Monday 9 November 2015

How Singles Day eclipsed Black Friday and Cyber Monday

According to The Telegraph, an annual celebration known in China as “bare sticks holiday” – see appearance of date: 11.11 – Singles Day began as an anti-Valentine’s Day (1 child policy = male surplus) in the 1990s when students at Nanjing University started celebrating their single status, online.

The chart says it all, don’t you think?

                                                                                               Chart: Highcharts.com via The Telegraph

Driven by Alibaba, in the 24 hours of Singles Day last year, and in spite of economic re-sets, Chinese consumers spent a record-breaking 57.1bn yuan (£5.86bn, or almost $9bn) across Alibaba’s platforms, more than double what American consumers spent online across the 48 combined hours of Black Friday and Cyber Monday.

Opportunities for suppliers?
  • A no-brainer for global brands
  • Scope for innovative niche brands, providing you can meet the demand..
  • Deep down, an incentive to seek out emerging trends and learn how to engage imaginatively, before the event become as obvious as Singles Day…

Worried about limited ‘singles potential’ following the recent abandonment of 1-child policy?  No worry, China will take a generation to begin to recover from that particular interference in the natural order, at least…


Thursday 5 November 2015

Wormwood Scrubs Click & Collect beta test



                                                                                 HM Prisons,Youtube viaTomo news US

Karl Jensen, 27, the 'delivery-man' outside the jail, liasing by mobile, tied a bag containing drugs, a knife and a McMuffin sandwich to a fishing line that was pulled into a cell.

Karl will now have time to practice this version of click & collect from the inside, as he serves his new 2.5 year sentence...

P.S. For those not visiting via government transport, the sat-nav details are Du Cane Rd, London W12 0AE

Wednesday 4 November 2015

Amazon moves back to the future of traditional book-shopping

pic: Amazon via The Atlantic   
With the benefit of a 20 year online head-start, and discovering the world's most popular books, Amazon are now capitalising on their insight via yesterday's opening of their first brick & mortar bookstore in Seattle.

Being Amazon, key disrupting innovations include:
  • Inventory: 6,000 titles (Amazons top selling online books), vs the over-crowded inventory of traditional book-stores
  • Merchandising: Books are displayed face-out to maximise appeal (at last, publishers' cover designs get an onshelf-viewing, a step forward from spine-displays of traditional booksellers)
  • Product information: under each book is a review card with the Amazon.com customer rating and a review
  • Availability: Online access to every book in print, most deliverable in hours... Compare with '...two weeks, Sir, if the wholesaler has it in stock?'
  • Freed-up space instore: Opportunity to hang out, or according to The Atlantic: Amazon Books is trying to be a place of community - a place where people will meet and hang out. A place that celebrates both introspection and extroversion. A place much like Apple’s buzzing, light-flooded, free-wifi-enabled temples - only with the tech gadgets on display being, for the most part, books.
  • Scaleability: an unlimited selection of closed-down shops...need I say more?

Where next?
Given the inevitability of revolutionising retail book-selling, again, think specialist-shops in most worthwhile categories, given the Amazon insight, like toys, for a start.

Action: Why not try a what-if re your category, and hopefully gain some time?

Amplify: How about the benefits of a 'group-think' by sharing the above?


Tuesday 3 November 2015

Starship-robot home delivery – a new threat for the mults?

     ‘Step aside, old guy’                                                                   pic: Starship Technologies

Former Skype co-founders have announced the launch of auto-buggies that are capable of carrying the equivalent of two grocery bags, and complete local deliveries within 5-30 minutes from a local hub or retail outlet, for £1.50 a drop, 10-15 times less than the cost of current last-mile delivery alternatives.

Thus in one stroke, they will become the latest market disruptor, meeting consumer needs to shop smaller, faster and more conveniently, with a delivery cost that undermines the traditional £20 cost that causes major retailers to lose £15 on a £5 delivery charge…

Starship Technologies is currently testing and demonstrating prototypes and plans to launch the first pilot services in cooperation with its service partners in the US, UK and other countries in 2016.

