Sunday 7 June 2015

Boots new single 2-way trip travel insurance for 115-year-olds, ideal for Ryanair travellers that need a name-change?

According to The Guardian, Boots has raised the upper age limit on its single-trip travel insurance policies to 115 years, effectively insuring anyone regardless of age, but only on a single-trip basis..

Meanwhile, the Independent reports that a passenger changed his name by deed poll because it was cheaper than Ryanair's penalty for altering a booking that got his name wrong...

I am sure both companies have factored in the possibility of a very senior citizen making an outward journey in his new name to a little-known out-of-town Ryanair airport, enjoying an unforgettable but distracting holiday before checking in under his old name for the return journey, stopping half way to the departure-gate for a mental re-boot, and then not being able to remember whether he was coming or going?

...and not forgetting the confusion at airport security....

Friday 5 June 2015

The £1 Cafe - Austerity biting, or meeting a market need?

                                                                                                                         pic: The Guardian

According to The Guardian, Fitzrovia’s new Caffix cafe is drawing in Londoners looking for an affordable lunch option by charging just £1 for all items.

From avocado and chicken baguettes to pots of curried chickpeas, quinoa salad or pesto pasta with roast beef, all cooked on site, Caffix cafe on Newman Street sells food for a fraction of the price that they would normally spend in the heart of capital.

Simple scalable idea, almost as impossible as setting up a Pound Shop in sophisticated UK retail...

Thinking of which, a possible service extension for Poundland?

Thursday 4 June 2015

For the Maturing NAM - all your daily medication in one pack!

                                                                                                       Source: PillPack Inc. via Bloomberg

According to Bloomberg, PillPack Inc have raised $50m to build a better online drugstore with a simple idea: dividing up customers’ pills by the time and date they should be taken.

Following its launch of the ‘daily’ service in February 2014, PillPack (see video here) has delivered over 1m packs by focusing on routine prescriptions and OTC products.

An obvious plus for an ageing population on an increasingly complex mix of medication, reaching new levels in convenience, and inevitable lock-in for satisfied users.

The issue for suppliers might be possible loss of the pack-to-patient connection

The only question is whether Walgreens-Boots and CVS can organise to replicate the service, cheaper…

Coming to a hall-door near you - Amazon on-box advertising!

                                                                                                                          pic: www.geekwire.com

Story here

Tuesday 2 June 2015

Apple Stores $4,500/sq ft/annum, strategically designed for optimum productivity




Over 15 years Apple have evolved a layout that beats all other retailers, key details at Business Insider, here

Regrettably, in case you feel inclined to pass some of these insights to your favourite buyer, let it be known that Apple are so fond of their layout, last year they succeeded in trademarking their store layout across Europe...

As a result, the ruling will apply not only in Germany, but will prevent others across Europe from replicating the interior of Apple Stores, with their distinctive symmetrical wooden benches on which electronics are laid out within a large, white space.

Fortunately no other retailer looks like this, which begs a question...

Monday 1 June 2015

Mike Ashley planning to launch chain of cut-price high street stores – a step away or ahead of Food Discounting?

According to the Mail On Sunday, the Sports Direct billionaire has launched a new discount store MEGA VALUE, in Kidderminster, Worcestershire. Similar to B&M and Wilko, it will stock products once found in Woolworths.

The issue for those acquainted with the Sports Direct model has to be the roll-out effect on the Big 4, but also the speed with which the new venture will climb aboard and accelerate the pace of Aldi & Lidl's impact on the UK grocery market.

Apart from some tough negotiations ahead, suppliers might take some consolation from Ashley’s belief in brands, as they decide whether to ignore or collaborate with the new kid on the block.

Either way, a store visit to Kidderminster might not go amiss…?

Friday 29 May 2015

Back Margin audits - Now it's your turn.

Accountancy watchdog to focus on suppliers after Tesco profits scandal.

