Ebusiness Despatches: Know your partners, know your customers, know your staff - retail lessons

Ebusiness has accelerated change in the retail world and produced new winners. But who will win the upcoming battles? Rene Carayol reports from the frontline...

Some of you will know I'm excited by what technology is doing for the world of retail. Of course, most people know about the rise of web-based retailers, or e-tailers. In some cases they have become defining icons of the internet age.

But this month I'd rather talk about what ebusiness in general is doing for some well-known high street names in the UK - the likes of Marks and Spencer, Safeway, Sainsbury's and Tesco.

I recently spoke at a conference held by the Institute of Grocery Distribution (IGD). It provided a platform for the above companies to preach from their own ebusiness gospels. Trust me, it may sound dull but it was scintillating.

Ebusiness is now an ongoing strategy for all these players, as it should be. And they're making some of the same moves. They all believe in more local outlet autonomy than in the past and they have used technology to allow store managers to 'pull' goods to their shops rather than have them 'pushed' by a sometimes less-than-clued-up head office. That's one example of progress across the board.

But in other areas differences appear. The 1990s saw Tesco rise to become the top retailer in the UK and one of the most respected globally. The success of Tesco.com - the world's largest online grocer - is just one part of the story. Tesco succeeded by making leaps of various sorts.

For one thing it started to reject suppliers in favour of partners. That sounds like spin - with in many cases the new partner the same company as the old supplier - but it isn't. A partner must share a retailer's vision and strategy. Conversely, a supplier is tactical and when something goes wrong they're simply penalised in line with the small print on an SLA.

Following Tesco are Safeway and Sainsbury's (more on them in a moment) with M&S slowly getting there. But don't get me wrong - when an M&S manager can talk intelligently and humbly in an open forum like the IGD conference you can conclude they're taking the first crucial steps. And good luck to them.

In conjunction with Tesco's move to partnerships was the realisation that outsourcing isn't just often a good idea but even a good idea when it comes to core competencies. The crucial thing is to have experts at the helm when it comes to anything mission critical.

Such thinking would be anathema to 1990s M&S but as all the companies I've mentioned realise making sure IT and business must be hand in glove - in other words, realise ebusiness is the key - such thinking becomes easier.

Sainsbury's, after losing its number one position, is now up to speed. Its CEO is Sir Peter Davies, ex of the Prudential, meaning he knows what technology can do, partly because of lessons learned from the creation of Pru online bank Egg.

Sainsbury has even set up a joint venture company with Accenture, called Swan, for the delivery of IT. I sense a new mood of entrepreneurialism at the company and a move away from having to do everything themselves.

Next to the moves towards partners and outsourcing, Tesco's other big gain was focusing on the customer, as seen by its launch of its loyalty card a few years back. I don't want to dwell on that here - being customer-focused should be a given - but rather talk about the next frontier, being employee focused.

There was evidence of this again at the IGD event. On a semantic level we should note that while there were plenty of supply chain directors and logistics directors at the event, Phil Clarke of Tesco stood out as a logistics and IT director. Combining these roles should be encouraged.

And on a much larger scale, the retailers who get staffing right will be in a strong position. Tesco currently has 290,000 employees. If it meets its expansion targets it'll have one million staff before 2010. Think about that for a moment. Knowing employees will fit snugly into the mantra of these companies. It will have to.

Know your partners, know your customers, know your staff. Do these things in any order but just make sure you do them.

And finally, don't think this is only advice for retailers.