KAMs' Highs & Lows

Early in a career, KAMs have to decide whether they want a roller-coaster ride or prefer a gentle see-saw at the quiet end of the playground.

Apart from the excitement, the former takes courage and can be more rewarding, but the latter no longer carries any guarantees….

Facebook gets physical...via new gift service to sell real goods

According to the FT, Facebook has launched a gift-service that allows users to send novelty items to friends, via revenue-sharing agreements with its partner-retailers.

The Amazonian elephant in the room…
However, despite the advantage of background personal insight, Facebook missed a big retrospective-trick by failing to anticipate the need for physical location details and not requesting personal addresses when members’ originally registered with the social network. Furthermore, given Amazon’s 1-click innovator’s advantage, Facebook is condemned to forever playing catch-up to the online retailer’s speed, efficiency and database…

Fulfilment issues for trade-partners
Given that volume-gifting will be mainly low-priced novelty items, partner-retailers face the triple whammy of securing addresses, 'instant' shipping of low-value items and awaiting their share of revenue, in a world where fast single-step purchase is king…

For suppliers, the issue becomes one of being able to anticipate the volume and speed required should a novelty gift-item catch on big-time with the Facebook community (for openers, think hundreds of millions…fast!).

Overall assessment
Better for Facebook to revert to virtual, and find digital gifting-options that meet the same needs…(or even partnering Amazon…). This could represent a real opportunity for service-suppliers to evolve ways of digitising their offering via Facebook (i.e. ‘Have a Guinness on me for your birthday!’ NB. an example only…nothing beats the real cash-based shared-experience !)

(but meanwhile, no harm in Facebook seeking ways of harvesting physical addresses from their vast connected-community, just-in-case…)

The top 10 high street stores to haggle in?

Latest research shows that most high street retailers are responsive to haggling, to varying degrees…
In a poll of 2,544 people, Martin Lewis of MoneySavingExpert.com  found that most high street players will respond to haggling, with the following success-rate for determined shoppers.

The top 10 high street stores to haggle in
Retailer       &    Success rate (of those who tried)
1. Comet              78%            6. Asda             60%
2. B&Q                78%            7. Tesco            58%
3. Currys/PCW    78%              8. Wickes          56%
4. Homebase        69%            9. Sainsbury's 54%
5. John Lewis       63%           10. Debenhams 53%
Source: MoneySavingExpert.com

How this approach can help in negotiating with buyers.
Given that many buyers can sharpen their negotiating skills simply by dealing with more suppliers per day than a NAM can manage in a week, coupled with the fact that role-reversal can add insight re the other party’s position, then taking every opportunity to haggle at store level could be your way of raising your negotiating game to new levels of expertise. (See here and scroll down for Martin’s Top 20 haggling tips)

For a real immersion in your customer’s culture, why not start easy and gradually move down the haggling league table before selecting your customers outlets for your experiments?

Some precautions
Given the prevalence of security cameras, it might be worth donning off-duty clothing and a hint of make-up to avoid your next encounter with your buyer becoming a retaliation session…

Going for broke?
Finally, the retailer most resistant to haggling in the survey was Boots (it figures?) with a success-rate score of 29% - a real opportunity to refine your haggling skills, especially if you handle a different account…

Kellogg's new tweet shop - pay with social currency...

                                                                                                pic Retail-focus
According to a report in Retail-focus, Kellogg's have opened a new pop-up 'tweet' shop on Soho's Meard Street in London. The standalone store – thought to be the first to allow customers to pay by Tweet instead of money – marks the company's move into the savoury crisps market and is open until Friday 28 September.

The shop is lined with hundreds of packs of crisps, a 'try before you buy' snacking area, a 'community noticeboard' that captures social media reaction to the unique retail space, and a  packet of new Special K Cracker Crisps can be bought by Tweeting a message about the snack range.

A real fusion of brand, medium and consumer, without retailer intervention..

Another potential use for empty shops in the high street?

