Is nothing sacred? Amazon predicts record Christmas day sales

Amazon is predicting record sales on Christmas day this year, as the online retailer kicks off its Boxing Day sale early. The sale will begin on Christmas itself and transactions are expected to peak at around 8.30pm as customers log on after the day's festivities.

It is not know how many purchases result from the discovery that expected presents from loved ones did not materialise…

In other words, if one had one’s heart set on a certain item, why not conduct a ‘selfie’ present-wise, from the closest one of all…

Seriously, have a really funny Christmas and a New Year with a difference!

Bottom Line: Aldi and Lidl are not just for Christmas

Despite the fact that 50% of the UK population have 'discovered' the discounters, and the insight is spreading across the whole social spectrum {If in doubt, why not add to the stats by going to your nearest Lidl and noting the variety of cars in the packed car-park?}, and into the upper reaches of the product portfolio (the Norwegian smoked salmon and reindeer meat are particularly good!), the key issue is permanence rather than pre-Christmas novelty.

Penetration
In fact, ABC1s (the traditional middle classes) made up just 25 per cent of discounter shoppers in 2011.
Last year that rose to 41 per cent – Aldi is no longer the preserve of the cash-strapped student stocking up for a house party.

With a combined UK market share of 6.9% (whilst in Ireland they have reached 14.3% share of market, and growing), it is worth remembering that this was not meant to happen, in the retail-sophisticated UK market...

However, the unprecedented global financial crisis has created the right place and time for the discounters, permanently...

Think about it, the savvy consumer is now in play, with a determination not to accept anything less than demonstrable value-for-money, all hard-wired into their psyche, not to be forgotten when the economy begins to rise above flatline..

In other words, it is unlikely that the discounters will sacrifice share in the post-Christmas 'hangover'...

However, if we all stick to high-end discounter alcohol, the negative after-effects should be minimal, allowing us to look forward to optimising flat-line 2014, hand-in-hand with Lidl old Aldi...

Google Glass Selfie...?

Debenhams ‘little help’ from suppliers...

If you have received notice of an alleged discount  of 2.5% on invoices outstanding on 17th December, you will have already calculated the incremental sales you need via Debenhams to cover the cost…?

Workings: (simply substitute your figures below)

• Suppose Sales to the customer £2m/annum, average payment period 45 days, i.e. 365/45, i.e. 8 times /year
• Suppose your Net Profit, before tax on customer’s business is 5%
• Average amount outstanding is £250k i.e. £2m/8
• 2.5% of £250k  is £6.25k i.e. by allowing an additional 2.5% off invoice, you are giving £6.25k from your net profit, before tax, to the customer
• Therefore, £6.25k/5 x 100 = £125k = incremental sales you require to cover the cost of making an additional investment of £6.25k in the customer…

This raises several issues:

• Creation of a precedent in terms of similar retrospective demands from customers in the future – ‘remember that new store we opened in ’93?’
• One more step towards ‘common industry practice’ quotable by other retailers requiring similar help from suppliers
• A reminder that in  buying and selling, one is dealing with independent legal entities, making what should be legally enforceable agreements…
• A deal is a deal, or should be… i.e. a retrospective demand without consultation undermines an agreement, and should be a trigger for renegotiation, or walkaway…

Opportunity
Given these unprecedented times, this type of request should be an opportunity to check out the consequences of each customer wanting similar help i.e. if your total UK sales are £50m, a 2.5% ‘one-off’ discount on outstanding invoices would require incremental sales of £3,125k, in a flat-line environment…. However, if all suppliers stand firm on existing agreements, causing some customers to eventually go bust, then perhaps running a ‘what if’ calculation on the financial consequences of a customer going into liquidation should form part of a reassessment of your total relationship with major customers, on the way to fair share negotiation…

Eventually, all suppliers will have to face up to the reality of 'what business they are in', the reward-for-risk balance required to make it worthwhile, with the Debenhams Christmas initiative presenting an opportunity to scope out the options available, before the banks do it for you…

'For things to remain the same, everything must change..'. The Leopard

                                                                                                            A PennLive editorial cartoon 

Taking pleasure at Aldi & Lidl's Irish business model

A new Mickey MacConnell song going the pub-rounds explains the compulsive appeal of the German discounters...

For non-native speakers, the lyrics are given below, courtesy of Noreen @ Mudcat.  Following which the Youtube version below should present only opportunities...  (Thanks Martin)

THE BALLAD OF LIDL AND ALDI
(Mickey MacConnell)

Well the wife she broke her ankle when she tumbled off the bike
Leaving me to do the housework, a job I never liked
And doing the weekly shopping seemed a dreadful chore to me
'Til I discovered LidldiAldi, LidldiAldi LidldiAldi Lidldidee.
Now I just can't wait for Thursdays when the specials go on view
I'm the first man to the trolleys; I'm the first man in the queue
For now I know what women mean about retail therapy
It's LidldiAldi, LidldiAldi LidldiAldi Lidldidee.

Its angle grinders and black puddings and a pot of German jam
A lump of heavy bacon and a wet suit from Japan
And a pack of streaky rashers, a crate of Russian stout
And a portable generator just in case the lights go out
Alloy wheels and windscreen wipers and a bag of Rooster spuds
An inflatable rubber dinghy to help survive the floods
Spanners, sockets and fish fingers, they're so cheap they're damn near free
At LidldiAldi, LidldiAldi, LidldiAldi, Lidldidee.

Now there's welding rods and prime organic beef to make a hearty stew
A hiking staff and spiky boots for climbing Kathmandu
Big heads of curly cabbage to make you eat your fill
Sledgehammers and bananas and a lovely cordless drill
And there's hatchets and hamburgers and there's tins of beans and peas
And a petrol driven chainsaw for cutting bits off trees
Strimmers, sabres, saws and sausages, computers and TVs
At LidldiAldi, LidldiAldi LidldiAldi Lidldidee.

