Five years ago New Zealand’s largest retail chain found itself heading towards a very precarious position. The Warehouse Group (TWG) was in a downward spiral and without something, or someone, coming to the rescue, it could well have crash landed.
With more than 220 stores nationwide including The Warehouse, Warehouse Stationary, Noel Leeming, Torpedo 7 and TWG Financial Services, TWG is a firm staple for kiwi shoppers.
However, the retail behemoth’s red sheds had been in decline for a number of years and had it not been for the actions of its former CEO, Mark Powell and his team, it is not unthinkable that it could have met the same fate as Dick Smith.
They turned the tide by investing hundreds of millions of dollars in overhauling stores, buying new businesses and improving its brand image.
While some market commentators have criticised the spend, it is undeniable that when Mark left New Zealand’s largest retail group in January this year, it was in much better shape than when he found it.
Born and raised in South Wales, Mark joined UK grocery giant Tesco in 2000 as its UK logistics operations director. He immigrated to New Zealand two years later and joined TWG. During his years of involvement his roles have included interim CEO of Australian operations and CEO of Warehouse Stationery.
Success is an imposter
His Welsh working-class upbringing and strong Christian beliefs have largely sculpted Mark’s personality.
A modest, down to earth person, he believes our modern culture overrates what is perceived to be success. “Society perceives success to be wealth, material possessions, big houses and flash cars.”
From this statement alone it’s clear he wasn’t your typical corporate executive. He did not covet having the role and he wasn’t in it for the $1.7 million salary.
In fact he’d stepped down to a one day a week advisory role for TWG in the mid 2000s to work on a theology degree. “I wasn’t particularly driven from a traditional corporate career perspective.”
Holding the title of CEO was never a role he saw himself in long term, yet his decision to take on the role was straightforward. “There was a job to do and I had the certain skills needed to do it. I committed for a maximum of five years and that is exactly how it’s played out.”
Pulling back from the edge
People often tend to judge others on obvious superficial success, but Mark says his time as CEO is best judged on what the company was saved from and how it is now positioned for the future. “Often, preventing disaster is as important as obvious success; saving a team from relegation is sometimes a greater achievement than winning the championship.”
Understanding just how close The Warehouse Group was to potential catastrophe is integral to understanding how important Mark’s work has been to the company.
When he took the helm in 2011 the core red shed business had been in sales decline for a good seven years, decreasing at two to three percent year after year. This trend meant the business could have been heading for a potential loss in the medium term.
“We were heading into very difficult territory. The situation would have been 10 times worse if we’d done nothing. And who knows, the red sheds may have even reached a point where it became unrecoverable. Many probably don’t see this; they don’t see this potential counterfactual scenario, which we prevented.”
To reverse the decline Mark headed a programme that involved investing in the stores, investing in its people and improving its products.
“It’s now had five years of decent sales growth and we accomplished a huge amount. Sure, more profit growth as well would have been lovely, yes, but I’m pretty satisfied with where we’ve landed.”
Refitting the red sheds
Mark says “retail isn’t rocket science” and that isn’t a flippant comment as he explains it comes down to four core areas. “Products, prices, promotions and the customer experience, whether that is instore on online.”
He recognised that the business had fallen behind in several of those areas, in particular the customer experience.
“A lot of our stores were very tired. We’d fallen behind on the store reinvestment programme.” This meant a substantial investment in refitting and reinvigorating the stores.
He says the retail environment is rapidly changing and to stay competitive stores must keep pace. “In retail business you really need to be refreshing your stores every seven to eight years. Your brand, your colour, your font and store environment all tire and they can suddenly look very old if you don’t refresh on a cycle.”
In the previous eight years before Mark came onboard, The Warehouse had only refitted about 10 different stores out of 90. “At that rate, if you take an average, that would mean every store would get refitted every 70 to 80 years.”
With a lot of catch-up to do, Mark spent just shy of $250 million on store refits and major acquisitions. “That cycle of refreshment and contemporising the stores was really important because it creates the environment that people shop in.
“In itself it is not going to help you win. You’ve got to get the products right, you’ve got to get the prices right and the team have to have a smile. But it’s a critical element in that cocktail of the customer experience and it had fallen behind.”
Some critics accused Mark of taking The Warehouse too upmarket, but he strongly rejected those comments. “In no way were we taking The Warehouse upmarket. It was about being discount and contemporary, not being cheap and unpleasant – there is a big difference.”
Service with a smile
Steven Tindall, founder of The Warehouse, built a strong business DNA in the 1990s, but Mark says that had slipped in the 2000s, corroding with it the employee culture. “The team were quite demotivated at the time.”
Boosting the work ethic and engagement of 12,000 staff across the group wasn’t a quick or simple job.
With an aligned executive team, Mark engaged with staff and created clarity in the organisation. “You’ve got to have clarity of purpose, clarity of principles and clarity of priorities.
“When you’ve got clarity around these three things the organisation has a genuine purpose, expectations are clear and people understand where they fit and how they can contribute.
It also makes them feel valued and leads to good training.
“When that’s consistently reinforced over time it raises engagement and builds culture.
“A lot of people in The Warehouse Group now see their job in retail as a career, not just a job. Is every single person bouncing into work every morning? No, you’ll never have that in any organisation, but the weight of the general mood and culture is definitely much more positive and generally people are pretty engaged across the group.”
A major part of putting a spring back into its employee’s step has been the Career Retailer Wage. Introduced in 2013 it increased thousands of trained and experienced staff pay who have completed all the required training levels for a role.
The move was a bid to reposition retail as a viable career. “A lot of people talk down about retail as a career, but you can have a great career in retail. It has been good to play a part in changing that perception through the Career Retailer Wage.”
Mark also led the way in helping to initiate the Retailer Degree at Massey University.
Digital Revolution
The digital revolution has put the power in the hands of the consumer. Last year alone New Zealanders spent almost $2.5 billion in online overseas purchases.
While it has created considerably more competition in the local retail sector, Mark says businesses can’t be frightened by it. “We’ve got to step up and compete rather than run away.”
When Mark took over the group was getting online at a snail’s pace. The team accelerated the transition and got the full range of products online within a year.
The move paid off; TWG’s online sales soared from $18 million in 2011 to $150 million in the last financial year.
Change of Direction
Wrapping up his role late last year he was frequently asked if he had enjoyed the job, but he says the answer wasn’t as simple as a yes or no.
“I don’t think everything in life is about enjoyment, but it has been very fulfilling and very purposeful. What has ultimately been the most fulfilling is to see the energy come back into the business.”
While Mark has made it clear he isn’t looking for another executive position, at 54 he is far from retiring. “I’ve got many, many other interests outside of The Warehouse Group and in some ways I’ve put them on hold for this role.”
He is now enjoying the change of focus away from the incredibly intense and demanding job, splitting his time into three blocks: business, Christian not for profit work and study. He also has a strong interest in politics which he will be exploring further in 2016.
In February he became Massey University’s first CEO-in-residence. The part-time position at the business school sees him serve as a liaison between the university and the business community, a guest lecturer and a mentor for students. He is also sitting on a number of boards and acting as an advisor.
So what can others learn from a man who has two bachelor’s degrees and two master’s degrees under his belt, with a third masters on its way?
Firstly, he says never stop learning – advice that he has evidently followed himself. “It’s healthy to constantly learn, reflect, learn, reflect.
“Secondly you need to be clear about why you are doing your job. That is an important question people need to ask themselves. You will be more fulfilled if you are part of something bigger than yourself that helps other people to flourish. It’s great to have ambitions, but not if they are self-centred.”
By Laura Baker
Ways to Hit the Ground Running
