Monday, 23 May 2016

Deep hair-conditioner - a lesson in brand dedication...?

Back in my marketing days in haircare, Peter, our hands-on sales director, always insisted on trying new product formulations personally, before signing off a brand for launch.

For those not yet into deep conditioning of the hair, the best treatment is a viscous waxy-like substance that needs to be liberally applied after a shampoo, and left in place for a couple of hours, ideally in warm steamy conditions.

Late one evening, having forgotten that he was due to report on the new formulation the next day, he hurriedly showered, shampooed and applied liberal quantities of deep conditioner before climbing into his pyjamas. Given that steam rooms were not a typical feature of even sales directors' homes at the time, Peter improvised by taking a Tesco plastic bag, wrapping it around his head and securing it firmly in place to accelerate the conditioning process.

By eleven he was settled by the fireside when his wife announced that having rained heavily all evening, the build-up of leaves on the flat roof of the garage had blocked the drain, causing floodwater to penetrate the upper floor. Peter hurriedly put on a raincoat over his pyjamas, donned his green wellies, grabbed a torch and climbed out onto the roof with a yard-brush, and began to rod the drain.

Not long after, a police car, silent and with blue light in off-mode, arrived in response to a report of an intruder by a concerned neighbour....

Peter's wife tried to explain, but the police decided that a personal account from Peter was necessary.

Eventually, having cleared the drain, Peter climbed back in the window onto the upper landing to be confronted by two bemused members of the local constabulary...

The next day, new product formulation sign-offs at Wella were henceforth delegated to the marketing department...

Time to take it for granted that not everyone can be taken for granted?


Thursday, 19 May 2016

The Entertainer triples email revenues

One of the UK’s most innovative toy retailers, The Entertainer is using The Message Cloud to power smarter emails tailored for specific personas in their existing database, according to Direct Commerce Magazine.  The results, showing a 3x increase in email revenue and 120% lift in mobile sales are worth further analysis, via a tool that can be especially useful in categories where a parent buys on behalf of a child.

The real benefit is in moving from blanket e-mailing - alienation - then refining and converting your existing consumer email data to a 1:1, non-intrusive, more productive dialogue via your existing contact details. Then, having refined the method, a move to a pro-active gathering of additional email details has to provide a basis for further growth…

Time to check out the possibilities re what you already know...?

Monday, 16 May 2016

wow = WOW! when you realise just 25% of Amazon sales are in Books & Media...

                                                                                                Pic: Pacific Crest via Business Insider

Latest US figures show that e-commerce is still only a tiny part of the overall retail industry, representing a mere 7.2% penetration rate.

However, when you begin to overlay Amazon performance, the threat to other retailers is obvious, as they play catch-up in category after category in the biggest trading opportunity ever...

Are you sure you are doing enough to anticipate the obvious?

Thursday, 12 May 2016

BHS Attracts ‘Multiple Offers’ As Deadline Closes

News of five potential bids raises a number of issues for BHS suppliers:
  • Having parked the pension deficit, a new owner will need to assess the profitability of every outlet, and sell off those that are a drain on the business, before exploring the viability and potential of the current business model
  • (There may be buyers among the secondary bidders seeking sites that are complementary to their current locations)
  • Previous suppliers to BHS need to check out possible prices & terms disparities re their relationships with the new owners...
  • …but deep down, the real issue will be the extent to which the brand has been damaged – terminally? - by the surrounding controversy…

Friday, 6 May 2016

More brands on Aldi’s shelves?

How about Nestlé, P&G and Unilever for starters?

Given the rate of growth of the discounters, primarily at the expense of brands, it was inevitable that major suppliers would begin to find ways of working with Aldi and Lidl in order to compensate for the sluggish growth of traditional retailers...

In fact, a new report by Miloš Ryba at the IGD, gives details of branded manufacturers such as Nestlé, P&G and Unilevers' increasing willingness to list their products on discounters’ shelves in Aldi Germany over the past 12 months.