Sao Paulo, 120mile traffic jams (+kidnapping)…

Next time you are stuck on the M25 on the way to Cheshunt, spare a thought for your colleague KAMs in Brazil, where traffic jams of 120 -180 miles in Buenos Aires are routine, wjth the added threat of being kidnapped for those KAMs working for major suppliers..
Several years ago while running a workshop at local headquarters of a multinational client I was informed that my personal bodyguard was essential in order to avoid the inconvenience and cost ($50k) of having to pay my ransom in order to conduct the workshop without interruption.
However, the $50k was a mere trifle compared with what they would have had to pay to release their global chairman, who paid a surprise visit from Europe, transferred from the airport by helicopter, landed on the roof, and participated in the workshop for 30 minutes before flying back to Europe again, all before the local mafia discovered he was in the country!.

The secrecy left me only moments to add a couple of spontaneous pleas for more local-KAM empowerment, before attempting to continue the session as planned.
Nice to be appreciated, if only via the price of a ransom…

Tesco to build national network of online-only 'dark stores'

They are not open to the public but used to assist nearby shops unable to keep up with internet orders. Tesco already has four dark stores in London but internet boss Ken Towle said on Monday that another two would open in Crawley and Erith, near Dartford, and it was scouting other cities, including Birmingham and Manchester, for locations.

Future dark stores
Towle said Tesco's would need "tens" rather than "hundreds" of dark stores. Speaking last week, Tesco chief executive, Philip Clarke, said Tesco.com "provides all the growth we have in our core food businesses these days".

Where this is heading
Besides representing a threat to Ocado, Tesco with 50% of an online grocery market that will be worth 6% of total grocery spend by 2016 (IGD), the market leader is still at an early stage in its rebalancing of online-and physical store presence that will reflect online demand, with an increasing dark store weighting that will provide a means of reducing online overheads and help to subsidise the cost of home delivery.

In other words, it will always be difficult for online grocers to break out of the '£5-per-drop' mode, so lower-cost dark stores will help by releasing more of the retail margin to help cover delivery cost losses   (See posting below)

Home Delivery charges - a one-way subsidy?

Given that picking, bagging and making a home delivery costs supermarkets up to £20, the £5 charge actually represents a subsidy for the service.

This leaves the retailer with four options:

• Absorb the loss: impossible on current retail margins, especially as the online/physical shop ratio increases?
• Charge more for instore purchases: An increasing an unacceptable burden on those that want/need to shop instore.
• Charge £20 per delivery: a significant turn-off for many online shoppers?
• Or radically increase the minimum order size: a likely mismatch with real shopper need?

Going for scale
Some retailers may see significant scaling up of home deliveries as a possible solution, with the milkman’s street-agreements as a way forward (in the final days of home delivery of milk, dairies agreed solus access to individual streets in order to make individual milkmens’ routes profitable), a practice that might cause issues with the competition authorities, nowadays…

A radical business model?
However, for radical thinkers, the way forward may be via a significant scaling down of store sizes and numbers to better match a shrinking need for physical presence as online increases. With less physical overheads, the average retail margins of 25% could be used to fund home delivery, thereby evolving a new retail model that fully acknowledges a future balance of online and physical retailing.

Otherwise, Amazonian third party online retailers will emerge to take up the space, profitably… 

Time & Money - optimising the connection

A client once had the problem of the Board spending too much time in board meetings.
Questioning revealed that having spent an hour deciding whether the outside fire-escape stairway should be painted red or silver, the Board waived through a £1m trade-funding budget in five minutes….

Solution:
Even more time was spent agreeing the total annual cost of the combined annual packages of the Board, and the resulting cost per minute in board meetings. Once agreed, however, the agenda items were prioritised and allocated timings in terms of cost and value, making each session a little more productive.
WalmAsda however, did even better by removing all seats and conducting the board meetings stood up…

How Poundland makes its millions - the brand-issue for suppliers and retailers

Monday's Poundland item in NamNews resulted in over 250 downloads, indicating a high degree of NAM-interest and perhaps curiosity re possible 'trick-missing' in some cases.

Given that the Telegraph article was also the subject of a 30-min prime TV programme (see 'Dispatches: Secrets of Poundland’ on September 17, Channel 4, 8pm) poundshop optimisation raises important issues for suppliers wanting to maintain their brand equity.

