10 things you shouldn’t do when expanding abroad

July 5, 2014

Published originally on Real Business

4 July 2014 by Peter Higgins.

As chairman of Cath Kidston, Peter Higgins helped grow the retailer into a renowned global success. But here he reveals it was at shirtmaker Charles Tyrwhitt that he learnt some of his most painful and instructive lessons…

1. Don’t launch in a country just as it enters the worst depression in its history

Back in 1996, when Charles Tyrwhitt was the 26th largest shirt retailer in Britain, founder Nick Wheeler and I decided on World Domination of the shirt market. Being former strategic management consultants, we had a plan so cunning that even Blackadder himself would have swooned.

It went like this: which country has lots of money, does mail order and loves British kit? America… er, no Japan. So Charles Tyrwhitt Japan was launched in November 1996 – just as the Nikkei collapsed.

2. Don’t completely ignore the experts

Recognising we needed help on the ground we had a simple choice: do we use either a) the best mail order consultant in Japan or b) an Irish friend of a friend. Naturally, we opted for the latter – and then wondered why we lost £100,000 in six months.

3. Don’t change your entire supply chain just to go into a new market

We could not understand such an unmitigated disaster: our shirts were great quality, the prices unbeatable. It was just the Japanese – they were too damn short for our shirts! If in a new market they don’t like what you produce, it’s usually a hint: get out.

4. If you have to do business in France, ensure your French expert is not Belgian

Undaunted, we reverted back to our cunning plan, this time choosing somewhere a little closer to home: France. OK, so Lands’ End had just withdrawn their Gallic operation, but what did they know? Quite a lot as it turned out – media and list costs were extortionate and the delivery system abysmal.

However, this time we hired a French mail order expert. Problem solved? Not exactly. A quarter of our parcels failed to arrive in Paris. Eventually, a group of extremely well dressed Parisian postmen were arrested. And then we discovered our French expert was actually Belgian. Another £100,000 down the drain – but, boy, were we learning fast!

5. Do not repeat errors…

With remarkable self-confidence/utter stupidity, we dusted off the map and entered the German market. When a reputable German list manager offered me 20,000 names of ‘35-55 year-old wealthy businessmen who have bought shirts for more than 100 Deutschemarks each, by mail order,’

I thought I was onto a winner. The resulting 0.1 per cent response rate made me realise he may have been a tad economical with the truth. We ended up losing £1m in four years on customer acquisition.

6. …or mention the war in Germany

Our German brochure was almost identical to our UK one, though we’d cleverly left extra space for German copy – their words are roughly a third longer than ours. It was only when the brochure was printed that it dawned on us that perhaps the Spitfire cufflinks on the front cover might be inappropriate for a German audience. However, the Germans really do have a sense of humour. We sold 60 pairs in that one book – a lot for us in those days.

7. Do not play a foreign market

Amazingly, the German business started to take off. Nick and I had a strong hunch, based on our expert knowledge of foreign markets, that the Deutschemark was about to strengthen. Our 1m DMs would soon be worth £300,000 not £250,000 and then we’d convert them back to sterling. However, sterling promptly went on a bull run that lasted pretty much until the day we finally converted our Deutschemarks; we got £225,000 in the end. Which is probably why we’re not FEX dealers.

8. See point five… and pay attention this time

Around 2003, we decided to launch in the US. With a team of brilliant local experts? Nope. By ourselves, yet again. (I finally learned my lesson taking Cath Kidston into Japan, once we’d found the right Japanese partner).

9. When opening retail stores in the US, avoid locations where customers are about to lose their jobs

At first we had some moderate success in the US, but then we opened two stores in New York – one on the ground floor of the Bear Stearns building, the other at the Lehman Bros head office. It could have been worse; at least the deal on the Merrill Lynch building fell through.

10. Don’t go abroad until you’re sure you’ve squeezed everything out of your UK business

Eventually we managed to make the multichannel model work in the US and Charles Tyrwhitt now has a good business in Germany too. But my biggest tip on international expansion, which I took on to Cath Kidston and Joe Browns, is deciding what NOT to do.

