Price maintenance via content reduction

Given the difficulties in passing on escalating ingredient and energy cost increases to the consumer because of a combination of trade resistance and breaches of price-points, some brand owners have resorted to pack-content reduction to mask price increases. Whilst they obviously preserve their legal integrity by updating the weight indication on the label, the real issue is consumer perception

To my mind this is one of the fundamental issues in the brand-consumer relationship in the current climate. As we know, a consumer buys a combination of Product, Price, Presentation and Place when choosing a brand. A consumer consciously or unconsciously compares this offering with alternatives available in the market. Good brand management is about maintaining these 4 Ps in harmony, and meeting the expectation of the consumer.

Brand equity is thus about preserving this trust of the consumer in the brand, in effect when they open the pack, the contents meet or even exceed their expectation.

Even being open and honest with the consumer when making changes to the offering may not prevent the consumer’s perception that they have been short-changed, causing them to second-guess all changes to the brand, thus damaging brand equity

When a brand owner changes one element of the package i.e. increases the price, or reduces the amount the consumer receives for the price, this balance is disturbed, and can cause the consumer to ‘re-compare’ the offer with alternatives available.

The real problem is that the consumer may then switch to a competitor brand without complaining to the brand owner, thus resulting in loss of market share…

( It used to be said that a complaining consumer was a loyal user trying to give the brand a second chance! )

As far as price-points are concerned, brand owners need to ask themselves if the savvy consumer is really influenced by ‘5s and 9s’ in this ‘post’ financial-crisis era…?.

Perhaps brand owners should allow cost-price increases to flow through to the retail price, hoping that eventually the same ingredient cost-increases will affect the competitors’ retail prices, given that legislation rightly prevents any price-coordination in the market.

If the brand’s offering is changed without resulting in equivalent changes in competitive offerings, then the result has to be loss of market share until 4P equilibrium is restored in the category..

Perhaps the real answer is to use a price increase as an opportunity to fundamentally re-assess the total offering vs. alternatives available, and update the offering to suit the savvy consumer…?

Flexirents in the High Street, New Study

According to a new study from the Investment Property Databank, independent retailers are seeing increasingly flexible leases and a rent drop by a third (in real terms) over the past two decades.

Key findings from the IPD include:

-Average lease length of 5.7 years; 


-Significant increases in break clauses ‘as retailers look to hedge against economic uncertainty’;


-34 per cent of new leases for High Street shops have a break clause, up from 3.9 per cent in 1999.

-Retailers have an average ‘rent free’ period of ten-months on a rent-weighted basis;


-The separate IPD data on standard shop rents shows that while inflation has risen by 94 per cent since 1989, rents for standard shops have only risen by 24 per cent, and in real terms fallen by 37 per cent.

“The issues facing our High Streets are extremely complex with recession, structural changes caused by the internet and consumer preference all in play,” said Liz Peace, chief executive of the British Property Federation. “In such times of change it is important that leases adapt.”

The traditional ‘institutional lease’, i.e. 20 years plus, with upward only rent reviews and no breaks, was inconsistent with many retailers’ needs.

With this barrier removed, independent retailers now need to up their game to match multiples processes, or lose the lot…

Jerry Leiber, hound-dog pragmatist, 1932-2011

Songwriter Leiber was extremely irritated by the changes that Presley made to the original lyrics of Hound Dog. He said in 2009. "The song is not about a dog; it's about a man, a freeloading gigolo. Elvis' version makes no sense to me, and, even more irritatingly, it is not the song that Mike Stoller and I wrote. Of course, the fact that it sold more than seven million copies took the sting out of what seemed to be a capricious change of lyrics."

A pointer for those of us who can feel precious about our routes to market…we may not like the fact that the price-orientated supermarkets may not fully represent our brand nuances, but the sales uplift can provide some consolation… 

Morrisons planning in-store GP surgeries

Morrisons has revealed it is considering following the lead of Sainsbury's and opening GP surgeries in store, in a move that will fuel the debate over the commercialisation of primary care.