Coping with inflation
In order to maintain the £1 price-point, suppliers and pound-shops have reduced pack-contents over the years. This is about consumer expectation, not the letter of promotions' legislation. As you know the original idea of branding was to persuade the consumer that the contents were safe, consistent and matched or even exceeded the expectation created by the advertising.... Think of the impact on a loyal user of having the contents of a £1 Family pack reduced by 50% in five years.
We all know why it happens, but we need to focus more on the impact

Extra-value packs 
Pound shops sell a number of well-known brands with “50% Extra Free”, or even “100% Extra Free”, on the packaging. i.e. a pack of eight bars for £1,while the mults offer the same eight bars for £1 also, without the flash.   Again a potential bad taste...

Consumer perception as driver
The issue is not about morality or even the letter of the law, but is more about the negative impact on consumer perception, a serious dilution of hard-won brand equity.
In the process we risk converting a savvy consumer into a cynical shopper that nowadays has the incentive and means to express their opinions via the internet...

The way forward
Brand-owners need to meet trade needs, but not at a cost to brand equity. Brand equity has to remain sacrosanct, its all you've got... Also, the retailers face the same challenge in preserving shop brand equity whilst responding to shopper demands, a possible basis for joint consultation?

It all goes back to trust in business, the basis for everything, and worth a lot more than a pound...

Boots breaks the 'silence' as it agrees deal with China firm

Alliance Boots, under the terms of a strategic alliance agreement signed yesterday, announced that it will acquire a 12% stake in Nanjing Pharmaceutical Company Limited, through a private placement, for a total consideration of approximately £56 million (RMB560 million), making it the second largest shareholder with Board and operational management representation.

Boots China profile
Nanjing Pharmaceutical Company Limited, which is listed on the Shanghai Stock Exchange, is the fifth largest pharmaceutical wholesaler in China with sales of around £2 billion (RMB20 billion) in 2011.
Alliance Boots first entered the Chinese pharmaceutical distribution market in 2008 through its Guangzhou Pharmaceuticals Corporation joint venture, which operates in complementary geographies and continues its successful development.

A powerful stepping-stone...
In all, with this latest move Boots is aiming at gaining a 20-30% share of the Chinese pharmaceutical distribution market. Apart from the inevitable appeal of adding a retail element in China asap, this major wholesale step is a clear indicator that even without the Walgreens’ tie-up, Alliance Boots is determined to pursue its policy of increasing its global reach and scale.

This will not only make it more influential in the Walgreens-Boots mix, but will be another step in making the company one of the most connected and centrally-run health & beauty operations in the world, at least in the short and medium term, say five years.

Impact on suppliers
This increasingly scalable company will continue to be heavily geared in a global economic environment. As a result there will be increasing pressure on the company to provide an exit strategy for its stakeholders via re-flotation.

All of this adds up to increasing power and influence in its relationships with suppliers, a position that will inevitably cause it to bring issues like prices & terms disparities, and especially absolute cost-prices to the negotiation table.

Action
It hopefully goes without saying that any supplier wishing stay in the ring needs to factor the full global profile of W-B into the mix, fast.
….and if anyone, anywhere in your company still needs convincing of the obvious, why not run the numbers on Walgreens-Boots owning even 20% of global Health & Beauty retail & wholesale, with power to match…  

Jim Sinegal, Costco CEO & Founder, my personal memories

Watching broadcasts of last week's Democratic Convention, I was surprised and pleased to see a speech by Jim Sinegal that brought back memories of meeting him 20 years ago.

At the time, many of my long suffering clients had been barely tolerant of my constant references to the inevitability of this new business model, the membership warehouse club, entering the UK and undermining the wholesale trade.  Eventually in 1992, I rang Costco's home office in Seattle, explained my interest, and asked to speak to someone who might add some insight. I was transferred to CEO Jim Sinegal, who politely asked what I wanted to know....

Despite many years of working in the US, I am still astonished at their ease of access to key business people, especially in the retail trade.