Now the wife has gone ballistic, marriage heading for the rocks
With her crutches and her shopping bag now she's hobbling round the shops
And she's cut up all me credit cards, I'm sad as sad can be
No more Aldi LidldiAldi, no more Lidldidee for me.
For the shed is full of plastic shit I didn't really want
And the gardens full of furniture and the house is full of plants
And I'm living in the doghouse; Rover, Fido, Shep and me
Because of Aldi LidldiAldi LidldiAldi Lidldidee.

So no more angle grinders nor black puddings, no more pots of German jam
No lumps of heavy bacon, no more wet suits from Japan
No packs of streaky rashers, and I'll have to do without
Another portable generator just in case the lights go out
No alloy wheels, no windscreen wipers, no bags of Rooster spuds
No inflatable rubber dinghies to help survive the floods
For I am living in the doghouse I'm as sad as sad can be,
No more Aldi LidldiAldi, no more Lidldidee for me!

Money-laundering Convenience on the High Street?

NAMs that may have noticed an increase in the numbers of High Street betting shops - those who have not, are probably working in the wrong areas - cannot miss the Fixed-Odds-Betting-Machines (FOBTs), often four per shop.

FOBTs can  be used for money laundering by paying cash into the terminal, making low-risk bets which involve a small relative loss, and withdrawing most of the proceeds as a voucher which are exchanged for cash at the shop counter.

Academically interested in how it works?
The most popular game is Roulette, which as you know pays out even money on Red and Black, and usually 35+ to 1 on the ‘Zero’ on the wheel.

NB. Thanks to Anonymous below, I have now made enquiries via 'trusted trade sources' and find that there is a £100 betting limit per game, so the amended illustration works out as follows:

A punter places £47.50 on Red, £47.50 on Black and £5 on Zero. A win on Red or Black pays £47.50 plus the original stake, and the £5 on Zero is lost.

The punter cashes in and walks out with £95, freshly laundered…  In other words, for a small charge i.e. the lost bets, most of the money is ‘cleansed’...

An FOBT allows players to bet on the outcome of various games and events with fixed odds, mainly roulette. The minimum amount wagered per spin is £1. The maximum bet cannot exceed a payout of £500 (i.e. putting £14.00 on a single number on roulette). The largest single payout cannot exceed £500.

The terminals arrived in Britain in 2001 and were lightly regulated from the outset. Punters in bookmakers found that they could bet £100 every 20 seconds on roulette. The temptation of high-speed, high-stake casino games in the high street proved irresistible: there are now 33,345 FOBTs in the UK.

Like all casino games, the "house" (i.e. the casino) has a built-in advantage, with current margins on roulette games being theoretically between 2.7% and 5%.

So it can be said there are still signs of life, and death, on the High Street… 

Return On CONVENIENCE Employed - the real reason for the Big 4 switch to convenience?

With small local stores offering higher Returns On Capital Employed - leasing rather than owning means less capital employed – allows major retailers to compensate for the diminishing ROCEs on their traditional estates. Following the global financial crisis Big 4 ROCEs have reached 10-12%, while Walmart still turn in 19%+ per annum…and as you know, ROCE drives share price performance…

Mintel forecasts Britain's convenience sector sales will grow 5 percent to £43.3bn in 2013 and jump to £54.1bn by 2018. Since the economic downturn, careful consumers now prefer to buy little and often and do so in the shop around the corner rather than out of town superstores, to save on the rising cost of petrol.

Recognising that small local convenience stores, along with the internet, will be the main driver of future sales growth, the Big 4 are all prioritising investment there.

Both convenience and online business require relatively little capital compared to developing large supermarket spaces. But crucially, while the profitability of online grocery is not yet proven, the returns from convenience stores can be, albeit without the benefits of scale economies in terms of running costs….

Apart from the obvious gains in terms of profitability and meeting more shopper-needs, this business shift, combined with supply chain efficiencies making two facings do the work of four in large space retail, has to mean increased space-redundancy in the Big 4’s larger outlets…

In practice, whilst the move to online and convenience will compensate in the short term, unless the major retailers find alternative uses for some larger outlets, overall ROCEs - and share prices - will continue to fall…

In the meantime, NAMs can help by emphasising ways in which their brands can be used to drive retail ROCEs in both formats, but this time with a ‘guarantee’ of a more attentive, share-owning buyer…

Belfast Tesco manager’s eye-watering engagement with shopper…

A fisherman grabbed a Tesco manager by the testicles and refused to let go after being stopped over an £800 shoplifting spree, a court has heard.

It was claimed he went into Tesco Newtownbreda Road on 5 December, took security tags off various goods and put them in bags.

Members of the public had to help release his grip as the victim suffered "extreme pain", prosecutors said....

Up to this point it was not clear if the initiative was opportunistic, or simply an extension of the Tesco £1bn ‘turnaround’ plan in terms of “grabbing management by the balls, and their hearts and minds will follow…”

Dying to live at home?

                                                                                                                                                     pic: BBC
The late Victorians and the Edwardians lived through a domestic revolution. Theirs was a bold and exciting age of innovation, groundbreaking discoveries and dramatic scientific changes, many of which altered life at home in profound ways - including some that were terrible and unforeseen, writes historian Dr Suzannah Lipscomb in BBC News.

1. Bread adulterated with alum
2. Boracic acid in milk
3. Exploding toilets
4. Killer staircases
5. Flammable parkesine (celluloid)
6. Carbolic acid poisoning
7. Radium (radiation poisoning)
8. The wonder material (asbestos)
9. Fridges design flaws
10. Electricity (quick & effective)

See original article for details & pics

Given our ‘progress’ in a hundred years, makes the horse-meat issue a bit passé?

