Saturday 30 January 2016

If Carlsberg did shopping trolleys... (Asda Clapham Junction)



In an effort to improve the shopping experience, Carlsberg worked with custom car experts Yiannimize to create a motorized trolley complete with an electric engine, a beer cooling system and satellite navigation. No more warm crates of beer, getting lost in the supermarket and struggling with wonky shopping trolley wheels.



Tuesday 26 January 2016

GCA-Tesco Investigation, What Now?

The GCA Investigation report establishes a basis for suppliers wishing to bench-mark and re-set their relationships with Tesco and other retailers.

Nothing beats a detailed reading of the report in order to identify key aspects to a supplier’s actual trading relationship with Tesco, but application has to be top-of-mind….

In practice, suppliers need to revisit all aspects of their trading relationship and establish working limits, i.e. walkaway points, in each case.

Essentially, the report provide two key areas for immediate application, Credit periods and Deductions.

Credit Periods
Tesco currently pays suppliers in 44 days on average, and the GCA report (7.3) refers to a Competition Commission Report published in 2000 that noted ....retailers delaying payments to suppliers beyond contractual payment periods or by more than 30 days from the date of invoices may adversely affect the competitiveness of some suppliers. 

In practice, for daily delivered SKUs, it could be said that seven days is even more appropriate, but every little helps…

However, strictly speaking, GSCOP specifies that breaches occur when a retailer deviates from a negotiated agreement on terms i.e. the onus is on suppliers to reach agreement on a 30-day credit period if they wish reduce their exposure and operate on that basis.

Deductions:
The report also focuses on unilateral deductions and gives sufficient examples for suppliers to use as a basis for internal adjustment of their systems. Essentially, this means assessing their supplier-retailer relationships re
- Unilateral deductions made in relation to historic claims (Post-audit recovery)
- Unilateral deductions for short deliveries and service level charges
- Unilateral deductions made for other items or unknown items

Given that it can be easier to document each aspect of the trading relationship in advance of execution, if only to avoid having to recover two year old documents under the pressure of a two week buyer deadline, suppliers need to establish ways of minimising post-audit claims, agree and document delivery and service level conditions and anticipate possible deductions for any other breaches.

The pending SFO report - due this week - will add numbers to the above, as well as fleshing out Trade investment definitions and measures.

On balance, the GCA and SFO reports can provide a basis for suppliers to revert to basics with Tesco, treating the company as a new major customer. This means re-assessing Tesco’s relative competitive appeal vs other customers from a consumer-shopper point of view (think media fall-out from both reports), the retailer’s development life-cycle in a radically changed market, and the characteristics that qualify them as an Invest, Maintain or Divest customer, all tailored to your brand consumer...

Finally, for your category, an objective re-assessment of your relative competitive appeal vs Tesco’s new appetites arising from both GCA and SFO investigations will help you determine the strength of your negotiation position in re-setting and optimising the opportunity window partially opened this morning by the GCA Report... 

Monday 25 January 2016

SFO Tesco investigation set to conclude this week

According to CityAM, quoting Cantor Fitzgerald’s Mike Dennis, the investigation could be wrapped up this week. Any fine/redress will obviously impact Tesco’s cash position in terms of repayment and re-financing bonds, adding to pressures on the company.

Longer term we believe that the government will legislate re the accounting for trade investment, and probably move to retro-payment based on auditable results. 

This means a move for suppliers to building in KPIs and compliance for every trade initiative, an inevitable and long overdue progression to fair-share dealing....

This development coupled with Tesco’s loss of market share, and unlikelihood of a return to old market dominance, means that suppliers are in a stronger position re negotiation of compliance.

A once-only opportunity for NAMs that are prepared to go all the way…

Thursday 21 January 2016

Counting on Tesco brand values to drive improved performance

                                                                                                                       Chart: CityAM                                                                                                              
The YouGov Index score shows a brand’s overall health and is a combination of several metrics – namely its Impression, Quality, Value, Satisfaction and Reputation measures.

