Impulse buying: the real reasons?

With research showing that half of UK shoppers buy on impulse, for instance spending £3.6bn a year on clothes, shoes and handbags they just don’t need. In fact, the average wardrobe contains £92 worth of unworn clothes, causing the appropriate level of guilt each time the door is opened.

However, the real advantage of the research lies in the main reasons discovered for why people buy on impulse:

Top ten impulse-buy excuses:

1. ‘I’m feeling really down so I deserve a treat’

2. ‘I’ve just been paid so I deserve a treat’

3. ‘There’s only one left in my size, it’s meant to be’

4. ‘I’ve had a terrible day and this will make up for it’

5. ‘If I buy this in a smaller size it will encourage me to slim into it’

6. ‘My life will be better because of it’

7. ‘All my friends have this and I’ll look silly if I don’t’

8. ‘If I buy this it will make the other things I own better’

9. ‘Everyone’s seen me in all my things on Facebook so I have to buy something new’

10. ‘I’m too embarrassed to say no to the sales assistant’

In other words, apart from the above list providing dead-cert ideas for appropriate signage instore - in case a shopper forgets an excuse in appropriate categories - there is surely a market for wardrobes that are built to conceal rather than display the contents, with a narrow door at one end allowing a suit to be clipped onto a rail and slid quietly into the darkness, ideally vacuum-packed to maximise the available space, thereby making it years before a reality-check is required...

The key issue is that in these flat-line times it is vital to take a positive approach to research, all research...

Heating up the carbonated drinks category?

World’s first hot carbonated drink to go on sale for Y130 (76p) from October in vending machines across Japan. The innovative new product produced by Coca-Cola in Japan will be the first carbonated drink to be served hot.

The self-heating product is called Canada Dry Hot Ginger Ale and, though some of us may balk at the idea of a hot fizzy beverage, the producers say the result is “an intensely spicy, cinnamon and apple-flavoured drink”.

Those with residual knowledge of school chemistry may choose to busy themselves this weekend with a simple experiment to prove that dissolved gas comes out of solution faster from warm water than cold. The reverse is also true: Dissolved gas tends to stay dissolved better in cold water, thus showing why five years of research have gone into the technology behind successfully containing heat and bubbles in a can…. (The article also contains a download giving the full chemical background)

Incidentally, those who are interrupted in the assimilation of their heated carbonated drink may regret that evolution has moved us on from that stage when our former gills would have allowed us to copy our fishy cousins in absorbing miniscule amounts of residual gas from cooled liquid… 

Tesco builds flats above their shops

Bustling about in hard hats and fluorescent jackets, builders employed by Tesco are putting the finishing touches to a 60,000 sq. ft. Tesco store and 250 apartments that sit above, behind and beside it.

Living above the shop is very much back in fashion as supermarkets lead the development of thousands of homes in their latest tactic to secure new sites. As a consequence, the race for market share among the UK's largest retailers is inadvertently helping London chip away at a housing shortfall that equates to at least 32,000 new homes per year.

Tesco’s huge projects in Woolwich, Highams Green and Streatham are merely paving the way for a wave of supermarket-led home building projects which will flood across the south-east. More than 4,500 homes are being planned by the big five grocers in London alone over the coming years, according to property advisor CBRE, while construction market analyst Glenigan estimates supermarkets will be laying the foundations for more than 2,100 homes in 2014. After completing the development, Tesco remain the main tenant and occupier for years, so they have an added incentive to make sure these are developments of the highest quality.

In other words, a major innovative move, meeting a real shopper need…

The initiative has echoes of 7-11 practice in Tokyo of taking the ground floor area of high-rise apartment buildings, just to be close to convenience customers. In fact, there the idea has been so successful that 7-11 is referred to as ‘The Refrigerator’ by tenants living above the store in typically small Tokyo apartments where space is a premium. In other words, tenants can run stock levels of milk in their apartment to a minimum, knowing that top-up is merely a lift-run away…

On a personal note, having lived above my parents’ Mom ‘n Pop store for most of my childhood, nothing beats the convenience of nipping downstairs for an impulse refill when the need arises…

A no-brainer for the mults…

Pop-up Britain - Piccadilly flagship for pop-up shops

Popup Britain, the retail arm of national enterprise campaign StartUp Britain, has opened a flagship store in Piccadilly to offer 30 retail start-ups a week-long opportunity to sell their products.