Fancy a new iPad at 95% discount? - the QuiBids penny-auction model

QuiBids is the world’s largest retail website that operates as a bidding fee auction, also known as a penny auction. The price of auctioned products increase by one QuiBids penny with each bid, which are equal to $0.60, and bidding doesn't start until there is only 5 minutes left in the auction. The final price are typically much lower than other auctions, but all bidders pay $0.60 each time they bid. Losers of the auction have the option of paying the retail price, minus the cost of their bids.

Their product selection runs from the latest Apple products - iPads, iPods, and MacBooks - to high definition televisions, gift cards to top retailers, and much more. To name a few recent sale prices of items like this, a New Apple iPad recently sold for £33.77, a Kindle Fire sold for £15.83, and a HP Laptop sold for £20.83.

For an auction winner, the true cost of an item won at auction is a bit higher than the final auction price because of the amount the auction winner spent bidding to win. But it’s typically modest, and even after bids, most winners save at least 75% off retail.

The OFT have some issues with some versions of the model and offer some pitfalls and offer advice here

There are obviously issues ref. the model’s similarity to a lottery, but with care, the penny auction - via sales to losers - can represent another route to consumer, and further dilution of trade concentration…..

The 'what-if' training dilemma...

"What if we train our NAMs , and they leave...?"
"What if you don't, and they stay...?

Google voice search - the lowtech London billboard crossover?

Google wanted to change consumers' behaviour, and inject some wit and romance into a Google service that could feel cold and distant.

The solution: 
Hyper-relevant context. Google identified London landmarks, and placed relevant billboards nearby in a total of 150 different creative executions around the city. For example, a billboard that said "Ley-tist Skohrz" was placed outside Chelsea FC. Because the service is voice search, the words were written phonetically, drawing further attention, in one of the most media-saturated cities on the planet. More pic-examples here.

Why it won the Media Grand Prix:
The campaign combined the three fundamentals of advertising: technology, analytics and storytelling, with technology driving targeting driving briefing and strategy and eventually creative, a reverse of the normal sequence...

The result:
Google and Manning Gottlieb OMD shop in the U.K. won the Media Grand Prix at the Cannes Lions International Festival of Creativity in 2012

More importantly, voice search in London more than doubled. 

A sign of the times?

"The only artists making a living nowadays are dead ones"
From the movie Blue is the Warmest Colour, a compelling study of relationships....

Managing uncertainty amidst the chaos

At a time when Tesco looks worse, Sainsbury’s are racing back to former glories, Boots, a basket-case only a few years ago but now looking global, Lidl stocking lobsters, and a virtual collapse in demand-growth, most NAMs could be excused for wanting to await a settling down in the market and the emergence of familiar patterns….

However, proactive NAMs know that the ability to cope with the current conditions determines real success in account management.

In other words, treating a flatline market as normal, and factoring risk into trade strategies has to be a way forward.

This means acknowledging that any growth has to come at the expense of the competition, requiring competitive profiling via a buying mix analysis.

It also means facing up to ‘permanent uncertainty’ by conducting a risk analysis for key options and initiatives. In practice this means exploring the impact on the business (high, medium or low), and chance of occurrence (high, medium or low) and developing contingency plans where things going wrong have high impact or a high chance of occurrence, or both.

Uncertainty can then be recognised for what it is, merely a stage in market development…    

Why You Spend More Money on Warm Days

New research in the Journal of Consumer Psychology by researchers led by Yonat Zwebner of The Hebrew University of Jerusalem, offers evidence that people value products more highly when they’re feeling comfortably warm. They argue that “exposure to physical warmth activates the concept of emotional warmth,” producing positive emotions and increasing the items’ perceived worth.

A series of experiments revealed a common thread:

The first was a large-scale study that looked at more than six million clicks on a price-comparison website, each of which indicated the intention to purchase a specific product. The researchers looked at two years’ worth of data on eight categories of products (such as watches), and compared the decision to buy with the average temperature on each day, finding “a significant positive effect of temperature on intention-to-purchase”.

A second experiment featured 46 university students, who were randomly assigned to hold and examine either a warm or cool therapeutic pad for 10 seconds “under the guise of a product-evaluation task.” Participants who held the warm pad were willing to pay significantly more for products offered for sale.

For the third experiment, researchers manipulated the temperature in the room where the study was conducted. Students looked at 11 images of “different target products that college students typically consume,” and asked how much they were willing to pay for each. Those in the warm room were willing to pay more for nine of the 11 products.

Conclusion: “Physical warmth induces emotional warmth, which generates greater positive reactions.”

At last, a possible explanation for why the lower temperature in buyers' offices may not be a reflection of the customer's energy conservation policies - or mood! - after all, despite your attempts at prolonged hand-shaking and even hugs.... 

(Thanks to Andrew Sullivan for the pointer)

Amazon 30 mins delivery by DRONE - in Bezos dreams?

Jeff Bezos has announced the online retailer has secretly been testing drones that can delivery packages directly to people's doors.  However, the project is at least five years from reality due to still-to-be-determined FAA regulations.

As you know, an octocopter is a type of rotorcraft - or drone - that is powered by eight rotor helicopter blades. Each of the arms are operated by their own motor. For this reason they are designed and used to lift 'heavy' objects. It is also makes them less likely to breakdown if there is a problem with one of the blades. Amazon say their self-made octocopters will be able to carry packages weighing up to five pounds, which accounts for about 86% of the items the company delivers.

Whilst the drones may be a PR stunt, and selling books online seemed  a 'no-go' a few years ago, Jeff's drone-dreams may become a nightmare for competitors...

...leaving time for a few what-ifs for those that feel they can still stay in the game...?

