Question: To Survive 2023 Does The N Brown plc Board Need Less Bean Counters At The Top Table?

As we draw closer towards the end of 2022 business and consumer chaos continues to reign in the UK.

Driven by a combination of issues from workers striking for better pay, the cost of living conundrum that not only impacts the domestic budget but also that of business, and the inevitable ongoing supply chain issues facing all retailers.

I strongly suspect that 2023 will shine an even brighter light on retail consolidation and in particular what was the traditional 'Home Shopping' (previously mail order) sector.

In this article I take a look at a company and sector I have first hand knowledge about.

I don't know about you but just like the festive ads we see from M&S, John Lewis, and others when I see the 'customer recruitment' adverts from several Home Shopping veterans like Freemans Grattans Group (FGH), Very Group, and N Brown I genuinely struggle to understand their USP as they all morph into the same brand and product message - it's as if they get an advertising template job lot from a creative company who then simply add a different logo and CTA at the end!!

N Brown plc?is a UK based traditional direct home shopping online and mail order company, back in the day it was the bellwether for the UK home shopping industry.

Following a slew of high profile senior departures from NBrown plc pre-Covid including the CFO, Buying Director, Customer Director (whatever that means) and CMO it seems that 'Steve Johnson' (CEO) and others on the board believe that replacing these key roles with people from the (non retail) airline industry Rachel Izzard (former CFO Aer Lingus) and wait for it...........'Sarah Walsh' as CEO for 'Retail' will turn things around.

Now I don't personally know any of these new appointments and at the time I genuinely wished them much success, the company clearly has plenty of talented boots on the ground but I have to think WTF is really going on in the mind of this leadership board?.

The key thing about N Brown (in my informed opinion) is that like others in the retail sector they have been, and still are led by analog financial service background leaders.

As such they've gone from being poised to seize the UK and international market opportunity for online shopping to a business that seems to be spending far too long in transformation triage. In the early part of the last decade they were way out in front of anyone else with a huge (spending) customer base, immense brand equity, proven logistics, and of course the plethora of eCommerce platforms we had implemented in record time.?

Clinging onto what was and slow incremental change in a dynamic digital world combined with continued consumer confusion around the USP is proving to be the real business threat.

"Due to rising inflation, a cost-of-living crisis has emerged. Many consumers have less money to spend on clothing and footwear, as they prioritise food and energy, both of which have risen in price". Fool.co.uk

Finally, competition in the clothing and footwear market has intensified in recent years. This is linked to the rise of online fast fashion. More traditional retailers, like N Brown, are seeing more competition from companies that are able to make the most of the fast fashion trend and offer cheaper products to consumers.

Unfortunately, and like many others in the industry this is a company that's had more than a decade of leaderless bewilderment, risk averse leadership, and without a doubt a lack of clear innovation direction and sound understanding of the tsunami of consumer behavioral change that's impacting retail businesses old and new alike.

As such they left the market wide open to numerous laggards and competitors (Shop Direct Group) and start-ups like ASOS, MissGuided and Boohoo.com - N Brown might argue that isn't their customer base, I would profoundly disagree.?

By 2001 I was a pivotal leader in changes to the operating model and as part of the team we grew an online business to ￡30m turnover in less than 18 months.

Of course this move had a huge impact on reducing call centre cost, and we were seen as the 'business to watch by the City where the share price was suitably raised, and closely watched by others in the retail sector looking for that nonexistent eCommerce 'silver bullet'..?

We even went out of our way to establish a 3rd party logistics company in order we leverage our IP and infrastructure for the burgeoning eCommerce sector. When announced (Zendor.com) also had a positive impact on the share price from city analyst that themselves were still trying to understand the ramifications on the sector for eCommerce - another example of a lost opportunity!

This was a company with the opportunity to dominate and own the online space, key to this was the need for bold constant reinvention, innovation, and brave visionary leadership who could see and invest in the future opportunity.?

Some believe N Brown shares have come under pressure in recent months due to macroeconomic headwinds out of its control.

As I write, the shares are trading for 24.40p. This is yet a further drop from it's ongoing 5 year decline.

Soaring?inflation, the rising cost of raw materials, as well as a supply chain crisis have all contributed - but I think the issues and downward trend started many years prior and just like the Covid impact sorted out the retail chaff.

In summary I'm not sure if N Brown in it's current guise and leadership still has another 12 months.

Here's why;

When we embarked on the eCommerce strategy for N Brown our most significant advantage and key goal was to migrate as many of the then 2m monthly active customers into the online channels as quickly and efficiently as possible.

Today eCommerce represents over 90%+ of total sales but simply leaning heavier into an operating channel does not make a business, as both the decline in revenues and subsequent drop in share price can evidence.?Marketwatch

For a business that was often seen as the home shopping bellwether with all the infrastructure, talent, customers, and financial resource to enable it to move forward as a retail behemoth it was superseded by younger and more dynamic local business competitors who had a key focus on changes in consumer behaviour and a keen eye for product?

When I left N Brown and set up my consultancy one of my first key clients was 'Shop Direct Group' (SDG) now The Very Group. At the time SDG were going through their own significant period of decline and reinvention, and without going into the history and detail (Littlewoods anyone) they had to transition from the traditional agency catalogue model to something more relevant to the 21st Century - something I think we can all agree they seem to have achieved.

Experience from my time working there, the culture of the company as it was, and the subsequent changes in leadership over the years is that despite the internalised view of the need for change and transformation it's simply a matter of reality that the lack of speed and dynamics of the transformation required for N Brown to reimagine itself was/is always far too iterative around protecting the legacy model of 'finance model first' over customer and product?

Unfortunately the bean counters always chose the safe and incremental route, so rather than fixing the N Brown roof whilst the sun was shining they elected to use the medium to reduce cost as the primary strategy.

We saw some shoots of innovative consumer and product aligned 'brand' thinking with the likes of 'Viva La Diva' and 'SimplyBe' but none really gained the internal support needed to move the digital dial forward.

If you look at the makeup of the board you will struggle to find anyone with a contemporary international online retail, product, or marketing pedigree - the majority are bean counters by profession - more of the same but with a tad more incremental change thrown in to keep the city happy?.?

Its an ineffectual analog board and non exec team acting as an echo chamber operating in a socially savvy digital world!!!

SUMMARY: The N Brown business model is/was predicated upon all it's customers operating a credit account, which in turn has meant that the key drivers of the business were as a result of it's financial products, and not so much its sale of physical products to consumers.

Fintech has blown that model apart with the likes of 'Klarna' providing all kinds of retailers and consumers the opportunity to 'spread the cost' - instantly!!!.

If this board don't wake up and smell the digital coffee everyone else is drinking my view is that the macroeconomic headwinds will will drive this freefall at a much faster rate then they have witnessed before;

• Work out where you can add value to today's customer and play to your inherent strengths for?home shopping?- reestablish the?'Why'.
• Bring in people who understand transformation - agree a plan and get out of the way.
• Stop juggling trading facia's and the reliance on the financially driven 'account model' - work out how to 'leverage' what you have to build a bright new future.

This is real, this is happening now, so, N Brown plc what's your plan to rethink and save this 100+ year old business,along with its people and related supply chain?