At No.231 Piccadilly, 20 paces from Piccadilly Circus, pop-up shops are given an opportunity to check out what difference a prime, albeit temporary location will make for their business idea...
Last week's pics express it well:

                                                                                                     pics: Brian Moore

A variety of retail ideas, but the prize for innovation has to go to the SWIG Hip-flask company, a space near the door, and a bespoke title to mark the occasion at Swigadilly Circus...

Worth a pop-in on your next West End store-check? 

Personal one-hour supermarket delivery service launches in London

Pocket Shop, a start-up website, has launched the ultimate in fast grocery deliveries – promising to have top-up bread, eggs and milk in the hands of London customers less than an hour after they click ‘send’.

Its Amazon-based system works by allocating online orders to one of Pocket Shop’s team of 20 trained buyers around the capital, using a GPS-based algorithm similar to those employed by taxi-ordering smartphone apps. Pocket Shop could scale the business by using crowdfunding techniques to recruit more part-time buyers.

A text message alerts the buyers, directing them to the nearest Tesco or Sainsbury’s supermarket. An app on the buyers phones then displays the customer’s shopping list with instructions on the optimum way to navigate the aisles. The company offers a ‘superstore’ range of 150,000 products at prices comparable to shopping in Local and Metro convenience stores. Waitrose and Marks & Spencer will be included soon, the company claims.

A key issue might be long term profitability in that the major mults claim that home delivery costs £20/delivery compared with a £5 charge… In other words, although Pocket Shop apply a product mark-up and a 1-hour delivery charge of £6.50, they presumably have to pay the buyer…

But if it works, and think saturation of Greater London for starters, then this represents the ultimate in personal convenience, for those willing and able to pay. Having reached critical mass the concept could morph into a personal pick-up service for dry-cleaning, prescriptions, and even pensions…

Then time for Amazon to move from back office to front of store?

A light-bulb idea that makes a real difference, free-of-charge...

Just when manufacturers were focused on LED light competition, and power suppliers were adjusting for lower consumption, Alfredo Moser, a Brazilian mechanic had a light-bulb moment and came up with a way of illuminating his house during the day without electricity - using nothing more than plastic bottles filled with water and a tiny bit of bleach to refract 40-60 watts of light into the room below, free….

First he makes a hole in a roof tile with a drill. Then, from the bottom upwards, he pushes a water-filled bottle into the newly-made hole. "You fix the bottle in with polyester resin. Even when it rains, the roof never leaks - not one drop."

In the Philippines, where a quarter of the population lives below the poverty line, and electricity is unusually expensive, the idea has really taken off, with Moser lamps now fitted in 140,000 homes. The idea has also caught on in about 15 other countries, from India and Bangladesh, to Tanzania, Argentina and Fiji.

Another case of consumers, strapped for cash, 'making  do' with cheaper alternatives...
Full light bulb details here 

EasyGroup hopes to take on Aldi et al with budget supermarket plan

EasyJet founder Sir Stelios Haji-Ioannou plans to challenge low-cost food retailers by undercutting low prices offered by budget supermarkets Aldi and Lidl, concentrating on affordable, basic 'no-brand-name' packet and tinned foods at bargain prices.

Recent retail figures suggest the UK grocery market is becoming increasingly polarised with the strongest sales gains coming at the top and bottom ends – with the likes of Waitrose doing well on one side and Aldi and Lidl on the other.

Starting with a store in their Croydon building and using a new web site easyFoodstore.com, "coming soon", the company hopes to make a viable return on capital employed.

Several plus-points stand out:

• This solus ‘white’ offering will have a unique focus compared with other retailers
• Stelios may have identified a genuine niche in a market that will remain flat-line to low-end consumers, for many years
• Aiming at ‘an acceptable return on capital’ and buying redundant high street outlets at low cost means the company will have very simple KPIs, with a focus on an ROCE of 10 -12%, in the current climate
• Little shortage of suppliers willing to supply
• Generic branding means goods can be multi-sourced to optimise leverage on cost prices
• The formula is infinitely scalable at low cost, to optimise low-price demand…

The 'downside'?
Stelios is not a shopkeeper, but once-upon-a-time he did not know much about running airlines, either…   

Apple Pitches Ad-Skipping for New TV Service – A must-have for fast-forward NAMs?