Every Lidl helps? - making do at the top…

The Squeezed Upper Shopping List

Lidl: Parma Prosciutto di Parma
90g, £1.99
- Ocado: Parma Ham, 85g, £3

Lidl: Vitasia Coconut milk, 400ml, 79p
- Waitrose: Essential Coconut Milk, 400ml, £1.89

Lidl: Vitafit Cloudy Apple Juice, 1 Litre, 99p
- Sainsbury’s: Copella Apple Juice 1.25 Litre, £2.80

Lidl: Deluxe British steak & ale pie, 540g, £2.49
- Tesco: steak and ale puff pastry pie, 550g, £3.50

Lidl: Barella Pesto Alla Genovese, 190g, 99p
- Tesco: Sacla Classic Basil Pesto, 190g, £2.20
(on offer at two for £4 until Jan 2)

Source: The Times, Thursday 28th Nov 2013

Problem: How can we get them back in segment, when they have lived a Lidl…?

China thief sends iPhone owner handwritten numbers

The pickpocket is believed to have taken the Apple handset from Zou Bin when they shared a taxi, the Xinhua news agency said.

Zou had nearly 1,000 contact numbers in the device and with no backup copy - like millions of other people around the world - he was more concerned about losing the data than the phone itself, it added.

Given Zou’s business involvement in the pub industry (a tough-guy business in most places), and aping Liam Neeson’s approach in the movie ‘Taken’, Zou’s text to the thief had the desired effect.

"I know you are the man who sat beside me. I can assure you that I will find you," he said in a text message to the thief.

"Look through the contact numbers in my mobile and you will know what trade I am in," he added. "Send me back the phone to the address below if you are sensible."

The thief painstakingly wrote out 11 pages of telephone numbers from the stolen iPhone and sent them and the sim-card to the owner within days…

NAMs outside the pub industry might find it more convenient to back up their phones occasionally…

Champagne vending: Moët goes multichannel?

The world's first Moët  & Chandon vending machine, which has just been installed in the Christmas Shop on the fourth floor of Selfridges, comes stocked with 350 art deco-inspired Swarovski crystal-adorned mini-bottles, a snip at £17.99 each….

Scope for provision of chilled flutes - and perhaps party-hats - to complete the instore theatricality for impulse-tasters…?

Face and barcode scanning a little passe? Ground-Breaking project to brain-scan shoppers...

Dr Paul Mullins and Dr Helen Morgan from the School of Psychology put a shopper through the fMRI scanner.

Psychologists at Bangor University are to brain-scan supermarket-shoppers to test their reactions to promotions and special offers in a major cutting-edge project  with one of Europe’s leading shopping behaviour specialists.

The project, to be carried out jointly by UK-based SBXL and the respected School of Psychology, will ask selected shoppers to simulate an £80 grocery shop in a supermarket, while going through a £3m 20-ton medical fMRI scanner.

A full range of supermarket products are displayed on a screen in front of them and they are asked to make normal shopping choices from a shopping list while faced with a wide range or promotions and special offers. The aim is to identify which part of the brain is involved in making choices by measuring blood flow and brain activity.

Early research suggests that around 23 minutes into their shop, customers begin to make choices with the emotional part of their brain – which can only guess at value for money – rather than the cognitive part of the brain which is capable of computation and logical decision-making. Results also show that after 40 minutes – the time taken for a typical weekly shop – the brain gets tired and effectively shuts down, ceasing to form rational thoughts.

Previous SBXL research that the brain behaves illogically when faced with the sort of information overload that shoppers are faced with in a typical supermarket. Previous research has shown us that nearly 20 per cent of shoppers are likely to put special offers in their basket even if they are more expensive than the normal product, and we know that nearly half of shoppers ignore buy-one-get-one-free items and only choose one.

Given that approximately a quarter of all products on supermarket shelves are on some kind of offer or promotion, this indicates that many millions of pounds at stake in lost margins if the supermarkets are getting it wrong. SBXL estimates that supermarkets and brands consistently give away 23 per cent more margin than they need to.

Hopefully, the research will help suppliers and retailers get to a closer realisation and satisfaction of real shopper 'need', rather than 'want'...

In other words, although the shopper is behaving illogically in selecting a 'special offer' that is more expensive than the normal product, there is perhaps more mileage for the retailer in pointing out the shopper's 'error' than making a few pence extra on the 'mis-purchase'...

A Quality Street in Tesco?

                                                                             pic: Tesco, Church St Hove, Brian Moore 24-11-13

The Squeezed Upper feels the pressure?

                                                pic: Waitrose, Marylebone High Street 23-11-13
Half Price Salmon & Champagne...

Entomophagy - Insect eating - crawls on to Paris menus

In the hip Montmartre neighbourhood of Paris, Le Festin Nu (The Naked Lunch) bistro gives customers the chance to select from a variety of entomological treats.

To accompany your glass of vin naturel (organic wine), you can try palm weevils with beetroot and oil of truffle; water scorpion with preserved peppers and black garlic; or grasshopper with quail's eggs.

Although insect snacks are relatively new to Europe, here's a taster of some of the world's delicacies:

• Colombia - roasted "hormigas culonas" (large-bottomed ants) are popular in certain regions
• Japan - "hachinoko" (boiled wasp larvae) and "zazamushi" (aquatic insect larvae) are two of a number of insect-based Japanese treats
• Nigeria - in some areas people feast on insects including termites, caterpillars, and compost beetle larvae. Queen termites are considered a delicacy and are only eaten by adults, according to the University of Kentucky
• Mexico - grasshopper tacos are just one delicacy to come from the country's estimated 300 to 550 species of edible insects

A report this year from the UN's Food and Agriculture Organisation (FAO) was seen as a call to action.

So even global KAMs in far flung places can entice the buyer with local delicacies…
…while their UK counterparts experiment on partners and colleagues before introducing it as a negotiation ploy…

Amazon Expanding Its Own Private Label Offering to Supermarket Goods?

Recent postings by Amazon give another reason for keeping an eye on job listings…

Allthings D report that one of the listings, for a financial analyst, mentioned the “launch of the Private Label Business in Consumables.” In another, for a “Senior Product Manager, Consumables Private Label,” Amazon said it is looking for the new hire to help “launch new high quality Amazon-branded products to our global customers.”

