Heart-shaped chocolates bulge from shelves, chefs lovingly prepare romantic-themed menus, and bar staff perfect their mix for Cupid’s cocktail. As Valentine's Day approaches, the retail and hospitality sectors are bustling with activity. Yet, amid these preparations, the impact of recent cost challenges looms large. It raises the question, how many will come up smelling of roses, and how many will be left seeing red?
Steve Goodburn is a Director at mdj2, the consultancy specialising in solving critical
challenges in the retail, trade, and hospitality sectors. He observes that those who maintain a customer-centric approach to productivity effectively walk their core customers hand-in- hand to the till, ensuring that every step of their experience aligns with their needs and expectations.
“We’ve seen too many businesses fail by cutting costs without considering the customer impact,” remarks Steve. “The key to not weakening your proposition while taking costs out is to only make reductions that the customer doesn’t notice.”
A customer-centric approach to productivity
While cost reduction is the intended outcome, adopting a customer-centric approach to productivity involves getting the right balance between both efficiency and effectiveness.
Efficiency means streamlining to find the simplest, most cost-effective methods. Although this often results in labour-savings, it’s not about indiscriminate cuts. Changes might involve reducing or redefining roles, reorganising reporting structures, or evolving systems and processes.
These actions are strategic, not merely blanket cost-cutting measures. The effectiveness
component ensures that any changes continue to meet customer needs. Both aspects must work in tandem to ensure that efforts to cut costs do not compromise service and sales.
The pitfalls of narrow cost-cutting
“Every change needs to benefit your core customer – and ideally, your colleagues as well,” says Steve. “Maintaining this focus is crucial, but you can lose sight of it, especially when under pressure to cut costs.”
Indiscriminate cost-cutting can erode an organisation’s value proposition.
“Without understanding customer reactions, reducing costs can initiate a ‘doom loop’. Ultimately, you can cut away at the very heart of your offer, until you go out of business.”
Putting efficiency and effectiveness at the heart of productivity
‘Will my core customers notice this change, and if they do, will it be a good or bad thing?’
This question is invaluable because it reflects the fundamental LEAN principle that customers identify what’s valuable. “If it isn’t valuable to them, it’s waste,” says Steve.
Efficiency and effectiveness are about waging a relentless war on waste, which means
eliminating expenses that do not add value and refining methods to achieve more with less. Identifying the most effective changes requires a deep understanding of operational realities.
An outside-in perspective can be helpful in this context, enabling decision-makers to see which changes will genuinely benefit their operation and enhance customer value.
Grounding your decision-making in your reality
“A big chunk of effective management hinges on making informed choices that drive up standards and sales,” notes Steve. He highlights the learning from many projects that often the most insightful productivity answers come from those in more junior ranks - those who are closest to the customer and the day-to-day work.
Steve, who previously led productivity departments for two major retailers before becoming a consultant, has since helped many leaders better understand the realities of what’s really happening within their teams and processes. Through comprehensive interviews, measurements, and analysis, mdj2, in collaboration with its specialist labour productivity
partner ReThink, provides a clearer picture of operational realities.
Significant savings from consistent experience
“The resulting savings can be significant, with seven figures secured for our most recent hospitality client,” says Steve. “This project initially aimed to boost field team effectiveness, rather than focusing on cost reduction”.
The organisation faced a customer experience challenge. Operating multiple consumer brands, each with its own identity, the goal was to enhance consistency in customer experience across these brands without compromising their unique personalities or standards.
This required distinguishing which operational elements were universally mandatory and which were discretionary, allowing brands the flexibility to adapt to local customer needs.
“Our analysis uncovered several areas for improvement, including excessive communications and travel, confused accountabilities, and inconsistencies in compliance, audit, and IT,” continues Steve.
By implementing these recommendations, the business will not only improve operational effectiveness and deliver better, more consistent customer outcomes but also achieve a
seven-figure cost saving.
The heart of productivity in consumer-centric sectors
Getting to the heart of productivity in sectors reliant on their people to deliver and
differentiate their customer offering is indeed a labour of love. It requires a commitment to place customer satisfaction at the core of every leadership decision. But, as anyone who has ever nurtured a strong personal relationship knows, the more attention you pay to the things that truly matter, the more rewarding the relationship becomes. As businesses finesse their preparations for Valentine's Day, the most astute will recognise an opportunity. They will reinforce that showing true love in business means continuously putting their customers at the heart of every decision.