According to a report by Jessica Lessin a former WSJ reporter and editor, Apple have apparently told media executives it wants to offer a “premium” version of the service that would allow users to skip ads and would compensate television networks for the lost revenue, according to people briefed on the conversations. This would allow users to watch ad-free live and on-demand television over an Apple set-top box or TV.

Whilst many viewers have traditionally 'fast-forwarded' TV recordings to eliminate advertising, the combination of Apple branding and smooth interfacing represents a step-change...making it easy to understand TV networks' reluctance....

However, given the realities of increased media fragmentation and the growth in multichannel delivery of content, perhaps it is time to take this final step towards the meeting of consumer need, testing viewer willingness to pay a premium for ad-free content.

It then remains for advertisers to make their messages so compelling and linked with the total consumption experience that viewers are prepared to accept the trade-off between interruption and break-free viewing...by choice.

In fact, there may even be a niche made up of NAMs that are so focused on their own and competitor advertising that they would pay a premium for back-to-back TV advertising...

Microbrewing to micromarketing - Aldi beer festival boost for breweries

Discount supermarket chain Aldi estimates it has sold £90,000 of Scottish craft beer in five weeks during its second in-store beer festival, featuring 33 beers from 13 breweries.

According to The Herald, the retailer has sold 52,000 bottles out of 70,000 it had in stock in its 46 stores across Scotland and is on target to beat last year's beer festival sales of £93,000. The festival is part of  Aldi’s ongoing commitment to working with local suppliers, according to Richard Holloway, Scottish Managing Director.

A small initiative from a global perspective, perhaps…, but monumental in terms of pressing all the buttons locally…

More details of Aldi’s Scottish beer initiatives here

Incidentally, for traditional branded suppliers, faced with the challenges of global brand-names innovation, again the Scottish micro-breweries can show the way...

See here for a list of 50 Scottish beers with the best names (+pack-shots + ingredients + selling points), ranging from Sheepshaggers Gold - “The Best Beer Baa None”, to a personal favourite, Beet Red Beer - “You can’t beet red beer”, brewed by Barney, a pal of mine in Edinburgh….

'Try it first' perfume service boosts sales for The Fragrance Shop

The days of unwanted perfume or aftershave presents sitting on the bathroom shelf may be coming to an end after The Fragrance Shop launched a “try it first” service, designed to boost online sales. It provides customers with a free sample of the purchased fragrance, meaning they can test it before opening the full bottle and return the fragrance for a full refund if they do not like it.

The Fragrance Shop credits the scheme with helping them show a 15% increase in sales to £81m in the year to March 31, with a click-and-collect online ordering service accounting for 17% of sales.

Representing what can be the final hurdle for the 'new user' savvy shopper, this initiative gives The Fragrance Shop a clear competitive advantage over traditional, albeit upmarket purveyors of fragrance, by removing the 'risk' element in making a decision to invest in a product where the reassurance or even 'permission' of other stakeholders/partners may be required to endorse or even authorise a purchase.

In other words, trial and discussion in the comfort of the home become an active part of the buying process, especially for online purchases..

A pointer for savvy C&T suppliers who might gain an advantage by supplying a small sample (or two) in each pack.....?  

Walmart to send automated shopping lists to its mobile app

By crunching data about a customer's buying habits, the store thinks it can pop up the things they'll need to buy. Using its ‘bigger than Pentagon’ database, it will automatically create shopping lists for customers on its mobile app

In so doing, Walmart is endorsing its belief that in-store buying influenced by mobile use is on track to be about twice as big as e-commerce sales by 2016.

The app already includes a shopping-list function, which can tell customers where to find their products in the store and give them relevant digital coupons they can redeem through the phone.

Potential revenue stream in offering manufacturers 'highlighting' of their brands already on list?