The consumables business at Amazon includes categories such as grocery, health, personal care and baby products. The AmazonFresh grocery delivery business also is part of the area.

Although Amazon private label has had a low profile to date, we believe that the ongoing recession is causing the company to mirror the growth of private label in classic retail.

Given the level of Amazon credibility, combined with its service record and responsiveness to consumer demand, the idea seems a ‘no-brainer’.

Either way, surely worth a what-if by branded and private label suppliers alike?

Hat-tip to Lisa Byfield-Green for pointing us at this news item

Alcohol update: the new poitín (poteen) subcategory

How poitín went from illegal moonshine to being sold in Tesco Ireland

Intensive catchup briefing for NAMs:

1. It is one of the most strongly alcoholic drinks on the planet. Homemade poitín can be anywhere between 50 and 90% alcohol by volume vs. average beer 4 to 6% and whiskey 40%. 
2. The first record of it is from the 6th century but it was illegal in Ireland for 300 years and was only legalised in 1997.
3. Purists may not like it but poitín is shedding its reputation as illegal moonshine and is for sale (legally) in shops and pubs around Ireland.

For those without DIY facilities, there are at least five companies in Ireland now selling poitín which can be bought in pubs and off-licences, while London cocktail bar Shebeen is selling eight different types of poitín, including one version made from potatoes in San Francisco. Irish company Coomara Irish Spirits recently made the biggest ever legal shipment of poitín to supermarket chain Tesco, which began stocking the spirit earlier this year.

NB. For those determined to try, the legal version of poitín is 40% and has been granted Geographical Indicative Status by the EU. As you know, this means that in the same way that champagne has to come from a certain area of France and Parmesan cheese can only come from a particular part of Italy, poitín can only come from Ireland.

NAM advice: i.e. Do read the label before you cannot.....
(For more exotic tastes, try Asian Snake Whiskey)

"Phil, about your new taxi-app.........?"

Social supermarket for the poorest Shoppers....

According to The Star, Britain’s cheapest supermarket is to open in Barnsley, South Yorkshire next month - stocked with cut-price food other stores have thrown out.

This members-only shop will carry a comprehensive range of food products priced at 30% of normal retail prices. Twenty more are planned for the UK next year, six in London.

Slow to emerge in the UK, and with 1,000 already open in Spain and Greece, the number of so-called social supermarkets in Austria has risen from around 40 in 2009 up to a current number of about 70. These supermarkets allow people at risk of poverty to purchase their daily groceries at lower cost than in normal supermarkets.

These supermarkets are commonly organised as charitable foundations. They collect excess or rejected goods from normal supermarkets and sell these to the needy at rock-bottom prices. While the quality of these products is normal, their packaging may be damaged, they could be mislabelled, or they may be approaching their expiration date. Shelves are mostly filled with products satisfying daily needs, such as dairy products, bread, pasta, fruit and vegetables, but also household products, toiletries, and books. These goods are usually one to two thirds cheaper than at regular supermarkets; bread is often free. Only people with per capita incomes of less than around 900 euros are entitled to purchase at social supermarkets.

Whilst social supermarkets represent an outlet for retailers' surplus/near-waste products, this emerging channel has to provide an opportunity for suppliers to find a socially beneficial outlet for suitable products.

...and for the really imaginative retailer, why not convert an outlet scheduled for closure, and really make a difference?  

If Poundland is good enough for Jane Asher?

Then perhaps its time to add discounters to your mainstream trade strategies...

News that Jane Asher will launch a Poundland bakeware collection should be a final indicator that suppliers need to factor budget retailing into their long-term trade strategies... The range will be rolled out across Poundland's 490-plus UK and Irish shops in spring 2014. Each item will sell for £1, including multipacks such as three wooden spoons and six silicone cases.

Asher said: "In my new Poundland range this will no longer be a problem as all the baking essentials are covered and offer amazing value for money. The range is very pretty, and comes in four pastel colours which can be mixed and matched. I've also included six quick, easy and delicious cake mixes."

In other words, a serious 'first' in celebrity endorsement for Poundland, while Aldi's Glen Orrin whisky makes an offer your cannot refuse at £55 for a 30 year old treat worth £150...

But added to share gains for Aldi and Lidl, and a prospect of flatline demand (real volume rather than political spin) for the next decade means that discounters deserve a permanent place in your long term mainstream trade strategies...

Meanwhile, if caviar is good enough for Lidl....

Lidl Caviar - playing each end of the 'squeezed middle'?

                                                                                        pic: Brian Moore - Lidl, Brighton (14.11.2013)

Have we all underestimated the discounters?

M&S Pre-launch pricing, or inflationary anticipation?

                                                        pic: Brian Moore - M&S Shoreham Road, BN43 6TD (9.11.2013)

Jewelled fruit cake, £8, will be £12....

Stage 1: Pre-launch price

Stage 2: Launch price

Stage 3: ......................?

Delicious, by the way...!

Shops Closed, meaning c-l-o-s-e-d!

                                                                                             pic: Brian Moore - Preston Street, Brighton

..........until an acknowledgement of overcapacity allows a return to domestic accommodation

Who’s minding the shopper?

The old deathbed story raises an interesting dilemma in retailing today:
An elderly shopkeeper on his deathbed asks for his wife and then for each of his six children. When the last one replies “I’m here” the old guy demands: “then who’s minding the shop?”

In other words, if the key retail stakeholders are all pre-occupied with survival and continuity of the business, then who’s minding the shopper?

Most of us accept the fact that, given the extent of their loyalty-data insight, compared with that of the supplier, and if knowledge defines ownership, the major retailers now ‘own’ the shopper. Despite the fact that a retailer’s knowledge is mainly derived from analysis of shopping behaviour, their increasing share of consumption via own label growth also means that they have potential access to the shopper’s consumers, and their consumption behaviour.