Anyway, the call went well, and Jim said that if I was prepared to come to Seattle, he would give me some time. The following week I was shown into his office for what turned out to be 4.5 hours of the most down-to-earth and practical description of a business start-up I had ever experienced. He outlined his simple philosophy of demonstrable value for money, the need for tight cost-control, an obsession with the numbers, financial KPIs and performance at his finger tips, and how he had set up Costco on these principles. And all of this without a hint of arrogance, simply an obvious pride in achievement.

At lunchtime he offered to drive me to the nearest Costco branch and show me how it worked in practice... As we got into a new state-of-art Mercedes, he explained that his wife had given him the car as a birthday present that morning, and he was obliged to accumulate some appreciative mileage before getting home that evening....

At the Costco branch, Jim wandered around the aisles, exchanging first-name banter with staff and customers alike, quoted rates of sale and profitability of random SKUs and 'specials' and generally illustrated most aspects of his business model by example. I asked if I might take some pics, and was met with a polite refusal, one of their golden rules...

Throughout the session we exchanged views on the contrast with the European retail and wholesale trade, typical 'trading norms' and dynamics, key players and their philosophies and obvious gaps in the market.....

I was left with a firm conviction that Costco would make a big impact on the wholesale market in most countries.....

A week later a small parcel arrived special delivery, containing 50 x 35mm pics covering most aspects of a typical Costco branch which added much colour to my increasingly stark warnings to clients...

One year later, Costco opened in Thurrock....

reEpricing while you wait?

The fast-moving Internet pricing games used by airlines and hotels are now moving to online retailing via a new generation of algorithms that are re-pricing products on an hour-by-hour and sometimes minute-by-minute basis.

A goal is to maintain the lowest price-even if only by a penny-so that their products will show up at the top of the search results by shoppers doing price comparisons.  The most frequent changes are for consumer electronics, clothing, shoes, jewellery and household staples like detergent and razor blades.

Retailers find that changing prices more frequently can boost sales dramatically, but requires a lot of attention. First they set the software to beat their competitors by a certain percentage. Then they set a floor price below which they will not go.

For consumers, the result is more volatile pricing. Once the low-price vendor for a particular item sells out, rivals selling the same product can immediately lift their prices without fear of being undercut.

In effect, retailer Epricing is making the world's most modern market into the most old-fashioned, taking us all back to the laws of supply and demand, with lessons in pricing that can optimise our more traditional routes to market.....24/7.

Who Needs Training?

CEO asks Sales Director: "What happens if we invest in developing our people & then they leave us?"
Sales Director: 'What happens if we don't, and they stay?""

Adapted from Sarah Ouakim via Jeremy Blain with thanks

If Airlines Sold Paint…

Given Ryanair’s imminent bid for Aer Lingus, coupled with many homeowner’s desire to avoid some painting chores by flying away for the weekend, we felt it might be interesting to link airlines and paint with a lesson in pricing for those NAMs that never like to forget the ‘day-job’

Customer: Hi. How much is your paint?

Clerk: Well sir, that depends on a lot of things.

Customer: Can’t you give me an approximate price?

Clerk: Our lowest price is our introductory special at $12 a gallon. After that we have dozens of different prices up to $199.

Customer: What’s the difference in the quality of the paint?

Clerk: Oh, there’s no difference. It’s all exactly the same stuff.

Customer: Well, in that case I’ll take your $12 paint.

Clerk: Well actually the $12 variety is only available on our website. If you want to buy it here at the store you’ll be charged an additional $20 Customer Convenience Fee

Customer: So if I go home and get it off the website, its only $12?

Clerk: That’s correct sir – plus a Credit Card Usage Fee of $6 and then there’s standard Shipping and Handling of $15.

Customer: What? So in other words buying online would cost me almost exactly the same as what I’d have to pay here in the store?

Clerk: I suppose so, but if you buy it here you get to use it immediately. Online purchases take ten business days to get to you – unless you pay the optional $25 Express My Paint Fee.

Customer: You’ve got to be kidding me!

Clerk: Well no sir, but it’s academic anyway as right now the $12 paint is completely sold out in both places.

Customer: That’s BS. I’m looking at shelves full of the stuff!

Clerk: Ah, but that doesn’t mean it’s available for sale. We sell only a certain number of introductory priced cans on any given day. Oops, look at that! It just became available again – at $17.50.

