Services, Students and Smells

Political paralysis  There is a sense that we’ve been here already. Boris Johnson’s approach to Brexit has differed significantly to that of the predecessor to his title; however, the outcome seems like it might be the same. Ahead of Tuesday’s vote on who should control the parliamentary timetable, pro-EU MP Phillip Lee had already crossed the floor to the Lib Dems, depriving Boris of his already thin majority. In the end, 21 other Conservatives voted against the government (and subsequently had their whip removed), paving the way for Parliament to prevent a no-deal Brexit (or at least compelling the PM to request a further deferral from Brussels). This path continued yesterday, as the draft law passed through both Commons and Lords. Bookmakers’ odds of a no-deal have since halved, and sterling has rallied. The prospect of leaving without a withdrawal agreement now sits at 15/1. On the other side of the coin, having been a 3/1 prospect just months ago, a second referendum now carries odds of 14/1. A middle of the road option based on Theresa May’s Withdrawal Agreement therefore becomes more likely. Johnson’s immediate response was to call for a general election; however, that would have required a two-thirds majority which he did not possess. Labour wouldn’t back such action until no-deal is off the table; albeit this could now happen in October. In the meantime, the Tories are stuck in power in what is now clearly a minority government. And so, here we are again, with the clock ticking down towards another false summit, still with no parliamentary majority for any form of deal, nor as yet a mechanism to unlock it. Meanwhile the political landscape and support continues to evolve around both party leaders.

Return on wellness?  In the same way that ‘experience’ is the word du jour in retail circles; the buzzword in office design in recent years has been ‘wellness’. Some businesses have spent significant cash on the pursuit of wellness, on the assumption that it delivers financial benefits in the form of talent attraction and reduced churn. So, it is worth it? Yes. And no… concludes a recent study published by Harvard Business Review. The claim that wellness supports financial targets is made out. However, the study finds that most expenditure is wasted on ‘pointless office perks’, and instead employers need to focus on getting the basics right. I’ve analysed a fair number of these studies over the past couple of years. One wellness factor scores at or near the top of every single one of them – access to natural daylight. In this study it came in P2 behind air quality. A close third and fourth were water quality and temperature. Not a gym or café in sight. Environmental conditions are typically controllable through good M&E. Increasingly, as the study suggests, employees want this to be customisable / personalisable using technology (light, temp) and furniture (sound). However, access to natural daylight is more reliant on selecting the right building in the first place, and hence an area worthy of focus for developers looking to maximise their alignment to occupier need. The advice in the report for estate managers? ‘A good rule of thumb is to never assume that you know what your employees want — but instead, find ways to ask them.

Omni-fail  People are increasingly shopping online, because of the convenience of doing so; right? Perhaps wrong. A recent study carried out by Veeqo concludes that the e-commerce needs of fashion consumers are not being met. Those needs are: (a) same day delivery (6% satisfied), live chat capability (31%), click and collect (35%) and fuss free returns (60%). Can you spot the common factor? These are all things that the physical store does in spades: (a) you can pick up the item and take it straight home, (b) you can chat ‘live’ to a real store attendant, (c) collection is immediate, and (d) you take the item back to the store you bought it in (there is no conflicting policies between the e-commerce and store businesses). Potentially there is some anchoring of e-commerce customers’ expectations to the services that they have historically received in store, but more likely these are enduring requirements. Much of the solution comes from the logistics and technology infrastructure, which needs scale to work. It is no surprise therefore that the top performing retailer for customer satisfaction in the UK (for the 5th consecutive year) is Amazon; an organisation with the scale and focus to invest in this infrastructure. It is still massively under share in the UK relative to its dominance of e-commerce in the US, but if these criteria are deciding factors for consumers, that may not remain the case for much longer.

Student payback  With increased tuition fees and the opportunity cost of not working for 3 years, the price paid for a tertiary education is increasingly a challenging one. This has become particularly so over the past decade, as the cost of living (particularly the rent) in major urban centres has risen significantly. Rents tend to go up in response to increases in the value of economic activities carried out in a location. However, for jobless students who don’t tap into the value side (and particularly for those whose parents don’t also) this is a one-sided equation. So, should prospective students shun urban universities in favour of extra-urban campuses with more space and better controls over rent? One should think carefully about that, according to a new study by CNBC which considered the ROI of education in centres across the US. Their analysis created a quotient of alumni salaries and the net cost of studying. Using this method, a significant percentage of the top performers were in major urban centres. This could point to the increasingly intertwined nature of the education and commercial ecosystems in our large cities (in the year 2017/18, 125 new university-owned or part-owned spin-off companies were created in the UK). More likely, however, based on the fact that higher salaries are typically found in large conurbations the data could point to the fact that graduates either tend to stay where they study, or that they go to college in their home city with the intention of remaining there. In the UK, student movements account for about 20% of all internal migration, with net inflows typically directed at the major cities, with the exception of London, which has a net outflow.

Olfactory opportunities  As noted in another article this week, good air quality is one of employees’ principal requirements of their workplace. Perhaps related to this, the smell of foods arising from the relatively modern practice of desk dining is also one of their top-reported peeves. This can even stretch into HR issues; a woman from Michigan successfully sued her employers for $10m for their failure to provide an environment that addressed her perfume aversion. Ban all smells? Let’s not be too hasty. A recent study by the Royal Melbourne University of Technology has found that certain food smells can significantly encourage impulse purchasing in shops. Melons were noted for their exceptional performance in this regard, but the study found that different smells performed better in different environments: grapefruits for department stores, lemons for fashion, oranges for furniture and so on. And apparently, the stronger the better. So, are we missing a trick in the management of our facilities? Hoteliers have been using scent marketing for decades, with lemongrass scoring very highly in the choice of aromas. More recently, office lobbies have responded to the challenge, with mint being a popular choice. ROI follows in the form of brand recognition, dwell time, purchasing likelihood, and repeat business likelihood. So, the next time your colleague cooks up a fish curry for lunch, resist the urge, and instead thank them for their contribution to creating a memorable sense of place.