They are thus capable of leveraging shopper insight in also taking ownership of the consumer…

Unfortunately, ownership does not guarantee action in the best interests of the shopping consumer…
This means that brand owners need to enter the aisle and ‘hand-hold’ the shopper in an attempt to complete the intended purchase in favour of brand-consumer and supplier…

More in this month’s edition of NamNews, now in your mailbox.

Understanding the shopping-consumer

At the moment of purchase a shopping-consumer’s world is all about one SKU, with potential access to all possible alternatives, literally at their fingertips…

Meanwhile, a retailer is coming from a perspective that covers the entire shop’s offering, a world of up to 50,000 SKUs, an expert in selection.

This classic case of depth vs. breadth can be synergistic in that the shopping-consumer can be reassured by the assumption that the retailer, as expert, has surveyed the entire market on their behalf and is now presenting the best offer available. Moreover, the shopper is also taking for granted the implied endorsement i.e. that the product contains ‘what it says on the tin’, especially given the fact that the shopping-consumer may also be making the purchase-decision on behalf of family, etc.

One can only imagine the shopper’s reaction when even a cursory check reveals they have been misled, or even short-changed, either financially, or in terms of what they expected to receive for the money... Moreover, they have a hand-held means of communicating their dis-satisfaction well beyond the walls of the store…

Whereas, if the retailer plays by even the rudimentary rules of consumer marketing, and meets or even exceeds shopper-expectation, they can harness the positive aspects a shopper’s ability to ‘tell a friend’, endorse a purchase and even recommend a visit… 

Looks not tips the key to a good table in Paris

For the handful of NAMs that still treat buyer-lunches as a trade investment, latest news from Paris indicate a need for new facial KPIs in making a non-refuse lunch-offer to key buyers...

According to satirical weekly Le Canard Enchaine, it's the quality of diners' looks -- not the size of their tips -- that make the difference at Le Georges, the upmarket restaurant on the top floor of the Pompidou Centre, and the Cafe Marly, which occupies a prime spot within the Louvre museum.

Two waitresses who have recently quit Le Georges told the weekly that they were ordered to sort customers into the good looking and the, ahem, less good looking. Those who made the cut were seated in prominent positions at the front of the restaurant while those who got the thumbs down were ushered off to the back, preferably out of sight.

At the Cafe Marly, the pavement terrace was reportedly declared an ugly-free zone with anyone seeking to reserve by phone systematically told, "We'll do our best but we can't guarantee it," pending a looks appraisal on arrival.

Mobile KamTip:
To bypass the screening process, why not attach a badly lit pic of George Clooney/Sandra Bullock to your mobile request for a down-to-earth table in a spacious corner?

Have a real weekend in unreal times, from the NamNews Team!

See it, snap it, buy it: the new way to shop online...

"We shop with our eyes, so why not search with a photo?" asks Jenny Griffiths, founder and CEO of Snap Fashion, the fashion search engine that uses pictures instead of words.

Her idea was born out of her frustration at trying and failing to find affordable equivalents to the designer clothes she found in fashion magazines. When regular search engines failed to quench her affordable fashion thirst - there are after all only so many ways you can describe an item of clothing to Google - the 26-year-old realised that her quest would be markedly easier if she could just submit a photo of the item she was searching for.

Snap Fashion obviously meets a shopper-need, but savvy NAMs will appreciate that there is a much bigger idea lurking here…

In other words, this is all about pattern and shape recognition. So anytime you see an ornament, poster, piece of furniture, hairstyle, gadget, or even a foreign-language version pack of a ‘well-known’ brand and ‘you don’t like to ask’, a simple pic will help you to find an affordable source..

In fact, all it would take is for a company called Amazon to adapt the software to their site to flesh out the real potential….

"clicks to bricks" - Online retailers move into the High Street

Rapha Cycle Club on Brewer Street, near Piccadilly Circus

"Retail observers have been significantly overestimating our use of online and digital technology for shopping - we like shopping in stores," says Nicole Flasch-Mihalko of LIM College, which carried out a survey with the National Retail Federation in the US.

A number of online retailers have taken the survey findings to heart....
For instance, Rapha, which started as an online business in 2004 selling high-performance cyclewear, opened its first store or Cycle Club in San Francisco in 2011. Now it also has branches in London, Osaka, New York and Sydney.

Rapha says its stores have been a big hit with customers, offering a showcase for its clothing but also acting as a place to absorb cycle culture - to drink coffee, join in organised cycle rides and watch major races on big screens.

For High Street landlords with vacant space to rent as well as online start-ups this trend is good news, says Ross Bailey, founder and chief executive of Appear Here. His firm brings together shop landlords and mainly e-commerce entrepreneurs, with the aim of making renting a pop-up or permanent physical shop easier and more flexible.

The key idea is online retailers - Ronliners -, with no baggage or no preconceived notion of what works in classic retailing, but especially with little to fear from the emergence of online, can focus on the shopper's experiential interaction with the product, secure in the knowledge that they have already secured the ongoing deal...

...while their traditional competitors focus on restricting access to the instore wifi... 

Perks of an MP include free snuff...

MPs are being supplied with snuff at taxpayers’ expense, according to an official guide to life in Parliament.

“No, no, Minister, just one pinch per nostril”

The Customer's P&L - A road-map for your business?

Despite the fact that using a customer's latest P&L for guidance can be a little like driving via the rear-view mirror, five years after the global financial crisis, the effects are now truly evident in most retailer's Annual Accounts.

For instance, where retailers were producing ROCEs of 15+%, Net Margins of 5+% and Stockturns of 20 times per annum, latest results are showing performances of half these levels, or worse...

With one exception: Walmart, the retail elephant in the room.