Customer: C’mon! You mean to say it went up while I’m standing here?!

Clerk: ‘Fraid so. Inventory control changes our prices all the time.

I strongly recommend you purchase your paint as soon as possible as it could go up again. How many gallons do you want?

Customer: Well, maybe three gallons. No, make that four, I don’t want to run out. I assume I can return anything I don’t open?

Clerk: Certainly sir. The $12 paint is non-refundable, but if you return it within 48 hours you will be entitled to a $5 credit towards the future purchase of another gallon of the same color at the same or higher price.

Customer: That’s crazy. In that case I’ll just give any unopened cans to my brother as he’s planning to repaint his home soon.

Clerk: Sorry sir, no-can-do! Our terms and CANditions – that’s a little in-house joke – prohibit paint transfer. It is strictly for the use of the original purchaser.

Customer: But wait a minute, I hadn’t spotted those “Paint Sale – $9.99* a Can” signs over there? That sounds like a much better deal.

Clerk: Ah yes, that’s from our low cost paint division. The asterisk denotes that the cans are actually half-gallons and the price is based on a minimum purchase of two. There is also an additional Environmental Fee of $5 per can, a non-refundable Can Deposit of $3.50, a Paint Facility Charge of $5 and if you want more than one color, the second has a $25 surcharge and the third is $50 extra.

Customer: This is utterly ridiculous. To hell with this! I’ll buy what I need somewhere else!

Clerk: Well sir, you may be able to buy paint for some rooms from another store, but you won’t be able to find paint for your connecting hall and stairway anywhere but here. And I should also point out that if you want Uni-Directional paint it is priced at $249 a gallon.

Customer: I thought your most expensive paint was $199!

Clerk: That’s only if you paint non-stop all the way around the room and back to the point at which you started. Stairways and hallways are considered one-way exceptions to the rule.

Customer: So, if I buy the $199 paint and use it in my hallway what are you going to do about it – send some goons in to paint over it?

Clerk: Wow, I believe you’re getting it now sir. But no, please, that would be plain silly. We’ll simply charge you a Direction Adjustment Fee plus the difference to $249 on your next purchase.

Customer: Next purchase? No way! I’m out ‘a here

Clerk: At Skyhigh Paints we never forget you have a choice, so thanks for shopping with us. Have a nice day!

Have a price-sensitive weekend, from the NamNews Team!

Credits: latest version found here
Appears to have originated in Travel Weekly, October 1998, by Alan H. Hess

Supermarkets eroding their brand equity?

Almost three-quarters of consumers believe supermarkets are trying to mislead them with confusing pricing practices, Which? has found.

Their survey of 2,100 shoppers revealed that 74 per cent think supermarkets are trying to dupe them.
Current legislation requires retailers to provide both a selling price and a unit price for products, but a spot-check of branches of each of the 10 leading supermarkets found none met the watchdog's best practice criteria developed with Trading Standards and the Royal National Institute of Blind People for size and legibility of unit pricing.

Deliberate or not?
The key issue is whether retailers are doing it deliberately, in which case nothing will change…
However, if retailers want true like-with-like comparison they need simplify the process for shoppers….

Making price comparison easier
Expressing the shelf-price per 100g/100ml along with the SKU price would surely add clarity to the (deliberate?) confusion caused by random use of Kg/g in shelf-label unit pricing, BOGOFs, extra-value packs, products sold in ‘standard packs & loose’ and especially the use of shrinking-packs to disguise price-rises….

Instead, stores routinely sell fresh fruit and vegetables in standard packs for a fixed price without providing a clear price comparison with the same items sold loose.

Call for legal enforcement
Consumer champions Which? are calling for a change in the law that would require retailers to provide clear unit prices, including shelf labels in large print against a clear background, showing a price based on a standard formula such as pence per item.

