. Perhaps the newspaper believes there has been little progress on public health in recent years. The letters pages were mainly silent on the FT’s stance. Noteworthy was a response from Britain’s greatest living artist David Hockney. He advised the FT: “ You state that cigarettes will be sold in ‘boxes decorated in an off-putting shade of olive green’. I don’t believe there are ‘off-putting’ colours, especially for a cigarette packet. The colour will be quite beautiful in a couple of weeks.” But I think there is a smarter objection based on the ideas of Adam Smith. In the The...

This is a story about how a man started out with one market stall and 25 years later sold his chain of 1,000 shops for more than £500m to Tesco. But Kevin Threlfall’s book One Stop One Life is more remarkable than that. Any modern convenience store operator wanting to learn about business should read Threlfall’s remarkable life story. You will pick up some neat ideas about how to exploit loopholes and spot profit opportunities. But mostly you should just pick up his zest for life. His parents had a knack for sales and after his dad opened a cut-price market stall in the 1950s they had enough money to pay for Threlfall to get a good education. Knowing how much money could be made from market stalls, he went into partnership with his dad selling special offers and top-up shopping. In competition with the supermarkets, Threlfall made a list of all the “must buy items” and priced them lower, sometimes making as little as a penny per pack. “In being cheapest on known value items ...

A new report commissioned by England's greatest real estate expert Peter Wetherell explains how Mount Street in Mayfair has been regenerated as a retail destination. The rents paid today are quite staggering: Lowe pays £175,000 a year for 3,320 sq ft, for example. But the rules can be applied anywhere. The most important thing is that landlords and retailers and public authorities need to work together. Wetherell recalls that he founded the Mount Street Association at the request of the Duke of Westminster after the duke had "walked from the old estate office in Davies Street to dine at Harry's in South Audley Street and had counted 19 empty shops". Mount Street connects Berkeley Square with Hyde Park and you may think such a location guarantees success. But it does not. It used to be a "street you cut through" to get from A to B. The triggers behind its transformation were the arrival of an anchor retail tenant in the shape of US fashion desig...

Mark Bittman writes an excellent article in Time on How to Eat Now encouraging people to eat at home because it’s good for you, for your family and it’s far easier than you think. He challenges why so many people are eating “hyperprocessed food, the stuff that is correctly called junk and should really carry warning labels.” He believes preparing food should be a source of comfort, pride, health, well-being, relaxation and sociability for people. Something that connects us to other humans. The solution to the obesity epidemic he says is to do it yourself, eat meals and stop gaining 25% of our daily calories from snacks. Helpfully, Time prints a list of store cupboard basics so that you know what to stock for local shoppers who subscribe to the above ideas. Here are Mark’s pantry basics. How many do you stock? Spices and herbs ·         Salt and black pepper ·         Ground cumin ·  ...

We can read lots into Warren Buffett telling CNBC that he made a mistake in investing in Tesco. “I am going to make mistakes,” he said. “But not because I buy businesses that I like as they go down in price but I am just going to be wrong sometimes on the facts.” The interview that we can see does not go on to examine what these facts might be. What I would suggest is that Buffett is saying that Tesco is a well-run business for the world of shopping that used to exist when he bought into Tesco in 2007. The supermarket retail world has changed beyond recognition since then. Morrisons under Dalton Philips claims it will be the first retailer in the world to price match Aldi and Lidl with its Match & More initiative (based on its mid-range own brands, not its value range). If he reads Dieter Brandes' BareEssentials Philips will see this is not the case. History is littered with retailers who have tried to beat Aldi on price and failed. But is the Aldi UK model ...