Beware Peer Pressure

The late Charlie Munger was known for saying, “All I want to know is where I’m going to die, so I never go there.” He was being more than just humorous. It was part of his business and investing philosophy. Essentially he was asking himself what things would kill the business and then making sure they never did any of it.

Here’s a case in point. Primark, the discount clothing retailer with 400 stores in 14 countries, has remained steadfast in its resistance to move online, even despite the huge pandemic shock in 2020

George Weston, chief executive of the chain’s owner, is adamant Primark “is and always has been a high street retailer” and said an evolution into a home delivery ecommerce business was simply not going to happen. “At our price points and our basket sizes [online] doesn’t just take some of the margin, it takes all of it,” he said. “Get over it,” has been his blunt message to those who advise otherwise.

How tempting it must have been to start selling online during the pandemic and afterwards and think of the peer pressure Primark must have been under to follow the rush online. But for Primark it was hard to see ecommerce as anything other than dilutive to their already thin margins. Delivering parcels of clothes to customers at home, and the expensive business of processing the ones they send back, fall into the category of where a discount retailer can die, so Primark never want to go there.

So what’s the take away this week? It’s not about online versus offline. That’s a discussion for another time. The BIG lesson here is to be very clear what is good for your business and what is dangerous for your business i.e. knowing where you will die and never going there. If you look at my practice, Jones And Co. Styling Opticians, you’ll see a business that does a lot of stuff that other businesses ignore, and equally you’ll see us ignore and refuse to participate in an enormous amount of things that the majority of peers in our industry rush to embrace.

Like Primark, don’t do something in your business just because it’s a trend and everyone is doing it. Just because you can do something doesn’t mean you should. In the year ahead, and for the rest of your career, be very selective and strategic about what you fully commit to and really go for it 100%, and then pass on anything where your only reason for doing it is peer pressure. Be your own person and build your own practice. Think things through. Avoid shiny objects that distract you from your core strategy and be aware of opportunity cost.