Customers can choose from a selection of short, precise delivery slots, and during delivery, shoppers can track the robot’s location in real time through a mobile app. On arrival only the app holder is able to unlock the cargo. Integrated navigation and obstacle avoidance software enables the robots to drive autonomously, but they are also overseen by human operators who can step in to ensure safety at all times, and where necessary converse with pedestrians.

Forgetting for a moment all the reasons why robot-delivery is not going to work, move into just-suppose mode and survey the post-success scene:
  • Reductions in traditional home delivery charges…consumers already twitchy
  • Mults/Ocado adopt robot-delivery, possibly leasing from Starship Tech?
  • Or mults leave the small-delivery field and focus on ‘big deliveries’
  • Just think applications in other categories/services…and don’t expect Jeff Bezos to sit this one out…

One thing is certain, the ‘fundamental re-structuring’ of the grocery market still has a mile to go…


Action for suppliers:
Starship Technologies are unlikely to attempt the additional risk of setting up of product-aggregation hubs and will probably form alliances with a wholesaler/s and/or possibly a major multiple..

If a wholesaler, expect that wholesaler to grow, and become more profitable and powerful.

In other words, time to reshuffle your customer portfolio deck, again!

Saturday 31 October 2015

Friday 30 October 2015

Amazon Fresh - losing to win vs. Tesco?

We all know that the last thing UK mults need is loss-leading online competition, the only real growth area currently available, in an medium where shelf-space is not an issue....

Given that Amazon are feeling their way forward with a fresh offering in London and Birmingham to Prime members and have traditionally been prepared to operate at a loss to build share, they represent a very real threat to the major mults.., initially in major conurbations where Amazon's dense coverage is a major strength.

Add to this the fact that home delivery can cost £20/drop vs. the maximum charge a consumer will tolerate is £5, and the scale of the threat can be appreciated.

With their 50%+ share of online grocery, Tesco have most to lose, but any Amazon Fresh success will obviously also impact the other mults.

The issue for suppliers has to be the extent to which the mults will try to recover losses via traditional brands as they try to compete in a new online reality...

Wednesday 28 October 2015

Walgreens Boots Alliance take Rite Aid - another global step..

Yesterday’s bid for Rite Aid will obviously impact the US market, but UK and EU NAMs need to place this move in a global context in order to anticipate the impact at local level.

For those that need reminding, in a few short years, Stefano Pessina transformed a small family business into Alliance Boots, a European drug retailing and wholesaling powerhouse, through a series of takeovers. In 2007, he took the company private in an $18.5bn leveraged buyout with KKR & Co. At year-end, KKR still owned about 4.6% of Walgreens stock.. And this successful integration and revitalisation of an iconic UK brand, without missing a beat (in contrast with Kraft's acquisition of Cadbury...).

WBA-Rite Aid will result in a company with annual sales of £65bn and a Mkt Cap = £68bn.
Compare this with Tesco annual sales £69.7bn and £15bn Market Cap…
(apart from the additional scale of WBA, this Sales/Mkt Cap comparison indicates the degree of Tesco's fall from grace, and the need for H&B suppliers to re-balance their customer portfolios...)

Given that the WBA merger has been one of the private-equity firm’s best-ever deals, making it well over four times KKR’s initial investment, the private equity group will want to stay at the table...
In other words, KKR are unlikely to miss out on funding further deals proposed by Mr Pessina…  

In defending the bid, Walgreens and Rite Aid would be likely to argue to regulators that they compete not just with other traditional drugstore chains, but also with companies such as groceries and club stores.

