Retail veteran Ian McLeod’s top lessons in leadership and transformation

Scot Ian McLeod drove change at UK supermarket group Asda in the UK ahead of its sale to Walmart, was chief merchandise officer and board member of Walmart Germany from 2000-01, led the turnaround of Halfords, the UK auto parts chain, prior to its float, and then took the helm of Coles in Australia for five years from 2008. In August, he left the business and his role as group CEO of DFI Retail Group, handing over the reins to his successor Scott Price, an executive with 25 years of global experience in retail, logistics and FMCG, most recently as president of international at UPS. DFI Retail Group is a multi-category retail group spanning supermarkets, convenience stores, health and beauty chains, Ikea franchises, and a stake in Starbucks Coffee chains in multiple Asian markets. “Transformational leaders need to lead through engagement and example because you can’t ask people to do things if you’re not prepared to do it yourself,” McLeod shares in an exclusive interview with Inside Retail. That’s why one Saturday morning in May McLeod could be spotted packing groceries for children in need at a Hong Kong grocery warehouse with a team of volunteers. He believed it was important for the group CEO to be seen rolling his sleeves up and mucking in rather than just assigning others to the task.  “If I’m just sat in an ivory tower, telling people to do that, it lacks authenticity.”That approach applies through every activity in the business, he continues, not just the public-facing parts. For example, making the tough calls on restructuring that will impact team members.“You need to be seen to be genuine, even if you’ve got to make tough decisions. People respect you if you’re honest about it. And therefore, part of being a strong leader, I believe, is leading through example, and making sure you engage and motivate people in the best way.”During the Covid pandemic, McLeod, like many executives in Hong Kong, was restricted from leaving the territory for up to two years. For a leader used to meeting team members across multiple markets in person, that presented the challenge of how he communicated with them effectively. The DFI team created a communication forum called DFI Live, where every quarter McLeod presented to teams, explaining what was going on, market by market. “It was a bit light-hearted,” he recalls, “it was a bit of fun. But it allowed us to give credit where it was due to individuals and it was full of pictures rather than words.” Each ‘show’ lasted around 30 to 40 minutes. “By doing that, it meant I was visible as the chief executive. And it also meant that if you were in a health and beauty store in Malaysia, then you could find out what was going on in a 7-Eleven in China, whereas previously, the business had been very sort of siloed in terms of its approach – a disparate set of businesses working very independently. “What I tried to do with creating DFI Retail Group from Dairy Farm was to create a cohesive group of businesses that are all interested in sharing in the success of each other. That’s where the communication aspect of [business] is often underestimated, but it is actually very important. “And because I’ve been in transformation for the best part of four decades, I’ve learned the good and the bad. This isn’t because I’m some kind of retail guru, this is because I’ve got the marks back from the mistakes that have been made and you learn from your mistakes as much as you learn from your successes. You adapt and change over time in terms of what’s worked and what hasn’t, and hopefully, continually improve.”A transformational agendaMcLeod believes the many transformations he led at DFI Retail Group have resulted in a much stronger foundation for the company to continue to grow, with a standout being the business’s digitalisation.  Over the years it had expanded and acquired other businesses, but the company had not really invested in core information systems at store level – such as modern point-of-sale systems to engage customers and the back-end solutions to replenishment he recalls as “rudimentary”.  As well as needing to transform the offline business, the team faced the challenge of integrating digital transformation as well to connect online and offline channels. In Hong Kong, for example, the company is building a platform to allow its customers to shop across multiple DFI banners – such as Wellcome supermarkets, Marketplace, and Mannings – on a single site with a single invoice. That initiative follows the launch of the successful loyalty program Yuu, a credit card with the Hang Seng Bank, fuel programs, and even travel insurance. “We are now thinking more holistically about how we can satisfy the broader needs of the customer rather than just selling them a can of beans or a bottle of shampoo. So that digitisation of the business – to allow us to be more effective at a local level, both in the store and outside the store – has provided opportunities to springboard further. But it required the right level of core development in the first place so we could make all that happen.”There’s a revolution inside stores as well, with McLeod citing the 7-Eleven chain in China as an example. When he took up the CEO role, the convenience store business was unable to expand further because its infrastructure was already strained, with the POS system breaking down every week. During the pandemic, DFI worked with a technology partner to build a sophisticated core digitalised network platform. “So from five years ago when the tills were breaking down, I was up there recently and I saw a customer come in, pick up a bottle of water, put it down in front of the till, press one button, pick up the water and walk straight out. I said to the CEO who was with me, ‘I think that guy hasn’t paid for that’. He replied: ‘Yes, he has. With facial recognition’. Now I know that’s a sensitive thing in terms of data privacy around the world, but you know, the customers don’t have