So when someone at a board meeting asks ‘Should we do international?’ say no the first nine times. On the tenth, ring an expert, make a detailed plan and file it at the bottom of your in-tray – until you run out of ideas in the UK. If you think it’s hard here, just wait until you get abroad.

Extracted from ‘Going Global: 30 Years 30 Insights’ by Piper, the leading specialist investor in consumer brands.

Peter Higgins and Nick Wheeler were management consultants at Bain & Company, before Higgins joined Wheeler at Charles Tyrwhitt in 1990. He stepped down as CEO in 2005 and became chairman at Cath Kidston, taking its profits from £250,000 to £12.5m during his five years at the home furnishings brand. He is currently a director at Charles Tyrwhitt, fashion etailer Joe Browns and German clothing company Schneider.

New EU cookie law takes the biscuit

April 25, 2012

This morning, an estimated 90% of websites across the EU became illegal under EU law, thanks to an incredibly dumb piece of legislation requiring all websites to ask permission from visitors to store information about their visit on their computers in the form of a cookie. Even more incredible – the law also applies to every single website in the world that can be viewed from within an EU country. So that’s just about every single website on the internet – around 644 million sites at the last count – outlawed at a stroke. Here’s a short video from Silktide.com that explains the main features – and failings – of this bodged legislation.

The law was intended to protect user privacy, but in process of achieving this it has effectively dealt a hammer blow to businesses. Simply put, according to the IT guys virtually every website uses cookies. But to find out whether yours does or not, you’ll probably need to hire a web developer, who will then charge you to add an intrusive pop-up on your webpage which blocks the visitor from viewing your site until they have clicked on a link to explicitly give their permission for the use of any cookies that your site uses, or may use in the future.

So you have the expense of the additional web development work, the result of which is to erect a barrier across the front of your web presence that prevents the casual browser delving further into your site. All that money you spent on SEO? well that’s just toast now because the casual visitor arriving from a search engine will be prevented from seeing that content. Web browsers will once again be plagued by pop-ups and check boxes preventing easy traversing of data.

The effects on site traffic will be dramatic: It’s been reported that traffic on The Information Commissioner’s Office website dropped a staggering 90% when they implemented their EU compliant site.

Oh and did I mention? Failure to comply will result in a £500,000 fine. Yes, you did read that right.

It is difficult to imagine a more ill-conceived, unworkable and downright stupid law. If you want to have your say, you can sign the UK government petition to help get this ridiculous law reviewed

The (further) perils of Twitter for business

April 18, 2012

Very interesting article this morning on Real Business concerning the legal implications of Twitter use. In particular, what it could mean for users who Tweet about their employer.

We all know that you should be extremely careful about what you say online. One case highlighted in the article is of a civil servant who found herself the subject of an acutely embarrassing (and not exactly career-enhancing) expose in The Independent.

A member of staff at the Department of Transport had a disclaimer in her Twitter profile stating that the tweets were personal opinions and were not representative of her employer. This disclaimer did not stop The Independent from publishing her tweets (about her job, her feelings towards work and wider political issues such as describing a course leader as “mental” and posting links to tweets attacking government “spin” and Whitehall waste) in an article about her employer. She complained to the Press Complaints Commission, but they found that because tweets are public property this was not an invasion of her privacy.

The article is well worth a read – you can view it in its entirety here Five more legal issues to consider when using Twitter

Real Business – The secret to a successful brand: Keep it nurtured

April 3, 2012

Which is more likely to succeed: a great idea left to languish or a good idea skilfully and closely developed over time? The answer is that building a durable and profitable brand requires an exact blend of both nature and nurture, argues Robin Rowland, CEO of YO! Sushi in a great article in Real Business

Advertising agencies tell us that the character and tone of a brand, how it speaks to its audience and what it means to them, is all about first impressions.

This I do not necessarily dispute. Nonetheless, for those of us running a business in the long term and for a brand to succeed beyond the great initial idea, it must be nurtured over time. And this is all about the great people behind it. 