This global player, on a low-price platform, continues to generate an ROCE of 19.6%, a Net Margin of 5.5% and a Stockturn of 10.7 times/annum, thereby demonstrating that it is still possible to achieve these results in retail... 

(incidentally, for those with an eye for detail, Walmart's 'low' stockturn reflects their mix of categories and the geographical scale of the US. When and if Walmart ever comes under ROCE pressure, they can simply insist on smaller, more frequent deliveries from 'eager-to-jump' suppliers...)

In turn, Walmart's performance puts pressure on other retailer's to revert at least to their pre-crisis performance levels in order to support their share prices.

...and as you know, a low share price encourages takeover bids, even in well-ordered, 'growing' economies...

In other words, retailers need suppliers, more than ever before.

In turn, NAMs need to be able to cost out each element of the remuneration package - margin, terms, trade-investment and deductions - and demonstrate each element's impact on the retailer's P&L and Balance Sheet, using the supplier's own P&L to measure progress...

Hopefully a little more engaging than making endless excuses ref inadequate trade investment funds...? 

(For a focused discussion on how this can work in your case, pls give me a call +44 (0)7977 273409)

UK shoppers replace loyalty cards with phones

A new survey from CloudZync via a poll of 2,000 consumers shows that while the average leather wallet now contains four loyalty cards, people have access to six schemes on their handsets.

Supermarkets are falling behind in the digital race - 92% of respondents have a physical card for Tesco, Sainsbury's or one of their rivals yet only 36% have a mobile scheme.

Furthermore, loyalty card users have on average £83 worth of redeemable points across their schemes at any point in time, and UK shoppers have cashed in on over £4 billion worth of points over the past year.

However, around £150 million in points remain unclaimed. Explaining why, 27% say that it takes too long to start earning benefits, 18% say they don't carry their cards in their wallets, and 14% don't remember to add on their points even when paying in-store.

In other words, traditional retailers are operating in ‘inertia-land’, on the assumption that low redemption rates will continue…

However, as with the infamous Hoover air-miles fiasco, if consumers are presented with more effective ways of managing their loyalty point redemption, current levels of inertia could disappear and be replaced by soaring redemption-levels, well beyond retailer expectations…

An app-nightmare in the making? 

Cocktails with aspirations - something special for the weekend?

NB. Large detailed version here

Circular outsourcing?

Source: Kevin Kelly http://kk.org/kk/ Scott Adams was ahead by a whole decade. From Dilbert, August 3, 2003

Sainsbury's taking Tesco to court over Price Promise – a definition of like-with-like?

Sainsbury’s move to obtain a judicial review is good in that it is an attempt to distinguish a legal ‘letter-and-spirit’ issue from a true like-with-like comparison of what a consumer gets for the money.

In other words, when Tesco and the watchdog's independent reviewer Sir Hayden Philips focus on function of the product, bottled water in terms of say quenching thirst, they are adhering to the letter of the law ref like-with-like comparability.

In doing so, they are not taking into account the ‘spirit-of-the law’ issues such as provenance or ethics.

However, the consumer places some value on ‘source’ and is prepared to factor some of this value into the offering when deciding that a price is acceptable, compared with available alternatives.

Consumers live by what they take to be the spirit of the law and feelings of being misled arise when a ‘letter-of-the-law’ claim is found to be wanting in practice, as any true marketer will appreciate.

The problem for the judiciary will be in trying to establish a universal value for provenance or ethics….

However, in the meantime, the media coverage will hopefully cause consumers - and retailers - to think a little more deeply about making a like-with-like comparison that goes a little closer to the spirit rather than simply the letter of the law in deciding that a given Product-Price-Presentation-Place combination is better value for money…

Baked Bean Heist via lorry-based picking?

Given the brand’s pulling power, combined with consumer click & collect trends, it should be no surprise that thieves decided to dispense with the click and help themselves to 1.5 pallets of Heinz baked beans with sausages ‘off the back of a lorry’ while the driver slept upfront in a layby on the A441 at Cookhill, near Redditch in Worcestershire.

By way of endorsement of the cab’s two-way soundproof qualities, the thieves were able to work undisturbed as they cut a large hole in the side of the white Scania vehicle and helped themselves to 6,400 tins.

"Police are appealing for information, especially about anyone trying to sell large quantities of Heinz baked beans in suspicious circumstances," a force spokesman said.

Hopefully the police have been briefed that it is quite normal for NAMs to spend their days trying to sell large quantities of product, but nonetheless it might be wise to cut down on over-generous multibuys while this one blows over… 

P.S. For those who want to double-check, the product code is 71517000 with an expiry date of 31 March 2015.

Second-guessing the Guesstimate: Getting the Unit-price Wrong at Tesco?

Following years persuading shoppers to attempt to compare like-with-like via the price-per-kilo addition to the shelf price, it would appear that a savvy shopper may also need to check the basic arithmetic of the multiplier...

According to an article in the Guardian, following the summer's 'strawberry court case', Tesco is once again allegedly getting its price-per-kilo labels on soft fruit wrong. Tesco's website apparently says its "Everyday Value" strawberries are £5.40 per kilo, but they are not. In reality they are a third more expensive at £7.14 per kilo.

The punnets are priced at £1.62 for 227g, with the label helpfully adding that the quantity of strawberries is equal to £5.40 per kilo. Now even those whose maths is pretty rusty can do a rough calculation – you get just over four 227g punnets in a kilo, so that is four times £1.62, which is rather more than £5.40
(i.e. £1.62/2.27 x 10 = £7.136).

The article lists several other instances, and quotes Tesco’s apparent replies to queries:
- “…as prices change all the time this figure is just meant to be a 'guide'."
- “…We'd like to reassure our online customers that no one has paid more for their berries than the listed price."

As often happens with corporate answers to consumer queries, answering the wrong question can be more damaging than correctly dealing with a genuine concern.