Next step automated deliveries unless countermanded?
Risky, but if they get it right….

The Savvy Consumer-group – how co-buying makes a difference…

With one of our highest page-view counts this year, each lasting an average of 2.54 minutes, yesterday’s NamNews announcement re Tesco’s new co-buying Wine initiative was by far our most popular NamNews item. It also indicated the high level of reader interest in what could be a new way of relating with a brand’s consumers.

Essentially, co-buying (cooperative buying power) provides a way of aggregating consumer demand and using the resulting power to influence all aspects of the offering (Product, Price, Presentation and Place), with cost-price reduction obviously making the news. (For other uses, see Pepsi, GSK, Pfizer, Sony, Warehouse, Achica and Mumsnet case-studies here)  

In practice, co-buying enables the savvy consumer to identify like-minded individuals, anywhere, all focused on your brand, and share views, experiences and especially perceptions of value. If that temporary grouping can then pool their demands, find a way of negotiating collectively with the supplier, and secure effective fulfillment of the order, then suppliers will have opened up a new two-way route to the consumer.

The new Tesco wine-buying initiative provides a way of removing some of these hurdles and road-testing the basic concept, with machinery that can scale and embrace additional categories in response to real demand, fast. 

It also gives Tesco extra buying muscle, but because of the two-way nature of the new channel, along with the 10:1 complain/praise ratio, the retailer will obviously be ultra-conscious of how they are seen to handle needs at each end of the supply chain…
…a potential win-win-win for consumer, retailer and supplier?

Big Brother checking you out, faster?

Supermarket giant Kroger Co. (KR) is winning the war against lengthy checkout lines with a powerful weapon: infrared cameras long used by the military and law-enforcement to track people.

These cameras, which detect body heat, sit at the entrances and above cash registers at most of Kroger's roughly 2,400 stores. Paired with in-house software that determines the number of lanes that need to be open, the technology has reduced the customer's average wait time to 26 seconds. That compares with an average of four minutes before Kroger began installing the cameras in 2010.

Kroger executives say they are continuously improving the QueVision software to better predict shopping behaviour and fine-tune the staffing of the checkout lanes. And they are testing other ways to get shoppers out more quickly, including a tunnel-like device resembling an MRI machine that scans items as they go through, then automatically bags them.

The real breakthrough will be on subsequent shopping trips when willing shoppers can be persuaded to avail of a longer in-aisle experience, knowing that checkout times are 90% faster…  

How Cinema should be,,,?

Customer engagement at the Komedia Cinema, Brighton
A pointer for cinemas everywhere?

Why the world loves Clarks and its shoes as it nears its 200th anniversary

                                                                                                        pic: Brian Moore
Obviously they make a good shoe, but I have always attributed Clarks’ success to their unique approach to two key factors – their design philosophy and trade management model.

How they design shoes
Essentially, Clarks design shoes from the inside out in terms of starting with a good fit, with appearance coming later. This is in contrast with more stylish continental shoes that start with appearance and work from the outside in, sometimes with unfortunate results in terms of comfort.

As their children - and their shoe requirements - transition to early teens, anyone with teenage daughters- or even grand-daughters - will appreciate the difficulty in persuading them to accept anything even remotely connected with ‘Clarks sandals’

Thus Clarks ‘loses’ the satisfied user for the vital middle years..

However, with age, the increasing need for comfort means that they pick up that same child in her mid-forties, thus realising the remaining life-time value of their users…

Filling the gap between childhood and middle-age has always represented a marketing challenge for Clarks (more on this ‘gap-filling’ and how this family firm has beaten the ‘3-generation’ rule, here)

How they manage the trade
From a retailing point of view, Clarks again have a unique approach. When the new season’s shoe-models have been approved, sufficient quantities are made to facilitate a series of viewings at selected hotels around the country. Shoe retailers are then invited to their nearest venue, are shown the range and are invited to commit on their requirements before leaving the premises… From experience the retailers know there are limited opportunities to go backwards or forwards on order quantities as the season develops.

When all the orders have been received, Clarks buy the leather and manufacture the shoes…

Meanwhile, where have the rest of us all missed a trade-trick, I ask myself….?