Sainsbury's offers free space to GPs wanting to run a surgery in their supermarkets, and has two GP surgeries in place – in stores at Heaton Park, Greater Manchester, and Colne, Lancashire. It announced in June it would be opening six new in-store GP surgeries across the UK.

It appears that Morrisons are looking at the possible provision of GP services in the store environment.

A logical development in that leading-edge supermarkets need to optimise the store visit by enriching the shopping experience. In effect, selling any goods and services that can legally be sold to shoppers…

Any provider of primary care experiencing drift of ‘business/custom’ to the multiples needs to up their game to equivalent levels of appeal in order to reduce or even reverse the flow.. unlikely in the case of the NHS, given current inefficiencies and attitudes to their ‘customers’… 

Supermarket space-race brewing?

Sainsburys buying the Twaites brewery site in Blackburn is merely the latest in a supermarket space-race in a diminishing pool of large-space locations that in many cases already have planning permission.

For breweries to survive in a competitive market, they need to optimise all routes to consumer…, including supermarkets. This results in lower prices, leading to a need for increased efficiencies, tending to make old, town-centre sites less fit for purpose… i.e.


Hertford brewer McMullen has sold its Victorian brewery site to Sainsbury’s

Old Harveys/Robinsons brewery in Ulverston, Cumbria, is also due to be turned into a supermarket.

The Young’s brewery site in Wandsworth, south-west London, is scheduled for redevelopment

The old Vaux Breweries in Sunderland, owned by Tesco but selling to regional development agency.

Meanwhile retail watchers are also keeping an eye on what happens at the Tetley brewery in Leeds, which closed its doors in June after 189 years. 

However, unlike other land grabs by supermarkets, the reaction to the brewery takeovers has been generally positive. 

Selling the site to one of the major multiples provides cash for purpose-built premises out-of-town.

Heritage-wise, the supermarkets can perhaps satisfy some of the people some of the time by attempting to preserve as much as possible of the original site, efficiencies permitting…..

A win-win-win for all?

The ultimate Gen Y office-pod

If you look at the NAM’s workspace of 10 years ago, you will find a cabinet with lots of files, a big desk with mounds of paper on it, bookshelves with reading material, and a lot of general clutter.

Today, all of this is replaced with just one tool: a laptop.

To optimise NAM output, Kogan Technologies have created new work pods which they believe will be the future of office spaces around the world. The chairs are unbelievably comfortable, and they have built-in heating, massage, speakers, and even SD and USB slots to play music.

In fact they look so comfortable it might be worth experimenting with the possible addition of a steering mechanism and four road-wheels for ultimate productivity…

Have a 24/7 ‘working weekend’ from the Namnews Team!

First UK click ‘n collect drive-tru

Tesco are launching Britain’s first drive-thru store at the Tesco Extra store in Baldock, Hertfordshire, tomorrow as a pilot.

The service is aimed at customers who do not want to carry out their weekly shop themselves, but who also do not have time to wait at home for an internet delivery.

Instead they will be able to drive to a dedicated area in a Tesco store at a set time and pick up their shopping without having to leave their car.

The service will be run by the Tesco dotcom team, with customers ordering their groceries online as if they were doing an internet shop, only they will then choose the Click and Collect option.

This will enable them to book a two-hour collection slot and they can pick up their shopping any time within this window.

They will then go to a reserved area in the car park, show a member of staff their shopping reference details and have their goods loaded into their car boot.

The charge for the service is £2, compared with a sliding scale of charges for internet deliveries which starts at £3.
Namtip: Scope to combine with a simultaneous petrol top-up by also offering the pick-up facility at Tesco forecourts?

Like-for-unlike Sales?

The way retailers report their like-for-like sales should be streamlined to reflect factors including the growth of online sales, or risk obsolescence of the measure, according to the KPMG/Synovate Retail Think Tank (RTT).

Currently there are no guidelines to how retailers should report like-for-like sales, which aim to provide a measure of underlying performance by taking out the impact on sales of new or closed stores. Retailers can choose whether they include figures on stores that are being refurbished, whether they include VAT, changes to products, discounts or promotions. That makes it difficult, says the RTT, to compare figures for different retailers.

