During Covid 19, many iconic organisations suddenly vanished. This came as a shock, especially as they had successfully survived the global financial crisis a decade earlier. What went wrong? In this article, we pay our respect to three famous names, and explore the lessons that they taught us.
Debenhams
A beloved high-street staple for over 200 years, Debenhams was in crisis long before the pandemic hit. There was a lot of complex diplomatic bickering involved in the chain-store’s collapse, but the root cause of this was that Debenhams simply couldn’t keep pace with changing consumer demands. Clinging to rusty formulas, the company lacked agility, allowing competitors to storm the catwalk. However, its major mistake was to underestimate the importance of e-commerce. Unable to adapt, and unable to supply during Covid, its shutters were forced to close.
The Body Shop
The idea of the iconic Body Shop closing its perfumed doors was once unthinkable. However, the story of what went wrong with the organisation is relatively straightforward. As a brand, The Body Shop was initially a trailblazer, marketing itself as clean, organic, and innovative. However, when the competitors moved in, nobody made any attempt to upgrade the brand for the changing dynamic. As the sparkly bath bombs of Lush burst onto the high street, The Body Shop stubbornly stuck to its 1980s values while failing to meet high operating costs. Operational efficiency plummeted, and the business was scrubbed out of existence by more cost-effective organic soaps.
Ted Baker
Clothing favourite Ted Baker had begun to experience an identity crisis long before the pandemic. Surrounded by competitors, Ted Baker did the opposite of The Body Shop and simply abandoned its values, leaving its customers hopelessly confused. This was mostly due to a catalogue of leadership errors, with each leader trying to pull the brand in a different direction. By the time that Covid 19 arrived, Ted Baker was trying to be sophisticated, fun, smart, casual, playful, and serious, all at once. Unsurprisingly, in an era where the immersive experience is everything, few customers were willing to be immersed into complete bewilderment.
What You Need To Know
There are several important lessons to be learned from these stories of businesses in administration. The first is the central importance of agility. You need agility, flexibility, and fluidity in order to neatly flow away from a crisis. For this, you must have robust strategic management accounting. If your bottom line is solid, then you will have the ability to respond. Additionally, pay very close attention to the relevance of your brand, especially in terms of digital presence. Finally, keep tight control of your operational costs. If the costs are becoming too high, something is going seriously wrong, and the risks can rapidly become hazards. For this, your best solution is high quality management accounting.
Where You Need Support
All SMEs benefit from experience and guidance. This is where teams such as Vanilla Accounting can become a powerful ally. Our management accounting services can offer insights and strategic guidance so that you can identify and avoid pitfalls before they become a problem. By placing a focus on financial security, we can help you to gain full control of your cashflow, creating strategic resilience that has the potential to withstand even the most unexpected events.
Find Out More
Debenhams, The Body Shop, and Ted Baker were in crisis long before the pandemic. Financial security could have offered the robustness that they required to survive. To learn more about building resilience in your organisation, download our Guide to Business Costs and Claims.
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