High street brands need to fall back in love with the customer

About the event

Meg Lustman’s turnaround success at Hobbs has lessons for other retailers.

‘The High Street as we used to know it in the UK is dead,’ says Meg Lustman, formerly CEO of upmarket women’s clothing company Hobbs and a veteran of brands from John Lewis to Karen Millen to Coast. However, she believes that there is scope for it to be revived in another form: ‘I think customers still enjoy the human interaction of shops ... [But] it had become very homogenous in the UK. There was nothing to distinguish between Oxford and, say, Derby, so it became very dull for customers, particularly when the disintermediation offered by online came about. The way we’re going to get customers going back to a physical space is going to be by creating something that’s more interesting and more engaging, that may be a hybrid of different things.’

Lustman was speaking at a Distinguished Speaker Seminar at Oxford Saïd. Interviewed by Associate Dean Kathy Harvey, she gave a range of insights into the business of fashion retailing, now and in the future.


Why traditional high street brands are in trouble

At Hobbs, Lustman had been parachuted in to turn around a once-successful business that had lost its way. The problems that she identified there are being played out in slightly different ways up and down the high street.

20 years ago, she said, ‘when there was a high street,’ we had very limited choice about how we shopped, where we shopped, when we shopped, and what we shopped. Now, with the advent of the internet we have gone from a world in which brands ‘told you what to do – what to buy and what price to pay’ to one where the customer is much more in charge: ‘They know how to get it cheapest, how to get it fastest, how to get it at the place that suits them.’

This means that businesses are forced to move faster. ‘If you put something in front of the customer and she doesn’t like it you know it very quickly and you can do something about it,’ said Lustman. ‘In the old world it took some time before we realised that we were losing customers. Hobbs just hadn’t kept up with the pace of change that was happening around them.’

The business (like many high street names) had been owned by private equity. The owners were looking for an exit, and ‘a management team that was rather tired and rather fed up took a really barmy decision around repositioning to make [Hobbs] attractive to a far east investor.’ The repositioning did not play to Hobbs’s core strengths and customers ‘just hated it.’

Lustman felt that the management team was ‘worn out.’ Her appointment meant that someone was able to ‘come in with a fresh pair of eyes and really help the business re-establish what it was good at.’

Don’t lose core values online

Asked by an audience member about the right balance between holding onto core values and making a transition to online, Lustman was clear that ‘you just have to think of channels as channels – as a way of getting to customers. You’ve always got to keep the core healthy – what makes your brand special, what differentiates it to customers.’

She thought that some of the brands that have gone under or are in danger of going under are in trouble simply because they have become irrelevant – ‘They no longer have the affection and loyalty and therefore the spending of their customers.’

Shops and websites are just ways of creating an experience of the brand for customers. ‘Browsing, buying or returning – the whole experience has to be a good experience and [brands have to be] learning something from it.’

The need to ‘fall back in love’ with the customer

‘When you lose the love of your customer and do something that she just doesn’t understand then you’ve lost your way,’ said Lustman.

Her solution at Hobbs was to deploy ‘puppy dog enthusiasm’ and remind staff ‘how wonderful it is to be in service to a customer like this who really treasures Hobbs. And Hobbs does something that nobody else on the high street does. Aren’t we lucky to be helping this customer?’

She described her leadership style at this point as just ‘bringing masses of energy and masses of purpose. And teams really like that: if you bring energy and clarity around the strategy it gives them the sense that it’s worth coming into work.’

At the same time she worked on helping the business to restructure itself, ‘to be able to talk to customers across all channels, to sort out the distribution, to really rethink how we did business and make sure that the things we were doing were being done in a joined up way.’

A clear-sighted approach to cutting costs

Inevitably these changes had to be made while ensuring that costs did not creep up. Lustman described how CEOs should approach making difficult, cost-cutting, decisions.

‘As a CEO your only filter should be “is this good for the business?” You can’t afford to fall in love with Molly who’s been doing this job for 15 years and isn’t she a honey and her cakes are so nice. You just can’t afford to do that. It’s got to be what’s right for the business and what’s right for the greater good. So if sacrificing hours or people or departments means that the business is fitter and more able to survive that has got to be the best thing.’

However, she said it was vital to be ‘really fair and honest with people about why you’re having to do it’. When jobs are cut, businesses should help ‘prepare people for the world ahead of them, make sure their CVs are in good shape, and make sure their skills are in good shape.’

Cutting hours – how to do it right

One of the biggest cuts that Lustman had to make was to the number of hours that were being worked in the stores.

The hours had increased over time. The young women (it was mostly women) who worked in the stores would ask to come back to work part-time after starting families. ‘Unfortunately they didn’t want to come back at the times that we needed them, but we kind of worked around that because we liked them,’ Lustman explained. The result, however, was that the hours that the staff spent on the shop floor did not correlate with the hours that the customers were in store.

A hard-headed analysis of tasks and footfall meant that Hobbs was looking to cut 35% of hours in store, which was likely to affect about 250 people. In the end, though, the number of people who actually left the business was only around 40. Lustman said this was down to communication.   

‘There were women who had said they couldn’t work on Saturdays or couldn’t do the hours that we were asking them to do. But when they realised that there wouldn’t be a job at all because we couldn’t afford these hours, they took the hours that they were offered. They didn’t have to: they were being offered redundancy. But we took them with us, and showed them the data behind our decision-making.’