June 21, 2023
Q&A with Paul McClenaghan CEO of Victoria Plum
Tell us about your background and what lead you to working in the retail sector?
First and foremost, I am a shopkeeper at heart – albeit more Albert Arkwright than Jeff Bezos! After a short stint working in supply chain at a subsidiary of GEC, I went to work for Currys in 1987 within their inventory planning department.
By the end of my first month, I was hooked on retail. I just oved the pace, the excitement of the deal and the ability to create value through buying and positioning a product. That’s also when I knew I wanted to be a buyer.
I spent almost 12 years at Dixons Group, during which time I became commercial director in the UK group.
I left Dixons to join the board of Halfords as group commercial director and, after 20 years working in retail for FTSE 250 businesses, I moved into private equity (PE) and my first PE chief executive officer (CEO) role.
I’ve now been in PE for more than 8 years. As well as being CEO for Victoria Plum, I’m also non-executive chairman of ecommerce educational resources supplier, Findel Education.
UK businesses have had to deal with a significant amount of volatility in past few years. DO you think this level of volatility and uncertainty is the ‘new normal’ and if so, what are the implications for UK retailers?
I suspect Brexit and Covid are still being cited for a lot more than they are entitled to.
From my perspective, there has been talk of ‘new normals’ ever since I can remember. Over the years, the UK has been through more devastating and systemic changes than it experienced in the lats decade, The truth is that the normality of retail is change.
Good retailers will always find ways to adapt and give customers what they want in the most creative and efficient way possible, whatever environment they find themselves in.
Of course, Brexit, Covid and the invasion of Ukraine are all significant events that have created volatility around the globe.
However, it is important to remember these are not trends. Their impact is punctuated and will eventually pass, meaning it’s vital that your business is best placed to succeed when the impact of these events come to an end.
I would say the only exception to this is remote working, elements of which seem to be here to stay.
What has been your biggest learning over the past year?
Over the years, I have learnt three key principles. First, good people want to think for themselves, and I fully appreciate there are people smarter and better than me at most things. Second, delivering meaningful change is hard and, third, real things take real time.
But, if this past year, or even this past decade, has taught me anything, it is re-affirmation that retail remains a shining light, an example of changeability, determination, and creativity. Retail continues to create value. It’s an industry that spawns resilient leaders and the most original thinkers.
I am genuinely saddened that this wonderful industry, which has been part of my life for so long, allows itself to be sidelined and overshadowed by businesses that do a lot less for employment, value-creation or advancement of the economy. I have learnt that retail needs a stronger voice.
What are the key changes you are seeing in consumer behaviour?
Customers are becoming increasingly digitally-savvy and, unsurprisingly, through both necessity and convenience, they are shopping around more and more for the best deals.
This has been brought about by the squeeze on household income and the ease of individual product ‘item shopping’, as opposed to ‘store shopping’.
If, as a customer, you are offered free delivery and free returns – which is a relative norm of modern online retailing – there is no disincentive to shop across different online stores based on price, specification, or brand for each individual item.
This will make some retail brands, namely those without a strong identity and low brand consideration, superfluous. This has been further exacerbated by the way Google Shopping has tuned in to this behaviour, which isn’t necessarily a bad thing for customers.
Looking ahead, what trends do you see shaping the retail industry?
I feel it is inevitable that artificial intelligence (AI) will play a bigger, more intrinsic role in our everyday lives. I can see a time when customers switch seamlessly between human contact and AI-generated content, to the point where the difference may be unrecognisable.
And, perhaps, once the deep learning ‘probabilities’, contextual problem-solving, creativity and human-like conversations are honed, AI will take more and more control of, and responsibility for, content creation. This could be to the point where the content the latest AI creates is based on previous successful AI-generated content.
I also think retailers will continue to problem solve for customers, but on a much deeper level, potentially through vertical integration or collaboration. This is partly the reason why, at Victoria Plum, we created our design and installation business, to take the complexity out of meeting the ultimate aim of our customers.
The other inevitable trend is that individual product ‘item shopping’ – in contrast to store or retail brand shopping – will become much more widespread. I can see this playing into the hands of google, and particularly Google Shopping, which may or may not be a good thing, depending on your level of embrace.
This particular observation reminds me of Rule One from Chales de Gaulle’s ‘Three Rules for Life’: “Recognise the inevitable and exploit its occurrence”. This should not be confused with Rule Three: “Never get caught between a dog and a lamp post”. However, both could equally apply!
There has been a lot of recent speculation about the potentially disruptive impact of AI on various Industries. What so you think the impact of AI will be on the retail industry specifically?
It seems to me that AI, and particularly Artificial General Intelligence (AGI), has the potential to change everything.
It gives us all the tools to drive productivity by augmenting human contact and activities. It can extend and save lives through early symptoms diagnosis; improve efficiency by using probability to find the path of least resistance; and increases the speed and success of problem-solving by recognising patterns and outcomes of behaviour.
When it comes to retail, I believe that AI- specifically deep-learning AI- has the potential to bring retailers closer to customers, and customers closer to products. If done properly, this could change how people and machines interact, to create a singularly personalised experience of both discovery and transaction.
Historically, the commercialisation or opportunity brought about by technical advances has been overstated in the short term and wildly underestimated in the long term. This is certainly true of advances in consumer electronics.
However, it feels to me that the opposite may be true of Generative Pre-Trained Transformer (GPT) AI and I say this in the knowledge that AI has been around for well over a decade. Goggle’s AI group formed in 2011, and the first Chatbot ‘language predictor model’ launched in 1986. The applications for AI that currently dominate the headlines seem to dumb-down and fall far short of the immense opportunities for businesses, including retail, on a transactional level to ‘save money, make money and stop losing money’.
Most observers, and certainly those in the tabloid media, seem content to both trivialise and demonise AI. From the trivial “write me a poem about Ted in accounts” (not that there is anything wrong with Ted, or accounting, for that matter!) to the apocalyptic “robots are going to take over the world”. And while the latter may be true on one level, it all depends on which elements of the world they take over and from whom.
The truth is that the opportunities for retail and commerce lay far beyond the applications discussed in headlines. These are namely AI’s ability to use ‘probability’ – based on deep machine learning using millions upon millions of learned scenarios – to drive faster, more elegant and efficient solution to the problems customers and colleagues are striving to solve.
This may potentially include things like customer journey flow, real time probability models for inventory management using probability of demand, automated retail pricing based on scarcity and delivery charges based on both predicted and real time route planning. The possibilities are endless.
AI offers a genuine opportunity to create value through an immersive, connected shopping experience. One where customers don’t have to think, because the machine recognises the customer’s wants and needs before the customer does, delivering the shopping journey through whatever media is proved best (video, images, talk, text).
This will enable the customer to achieve everything they want, where and when they want it. They will be inspired and invested in the process. A process uniquely personalised to each customer at each stage of their journey.
My ambition for Victoria Plum is for our business to be at the forefront of these amazing opportunities for retailers.