What happens when the advertising does not deliver in reality? A brand is only ever as good as the customer’s last experience and for that experience to "wow" every time the person delivering the brand has to be completely engaged in it. 

If you have not been able to fire up your staff with the enthusiasm, brand knowledge and sheer magic of it all, the brand will not succeed in the real world. This is felt particularly keenly in the hospitality business, where we rely upon our customer facing people to communicate the brand values that underpin our business.

People are also the biggest potential variable within the company. With different locations, people, managers and a higher-than-average rate of staff turnover in the restaurant sector, ensuring a consistent service and brand is the main challenge.

Communicating with every member of the team so they feel part of the whole is essential. There is little point carefully penning brand values, thoughts and ideas, developing them through focus groups and with expert consultancies, if they never make it out of the office and on to the floor.

It is often said that entrepreneurs who start a business with an innovative idea may not always be the best people to take the business to the next stage. And while most people focus on the need for different management skills, when you operate a big brand it is just as important to secure "brand-nurturing" skills.

This is about the ability to grow a brand beyond the inspirational first stage while at the same time preserving the essence and spirit which made it a great idea in the first place. 

This doesn’t stop just because the company becomes bigger and more successful. As brands grow, the nurturing must continue. An essential part of Howard Schultz’s remarkable turnaround at Starbucks was his focus on creating brand value by supporting those working in the business to deliver every detail of it.

His core philosophy is to "take care of our associates so they will take care of the guests…executing even the smallest detail to perfection is the difference between a great guest experience and a failure."

As a restaurateur for virtually my entire career, perhaps it is easier for me to make the connection between people and brand, but I believe that is a sound principle to follow whatever industry you are in. When it comes to fostering the brand it is about making sure that everything you do is real, genuine, believable and distinctive, from the boardroom to the grass roots.

There’s little doubt that nature triumphed with the acorn, but try to rest in its shade on a sunny day and you’ll really appreciate the importance of nurture.

Robin Rowland is CEO of YO! Sushi, which in 2012 celebrates 15 years of serving Japan’s most famous delicacy in the UK.

Real Business – The secret to a successful brand: Keep it nurtured

Cutting through the hype of social media

March 7, 2012

The use of social media by brands is still one of the hottest topics in PR. However there is still a huge amount of debate about why and how companies should get involved. Some excellent research and a very nifty presentation from Content & Motion aims to dispel the myths and help companies make up their own minds.

Multitasking: More Is Less says the WSJ

July 26, 2011

There’s growing evidence that multitasking can be harmful, and businesses need to re-examine goals for workers, writes Ruth Mantell in the Wall Street Journal

“With the ubiquity of mobile devices and other communications technology, many workers are expected to multitask, with some employees taking pride in their perceived ability to switch between complex tasks. But all this multitasking is putting workers, as well as their employers, at risk, experts say.

"It’s unequivocally the case that workers who are doing multiple things at one time are doing them poorly," says Clifford Nass, director of the Communication Between Humans and Interactive Media Lab at Stanford University. "The human brain just really isn’t built to switch rapidly from one task to another. Workers who constantly multitask are hurting their ability to get work done, even when they are not multitasking. People become much more distracted, can’t manage their memory very well."

Companies that demand multitasking may be damaging productivity.

"It would be a total tragedy if when we have so much potential to make the work force more intelligent, we are actually making the work force dumber," Mr. Nass says. "Companies that are demanding that workers multitask might not only be hurting their productivity, but may be making the workforce worse thinkers."

In a 2009 study, Mr. Nass and other researchers found that heavy media multitaskers are "more susceptible to interference from irrelevant environmental stimuli," and were worse at switching between tasks, likely because of their lesser ability to ignore irrelevant information.

Some companies are beginning to worry about the impact of multitasking, Mr. Nass says.

"Slowly you are starting to see companies starting to change from everything having to be answered immediately," Mr. Nass says.

From an employer’s point of view, one of the most worrying effects may be the trouble that chronic multitaskers have focusing.