Nestlé currently offers Nesquik, Smarties and Wagner-Pizza, while P&G lists Blend-a-med, Lenor, Pampers, Ariel, Always and most recently Head & Shoulders in Aldi...

Just last week, Unilever, joined them with listings of Knorr, Langnese-Magnum and Duschdas...

More details in Miloš' article, but the key message for all branded suppliers has to be the need to reassess trade and channel strategies in order to define a non-compromising role for their brands in outlets that will otherwise continue to grow at the expense of brands...

And if the big guys are managing the transition, it must be possible for others...

Thursday, 5 May 2016

Morrisons second quarter of sales growth, a baseline for NAMs?

Today’s news of steady progression establishes a minimum standard for Morrisons’ NAMs in making their financial case for a fair share deal for both parties.

In other words, unless your brand has grown by at least 0.7%, you won’t justify an interview.

However, the more your growth exceeds Morrisons average, the greater your appeal…

The key build on this position is to measure and compare Morrisons main financial ratios with your conservative estimate of your brand’s performance to show point-for-point how you are adding to the retailer’s comeback performance…

In other words, until Morrisons reveal more detail, work with the latest annual report and calculate their Net Margin, rotation, credit period, sales/sq ft and rate of growth, and then compare with your best estimate of your brand’s performance within the retailer.

For instance, you are already growing faster, like-or-like, so you have the buyer’s attention...

Next assess bottom line impact, your real contributor...

Typically, most mults, operate on an average 25% gross margin, will receive up to 20% of purchases in Trade Investment, average 43 days credit, turn their stock 25.6 times/annum and sell approx £900/sq. ft./annum.

Net Margin
Say Morrisons Gross Margin on your brand is 30%, with typical shrinkage (2%) and Store costs & Handling (15%), Overheads of 5%, you are contributing 8% to their bottom line…minimum.

If their GM on your brand is less than 25%, tip in your trade investment…

Trade credit
If you are giving more than 43 days credit, you are adding the additional cost savings to their bottom line.

Stockturn
If you are delivering your main SKU on a weekly basis, this looks like a stockturn of 50 times a year.

Sales/sq. ft./annum
Calculate your brands foot-print performance in Morrisons (number of facings x back-of-facings stock x SKU footprint x number of stores stocked) to give your selling area, and divide it into your annual sales to Morrisons to provide your sales/sq. ft., vs Morrisons average…

The above calculations will give you a conservative estimate of your positive impact on Morrisons performance…and hopefully a basis for indepth discussion on leveraging your brand's performance and optimising your trade investment in the aisle...

Tuesday, 3 May 2016

Where are Aldi & Lidl headed, profitwise?

Thinking back to the relative simplicity of the 800 SKU model, based primarily on surrogate label with a handful of anchor brands, coupled with low staffing levels and small outlets, it was relatively easy to beat the multiples on price and yet make adequate profits.

At that time, it was cost-effective to approach the multiples’ suppliers of private label, and piggy-back on key lines, without picking up origination and compliance costs.

However, now that the discounters are extending their ranges via more creative product introductions, it follows that they will need more expertise in terms of more support staff in R&D, Tech, QC, apart from picking up the burden of the usual ‘9 out of 10’ failure rate…

Furthermore, as they continue to grow share, consumer media will highlight any product defects, thus triggering the ‘tell a friend’ mechanism – 'if I like it, I tell one friend, disappoint me and I tell 10 friends…'

All adding further to the compliance overhead.

Given the fact that the mults continue to keep pressure on shelf prices, it follows that the discounters’ additional costs will dilute bottom line performance. Perhaps this will become an opportunity for an entrepreneur to re-discover the original 'hard discount' formula, and launch a competitor to Aldi & Lidl?

Leaving us all to ponder on where the legal responsibility for damage to consumers can be laid: retailer or O/L manufacturer?

Welcome to the high-cost world of ‘normal’ retail…