As most savvy customers increasingly familiar with price-comparison web-facilities will realise, a ‘per kilo’ conversion is a straight-forward arithmetical calculation that can presumably be locked to the SKU price in even the most basic computer systems i.e. there should be little scope for ‘human error’ once the new shelf-price is established…

Secondly, attempting to reassure the shopper that they have been charged the correct shelf-price is a reply more in keeping with the letter rather than the spirit of the law – a statement which is legally correct but misses the point that the shopper can be making a purchasing decision based upon the ‘per kilo’ comparison with other SKUs...

It might also be claimed that the ‘per kilo’ represents only pennies and should make little difference, except to a savvy consumer that has undergone years of persuasion that every little helps…

A little self-amuse in a long-haul loo...

On your next trip overseas, why not repair to the aircraft rest-room and release your inner artist....?

While on a long-haul flight, when most people would sleep, read a book or chew on complimentary snacks, Nina Katchadourian spends her time locked in the airplane’s lavatory taking 'selfies' in the style of 15th century Flemish paintings...

.  

Details plus ten additional examples here

Thanks to Emma Carlin and Anne Johnstone for link and application

The Amazon approach to backhauling: from within P&G warehouses..

Each day, P&G loads products onto pallets and passes them over to Amazon inside a small, fenced-off area of a joint-warehouse stocked with Pampers, and Bounty paper towels. Amazon employees then package, label and ship the items directly to the people who ordered them.

The e-commerce giant is quietly setting up shop inside the warehouses of a number of important suppliers as it works to open up the next big frontier for Internet sales: everyday products like toilet paper, diapers and shampoo. Amazon is going out to its suppliers with a program it calls Vendor Flex. By piggybacking on their warehouses and distribution networks, Amazon is able to reduce its own costs of moving and storing goods, better compete on price with Walmart and Costco, and cut the time it takes to get items to doorsteps.

Household staples have traditionally been considered too bulky or cheap to justify the cost of shipping. Americans currently buy just 2% of such goods online, retail analysts estimate. Yet even that sliver of business was worth $16 billion in 2012, according to Nielsen, who believe online sales will grow by 25% a year to $32 billion in 2015.

Having cracked the problem of bulky product shipments to consumers, why should Amazon and P&G not extend the idea to other parts of the portfolio?

With pay-offs for both parties (Amazon saving costs of bulky-storage, and P&G eliminating the cost of onward distribution) the idea has already spread to 7 P&G distribution centres worldwide…

...and with no mention of the resulting dilution of traditional multiples buying power, watch this space….

Selling ideas to the unresponsive buyer – challenging the status quo

A buyer who is ‘satisfied’ with your competitor’s brand, the status quo, is not in the market for change.

In other words, it is not possible to sell to a satisfied buyer.

Disturbing the status quo is crucial in making the buyer receptive to new ideas i.e. if the buyer is happy with the current situation, then there is no reason to change, and even less need to consider your proposition.  The first step means de-stabilising current levels of buyer complacency by appealing to their curiosity regarding how others are dealing more effectively with the same issue, or shocking them by exposing their personal vulnerability to changes in the market.

For instance, a buyer that buys at the same price and sells at prices equal to the competition yet nets 3% vs. the rival’s 5%, is obviously open to explanations…. Likewise, a highly geared retailer may not appreciate the danger of a 2% increase in cost of borrowing…

Successfully challenging the status quo means being able to capitalise on the key advantage of the NAM role – breadth of vision arising from experience of the category across the entire marketplace, an insight into all possible ways of making the category available to the consumer – combined with the indepth, but narrow view of the buyer operating within their own store environment.

This potential synergy can be leveraged when the buyer views the NAM as a pan-market expert, a source of insight as to how the other guys are doing. Nothing confidential, simply reassurance that tricks are not being missed…

However, successfully challenging the buyer’s perception of the status quo is not so much about opening the wound, but, having done so, being able to show a plausible link between your proposed solution and the ‘new’ problem.

Otherwise the buyer has simply been made available and receptive to your competitor’s next offer. 

A shelf nearby is watching you....

According to The Washington Post, Mondelez, says it's planning to debut a grocery shelf in 2015 that comes equipped with sensors to determine the age and sex of passing customers. Hooked up to Microsoft's Kinect controller, the shelf will be able to use basic facial features like bone structure to build a profile of a potential snacker.

While pictures of your actual face won't be stored, aggregate demographic data from thousands of transactions will be used to funnel appropriate products for impulse purchase....

It remains to be seen whether the resulting privacy-agro will the negate the obvious advantages of shelf optimisation...

A market segment of one consumer....how the market for consumer durables is adapting to real demand...

For the past 100 years, we have been taught to think that most things we use are best made in quantity on a production line.

Companies remained stuck in the 20th Century when life was moving on. Organisations of all kinds still saw their users through the lens of the mass market philosophy. They looked on their users as groups of people with similar desires. They missed the ability of emerging countries to do better.

In fact western companies simply cannot compete with the developing country producers who are using the mass production model faster and cheaper.

To compete on something other than price, companies based in the West will have to escape from their preoccupation with mass markets and fulfil the precisely-defined individual requirements of their individual customers with breathtaking speed and efficiency, in an environment termed the ‘heartbeat economy’ by Peter Day.

Joe Pine, an American management writer who has become the prophet of what is known as mass customisation, put it like this: "Customers don't want a choice. They want exactly what they want."

Thus the savvy consumer morphs into an ‘individual’ demanding a bespoke solution, and is already satisfying that appetite via the ‘tailor-makeable’ attributes of the smartphone…with 3D printing awaiting applications in other product areas.

Obviously, satisfying this ‘bespoke’ appetite has started and will develop with consumer durables, but once ‘the’ consumer experiences and develops a taste for individual treatment, do you really believe that FMCG can remain ‘as is’?

A fundamental challenge to all of our thinking…?