Four ways to lead in retail and transform business: Dairy Farm CEO and ex-Coles boss

By Lester Wan contact

- Last updated on GMT

Dairy Farm CEO McLeod pointed out customers around the world want quality and value, albeit in different ways. ©ConsumerGoodsForum
Dairy Farm CEO McLeod pointed out customers around the world want quality and value, albeit in different ways. ©ConsumerGoodsForum

Related tags: Dairy Farm, Coles, Supermarket, Grocery shopping, Retailing

The boss of Dairy Farm International Holdings – the owner of retail powerhouses Giant, 7-Eleven and Cold Storage – has shared his top tips of retail management…including what he learned from rap superstar LL Cool J.

Ian McLeod said he met the rapper shortly after arriving in Australia to take up a position with Coles.

When he mentioned his new role, the rapper responded: “Congratulations! You know, you only get one chance to make a good first impression.”

He said that advice has been valuable to him over the years as a CEO who would have to move “up and down the fretboard”​ and engage, perhaps, the Prime Minister at one end and a cashier at the other.

Here are McLeod’s retail leadership tips, which he delivered at the recent Consumer Goods Forum Global Summit.

1. Transforming through engagement

When he joined Coles, he noticed there was a sign at every checkout counter which said: “We reserve the right to check your bags.”

He asked the cashier or the checkout supervisor, “If Mrs Smith comes through with a big trolley of groceries, $200 worth, and she’s got two kids, one under each arm, we’re going to ask her to open up her bag to see if she’s stolen a can of beans?”

He was appalled when he got an affirmative answer.

He instructed them to remove all of these signs in every store across the company and to stop this practice despite the protest of the Loss Prevention department, which he affectionately called “Sales Prevention”​. The signs were removed within 48 hours.

“Treat your customers as customers; don’t treat them like criminals,”​ said McLeod.

“Try and make sure you look after them, because every customer who comes through your door is somebody you want to come through again.

“If you treat your customers well, they’ll come back,” ​he said.

2. Dealing with dynamic retail

McLeod said retail is a dynamic business and if you stand still and don’t move or progress, it will be taken away.

“You can see that from the competition, such as how people like Alibaba, Tencent and Amazon are developing. There’s massive transition in technology that’s going to revolutionise how retail is going to prevail over the next few years,” ​he said.

Nonetheless, he said he has heard about the death of traditional retail since 1999, and it is still around.

“What’s important is you have to be relevant to the customer,” ​he said.

“As the CEO of Alibaba said, there is a symbiosis between online and offline now. You need to think about how you can make that more of a customer experience rather than just a transactional function.”

He emphasised there is definitely a role for bricks and mortar retailers but they have to adapt and change, embrace development and improve. Businesses need to glean and use data more effectively, understand their customers in greater detail and better personalise services, he said.

Four years ago, 80% of Chinese consumers were using cash. Now, 80% are using cashless transactions via WeChat or Alipay, he pointed out.

3. Avoiding the pitfall of complacency

McLeod said pitfalls exist within the culture of an organisation.

“If you have an organisation which is dynamic, never complacent, wants to improve and develop, and recognises the values there, then it’s a good place to be,” ​he said.

“Where there is risk is if you’ve got an organisation that has been successful for a number of years. With that success comes complacency, arrogance and even ego. They’re the things that get in the way.”

He said a retailer in that a position coming under threat would go into denial.

“They think if it worked for 20, 30 years, it will probably work for another 30. Therefore, they don’t move quickly enough,​” he said.

“One of the benefits we had was that our main competitor was complacent. They thought it couldn’t be done. They thought we couldn’t turn this thing around.

“By the time we got momentum, after 18 months, and they started to think, ‘Actually these guys might be a threat’, it was almost too late for them,” ​he said.

4. Vying with varying competition

McLeod pointed out that people do have different tastes, but customers around the world all want quality and value, albeit in different ways.

In Australia, some of the major competitors for Coles were the high street butcher, baker and greengrocer.

This meant Coles had to match their service and standards.

“We moved away from pre-packed and plastic bags to open shelves, fresh fish on ice, and so on,” ​he said.

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