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STRIKING THE RIGHT MARGIN

In retail, the need to cut costs runs parallel to the need to provide a first-class customer experience. Bill Dolworth reports on FM service trends in this most sensitive of sectors


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09 October 2017 Bill Dolworth


The retail environment is sensitive like no other. If the experience of the consumer, the shopper, is poor, then it hits sales and sales hit revenue and performance and everyone suffers. If someone asked you for three trends in retail FM, you might be excused for misquoting Tony Blair and answer: customer, customer and customer. It is why retail FM is a tough market.


Contract award announcements give a sense of how tense some of the negotiations will have been. Certain words and phrases repeat: efficiency, customer focus, streamline operations, reduce costs. But the diversity of the services demanded by landlords and tenant retailers and the scope of their facilities make the sector difficult to pin down too.


At one end retail is defined easily by the high street and major supermarkets. At the other it is bookmakers, cinema complexes and shopping centres – often with very different tenants from fashion boutiques and large department stores to restaurants and coffee shops.


The common denominators are heavy footfall, long opening hours, a mix of behind-the-scenes building services systems and a constant need for security and cleaning. Plus, one more: the need to save money. It is the elephant in the corner of every shopping location.


Paul Crilly, managing director of Not Just Cleaning sums up the position. 


“As physical retail focuses on the consumer experience this places an emphasis on support service resources, the quality of resources and the support they receive. It is the biggest challenge faced right now in large-scale retail FM, but better partnerships and more collaborations may well solve this.”



Forever cost

Money shapes the demands of the clients and the responses of the service provider. But it doesn’t dictate the trends that are emerging. Brand development, training and rewarding of people and being adaptable – that is where the trends lie. It starts with knowing the market.


Mark Rycraft, a member of BIFM’s retail SIG and centre manager at the Middleton Grange Shopping Centre in Hartlepool; says: “Where we work, service providers need to ensure they fully understand their client’s objectives – the landlord. They also must appreciate the objective of every retailer, because each one will have a different target demographic which brings with that a different customer expectation. If FM service providers understand their clients and the retailers’ objectives they can change their approach accordingly and at the same time become leaders within their industry.”


This is important, because, as Rycraft adds, the retail landscape has changed dramatically over the past five years. Not just that, but also the constant drive to maintain sales must be the prime objective: if that is met then the asset itself (shopping centre or individual unit) increases in value. Appreciating that only comes with time and even when you have knowledge of the market the client’s demands vary. Darren Furlong, account manager for VINCI Facilities, explains.


“The scope of change we have to deal is quite fluid. A customers’ portfolio at the start of a year can be very different to the end of the year – so tracking changes and costs and keeping budgeting information accurate is a challenge. Large retailers are regularly opening and closing stores to capitalise on key footfall hotspots. Retailers are always looking to save money, for example, checking the leases they can exit and then move into a nearby unit for less.”


A key trend, then, is flexibility. Knowing the market and delivering more for less is a given. What’s required is being adaptable – particularly regarding service levels – combined with a trend to challenge, or, educate the client. Take compliance. For organisations such as VINCI Facilities and NG Bailey compliance is their role. But there is anecdotal evidence that certain hard FM compliance issues can suffer due to budgetary pressures. Likewise, Paul Crilly hinted that all retailers are very price sensitive, forcing certain soft service requirements onto the retail staff (keep the store clean) with limited PPM support.



Partnership a priority

The problem is expectations on the client side, where pressure to limit costs can drive negative behaviours. David Whitely, operations director for NG Bailey says it is vital for clients to pursue their statutory compliance obligations – using data and robust systems to guarantee the desired retail experience. Following the Grenfell Tower tragedy there is renewed emphasis on fire safety – no corners should be cut.


But there is also the opportunity to encourage the client to think differently. Darren Furlong of VINCI explained that second and third-generation outsourcing contracts don’t generally harvest massive savings because the initial easy savings have been already achieved.


“FM companies are now starting to see upward pressures in material cost inflation along with rising labour rates which need passing on. Yet, retailers are all pushing for further savings. So, we need to think harder,” says Furlong. “Increasing service expectations for no extra money doesn’t need to be boots on the ground and lower rates. It can be small incremental things that have lasting impressions – why not run joint client and FM provider training sessions? After all, you should constantly train your own team on HSE, technical works, and compliance, so why not include the customer and this will also act to build a one team mentality.”


This collaborative approach was championed by Whiteley and argued for by Rycraft. Is it a blurring of services or boundaries between client and service provider? No, it is about partnership.


It is about common sense and being adaptable so the right service is delivered and expectations met. The most obvious boundary change now is that the maintenance working week is morphing to mirror the seven-day-a-week retail environment. Evenings and weekends used to be covered by emergency attendances for trading affected and security issues; regular maintenance issues are now reported and completed outside of the traditional 9-5 Monday to Friday.