The chart speaks for itself and echoes Tesco’s sales results from Jan 2014 to Jan 2016, through a low point in December 2014 and a continuing upward trend into 2016…making the point that at base, it’s the brand that counts, more than a little…

A Tesco on the way back now has to nurture its delicate relationships with shoppers  and suppliers – and regulators – to avoid even a little unhelpful misstep….

HT to Andy Parker for pointer

Wednesday 20 January 2016

Trade Investment Accountability and how Governments will legislate…

Following the Tesco Accounting scandal, a lack of consensus among the UK's major food retailers is detracting from efforts by the Financial Reporting Council (FRC) to improve the way that companies report complex supplier arrangements and will prolong the uneven disclosure of supplier income, according to a new report by Moody’s Investors Service - more here

NAM Implications:
  • The combination of inconsistency and scale of payments involved means that governments will eventually legislate to optimise taxable income
  • It is probable that such legislation will be conservative (small ‘c’), retrospective, i.e. paid after-the-event and based on measurable results,  the only certainty...
  • In other words, all trade investment will specify KPIs, build in compliance, and payments will be withheld until auditable results are available
NAMs and their customers had best prepare for the inevitable…

The ultimate T-cut: Asda plans to axe free tea and toast perk for staff

Reports in The Standard that Asda will stop providing breakfast perks, which also include coffee and vending machines, insisting it must make “tough decisions”,  means that the company could fall foul of the Law of Unintended Consequences.....

Although possibly a minor scratch for the owners, this could be major gash for the recipients, and their unions…

Think also of the massive signal being sent to the market – ‘I knew their Christmas was bad, but…’

It remains to be seen how this T-cut application will affect the staff-shopper interface, but the issue for NAMs has to be how this 'financial viability' parameter will impact their next session with the buyer… 

Tuesday 19 January 2016

Amazon Rumoured To Be Eyeing Tie-Up With Ocado

City rumours reported in The Daily Mail yesterday suggested that Amazon is preparing to make an approach for Ocado as part of its plans to launch a full grocery delivery service in the UK.

NAM Implications:
  • For Amazon this means leap-frogging years of food-delivery expertise in the UK’s most concentrated M25 market
  • For Ocado, a takeover by Amazon provides a means of capitalising on their investment to date in leading-edge fulfilment and a degree of food-delivery experience that far outranks* Amazon Fresh, besides providing an additional revenue stream via third party retail usage of their facilities
  • For the mults, already tempted to outsource fulfilment to a 'manageable' Ocado, joining with the biggest elephant in the room might be too tight a squeeze…
  • ...and no mention of money, because the potential gains are so obvious for Amazon…
*See Paul Clarke Ocado presentation 

Monday 18 January 2016

HomeBunnings - an Au shake-up of the UK DIY sector?

News of Bunnings £340m takeover of Homebase means inevitable change to DIY retailing.
Wesfarmers need to justify an overseas investment, Bunnings need to make an impact, and the competition need to make counteracting moves.

What is certain is all DIY retailers are now in the market for innovative instore - and car-park - theatre* initiatives.

A must-take opportunity for all suppliers to be first from the trap, while others sit and wait...

* Bunnings is known for its “sausage sizzles” outside stores where local sports or community groups are allowed to set up stalls and sell food to customers, UK weather permitting....

Saturday 16 January 2016

A 'Bowie-comment' on the global stockmarket rout

Ground Control to Major Tim
Ground Control to Major Tim
Take your Man up pills and put tin helmet on

Ground Control to Major Tim
Commencing meltdown, algos on
Check deflation and may Goldman Sachs be with you

This is Ground Control to Major Tim
You’ve really made bad trades
And the papers want to know whose shirts you’ll wear
Now it’s time to leave the free-fall if you dare

This is Major Tim to Ground Control
The markets are through the floor
And the £’s floating in a most peculiar way
And the stats look very different today

For here
Am I with a tin hat on
Just got out of bed
All the markets are bright red
And there’s no easing from the Fed

Now I’ve lost one hundred thousand pounds
I’m feeling very sick
But I think my broker knows which way to go
Tell my bank I owe it very much you know

Ground Control to Major Tim
Your stop-loss is dead,
You’re really on a limb
Can you hear me, Major Tim?
Can you hear me, Major Tim?
Can you hear me, Major Tim?
Can you….