According to The Guardian, the Financial Reporting Council (FRC) will make retailers’ relationships with their suppliers a priority due to ‘increasingly complex arrangements’ in their inspections in 2015/16. The FRC will “pay particular attention to the audit of revenue recognition and complex supplier arrangements” at food, drink and consumer goods manufacturers, as well as retailers. They plan to check a significant number of audits - of the 140 checks planned - in these sectors.

More details of scope and process are given in the FRC latest Annual Report published today, and for convenience we have highlighted key sections below, but best point your finance colleagues at the original document, here.

As indicated, this is about Back Margin definitions and how suppliers and retailers account for payments made to retailers. 

We believe that we are headed towards further clarity, meaning that payments to retailers will eventually be measured more accurately, paid retrospectively - in arrears - and based upon results achieved vs. agreed KPIs, in order to comply with strict auditing standards and process.

Action for suppliers:
  • Identify and clarify all of the ways in which you remunerate the customer
  • Reassess the 'buckets', clarify the definitions, measurement process and ensure the customer agrees...
  • Focus on Tesco's three permitted buckets (scale discounts, rewards for display and payments re product re-calls) that will probably  become 'standards' eventually, as SFO, FRC and GCA investigations begin to report findings
  • Think through internal processes re proposal, objectives, agreement (you and the customer), timing and payment (if in any doubt about the eventual accounting rigour involved, check with your production colleagues re their capital requisition process...)
  • Whilst your company will hopefully escape an FRC inspection in 2015/16, auditors will obviously be increasingly conscious of the risks involved and will be more than likely operating to the above standards anyway...

The FRS Annual Report (extracts)
Section 2-4 Page 7 refers to
...Given the focus in recent months in respect of complex supplier arrangements, food, drink and consumer goods manufacturers and retailers have been designated as a priority sector for our 2015/16 inspections and a significant number of audits we plan to inspect will be from those business sectors. These inspections will pay particular attention to the extent to which the audit team has challenged and corroborated the appropriateness of how complex supplier arrangements are accounted for. Corporate Reporting Review (CRR) as part of their programme of reviews of financial statements will also be giving priority to the reporting of these arrangements. We also plan to inspect a number of first year audits to assess the extent to which changes in auditors have an impact on audit quality.

In early 2015 we engaged external consultants to undertake an extensive review of our inspection activities and how these can promote continuous improvements in audit quality. The outcome of this review will be incorporated in the FRC’s Strategy for 2016/19.

Analysis of inspection findings: Section 3-5, page 16 Future Inspections: Section 7-2, page 32: ... planning to inspect around 140 audits.... The priority sectors for 2015/16 are insurance; food, drink and consumer goods manufacturers and retailers... Our inspections will pay particular attention to the audit of revenue recognition and complex supplier arrangements.

Appendix A, page 36 Inspection Process
Our inspections comprise a review of the firms’ policies and procedures supporting audit quality and a review of the quality of selected audits of listed and other major public interest entities that fall within the scope of independent inspection, as determined each year. 

Scope in Appendix B


Thursday 28 May 2015

Fifa emerges from under the covers - a sponsorship crisis for anyone that cares about branding...?


Deep down, global football may be too big to fail, in that this could be just another crisis...

However, given that a sponsor's nightmare has to be the possibility of the star succumbing to drugs, booze or worse, Fifa, by exception, can be no exception.

In sponsorship, nothing beats the speed with which a sponsor slides from under a problem package. The obligatory public responses of some of the biggest brands in terms of expressing concern, disappointment, have to be code for 'lets work out the best way of getting out of here, fast...'  And as demand usually determines prices of advertising in sports sponsorship, those that decide to weather it out, will find some consolation in reduced rate-cards...

Players, themselves conscious of personal shelf-life limitations, will also focus on how they can distance themselves from the fall-out...

Leaving the consumer, that docile recipient of unprecedented brand-based revelations over the past few years, to vote in the only way possible, with their feet...

Meanwhile, as the US authorities have already said, this is only the beginning...and no amount of blethering will make a difference...

Friday 22 May 2015

The Londis, Budgens, Premier Combo - a new kid on the block?

