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...?