There is also need for a consistent approach to reporting sales online and from other emerging channels.

RTT recommendations in new white paper:

-       website sales be included in like-for-like sales, except in the case of new website launches

-       trading updates for like-for-like sales should cover a standard period of time, especially over Christmas

-       excluding new and closed stores from like-for-like figures but including stores that are being refurbished

-       like-for-like sales figures should be provided both including and excluding VAT

-       any discounts should be reflected in like-for-like sales at the value that the customer paid

-       future money-off vouchers should only be taken into account at the point of redemption

Assessment of the health and value creation of a retailer requires a balanced view across a much broader set of metrics covering cash generation, profitability, and productivity.

Real issue is whether a retailer is attempting to clarify or obscure its real comparability with competition.

All else is detail….

Betting shops set to outnumber the High Street banks

Bookies are opening at a rate of 11 a month according to the Gambling Commission.

Banks, meanwhile, shut 14 branches a month, many offering up the space to betting shops.

The public may therefore be relieved to find that their access to the two types of gambling establishment remains almost constant, despite difficulties in distinguishing the two…

Think of it as the difference between private and public i.e. if a betting shop fails to make a profit, it goes bust, whilst a failing bank is bailed out by the public purse…its losses socialised whilst its profits are privatised… 

Minding the store…

Apart from the breakdown in civil order, recent riots have focused media attention on invasive shrinkage in retailing  

However, independent retailers can never afford to ignore ‘normal’ stealing by those with legitimate access to the store…

Shoppers spending £70 on groceries can feel that they deserve a small bonus in the shape of a bar of chocolate munched en route to the checkout…

In the same way, low-paid shop staff can form the opinion that inadequate wages somehow legitimise topping-up earnings in kind or from the till…

In other words, whilst it can be legally easier to trap a ‘real’ thief, apprehending someone who does not believe they are stealing presents a moral challenge…

In the case of a hitherto loyal employee, the case becomes even more difficult.

However, given that the theft of £10 from a shop operating on a 2% net margin requires incremental sales of £500 to recover the loss, an independent retailer’s survival can depend on increased surveillance of employees as well as shoppers..

In such cases there can be no grey areas…

Have an non-intrusive weekend, from the NamNews Team!

Charity Shops as Unfair Competition?

They have the potential to serve four purposes in that they offer a social service, enable the recycling of goods, help to raise awareness of the charity and provide a fundraising medium. With increased professionalism in their operations, competition has escalated for customers, goods and volunteers, both with other charities and with established retailers. With approximately 7000 shops generating £170m in profit and more than 160,000 volunteers nationwide, charity shops have several advantages over other retailers

-       80% business rates relief because of charitable status, often a tipping point towards liquidation for regular shops

-       Allowed to gift-aid their profits. This means they receive back the basic rate of tax paid by each customer i.e. the sale of a book in a charity shop for £4 would actually result in the charity receiving £5

-       Ease in paying high street rents. With low staffing costs (a typical charity shop will have one paid, full-time manager and around 16 part-time volunteers) means more of their turnover can go towards paying rent)

Next steps retail consolidation, increased political clout, more choosiness ref donated goods, and coping with some of the issues associated with swimming amongst the bigger fish?

Time for the OFT to check out the sector, if only as a warm-up exercise before reverting to major mults issues?

Understanding the aging consumer…?

As a brand’s consumer gets older, their perspective changes in all sorts of ways…the ‘simple’ aging process can make demands on a body that cannot be imagined by a younger person, until now.

To simulate what it feels like to be old, the above Mobilstrictor suit includes marbles sewn into socks, scratched goggles, straps and splints that make every move agony...after a few moments 40 year old reporter Jane Fryer complained ‘This is a bloody nightmare. My ankles ache, my hips are stiff, my feet are throbbing and my legs have gone all floppy and hopeless. I can’t lift either arm above shoulder height, my fingers are unwieldy and my sight is slightly blurred….’

The idea behind Howard’s ‘Mobilistrictor’ invention is to let able-bodied people experience what it’s like to be old.

Not to look old — but to actually feel old, with stiff joints, arthritic feet and horribly fumbly fingers that don’t work when you want them to.

