When Companies Go Against The Grain
For most businesses keeping up with trends and important shifts in their sector is vital to remaining successful and maintaining their reputation. Falling behind the competition whether that be technologically or financially can be a death sentence for any business, however there are some companies that choose to break rank and do not always operate in the way as every other business in their field, for better or worse. We decided to take a look at what happens when companies go against the grain and the implications that follow.
Many businesses are currently preparing for Christmas and as such they are planning extensively in order to be as successful as possible. While preparing for the holiday shopping season Debenhams have introduced a new scheme for their suppliers that is different to the one offered by their competitors. The scheme is similar to one Debenhams introduced in 2013 that was dubbed the “Santa Tax”. The scheme requests a reduction of between 1pc and 2pc on bills in exchange for Debenhams paying the suppliers either 30 or 60 days earlier than they currently do. The Santa Tax of 2013 forced suppliers to cut their prices by at least 2pc just eight days before Christmas.
While Debenhams has stated that the scheme is optional suppliers have said they do feel pressured to agree to it in order to maintain their relationship with the brand. Unlike its rival, John Lewis, Debenhams has not signed up to the Government’s Prompt Payment Code which promotes a 30-day term as standard. By going against the grain in their decision to request this 1-2pc reduction Debenhams may feel some tension in the way their suppliers interact with them, especially when businesses such as Tesco have announced that they will reduce terms of payment for their smallest suppliers to only 14 days to help start a new age of transparency.
Another brand that has decided to do something completely different to its competitors is Morrisons who have decided to cut the cost of petrol and diesel by 7p per litre for their customers in order to help them with the costs of getting around in order to shop for Christmas. Customers who spend at least £40 at the supermarket checkout will pay £1 or less for every litre which is substantially lower than the average national price. Many other businesses are already reducing prices in order to compete and experts believe other supermarkets will follow suit soon with their own discounts.
While the AA have said that this move by Morrisons is positive for motorists in the run up to Christmas, there are also fears that these drops in petrol prices will lead Chancellor George Osborne to significantly raise fuel duty in the near future. However, rewarding customers for their loyalty to the Morrisons brand is certain to bring more people to the pumps meaning that Morrisons could be trend setters rather than simply following the crowd.
Following the crowd can frequently be beneficial for everyone, however last year’s Black Friday saw crowds swarm to discounts in shops causing widespread chaos. This year however, Asda have decided to do something different and not take part. While there is method to the madness of Black Friday, Asda have stated that they did not want to hold their customers “hostage” to one single day of sales and that fatigue had set in around the event. They have instead announced they aim to spread customer savings across their full range of products. The continued use of supermarket deals and sales rather than one concentrated day may be beneficial for Asda in the long run as it may lead to continued purchases rather than customers simply coming into the store only once, however they may also miss out on the spike in sales Black Friday brings.
Going against the grain can be a bold move for any business, and while the implications of doing so may only become clear with time, sometimes taking a risk and doing something different can be an incredible thing. It is logical that businesses change because customer needs are always changing. The central question that businesses should be asking in order to predict whether their decisions will be truly beneficial in the long run appears to be whether their choices will keep bringing the customer back.