BONDS BOSS SAYS BUSINESS MUST ADAPT TO SURVIVE
26 May 2011,
CONTROVERSIAL Pacific Brands CEO Sue Morphet (pictured) says manufacturers and retailers must adapt to survive in the new economy.
Morphet led a business lunch in Brisbane today presented by the Australian Institute of Company Directors to discuss the onset on online shopping and the need for innovation in the industry.
She says the retail industry, business world and entire world is changing, but from that change comes opportunities that are both ‘exciting and encouraging’.
“The business world is changing and we have to adapt to survive, I don’t know why we’re so concerned though, because there has always been change. Adaptation should be etched into our commercial DNA,” she says.
“What’s different now though, is the velocity of change. The velocity of change today, means that reaction time has been cut to months and often weeks. That means, that if you’re an innovator, the competition is breathing down your neck, forcing you to innovate faster, more often and in ways, which are hard to copy.
“This velocity of change is breathtaking, we have to stay one step ahead and the world is moving quickly.”
Adapt or perish
Morphet began her stint as CEO of Pacific Brands, which includes Bonds, Berlei and Sheridan. In January 2008 the company shocked the wider Australian community by sacking 1850 workers and closing seven factories in New South Wales, Victoria and Queensland. Today the top 150 ASX company has a workforce of more than 6000 and close to $2 billion in sales annually.
She says Pacific Brands is operating in a world that required them to re-shape or be left behind.
“Two years ago, at Pacific Brands, we had reached a point where complexity had overwhelmed our capabilities, the complexity of a changing market, the complexity of our brands and products and the complexities our internal systems and processes,” she says.
“We were a brand company that wasn’t flexible and we couldn’t deal with changing circumstances and for a brand company, that is a recipe for a slow death.
“The effect of that complexity and a changing market was fairly public for us. We had to reshape our company to survive in a changing market and one of the major steps we took was to cease local manufacturing. It was something all our major competitors had done years, and in some decades before and we’d simply lost our competitive advantage.
“We were the last bastion of local mass produced clothing in Australia so it was a major change for our local industry. We were swimming against the tide and subsidising our Australian manufacturers with the cost savings from offshore and other profits we had. It was a tough decision, but the right one for our company.”
In addition, Morphet says the complexity of the brands and products was strangling the company’s resources and creativity.
“There were so many brands that weren’t pulling their weight and we needed to be competitive and put our resources, both people and systems and money into the brands that were going to make a difference to our company and those brands were the likes of Bonds, Sheridan, King Gee, Hard Yakka,” she says.
“We had to clean up our house and focus our resources where we needed them, so we cut the non core brands. Only the best in the market would survive and we had to focus on what brands would be the best and be the future wealth of the company.
“We can all see competitors coming in and if we’re not good enough to beat them locally, then we will go.”
Morphet says the company needs to take advantage of new challenges and opportunities and right now, the most disruptive change is online retailing.
“Online shopping has been around for more than a decade, but we’ve seen incredible growth over the last few years, although we still have an immature market, compared to the rest of the world,” she says.
“There will be online and there will be bricks and mortar, we’re not going to lose shopping centres, because people shop for experience as well as to purchase goods. The real impact of online is that we use it to explore and research our purchases, so the customer has been right, but now the customer has all the power.”
Morphet believes that in order for the company to justify the value of its brands, its products have to be innovative and high quality.
“We also have to be engaging in the needs, wants and emotions of the shopping public that we’re looking to target,” she says.
“Consumers have to feel they need your goods, you have to achieve this, otherwise, they’ll just feel like price point is good enough to base their decisions on, so the online revolution is forcing us to re-evaluate what we do.
“I think the solution for us is that we have to think about the way we retail, the way we pitch our brands and the way we communicate with our customers and satisfy them. We need to reconsider how we talk to our consumers in a contemporary way.”