Finally, according to the WSJ, Mr. Pessina hasn’t been shy about his desire to do big deals. “We can clearly see the need or the opportunity for horizontal and vertical consolidation in our industry”

Joining some of the obvious dots, we should assume that SP is still working to a global agenda, growing by acquisition, targeting anything in healthcare and beauty, but also competing with grocers and warehouse clubs, anywhere…with appropriate funding on tap via KKR and the stockmarket…

Watch this space…

NAM Implications:
  • Scale? At $100bn sales, almost as big as Tesco global...!
  • Synergies? $1bn savings in year one is just the start ...
  • Negotiation? First agenda item has to be prices & terms disparities.
  • Preventive action? Suppliers have six months to remove anomalies, while WBA are distracted by the inevitable government scrutiny.
  • Amplify? Worth sharing with global colleagues for a co-ordinated approach?


Tuesday 27 October 2015

VW and the never-ending cycle of corporate scandals - how Darwin can help

According to the BBC, after Libor, payment protection insurance, phone hacking and every other scandal, nothing appears to have been learned to stem the tide of bad behaviour from some of the world's largest companies.

And now VW has been caught cheating on emissions tests, having been caught and fined in 1973 for dodging similar tests.

Research by Cass Business School’s Professor Andre Spicer indicates predictable post-scandal behaviour:

First three to six months: high activity, scapegoating, calm restoration, removal of people, evidence, stories and reminders…

More detail in the original article re failure to learn from mistakes via a focus on getting things done rather than how results are achieved, resulting in a culture that encourages recruitment of similar individuals with the same views, rather than a policy of diversity…

Stephen Carver, a lecturer at Cranfield points out that Darwinian survival is not survival of the fittest - he never said that. It's the most able to adapt. And that means diversity…

Impact on the brand
However, we would add that a fixation on complying with the letter, rather than the spirit of the law probably causes more damage in the eyes of the consumer. Considering the years spent building brand equity – that reassurance that it is not necessary to second-guess the quality – or the quantity – in the tin, the essence of branding…

Also we all know that FMCG marketing is built on the premise that the cost of introducing the consumer to the brand and achieving initial trial is so high that it is only on second or third purchase with less spent on having to ‘educate’ the consumer, does the  brand begin to make a profit.  Destroy that trust – by short-changing on contents vs. expectation – and then suffer the cost of re-building that trust.

For instance, if we accept that when a consumer’s needs are exceeded, they tell a friend, when disappointed, they tell ten friends, it might be said that a brand re-build costs ten times the cost of introduction.

Exaggeration?
Why not try it for yourself, sometime…?

Thursday 22 October 2015

When the buyer wants even more – an opportunity for a partnership re-cast?


As you know, with Walmart and most probably Asda wanting extra help from suppliers to cover rising, but surely not unanticipated business costs, it is possible but unwise to simply say 'No’.

Better to treat this as an opportunity to go back to fundamentals on each side of the table. This is a bit like when a buyer makes a new demand immediately following the conclusion of a deal, such as ‘…and you will deliver to each branch’, a very old trick – so old, we used to call it the ‘quivering quill’ or sign-off demand – that destabilises the balance of a fair-share deal just negotiated.

The key here is to assume exaggerated shock or anger – if you have not anticipated the move and are really shocked/angered, your negotiation technique may need more fundamental remedials – and even go so far as to act as if you are about to terminate the interview - such as screwing up the draft plan. Apologise for having assumed a deal had been reached, and take the discussion back to the buyer’s ideal world requirements of a partnership with you and your company.

These are obviously extremely high-stakes moves, so you will obviously have placed the entire relationship in context, calculated the cost and value of each element, and will be acutely conscious of the fact that losing the Asda business means a factory closes…

The benefits of pre-interview planning means you do not have to prepare and respond to these moves ‘on the go’.

The key is to prepare right things… 

Full analysis and action in October issue of NamNews

Tuesday 20 October 2015

Amazon prepares for your Christmas shopping.....

                                                                                                                             Ralph D. Freso/Reuters
See 15 pics, (worth 15,000 words?) here