The retail sector is notoriously unpredictable, with retailers often facing a turbulent and uncertain future. Just because you’re a winner today, doesn’t mean the situation can’t change tomorrow.
Challenges are inevitable, so how do you ensure you not only survive but also thrive in times of constant change? The answer lies in purpose.
As humans we are led by purpose, it’s the guide to the way we think, feel, act, say and do.
And in organisations it’s the common thread that connects everything within it to a higher reason for being - providing clarity for why the business exists and bringing consistency into how it operates, serves its customers and solves challenges.
“Without a clear purpose, you are making choices in a vacuum.”
The objective of a clear purpose within an organisation has been well documented - but in a VUCA (volatile, uncertain, complex, ambiguous) retail world, how has purpose, or lack of, played a role in the winners and losers of retail?
When a company doesn’t have a clear ‘why’ guiding it forward, it can lead to uncertainty and lack of direction for employees, and misaligned messages to consumers. Businesses become more reactive, and they often waste time discussing how to best respond to challenges rather than having a proactive approach.
When all hope seems lost, bring it back to basics
Starbucks was a successful coffee company, but they didn’t actually have a clear purpose guiding them at the start. Riding on the back of their early rapid growth, they spent a few years entering the entertainment industry without a clear reason why, causing their core coffee business to suffer. In 2008, sales had dramatically fallen and Starbucks was on the brink of collapse.
Employees were disconnected from the Starbucks brand and had lost sight of how to be effective brand ambassadors. They’d lost the sense of who Starbucks was, why it existed as a business and their individual role within the organisation. This lack of clarity flowed throughout the business, and ultimately impacted the consumer experience.
Starbucks realised they had to rebuild what they stood for in the world. Shuttering their entertainment business, Starbucks invested in discovering their purpose. They wanted to become their consumers’ favourite part of the day, and built their purpose on: “To inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time.”
This gave strategic direction for employees to focus and reconnect with customers around, giving them motivation and inspiration to create same-store experiences, and drive sales.
And 15 years later, Starbucks is as strong as ever. A market leader in the industry and a staple in consumers' everyday lives.
Whilst it’s working now, prepare for the future
The natural power of purpose means it has a strong influence on the performance of an organisation. But you don’t get returns without investment and in an unpredictable sector, purpose provides stability and guidance for the future. It’s a strategic decision making tool.
Tesco currently has the largest share in the UK supermarket sector. They’re number 1 and they know it. But, front and centre of their 2022 annual report was a refreshed, new purpose. With such a strong commercial position, why would they change their purpose when things are going well?
Tesco recognise the power and importance of a serving purpose, which will help drive their growth and guide their decision making.
From “serving shoppers a little bit better every day”, Tesco has a new evolved purpose ‘serving our customers, communities and planet a little bit better every day’. It’s their anchor to ‘building a stronger and more sustainable business’. Tesco stated “By acknowledging our communities and the planet within our purpose, we ensure they are factored into every decision we make”
The purpose ticks all the boxes for guiding how Tesco needs to show up to stay competitive in the future. It connects to Tesco’s commercial and carbon goals, and helps them deliver on some big consumer needs around sustainability and community values. A company living out its purpose is a way for consumers to connect deeply, and for that company to build stronger brand loyalty. It is easier for customers to align themselves with a brand with a clear purpose.
A clear purpose gives their employees a sense of ownership into why Tesco exists, helping them all individually contribute to push the company forward in a way which is authentic to the organisation. It is a clear guide into how they will respond to future challenges as they ideate and problem-solve through with focused direction.
We are all human, and we all need purpose
The retail industry can often seem like a constant uphill battle. But what businesses and consumers need to even out the path ahead is a strong purpose. Not only is It human nature to operate and align with a purpose, but it offers clear strategic direction and demonstrable commercial advantage.
“42% of companies that were not considered “purpose- driven” showed a drop in revenue in a calendar year. On the other side, 85% of purpose-led companies showed positive growth.”*
One of our clients is proof that now is the right time to make such a worthwhile investment. We collaborated with them to discover their purpose as the platform to unify the organisation and realise their growth ambitions. We focused on building their purpose from within by engaging with employees and the organisation’s values, simultaneously challenging and stretching them towards their ambition. As everyone galvanises around their new purpose, our client has already seen a shift within their organisation to give them a competitive advantage as decisions become easier, and everyone’s efforts are focussed towards a common goal.
In times of crisis, it’s common to want to solve for the short-term, but future-proofing your organisation means thinking beyond the immediate challenge at hand. By investing in a purpose which is felt and lived by all your people, you will equip your organisation to weather the storms of today and find authentic ways to turn challenges into opportunities for sustainable growth, relevance and impact for tomorrow.
Want to make progress with your purpose? Let's talk.
*McLeod and More. The Noble Purpose Business