Avoid putting all your eggs in one basket to prevent being wiped out by an unexpected shock
JOHN TIMPSON Sir John Timpson is chairman of the high street services provider Timpson. Email him at firstname.lastname@example.org
Q Recently The Telegraph reported that junk food companies had been thrown into panic by the burgeoning popularity of new weight loss drugs. What would your advice be to a company facing a sudden, unexpected change in the market? A Usually, what might appear like an absolute disaster turns out to be a news story that is quickly forgotten. But I will never forget spotting what must have been one of the unluckiest shops in history when, in 1988, I walked through an arcade in Peterborough. It was the decade of niche retailers. Body Shop, Tie Rack and Sock Shop all joined the Stock Exchange at massive price to earnings ratios, making millionaires of their founders. The new shop that grabbed my attention had only been open for three weeks. It was called Just Eggs. It only sold eggs, stocking every edible egg you have heard of. Hens eggs, eggs from quails, duck, geese, turkey and – for show rather than for sale – a few emu and ostrich eggs. I was tempted to buy a dozen quail’s eggs, but moved on. I came to regret this when, two weeks later, Edwina Currie, the then health minister, made an announcement. She said: “Most of the egg production in this country is now, sadly, affected by salmonella.” When I went back to Peterborough six months later, Just Eggs was no longer in business. The original niche businesses had mixed fortunes. The Body Shop thrived under the ethical leadership of its founder, Anita Roddick. Tie Rack prospered until men dressed down for the office and ties went out of favour. Sock Shop was the first to suffer. New styles of socks and stockings commanded a premium, but within months the market price of fashion tights went down from an initial £16.99 to £6.99 or even £2.99. Sock Shop had to keep ahead of the competition to make a good margin. It became an impossible challenge, so Sock Shop enjoyed a glorious but brief time as the market leader. Like Just Eggs, Tie Rack and Sock Shop discovered the dangers of being in a single product market. It only takes one bit of bad publicity to make a massive difference. In autumn 1952 our shoe shops introduced the Ranger Slipper – a boys’ bootee that carried a toy gun in a pouch. It sold so quickly that we expected to clear 100,000 pairs before Christmas. But in November a policeman was shot by two teenagers called Christopher Craig and Derek Bentley and a letter was published, in a newspaper, from a woman complaining that our bootees encouraged violence in children. Within a week Ranger Slipper sales had dwindled to a trickle. By December we had withdrawn them from sale. It isn’t just restaurants or retailers that are at risk. In a world where woke views are held by a vocal section of the public, you can be boycotted because your company is considered to have unacceptable connections. Few of these unwelcome changes are predicted by risk assessments. They come out of the blue and immediately wipe everything else off your agenda. Faced with this new challenge you need a plan. But first, have a big think: what will happen if you do nothing? What else can you do? Sudden shocks can knock your confidence, but are seldom as bad as they first seem. You still have a business with a track record, a reputation and a culture. Work out if you can use your strengths to turn this unexpected change of events to your advantage. To reduce the risk of being wiped out by an unexpected disaster, never put all your eggs in one basket.