Furlong says: “Retail FM is more than just processing a work order through to completion. As retailers have increasingly sought to outsource property functions we are being more integrated with internal functions and staff with regular conversations between retail operations, merchandising, property, health and safety, etc. There are numerous stakeholders to work with and keep happy rather than just an FM manager.”



Adapting to need

That idea of flexibility also applies to what you expect of your team. For example, an engineer for NG Bailey delivering M&E in and around a shopping centre is not just an engineer.


“In some instances, our people are first responders. That might mean delivering first aid to a consumer, or it might be that we are amongst the heart of a security issue that requires calm, good communication and effective crowd control,” says David Whiteley, operations director for NG Bailey.


Rycraft goes further: “When staffing up a retail FM contract the ability of the individual to deal with all manner of issues is of paramount importance. These days, any centre team needs to be multiskilled. Anyone member of the team may have to deal with customers presenting with immediate ill-health problems and first aid incidents requiring the use of a defibrillator. Shortly after that, we will be requiring the same member of staff to meet and greet customers and deal with any of their shopping needs and requirements. Later, in the day a member of staff may be dealing with an attempted theft within one of the retail outlets. Finding the right people for delivering those expectations is not an easy task.”


It brings us back to money and costs and it is worry for Crilly. Retailers very much value the ambassadorial role of service staff, but the rates of pay available – particularly in big retail – might not extend far enough. The situations described by Rycraft and Whiteley can potentially be very demanding and require a significant level of engagement at a level the pay grade might not match.


Many service providers will train their people to cope with all kinds of situations; some personnel are qualified as first responders. But this is the exception not the norm. Staffing up retail FM contracts is a big issue – driven by that elephant in the room, money.


Paul Crilly says: “The big multiples, high-volume high street and grocery retailers can often limit effective service by onerous commercial constraints that only serve to undermine the customer experience because of penalties for under-provision of headcount, or fixed contract hours, at odds with successful outcome contracts.”


Whiteley stresses that this all about guaranteeing the customer experience and links to what everyone we spoke to said: each retailer has different customers, all with varied expectations. The job is to give them the best environment to go about their shopping. 


“It is not all about cleaning and security. Yes, it has to happen, but any staff in a retail environment from engineers and cleaners to security and front-of-house are representing a brand. Our job is to collaborate and get the public through the doors, stay there, be safe and drive sales,” says Whiteley.



Setting an incentive

In ‘big retail’, the landlords see FM as an integral, highly regarded component of the customer experience. “However,” says Paul Crilly, “There are potential complications within the approach to the labour pool from which FM providers and retailers draw their resources. Incentivising the FM providers’ workforce can provide a political challenge.”


Let’s think about that. We know that shop assistants, cleaners, engineers and security guards are the representatives of the respective retail brand. That might be the landlord, or the landmark retail tenant. Does that role as brand ambassador go beyond their FM job description? There is a trend to ask more of people within retail FM. So, they need rewarding, but how?


It is a delicate balance. Crilly says: “Consider the reactions amongst the various employees if an FM provider introduces the (real) Living Wage to stimulate recruitment and retention. The tenant community (the retailers) for whom lots of their workforce may be National Wage recipients would not be happy, as this may create an employment draw.”


Fabric conditioners

FM’s role in maintaining the built fabric plays a role too. Sainsbury’s made this a key element in its brand impact initiative that literally cleaned up the exterior of its stores to not just improve how its stores were perceived, but lift the morale of its store teams as well.


This reflects what is at the heart of retail FM: continuity. Retail is a fragile sector in as much as the success or failure of the shops is as much about the perception of the store as it is the products they are selling. To be a great retail environment you are creating an experience. That means FM – all aspects of FM – must work hand in glove with the retail strategists to create that consumer-friendly retail experience. The Spitalfields Estate in the City of London is a good example.


Tenon has worked there for 12 years. In late 2005, after 18 years of preparation, the Spitalfields regeneration programme was completed. This resulted in the creation of two new public spaces, Bishops Square and Crispin Place, a public art programme, an events programme, the restoration of several historic streets in E1 and a selection of carefully selected independent retailers and restaurants.


A visitor today will find designers and artists selling fashions, homewares and accessories or vintage and antique clothing, furniture and crafts. Spitalfields is no longer considered just a Sunday destination; it has evolved into one of London’s most vibrant areas. It is an example of a retail experience and the kind of site that demands street cleaning, pest control, waste removal and high and low-level window cleaning throughout the estate, with a team onsite seven days a week for 15 hours a day.


This trend for brand development in retail is paramount. It is, though, dependent on FM providers finding the right balance to develop their teams to be ambassadors for the respective brands and for the client (landlord or tenant) to give the FM supply the scope to do their job without one eye on that elephant in the shop corner.

Emma Potter