to use it. But if they sign up to our program through our app, they can go into the store and it will automatically take the money from their [bank] card. No cash changes hands and in fact they don’t even talk with anybody during the transaction. That just sort of kind of blew me away in terms of its simplicity. But we would never have been able to get anywhere near that had it not been for the digitalisation of the core of the system.”A strong strategy only succeeds through effective executionWhen McLeod began to implement the changes necessary to strengthen DFI Retail’s multinational business, a core aspect was portfolio optimisation. McLeod inherited a group of disparate businesses operating independently in multiple categories across multiple markets. Some were strong, others struggling. He recalls it was key to look at each business in each market independently, looking at overall market share, what the opportunity there is to grow it into a strong position over time, the capital required to get there, including the level of management and leadership investment, and review the competition. He cites the Philippines as an example. In 2015, DFI bought a 50 per cent stake in health and beauty business Rose Pharmacy, which had 238 stores then, before taking full ownership in the business in 2017, by which time it had expanded to 300 stores. The company also had an upmarket grocer called Rustans and several other supermarket banners there.“Both those [businesses] were okay, but neither of them had very strong market share positions – they were sort of number six, or maybe even number seven in the market. So even though the Philippines has 113 million people, the effort required to get to scale would be such that your return on capital would be questionable.” In short, it was not worth the investment to build the business to a size that would have a leading position in the category. The solution: DFI sold the two businesses – in different deals in 2018 and 2020 – to established retail group Robinson’s Retail, taking a 20 per cent stake in Robinsons.  “So we are now major shareholders in the second largest retailer in the Philippines.” A result that best served the local population and management. In Malaysia, after the company invested time, management expertise, and money over the years in restructuring its Giant supermarket and hypermarket business, DFI sold it to local operators in February of this year. “Our belief was that the business itself would be better served under local leadership, so we agreed to transition the business into new ownership with a couple of entrepreneurs in Malaysia. We also think it’s the best thing to do to secure the futures of our people.” A third example was the divestment of the Wellcome supermarket business in Taiwan to French multinational Carrefour in June 2020. Passing the batonMcLeod is discreet when it comes to the next stage of his career. For now, he is looking forward to spending time with family in Australia and Scotland. After that, does he have another transformational role in sight now he is a free agent?“I’ve got to make sure I pick the right opportunities that are presented to me,” he tells Inside Retail. “But if there are opportunities out there where I can add value by helping others with my experience – almost irrespective of where it is because I’m sort of a nomad internationally – if there’s value that I can add, I would like to do so. But what shape or form that might take, that’s very much up to discussions that I might have with people going forward.”“I have enjoyed every transformation I’ve done. And for some strange reason, however tough they are, I do seem to enjoy it. And I think I’ve learned a lot along the way,” he reflects.“The beauty of retail is that … it is ever-evolving and ever-changing, so the job is never done.” Core lessons in digital transformationThrough his time in retail, McLeod has learned many lessons on how to build and sustain strong retail transformation programs. Besides the experiences and conclusions above, here are some of those key ones: 1. Be genuine and authentic If you cannot convince yourself you can achieve change, then you’re not going to be able to convince anyone else, he says.  “You’ve got to convince others to come on the journey with you. You have to be genuine and authentic in terms of your commitment and in your belief that you can succeed.” 2. Build the right team“The second lesson I’ve learned along the way is if you’re going to build a successful transformation you need to build a strong team that is prepared to take the tough decisions. Therefore, try to make sure in each of the key areas, you have got people that have solid experience and the strength to make sure that they will deliver on the changes that are required because some of these changes will be quite difficult.”As he built his management team, McLeod says he sought to combine strong core local knowledge and international retail expertise to oversee markets – people including Choo Peng Chee who is now CEO of DFI Retail North Asia, former Tesco executive Chris Bush, now CEO of DFI Retail Southeast Asia, and to drive the digital transformation required, Johnny Wong, now CEO of DFI Retail Digital. 3. A strategy needs a vision – and a vision needs a strategy“If you cannot describe your strategy in under five minutes you haven’t got one. Articulation is critical,” explains McLeod. That applies especially to team members in each store of each chain in each market, he explains. People must be able to understand what you are doing and buy into it if the execution is to be successful. 4. Show people you care“You have to be able to show people you care,” explains McLeod. “You have to take people with you and as a leader, you need to be out front and visible.” Don’t think of people as numbers – treat them as individuals. This philosophy applies to both the consumers the company serves and the staff it employs.This story first appeared in the September 2023 issue of Inside Retail Asia magazine.