For here
Am I with a tin hat on
Just got out of bed
All the markets are bright red
And there’s no easing from the Fed….

Source: Stephenroi - comment on The Slog https://hat4uk.wordpress.com/ 15-01-2016

Wednesday 13 January 2016

Guest Blog: Releasing cash is always faster than generating sales

5 levers to release cash....
By Ian Yates, Director at Barcanet

Looking for cash...want to avoid the travel ban, release funds for innovation, identify more efficient operating models?

Historically, companies have managed costs through a series of (mainly) uncoordinated technologies and processes, supported by tactical initiatives when budgets needed to be squeezed.

Today, with competitors constantly innovating and new entrants changing the game, businesses need to take a more enduring approach to cost optimisation and find new operating models and/or efficiencies to release the cash needed to fund their own innovation and growth.

Working with hundreds of businesses around the world, I have found the following five levers consistently optimise spend across any business operating cost;

1. Visibility
Whether you run a multi-national organisation with disparate systems, and de-centralised supply-base or a sole-supply contract with complex commercial or operational terms, getting visibility of spend, usage and performance drives better decision making.

The visibility lever will;
  • Centralise usage and costs data
  • Bring transparency to complex categories and contracts
  • Provide governance for your business policies
Giving the right insight, to the right people, at the right time allows for simple data-driven decision making.

2. Compliance
Errors in invoices or missed discounts accounts for up to 3% of the cost of goods/services bought in some categories. Some estimates put ‘procurement fraud’ at as much as 1% of a businesses turnover.

The compliance lever includes factors such as;
  • AP and contact commercial terms compliance
  • Governance over days-to-pay and early-payment discounts
  • Identification of shadow/rogue spend
Finance and ERP systems deliver an element of this compliance, but a lot of value is lost throughout the process. Pre-payment audit routines and insightful reporting retains cash in the business and provides the mechanism to drive change.

3. Consumption
Be that non-production, “We were paying $5m per annum on mobile phone services for people who had already left the business – some of them years ago!” or production, “We used 0.5% more in one factory than another, with almost identical outputs, doesn’t seem a lot but the cost was millions per year”.

The consumption lever brings insight to make simple, data-driven decisions;
  • Benchmarking internal usage and cost profiles
  • Optimising assets
  • Making users accountable
Generating the realisation of cost brings behavioural and cultural change. Users are in the best position to reduce costs and bring faster innovation to business operating models.

4. Price
Over two-thirds of CPO’s see cost reduction as a priority, and yet 84% are not satisfied with the levels of insight they receive. Businesses need to recruit well and have a strategy for these procurement professionals to align with. However arming them with good, consistent data allows the team to negotiate and manage suppliers from a position of knowledge.

The price lever comes from;
  • A suite of reports of spend and usage from all silo’s in the business
  • Insight to business and new product strategy
  • Supplier performance and risk management insight
Procurement working as a business partner rather than simply a cost reduction specialist, better defines the business objectives for the supply base, increasing agility, optimising costs and reducing supply-chain risks.

5. Process
Simplification and standardisation are two of the key words I hear repeated at almost every customer. But where do you focus resource where it really matters?

The process lever provides the business and the change agents with insight to identify these areas and data on where best practice is being achieved;
  • Benchmarking cost, usage, margin and ROI
  • Identifying why rogue/shadow spend happens – what is the benefit
  • Identifying impacts across silos

You will find some components of these levers are simple to implement, others require a more structured approach to sustain the benefits over the longer term. However, these benefits can be significant and worth the investment - sustainable reductions of 20-50% of operating expenses.


More details here

For further information, contact Ian Yates, Director at Barcanet
Email: ian.yates@barcanet.com or Tel. +44 7868-745705


Aldi's older UK stores growth slowdown - beginning of the end, or end of the beginning?

With Aldi growing new space by 10-15% per annum, the discounter is clearly racing to reach its full foot-print potential in the UK.

Although like-for-like sales in stores open more than 1 year are 1%, the emphasis has to be on making the Aldi offer accessible to the entire UK population, in the current flat-line market. Given the relatively low cost of opening new outlets, Aldi – and Lidl – are better able to afford a greater degree of geographical infilling than are the redundant-space mults.