At mdj2, we solve critical challenges in the retail, trade, and hospitality sectors to drive change, efficiency, and growth. Leaders in these sectors choose to partner with us to harness their opportunities and overcome their greatest pain points — everything from proposition and process to productivity and people. This year we’re celebrating 20 years of delivering real and measurable outcomes because to us, yours is always more than just another project. If you’re looking for a partner this Valentine’s Day who cares about you and your next productivity project – then we’d love to chat to you.
Contact us at: +44 (0)1329 833 291 / info@mdj2.co.uk / www.mdj2.co.uk
For those in the retail, trade, and hospitality sectors, one thing is certain in 2025: the year of the snake will have a sharp bite. Rising costs, falling confidence, and stagnant demand are challenging enough, but the end of this quarter will also see the impacts of rising employer National Insurance Contributions and increases to the National Living Wage hit – a significant blow to labour-hungry sectors that rely on their people to deliver and differentiate their customer offer.
“Whether small or supersized, most businesses have now calculated the eye-watering impact these additional costs are going to have on their P&L and, in this subdued market,
are facing into an uncomfortable truth – the year ahead is likely to be one of tough choices,” says Andy Newman from mdj2, the consultancy that specialises in solving critical challenges in the retail, trade, and hospitality industries.
Drastic measures: Respond don’t react
In response, many industry leaders are reportedly planning drastic measures; the media is full of headlines about companies drawing up plans to slash staff, squeeze suppliers, push prices, cut capex, and axe activities. There’s certainly no shortage of reports suggesting extensive cost-cutting strategies across the board.
It’s hardly a surprise that 70% of the Chief Financial Officers recently interviewed by the British Retail Consortium report to feeling pessimistic about the year ahead.
Yet cutting costs isn’t the sole answer.
“The trouble with this approach is it’s a death spiral,” says mdj2’s John Alexander. “As soon as you lose staff, you lose momentum. Those colleagues you cut tend not to be idle, so when you take them out, your business does less – it’s less productive, less innovative.”
Echoing this sentiment, mdj2’s founder, Neil Munz-Jones warns, “Cost cutting alone isn’t going to solve this. While cutting colleagues and capex may help meet short term cash flow targets, it won’t sustain sales growth. When you indiscriminately slash, you end up cutting the wrong things.”
Beyond cost cutting: The path to sustained growth
So, what’s the answer? Neil believes that this year’s winners will be those who effectively juggle cost reductions with strategic investments to grow their way out. This balancing act will require investing in the now to achieve sales growth targets, while also engaging in longer-term projects for future success.
“Despite the tough environment, someone out there will be making these investments. The pace of change is relentlessly accelerating, raising the bar each year. You can tread water for a while, but eventually, you will run out of energy and sink if you don’t move forward,” says Neil.
The critical question then is where to cut and where to invest to manage this year’s looming shortfall.
Clarity: Focus on proposition and productivity
“If I had to simplify it, I’d say focus on two things,” says mdj2 Director, Steve Goodburn, “Proposition and Productivity – in that order”.
“Being crystal clear on your proposition is the place to start,” continues Steve, emphasising the importance of ensuring everyone in the organisation has clarity on who you want to appeal to and how you distinguish yourself from the competition.
“Once everyone is clear on the proposition, it’s far easier to make strategic decisions about what to cut and where to invest,” adds Steve. In an environment where many are heavily focused on cost reduction, Steve notes that those who come out on top don’t do so at the expense of productivity.
From doom to bloom: Strategies that work
“When you look across the retail landscape, you’ve got winners and losers. The losers get caught in a doom loop; the winners reinvent themselves to continue to bloom. It’s a trend I see accelerating,” says Steve.
This is where the twin strategies of proposition and productivity come into play. “Firstly, it’s having absolute clarity on your core customer and proposition, then effectively designing your organisation to deliver it in the most efficient way.”
Ready to outsmart the Year of the Snake and sidestep its sharp bite? If refining your proposition, enhancing productivity, or balancing efficiency with effectiveness is on your agenda, we’re here to help. Connect with us today, we promise, we don’t bite!
info@mdj2.co.uk / +44 (0)1329 833 291 / www.mdj2.co.uk
At mdj2, we solve critical challenges in the retail, trade, and hospitality sectors to drive change, efficiency, and growth. Leaders in these sectors partner with us to harness their opportunities and overcome their greatest pain points — everything from proposition and process to productivity and people. This year we’re celebrating 20 years of delivering real and measurable outcomes because to us, yours is always more than just another project.