Britain has an exploding elderly population, with more people over 65 than under 25. Over the next 25 years, the number of pensioners will more than double.

In fact, the figures released earlier this week show an astonishing increase in life expectancy across the generations, with babies born this year almost eight times more likely to reach 100 than one born in 1931.

And it doesn’t stop there — 23-year-olds are three times more likely to reach 100 than their grandparents, and roughly twice as likely to reach 100 as their parents.

In other words, if your brand has an aging user profile, it will become increasingly important to factor the realities of aging into actual use of the product and help your consumer in ways virtually impossible to imagine today…

Young savvy consumer for real insight?

A 10 yr old child demonstrated a series of flaws in mobile games at the latest DefCon hacker conference (!)

Going by the handle CyFi, the hacker presented her findings at the DefCon hacker conference held in Las Vegas.

CyFi discovered the bug after getting bored with the pace of farming games and seeking ways to speed them up.

As you know (!) many farm-based games force players to wait hours before they can harvest a crop grown from virtual seeds. As a result CyFi, started fiddling with the clock on her handset to see if she could produce crops more quickly….

She found that advancing the clock on a tablet or phone can, in many games, open a loophole that can be exploited.

The conference organisers now have a series of sessions aimed at a new generation of tinkerers….

A lesson for us all in tapping into the savvy consumer a little earlier, and really listening…?

End of the Shopper Receipt?

In the US,  major retailers, including Whole Foods Market, Nordstrom, Gap Inc. (which owns Old Navy and Banana Republic), Anthropologie, Patagonia, Sears and Kmart, have begun offering electronic versions of receipts, either e-mailed or uploaded to password-protected Web sites.

Retailers first considered e-receipts in the late 1990s, but the dot-com crash stopped most efforts.

In 2005, Apple introduced electronic receipts at its stylish retail stores. More mainstream retailers found the checkout system difficult to replicate and were concerned that most shoppers were not quite ready for such a technological leap.

However, with wider use of mobile phones for payments, as with Google Wallet, e-receipts will become standard.

In terms of creativity, Nordstrom are considering increasing appeal by adding a photo of the item to the receipt so that a shopper can add it to a Facebook wall

To overcome objections to use of email addresses, some retailers are uploading  purchase information to a password-protected site. Customers can search their receipts and eventually  review tallies of how much they spend on ice cream or shampoo.

Can you imagine the added plus for a Tesco to be able to link receipts and Clubcard data, and the downside for those who cannot?

Augmented reality helps KAMs to scale new heights in ‘window-shopping’….

The latest issue of Tatler, which went on sale today, features a collaboration with augmented reality developer Holition that allows readers to see how jewellery worth millions, from a dozen brands including Boodles, Cartier, Chanel, De Beers and Fabergé would look on them.

In all cases, users can virtually ‘try on’ jewellery worth £10m, without the embarrassment of having to slink away ‘to think about it’  – and the only equipment they need is a pair of scissors and a computer with a webcam.

For context, it might be worth starting with the Boucheron Jwlrymachine (above), a snip starting at £200k.

Have a really augmented weekend, from the NamNews Team!

World's first pop-up mall coming to London

Sixty  shipping containers are to be transformed into the world's first pop-up shopping mall -- set to open its doors in Shoreditch, East London.

Boxpark is going to open in October -- two months later than planned -- in a 4.7 hectare site called The Goodsyard -- a former railway yard, which has been derelict for more than 40 years.

Founder and managing director  of the venture is Roger Wade -- creator of the fashion brand  Boxfresh. He says: "The container is the ultimate in industrial design but why not use it in a retail perspective."

Built next to the new  Shoreditch High Street train station, Boxpark will see 60 customised containers lifted onto the site. Forty will made up the ground floor of the mall, and upstairs will be a further 20 units housing cafes and art galleries. The retailers will not be limited to fashion with Wade stating that they contacting "any retailer who we think are doing something a little different".

With all the flexibility of 1 or 5 year leases, and based on the US pop-up shop idea*, the venture will provide a means of allowing more innovation in retail

* US pop-up shop: Most retail stores would consider staying in business for just a few days a total failure. But a growing number of merchants are opening overnight shops that appear and disappear within the blink of an eye.