It could therefore be said that Aldi are approaching the end of the beginning of the first discounter-wave in the UK.

With Kantar figures showing Aldi and Lidl attracting 1m more shoppers to their stores, resulting in a 13.3% and 18.5% jump in sales respectively, it can be seen that initial access to their offering can be lucrative for the discounters. Given that they are simultaneously pushing upmarket, successfully, and with no end to flat-line demand in sight, the discounters are surely pursuing the right priorities in this market.

Given eventual discounter outlet saturation, both players will then have sufficient financial momentum to focus on optimising like-for-like performance at local level, well in advance of any end in sight…

Meanwhile, branded suppliers have to find ways of sharing in this discounter growth. This means finding ways of moving from the ‘ongoing continuous relationship’ process that was possible with traditional retailers, to the ad hoc transactional dealings necessary with discounters.

For instance, a little-noticed announcement by NestlĂ© some weeks ago re highlighting its confectionery brands in all of Aldi’s German outlets, indicates one of the moves being made towards continuous collaboration with this increasingly important route to consumer for major brands…

To help your colleagues focus on this challenge, why not consider running a what-if on the Aldi-Lidl combination eventually moving from a 10% to a 20% share of the UK grocery market?


Sunday 10 January 2016

A Brand New Challenge?

                                                                                                      Pic: Brilliant Ads

Wednesday 6 January 2016

Argos - a Local-leap by Sainsbury's?

Yesterday’s surprise announcement of an initial rebuff by HRG not only places the Argos-Homebase combination firmly in the takeover frame, but also sets a minimum starting price of £1bn.

The advantages for Sainsbury’s in terms of adding to their non-food offering, making more use of big-space via a transfer of Argos Click & Collect, and re-acquiring a DIY operation they sold some years back, combined with successful initial trials of Argos shop-in-shop make this a must-have acquisition, but not at any price.

Incidentally, gaining access to Argos Click & Collect expertise hopefully does not rank high in terms of plus-points, given that this ‘mail-order’ company transitioned into ‘hard-copy’ click & collect as an extension of their original business rather than a high-tech entry into online…

It also goes without saying that Argos vs. Amazon is a no-contest battle, on any parameter…

In terms of upping-the-ante, with a market capitalisation of £5bn, a share price showing a 57% drop since 2008, and continuing pressure from the discounters, Sainsbury’s is not in a position to raise their bid significantly in the month that remains in which to make an improved offer.

However, having put HRG in the spotlight, other mults now have until 2nd February to assess the relative appeal of acquisition in terms of similar advantages to their businesses.

In practice, Tesco and Morrisons are currently distracted by more pressing issues, but Asda’s Walmart (Mkt Cap $196bn) would have little problem in covering ‘whatever it takes’ to add scale to their UK repertoire…

On balance, the next move depends on the extent to which Sainsbury’s faith in the future of Local convenience causes them to consider converting ‘as many as it takes’ of Argos 800 High Street outlets – moving more Argos ranges into larger Sainsbury’s outlets – into additional Local branches, and persuading their largest shareholder - Qatari - to make up the difference…

Tuesday 5 January 2016

Amazon Pantry could help itself to Ocado's lunch, but the combination impacts us all


                                                                                 Source: Wired via Business Insider

An article in Business Insider, acknowledges that the introduction of Amazon Pantry, already impacting Ocado shares, down 35% since June 2015, is hurting Ocado, but reports that Goldman Sachs has an interesting theory about how this might actually be good for Ocado.

Essentially, apart from putting Ocado into the takeover frame, Amazon Pantry will add to pressure on the mults, pointing them at possibly leasing Ocado's online platform and delivery infrastructure, and, as per Paul Clarke's presentation above, online grocery delivery is more complicated than general merchandise.

However, the real issue is that the combination of Amazon and Ocado expertise is raising the online bar to such an extent that other retailers may not even bother...

NB Making a difference to your online approach in 2016:  If you want a real insight into the unprecedented standards being set by Ocado in developing an online multi-product delivery-pipeline into your home, see CEO Paul Clarke's 16min +10min Q&A presentation to the Wired Retail conference above