Morrisons Act first 
A week ago we advocated this approach in KamBlog
Now Morrisons have announced it will introduce standard large labels showing the unit price and price per kilo or per litre across all its products by the end of next year. A pity if other retailers wait that long to follow suit…

Evaluating the real brand of supplier or retailer
Shoppers use price as the final ‘decider’, but we should remember that this is on the assumption  that all other things are equal. In other words, by making it clear what the shopper is getting for the money, the ‘per 100’ comparison forces the brand to rely upon Performance, Presentation and Place in a like-with-like Price evaluation with the available competition, causing the shopper-consumer to fall back on the brand equity we have taken so much trouble to build and sustain over the years.

In the old days it used to be called trust…the most precious commodity in any business!

M&S Flag-ship floor plan - the real priorities?

Click image for larger copy

You have seen the pics, (if not, Google Images Chester Oaks M&S)
You may have even made a storecheck…
Either way a floor-plan of ground and firsl floors layout will help you appreciate the relative importance of Food vs. Non-food, departmental adjacencies and all the other little things that tell you where a retailer is going…

P.S. If you would like a 3MB pdf of the the above floorplan, please email me on bmoore@namnews.com

RUSSIA: X5 Retail Head of Hypermarket Division, Jan Fuchs off to opportunities elsewhere…

Russia’s largest retailer has confirmed that it has lost the services of a number of senior managers due to disappointing results. The departures add more pressure on the group, which has seen sales at its hypermarkets fall regularly in the past few quarters.

• With sales declines like these is it any wonder that Jan Fuchs off to opportunities elsewhere…?
• Apologies, I have waited 54 years to use that one, ever since the London Evening Standard carried the headline “Famous explorer Sir Vivian Fuchs off to the North Pole” back in 1958…

Eye-controlled Gaze TV unveiled in Berlin’s IFA Trade show

Viewers that resisted over-dosing on their Olympics viewing can now revert to potato-mode by avoiding unnecessary exercise caused by having to reach out and press the clicker…
Details + pic at BBC

How it works
Viewers control the set by staring at the top or bottom of the screen to activate a user-interface.
The user can then change the volume, switch channel or carry out other functions by looking at icons shown on the display.

Applications
Apart from TV, the eye-tracking technology originally aimed at helping disabled people control computers. Potential applications include gaze-controlled car information systems, surgery room image display screens, and video games.

New levels of viewer engagement?
Whilst still at prototype stage, Gaze TV’s elimination of the remote-control offers potential for whole new levels of family disagreement, apart from the hazard of high-speed random channel switching caused by a family member nodding off during the boring parts…
It is also a step up from attempts to involve family pets in the viewing process

However, the real issue for advertisers has to be the renewed pressure on maintaining viewer engagement, the need to refine the message to a precise and unique fit with consumer need, linked with a solution that delivers above expectation, better than alternatives available, or else…. 

Beat 'em or join 'em? Coca Cola co-branded Private label promo…

                                                                               pic: Brand Privat, Romania*
In their fourth co-branded promotion in Romania, Coca Cola have again linked with a private label.
For the next two weeks Coca Cola will team with Real Quality, the mainstream private brand from Real hypermarket (part of Metro Group) in a ‘buy a special Olympic pack (2 bottles 2l Coca Cola) and get a free 50g pack with Real Quality salted sticks.

Previous promotions included:  

1. Coca Cola with spaghetti Fine Food (mainstream Private label from Metro Cash&Carry). Buy one box with four bottle Coca Cola 2l get 2 packs spaghetti 200g for free. This one was followed by a huge door-to-door campaign. Over 400,000 free samples (one bottle 1l Coca Cola + one pack 200g spaghetti Fine Food).
2. Coca Cola with spaghetti Top Apetit (entry level Private label from Penny Market – part of Rewe Group). Buy two bottle Coca Cola 2,5l and get one pack spaghetti 300g for free.
3. Coca Cola with “pasca*” Cora (mainstream Private label from Cora – the hypermarket chain Louis Delhaize). Special promo price for the pack.                                                                                             *pasca is the Romanian name for a traditional cheese pie made only for Easter. Followed by a two weeks out-door campaign in all the cities with Cora hypermarkets.

The real issue here is a major brand’s willingness to seek synergies via collaboration with a private label when it represents a logical, linked offering to the consumer…
A lesson (and a test?) for other brands?


Source: Brand Privat, Romania