Hiving off capital intensity - How Coca Cola bottling works...

The Coca-Cola model splits ownership of the brand and concentrate from capital-intensive bottling and logistics, by far the bulk of which is handled by independent franchises, with the remainder owned by the company. The system works for Coca-Cola by providing it with the superior margins that come with an asset-lite model, while giving it control over the bottlers.

In general, Coca Cola appear to favour the franchise option and in fact operate Bottling Investments Group, dubbed “the hospital ward” by outsiders, who describe it as the place where ailing bottlers are spruced up before being sold on again. According to the FT, the company is in the process of building scale and closer links with its franchisees through greater co-ordination and consolidation of the sprawling bottling empire. Details of regional/local performance and analysts' estimates of financial impact in key regions are given in the FT article. 

Food for thought?
Whilst the option of splitting brand ownership from production & logistics may not be available to all other suppliers, the advantage in terms of ‘allowing’ the multiple franchisees to handle the commercial relationship (esp. margins, prices and terms) with the trade, and the consequent dilution of retailer power, has to make this alternative worthy of exploration…

By keeping commercial issues tied to ‘local’ production units, the supplier could then focus upon brand building, and more effective management/negotiation/compliance ref trade spend, without the distraction of having to deal with other parts of the commercial relationship…

Too radical? Welcome to these unprecedented times….

Showroom retailing with a difference - you try on clothes in store, but must buy online...

At the Bonobos Guideshop in Washington, D.C., visitors can sip on beer while they try on clothes for size, but they can only purchase by placing an order on the website. The clothes are then delivered for free within two business days.

Target audience: 
The try-before-you-buy strategy is ideal for men who want to look good but hate shopping. Shoppers who book an appointment at a Guideshop - and there are only two appointments an hour, so the shop is never crowded - are greeted by personal shoppers who hand them a beer and guide them to well-fitted clothes, with the benefits of trying-on outweighing any disadvantages

Inventory economies
From the traditional retailer's point of view, where it's very difficult to get the right sizes for each location, the Bonobos model means nothing is out of stock at a store unless it's out of stock companywide. In other words they are able to deliver the same productivity with a fraction of the typical inventory investment

Other trying-retailers emerging
Online eyewear dealer Warby Parker and Gap's Piperlime Internet label have been opening up physical locations for consumers to try on the goods, and Amazon CEO Jeff Bezos plans to open stores, where customers can check out the Kindle line. It's all an attempt to ride on the $150 billion-a-year in sales success of Apple, whose hands-on-centric stores changed the focus from buying to trying.

Bonobos opened up its first Guideshop in May 2012 in New York and now has locations in Chicago, Boston, San Francisco and D.C.. Five more are planned by the end of the year.

The trying future?
It is easy to dismiss the Bonobos approach as one-off, but think why consumers visit shops -trial-  and then eliminate all the elements that do not directly contribute to that process, allowing retailers to really concentrate on enriching the experience, with no distractions...welcome to the new world of ultimate shopper marketing?

More detail and video here 

Tesco to buy Giraffe restaurants for £50m - a long neck stuck out for space-synergies?

Rather than a case of Tesco taking a risk in the search for incremental on-premise consumption, or even to increase store ‘temperature’ in and near the store, this move* should be seen as a way of creating space-synergies in relatively expensive retail real estate. In other words, if the most difficult strep in retailing is getting consumers into the store, it follows that a retailer should then attempt to sell anything that can be legally sold to shoppers.

This latest Tesco initiative will complement rather than replace existing in-store catering and only work if it succeeds in holding people longer in store, and the combination of food-service and retail sales produces incremental profits.

Dilution is not an option.

In practice, the space given to in-store consumption will have to be subjected to the same space productivity KPI of £1,000 sales/sq.ft./annum as the rest of the business, a move that will be watched carefully by those departments that have to sacrifice space to accommodate the new venture. Again, a net profit of at least 5.9% i.e. £59/sq.ft./annum will be a base requirement in order to avoid dilution of overall Tesco profitability.