"They are seduced by irrelevancy. They are constantly distracting themselves. They will look for distraction even when no such distraction exists," Mr. Nass says. "We are creating a culture that encourages workers to be less effective, handle information poorly and have a tougher time in social relationships. What does the work force look like where people can’t pay attention, where people can’t think deeply and where people lack emotional skills? It’s a pretty scary world."

Troubles can start when individuals try to work simultaneously on more than one complex task. Complex tasks require some reflection or mindfulness, says Earl Miller, a professor of neuroscience at the Massachusetts Institute of Technology.

"Anything that involves upgrading information requires consciousness, and that’s where the limited bandwidth comes in," says Mr. Miller.

Complex multitasking can mean missing out on details.

"The best way to get things properly stored in long-term memory is to pay close attention to them, and if you are overtaxing your short-term memory, you are going to be missing things and they won’t appear in long-term memory because they won’t be stored in the first place," Mr. Miller says.

When workers do complex multitasking they are often in a state of stress, and unable to recognize opportunities and solutions, says Linda Stone, a former senior high-tech executive based in Seattle.

"There could be an answer right in front of you that doesn’t look like what you think it should look like," Ms. Stone says. "In a stressed state, we often miss things that are right in front of us."

Multitaskers think they are much more successful at completing tasks than they actually are, experts say. Ms. Stone uses the phrase "continuous partial attention" to describe complex multitasking.

"We may believe that when we’re driving and talking on a cellphone, we are aware of everything around us," Ms. Stone says. "The truth is, we’re often missing quite a bit."

It can be tough to resist the allure of an unread email or unresponded-to instant message, but the reward is completing tasks at a higher quality level. Here are tips from the experts about how to stop, or at least curb, multitasking:

Strategize: "Plan ahead and remove the possibility of distraction. If there are [fewer] things tempting you, it’s easier to focus on the job at hand," says Mr. Miller.

Work on a single task for at least 20 minutes: "When you start to do something, do it and nothing else for 20 minutes. This trains you to focus, to think deeply. It trains you not to think that distraction is a positive, and it teaches your brain to be able to focus," Mr. Nass says.

Make face time sacred: "It’s very, very important for the human brain to really spend some time talking to one person, face-to-face, without any technological distraction," Mr. Nass says”

Ruth Mantell, On Sunday 10 July 2011, 11:22 SGT

Multitasking: More Is Less – Yahoo! Singapore Finance

"Social media is useless" says Telegraph – but where’s the evidence?

October 21, 2010

The Daily Telegraph recently published an article in which it claimed that the majority of small businesses found social media of no use to their business under the heading “Small Firms: Social media is useless”

A survey conducted by the Forum of Private Business (FPB) found that 52pc of respondents who use social media sites such as LinkedIn, Facebook or Twitter, regard them as ‘not useful’ or ‘useless’ to their businesses.

OK – 52% is technically a majority, but only just. What about the 48% of businesses that find social media tools useful? That’s a lot of businesses; and a lot of potential customers just waiting to be engaged.

FPB spokesman Phil McCabe said: “It’s clear that, while a lot of our members are certainly trying out social media for their businesses, many remain unconvinced of its benefits.”

That maybe true. But perhaps that has just as much to do with how effectively they’re using it, as it does the usefulness of the media itself. The same report goes on to state that nearly 20% of respondents “Didn’t have a website.” Would the Telegraph argue that this proves the internet is not a useful business tool? Social media is not the magic silver bullet of marketing, but it is a useful tool for some businesses to be able to engage with their customers.

When choosing to use social media, you should follow exactly the same evaluation criteria as you would use for any other marketing tactic: determine the target audience, the ability of your chosen medium to reach them and what you hope to achieve as a result. There’s nothing to say you have to use social media, any more than there is a rule that you have to use advertising, fly-posting or cold-calling in your marketing strategy. All these techniques will work in the right circumstances. But only you can decide whether they are appropriate for your aims.

Small firms: "Social media is useless" – Telegraph