Retail is the new reality

The departure of Punch boss Giles Thorley is part of a changing of the guard trend, says The PMA Team.

He's the last of seven senior or board-level Punch executives to have left within three years. Apart from Andrew Knight, who left the Spirit managed arm, they all had one thing in common — they lacked retail experience.

The pub game has changed radically for owners of pubs within a few short years. For a while, the game was about buying and selling pubs, confident in the knowledge that the on-going property boom provided a rising tide of value.

Then, in 2007, came the double shock of the smoking ban and the credit crunch, which led to one of the longest recessions of the past century. The net result was akin to two sizeable earthquakes occurring at the same time within the tenanted pub sector.

Tenants' incomes have been down hugely while pubco incomes have also suffered (although by not quite as much). The big bulk buyers of pubs (Admiral Taverns, aAim) disappeared from the marketplace.

It was a completely new world and the pubcos needed new answers. And the answers were all about retailing: how you go about ensuring your pubs are fully equipped to maximise their competitive position.

It meant a new focus on customers and unlocking the potential of tenanted pubs to adapt to their needs. As it turns out, a number of the large pub companies were lacking senior personnel who hail from a retail background.

Punch's personnel changes of the past three years are an implicit acknowledgement of this. New leased division boss Roger Whiteside, for example, has experience in running Marks & Spencer's food offer — his two predecessors had almost nothing in the way of consumer-facing pedigrees.

Thorley himself is similarly lacking in proper retail experience. It's key to why it's time for him to move on and I'd be amazed if his replacement doesn't have a curriculum vitae that centres on getting tills ringing.

The sub-text to Thorley's departure is part of a trend evident across the sector. Simon Longbottom, the newish head of Greene King's tenanted division, worked for a long time running managed pubs at Mitchells & Butlers. He replaced David Elliott who ran managed pubs in Scotland for a time earlier in his career.

Alistair Darby sold beer before taking over Marston's tenanted division, but he also has lots of experience running pubs within the managed division. It's no coincidence that these three divisions, all led now by people with extensive retail experience, have seen real consumer-facing innovation in the past 18 months.

In 2010, the tenanted sector is all about individuated and purposeful retail support, sustainable sales growth and high-quality tenant selection and training.

Anybody hitting the levers that served so well during the fat years is barking up the wrong tree.