These "pop-up shops" essentially are temporary boutiques that pop-up in random locations for a couple days to a week and offer exclusive items. The quickie format originated in New York City but is rapidly spreading across the US, filling in empty spaces abandoned by out-of-business retailers. Some pop-ups are run by large retailers but a new trend is towards pop-ups fronted by small boutiques with a strong online presence. Minimal storage costs and cut-rate rents allow retailers to offer high savings, although the selection is fairly limited. Shoppers like the bargains but also appreciate the unique products on offer.

If the trend continues, it could reshape the US retail landscape, diminishing the power of commercial landlords and making it easier for large merchants to test new locations and products with little commitment. It also allows smaller companies to quickly run through new stock without the expense of storage or hiring permanent employees.

A break-through lesson for UK landlords and Local Government?

Numbers, numbers everywhere, and not a prop to think...

In unprecedented times we have unprecedented access to numbers, and some NAMs even find themselves working to three places of decimals on the wrong numbers…

However, the answer is not to ignore the numbers and revert to gut-feeling, but to find and use the numbers that ultimately drive the business.

Ego-trips excepted, we are all in business to optimise reward for risk.

This means generating a Return on Capital Employed that is a little better than others using a similar business model. Take a minimum of 15% in current times.

ROCE is in turn driven by Net Margin and Capital Turn i.e. ROCE = Return /Sales x Sales/Cap Employed

If ROCE is Greek to you……?

However, if you know ROCE backwards, then you realise that all other numbers are merely supportive…

More 

The Gobstopper, sweet niche retailing

Full-time mum-of-two, Lisa Oakes, 37, opened a traditional sweet shop in Hale, Manchester on July 5^th and is already inundated with eager young customers

Sweets in the shop are displayed in traditional glass jars and weighed out on vintage scales on top of a refurbished antique haberdashery counter.

Retro sweets are on offer including rhubarb and custards, sherbet lemons, cola cubes, liquorice, locally sourced chocolate and fudge

Slight personal disappointment at the apparent absence of bulls eyes, but still worth a visit..

Shopper engagement is revealed by the fingerprints and nose prints on the window where children have been taking an eager look inside!

All the ingredients for successful niche retailing, especially given plans to supply online .

All it needs is the application of some basic guidelines to make the idea scalable

In fact in an article called Niche Retailing: Uncovering New Retail Opportunities 

Frank Lucer suggests the following rules:

-       Catering To Customer Preferences

-       Going Deep Instead Of Going Wide

-       Leveraging Your Small Size

-       Learn from Amazon about leveraging the Long Tail

Small retailers can use this same strategy to attract customers and encourage sales. It is the essence of niche retailing. It can help independent shop owners cater to their customers' preferences and "go deep" into their product categories while leveraging their size.

As the level of competition rises in every sector, uncovering these new opportunities can make the difference between success and failure in unprecedented times.

Tesco Book publishing: All You Want To Know About Fruit

News that Tesco hopes to boost sales and consumption of fruit via a ‘non-Tesco’ book promoted this week in Tesco Superstores and Extra stores raises some interesting ideas about the future of book publishing.  

The book is written by Mark Blaylock and based on an idea by Tesco category director Nick Tatum. But although Tatum and members of his technical team are credited, the book does not bear Tesco branding or identify contributors as Tesco staff.     

This ‘non-Tesco’ livery, combined with free distribution to shoppers spending £5 on fruit, and special fixture display in the fruit section is bound to qualify the book for best-seller status, with obvious benefits for suppliers, Tesco,  shoppers and authors alike.

Suppliers in other categories should anticipate, even encourage similar treatments in their categories.

However, the real payoff for shoppers could be the extension of the idea to the commissioning of fiction works targeted at specific segments within Tesco’s 15m Clubcard population…

Think of the pleasure of curling up with a bespoke Stephen King novel, populated with like-minded folk within our income bracket, sharing our interests, health profile, age and family demographics, shopping and eating habits….scarey!