Showing posts with label basics. Show all posts
Showing posts with label basics. Show all posts

Monday 5 August 2013

EasyGroup hopes to take on Aldi et al with budget supermarket plan

EasyJet founder Sir Stelios Haji-Ioannou plans to challenge low-cost food retailers by undercutting low prices offered by budget supermarkets Aldi and Lidl, concentrating on affordable, basic 'no-brand-name' packet and tinned foods at bargain prices.

Recent retail figures suggest the UK grocery market is becoming increasingly polarised with the strongest sales gains coming at the top and bottom ends – with the likes of Waitrose doing well on one side and Aldi and Lidl on the other.

Starting with a store in their Croydon building and using a new web site easyFoodstore.com, "coming soon", the company hopes to make a viable return on capital employed.

Several plus-points stand out:
  • This solus ‘white’ offering will have a unique focus compared with other retailers
  • Stelios may have identified a genuine niche in a market that will remain flat-line to low-end consumers, for many years
  • Aiming at ‘an acceptable return on capital’ and buying redundant high street outlets at low cost means the company will have very simple KPIs, with a focus on an ROCE of 10 -12%, in the current climate
  • Little shortage of suppliers willing to supply
  • Generic branding means goods can be multi-sourced to optimise leverage on cost prices
  • The formula is infinitely scalable at low cost, to optimise low-price demand…

The 'downside'?
Stelios is not a shopkeeper, but once-upon-a-time he did not know much about running airlines, either…   

Thursday 28 February 2013

High Street Winners & Losers: 'Just gimme the facts, NAM'*

High Street store closures: Just the facts... 
The BBC have highlighted analysis from PwC and the Local Data Company revealing that chains shut an average of 20 shops a day last year.

The facts: 
WINNERS
Payday Loans +20%
Pawnbrokers +13.2%
Poundshops +13%
Supermarkets +3.6%
Coffee shops +3.4%
Betting shops +3.3%
Charity shops +2.7%

LOSERS
Computer Games -45%
Health food -24.7%
Card shops -23.4%
Recruitment -15.1%
General clothes -8.7%
Women's clothes -7.2%
Banks/financial -2.9%
Net change in units in 2012. Source: Local Data Company

Who?
See KamBlog for list of 'casualties'

Why?
At the very least, the above figures reveal chronic over-capacity. This is only partly driven by retailers' inability to evolve an omni-channel response to the emergence of online.

Why now?
In turn, this overcapacity reflects equivalent levels of supplier-side ability to produce more than is now required as we continue to awaken from a thirty year dream of borrowing-based demand….

New demands from the super-savvy consumer
A new complication has been the meat crisis, merely the tip of an iceberg that is becoming a fundamental challenge to brand integrity. This is causing the super-savvy consumer to demand proof that ingredients actually match up to on-tin descriptions, adding this new requirement to their now constant demand for demonstrable value for money.

How to survive and thrive
For those that are managing to survive this mother-of-all-wake-up calls, paradoxically the way forward has to be a step back to basics, a fundamental review of consumer need, a realistic comparison with alternatives available, and then a stripping-back of the brand-offer to a precise fit with need, and priced accordingly…all communicated and made available, however, wherever and whenever the consumer beckons…
This is the new fact-based reality, folks….

* 'Just gimme the facts, MAM' was a catch-phrase from Dragnet, perhaps the most famous and influential police procedural drama in media history. The radio and TV series gave millions of audience members a feel for the boredom and drudgery, as well as the danger and heroism, of real-life police work.

Jack Webb wrote, produced and played lead Joe Friday. He insisted on realism in every aspect of the show. The dialogue was clipped, understated and sparse, influenced by the hard-boiled school of crime fiction. Scripts were fast moving but didn’t seem rushed. Every aspect of police work was chronicled, step by step: From patrols and paperwork, to crime scene investigation, lab work and questioning witnesses or suspects. The detectives’ personal lives were mentioned but rarely took centre stage.
A bit like the new-era role of the NAM, really…..

Tuesday 24 April 2012

Maths blunder wipes £170m off SuperGroup shares

A routine audit last week revealed a series of forecasting and accounting errors. The most basic error was the insertion of a 'plus' rather than a 'minus' into the fashion retailer’s company accounts, which contributed to its third profit warning since October.
The news wiped around £170m off the company's value as shares plummeted 38% to 351.8p in trading on 20 April.
Thinking positively, the person responsible should perhaps be thankful that the UK financial environment is relatively benign in that, apart from the impact on the share price, no personal retribution need be expected.….
Other geographies can be less tolerant...
For instance, in the early years following the fall of the Berlin Wall, a marketing director pal working in Moscow, issued a new trade discount structure at 0900, realised during coffee break he had inadvertently approved an arithmetical error that would cost some key distributors (with strong family ties in the ‘toe’ of Italy) significant sums before a correction would kick in…..
The company immediately despatched cars to his apartment and kindergarten to pick up his wife and child, and all three were on a flight out of Moscow by early afternoon….