Representing approximately £830m in incremental sales, taking them to 9.4% of the UK convenience sector, and building on their supply chain efficiencies, Booker’s acquisition of Londis and Budgens has to represent a quantum leap for the Group.

The strategic link with Musgraves also offers two-way synergies, whilst the increased buying power ‘can’t hurt’ on Booker's side of negotiation table.

The issue for suppliers has to be the speed with which they can review their trading strategies, terms and conditions (prices & terms disparities) and negotiate some compromises in the small window afforded by the inevitable competition issues resolution…

In terms of re-negotiation, suppliers need to re-assess their relative competitive appeal to Booker, given the new combo above.

From a shopper perspective, it might also be worth re-mapping the relative competitive appeal of Londis, Budgens and Premier from the perspective of the consumer-shopper.  To accelerate the process, see our Buying Mix Analysis tool

That then leaves preparation of a settlement point that reflects your perceived pulling power with the 'new Booker', and goes some way towards closing any prices/terms gap, before Booker does it on your behalf...

For a free HIM infographic re shopper insights see here


Thursday 21 May 2015

Methinks, in these unprecedented times, we need to question too much….

                                                                                                                         pic: Jonathan Streeton

Wednesday 20 May 2015

Asda's 3.9% fall in like-for-likes - why Walmart won't go over the top...

News of Asda’s Q1 results might cause suppliers - and rival retailers – to expect a ‘decisive’ price-cut response financed by Walmart, in these times of unprecedented moves by the mults.

However, joining a couple of extra dots could indicate otherwise.

For instance, comparing relative financials of Walmart and Asda could provide some clarity:

Walmart (2015) Results 
Net Sales               $482bn +1.9% YOY
Net Income             $24bn
Net margin              5.1%
ROCE                   17.9%

Asda (2013, latest results available at Companies House)
Net Margin              3.9%
ROCE                   12.1%

Neither of these companies want to increase Walmart-Asda profit differentials...

Also, Walmart – and Asda – don’t do knee-jerk, so the response to the Q1 shortfall will be a price drop sufficient to 'restore order', but sustainable in the long term, and probably financed by the UK operation, meaning it will not be an over-the-top initiative.

That being the case, coupled with yesterday’s economic news of -0.1% ‘negative inflation’, could mean that we are in for a calm period of sustained flat-line demand…

…where growth will come at the expense of less-alert competition..

Monday 18 May 2015

'Docking' the long tail, a product-cull too far?

Given that the UK’s largest retailers appear to differ re the need to cull 30% of Tesco’s range (Sainsbury: “…customers tell us they can buy things in our shops that they can’t buy elsewhere.” vs. Tesco: “…20% of SKU's in an Extra store are only selling 1 pack per store per week”.), and as Dave Lewis is the one currently wielding the docking-knife, it is perhaps more important for NAMs to anticipate a 30% reduction in SKUs and plan accordingly…
  • The issue for suppliers is where the end of the long tail starts…
  • Combining this idea with the 80/20 rule, suppose 18,000 of Tesco’s 90,000 SKUs account for 80% of their in-store turnover, then 30,000 SKU de-lists may not be sufficient...
Action: At the very least, major retailers should check at what point in the tail, weekly off-take does not justify the space allocated…
  • …and given that the cost of retail space online is irrelevant, the remaining SKU’s could be added to the online portfolio, or de-listed…Perhaps a final compromise for de-listed NAMs?
Finally, if Tesco manage to gain a competitive edge via product-culling, how long before others follow, or sacrifice share?

(BTW, NAMs that have enjoyed a less sheltered childhood will be aware that docking a working dog’s tail was a fairly common practice in the old days, the actual method being the only ‘bone of contention’, whilst adding a whole new meaning to ‘cross-docking’….) 


Saturday 16 May 2015

The NAM-Suitsy - A pyjama onesie when 24/7 is not enough...

                                                                                         pic: Greg Ferenstein, The Ferenstein Wire