Thursday, March 18, 2010

Taking Lots of Small Steps

Shoe department at Gallery Lafayette Paris 2009

I have just read the article by columnist Chanticleer on page 64 of the Australian Financial Review (Thursday 18 March 2010) talking about the strong results of the Australian specialist high-end retailer David Jones Limited – which is the Australian woman’s little slice of Paris.

David Jones Limited – or as it affectionately known in Australia - “DJs” – has sparked a minor rally on the Australian Stock Exchange by returning a global best practice 40 percent gross margin on its sales revenue of Australian dollar 1.086 billion in revenue for the half year to December 2009.  It will pay an interim dividend of 12 cents on May 3rd.  Naturally this sparked a rally on its shares – which flowed over into the general market.

This is an awesome result in the context of the Global Financial Crisis.  I wonder how many global fashion retailers have achieved similar results over the last 6 months?  The general reporting suggests that the market for discretionary fashion goods has been stagnant.

How did Chief Executive Officer Mark McInnes and Chief Financial Officer Stephen Goddard achieve this outcome? 

As Chanticleer points out; by taking lots of small steps. 

McInnes and Goddard achieved this result by focussing on the small things:

  • ·      By constant attention to removing costs (through 58 separate cost reduction projects they reduced cost by 0.3 % in the 6 months).
  • ·      Persistent striving to better supplier relationships (including a line by line review of their day to day banking arrangements).

Through this focus on incremental small steps – they have achieved a global  best practice result. 
Chanticleer adds that DJ’s has never lost its focus on its core value proposition – to appeal to women and to attracting them back for repeat purchases – rather than on new customer acquisition.

Whatever your goal, you can achieve great outcomes by focusing on the details and taking lots of small steps.

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