KAM Moral: If you make a mistake in the numbers, be the first to discover, admit and have an appropriate correction plan ready.. You are already first at Square Two, take advantage of it…
In other words, get used to approximating ‘in your head’ and develop the ability to spot figures that do not add up (remember that manual skill that allowed you to graduate from kindergarten?), and always keep your car-keys in your pocket, just-in-case….  

Tuesday 27 March 2012

Same-price pack-size shrinkage, a con or what?

Given the status of the brands and companies involved, it is obvious that the letter of the law is being adhered to, in that weights and measures are all accurately displayed on the pack. It is not even about the spirit of the law, in that it not the job of the legislature to maintain consumer trust in a brand. It is not about economics in that most research will prove that prices of ingredients, energy and labour have consistently risen faster than improvements in NAMs' ability to negotiate trade price increases of equivalent value…

'Everyone doing it'?
Moreover, it is not about the fact that 'everyone is doing it', in that the degree of collusion required to accurately preserve market/category equilibrium would be in clear breach of the law.
It is not even a new phenomenon, given that many of us cherish memories of our first bar of Cadbury’s Milk Flake, when it seemed so large one did not even object to sharing it with a younger brother..

Perception is the problem
No, pack size shrinkage is really about perception, the fact that a brand that has worked so hard and so long on convincing me that their combination of Product, Price, Presentation and Place is better than the competition in terms of value for money, suddenly, without consultation, destabilises that trust by allowing me to conclude that I am no longer getting what I thought it said on the tin… Moreover, if the brand’s marketing mix previously offered only a marginal advantage over the competitor’s offering, then the competitor suddenly becomes a serious contender for my attentions and even loyalty, at least until the next price rise.....

We are all savvy consumers

It is especially an insult to my intelligence as a savvy consumer, a person who has survived by learning never again to outsource product and service decision-making to marketers and retailers, and has set demonstrable value-for-money as a prerequisite for any purchasing decision.

What to do about it?
In fact, all the clues are available in the notes above:
If a brand makes a fundamental change in the Marketing Mix, it destabilises the market/category’s status quo, and needs to ‘re-sell’ me on its advantages over available alternatives, (via an up-to-date Buying Mix Analysis). 
I am not interested in boring stuff about ingredient, energy and labour cost increases, the media are full of it, in between the bits about political and financial corruption. 
I don’t want to know about those nasty retailers unfairly refusing to allow adequate and logical price increases.
I simply want assurance (and increasingly, proof) that the brand’s combination of Product, Price, Presentation and Place is so overwhelming that I would not even dream of considering alternatives…
Seemple, uh?       (Seemple = Shorthand for 'seems simple' ; Uh? = please read again )

Thursday 23 April 2009

Budget action for NAMs & KAMs

Yesterday's budget side-stepped the real issues, the need to radically cut public spending and public sector employment…
Whilst the electorate will eventually take appropriate steps via the polls, NAMs & KAMs need to focus day-job activities on the here & now.

In other words really go back to basics.
Whilst the cliches abound, i.e. cut every cost (we have to assume everything possible has been cut), it is preferable to focus on making every £1 count…this means that if yours is a 10% net profit company, then every £10k spent on the customer needs incremental sales of £100k to justify the expense.
More importantly, it is crucial that your marketing colleagues re-assess your brand's pulling power with the consumer vs other brands and own label alternatives (try our Buying Mix Analysis tool for speed and consistency) and cut out the resulting 'me-toos' and passengers in the product portfolio.
Then apply the same technique to your customer portfolio to re-assess your appeal to each customer, using their latest financials..and form new trade partnerships.

These are radical moves, but yesterday the Chancellor proved that the problems are even more so.
Opportunities abound while others try to recover from shell-shock!!

Tuesday 24 March 2009

Retail - All change?

Given the differing levels and types of impact of the credit crunch upon different consumer segments (mortages, pensions, savings, stocks, employment) causing a radical re-balancing of consumer spending-profiles in the past six months, is it not reasonable to anticipate fundamental changes in the financial circumstances of your major customers?
With their different financial profiles in terms of market capitalisation, ROCE, share-price, levels of overdraft and stockholding, credit period, margins, terms and ownership vs leasing of premises, it follows that each customer has been affected in radically different ways by the shortage of money in the economy.

This means that their relative risks and value within your customer portfolio have changed, fundamentally.
Time for a reclassification of each in terms of invest, maintain or divest, followed by a re-audit of your pulling power relative to your competition in the eyes of each customer?
Or perhaps run the risk of waiting until it all settles down?

Thursday 19 March 2009

Recession-beating retailers: preppy, edgy or just cheap

Superdry is a fast-growing (+31%) British retailer (More) in recession with booming sales, no debt and a store opening programme in the UK and abroad. It has never advertised, never held a sale and has celebrities like David Beckham modelling its clothes not because they are getting paid to do so, but because they seem to like them.
Superdry is just one of the relatively upmarket retail brands (like Jack Wills, Reiss, All saints and Joules) aimed at teenagers and twentysomethings who are unhampered by the financial challenges currently facing their parents.
In other words, revisiting your consumer need-set, and your ability to meet it better than the competition, has to be a way to join the recession-busters..
And cut out anything surplus to consumer need, before the market does it on your behalf...