The pursuit of these numbers (a first for HORECA?) will cause Tesco to examine and refine the on-premise consumption model. They will then search for cost savings and improved efficiencies from mouth-of-consumer all the way back to the green fields. This means better buying through to optimised service of consumption-needs within a store-café…with the added benefit of complementary sales for home consumption.

Experienced Tesco-watchers will know that Giraffe was not an impulse-purchase...

A lesson/warning for horeca owners everywhere?

For retail brands’ suppliers that also provide products in food services, it means harmonising the entire package of prices, terms and service levels, to the standard of their traditional Tesco business…minimum.

Moreover, the latest meat scandal will add ingredients-integrity to an already complicated package…

In terms of knock-on, these moves will add pressure to traditional food services suppliers that have never had to deal with the Big Four…and those in doubt should check out trade funding and deductions, for a glimpse of the New World…

Finally, for multiple restaurants and café players that feel they have little to fear from a grocer entering the battle-for-mouths, or who believe they could deal with this naïve 'competitor' by wringing its neck like a chicken, may we advise caution by paraphrasing the response of a similarly under-estimated player of the Forties: ‘Some neck, some chicken….’

On balance, it could be said that a neck is being stuck out, the only issue is whose…. 

* The Daily Telegraph

Amazon-Tesco: Optimising the most targeted TV audience in the world…

As Tesco and Amazon compete in developing different routes to market dominance, they each represent an unprecedented threat to both the traditional entertainment industry and other retailers…

Amazon TV production
Amazon's recent move into original TV production mixes the tactics of traditional network TV with innovations from the online world. It does not sell a stand-alone video subscription service like Netflix - instead, it bundles streaming video with its Amazon Prime membership program, in which shoppers pay an annual fee of $79 for two-day shipping on most of their purchases from Amazon.com. They are creating pilots for about a dozen shows, anyone of which becoming a breakout hit would attract people to Amazon Prime, the only source…

Established TV and movie players seem unperturbed by Amazon's efforts, considering the company just another entrant, among many, in the quest for original content (!).

Streaming Tesco
Meanwhile down the block, having bought an 80% stake in the Blinkbox film and TV site in 2011, Tesco is preparing to launch two specialist ebook and music retail websites later this year. The three Blinkbox retail sites will sit separately from Tesco’s main online store and will only carry subtle Tesco branding. However, the supermarket will advertise the sites heavily in store and use them to ensure that customers in search of specialist online sites for books, music, films and TV box sets continue buying from Tesco. 

The real breakthrough will be Tesco TV, a new television station that will be available to members of Tesco’s ClubCard loyalty scheme, free of charge, and will offer a mix of archive films and television shows.

Amazon and Tesco, in their different approaches to the market, are evolving ways of capitalising on their unique access to their tribes, deriving synergies which other retailers have already underestimated to their cost, and which traditional entertainment producers are not even dreaming about… 

New compressed aerosols deliver same quantity from 50% of the space…

Dove’s 150ml cans shrink to 75ml, but contain the same amount of deodorant and remain the same price.

Undoubtedly a great ‘Green’ move, the real merit of the idea is in demonstrating to the savvy consumer that Unilever is prepared to play fair when it comes to adjusting prices to reflect cost increases.

In other words, the new aerosol will focus attention on what consumers get for the money, when it comes to changes in pack sizes.

As you know, following years of freezes on trade prices, a number of suppliers have resorted to reductions in pack contents to disguise shelf-price increases, possibly causing damage to consumers’ faith in the brand. This latest move by Unilever heightens interest in the issue… and will surely cause the ultra-savvy consumer (and the competition) to conduct comparison tests for ‘peace of mind’….

Today's launch will be backed by a £13m marketing campaign. In these unprecedented times, Unilever will need to devote a high proportion of the money to explaining how an aerosol 50% smaller contains the same amount of active ingredient. However, if competitors have equivalent technology available in the wings, their subsequent launches will ease the consumer-education burden, but will leave Unilever with the innovator’s advantage for Sure Women, Dove and Vaseline Intensive.

Incidentally, given the resulting 15% reduction in shelf space taken up by the new cans, it would also be interesting to check out the small print of Unilever's retail agreements to see if shelf-payments specify shelf-length or number of facings…

It sure is complicated launching new products nowadays...

Watch this space...