Viewpoint – An ethical high street
A comment piece in The Times newspaper recently caught my eye. It was written by Julian Richer, the owner of electrical retailer Richer Sounds in the UK, who had some interesting observations on the retail sector in the UK and how ethics have a bigger impact on retailer success than most people imagine. As investors, both Islamic or otherwise, assess investment opportunities in the retail sector, his observations seemed timely.
Firstly, while Richer acknowledges it is a challenging time for many retailers in the UK at the moment, he sees this as part of a never-ending evolution, noting that only 28 of the companies listed in the first FTSE 100 Index of 1984 have survived until today, the others having been transformed in some way or having simply disappeared.
Noting Richer Sounds’s resilience and success over the years, including through three recessions and the rise of online rivals, Richer puts this down to providing a positive customer experience which sounds fairly simple. However, the way he achieves this is deeper and more comprehensive, which he investigates in his book ‘The Ethical Capitalist’.
What struck me reading the book are the similarities that I have noted myself over the years between Shariah principles and what used to be known as simply good business ethics. Richer’s principles of retaining customers comes down to treating his employees fairly with good levels of remuneration, working conditions and benefits. His team members appreciate this and want the business to prosper.
Richer also emphasizes the need to treat suppliers and service providers fairly with respect to terms negotiated and paying people on time – sounds familiar. Simple things, but he maintains that by doing so they are willing to go the extra mile when he needs them to, further enhancing the customer experience.
From an Islamic investor’s perspective into the retail sector, assessing such ethical behavior can be harder to assess. While many say the right thing in their annual reports and the like, Richer notes that actions speak far louder than words.
We at 90 North certainly see investment opportunities in UK retail assets, and believe that some properties have been discounted too far. With these, we are starting to dig behind the headline of whether a retailer’s goods are Shariah compliant to try and determine the retailer’s management ethics.
As for Richer’s book, I am finding it enlightening, so I should leave the last words on profitable ethics to him: “The businesses that get it right understand a few basic principles. They treat everyone well, not just because it’s the right thing to do but because that’s how you end up with friendly, knowledgeable staff serving customers who will want to come back.”
This article was first published in Islamic Finance news dated the 27th June 2018.