Showing posts with label savvy consumer.. Show all posts
Showing posts with label savvy consumer.. Show all posts

Wednesday 12 June 2013

Why cash is making a comeback

Despite increasing reassurances by the banks (!) as to their safety and reliability, the rise of contactless payments and chip-and-pin has gone into reverse. New figures reveal that more of us prefer to use hard currency – whether because our accounts are empty or because we prefer the security of coins and notes.

According to a new report from the Payments Council and Link, which runs the UK's cash machines, the volume of cash payments rose by 200m in 2012, reversing the year-on-year decline over the past decade, with more than half of all our payments in cash, reflecting its easy use and its wide acceptance.

Whilst many prefer the anonymity of cash payment, remembering also to take the batteries out of their phones, or leave them at home, don't drive a car, or avoid walking past their daily allocation of 300 security cameras, and obviously ignoring the potential advantages of a 24/7 alibi, a key advantage of paying in cash means that we are continually confronted with the state of our personal finances. This helps to sharpen our savvy-consumer skills when paying with our ‘real money’…

NAM application
In the same way, NAMs who quantify and convert all concessions into cost and value, capturing the resulting impact on their company P&L, can  more easily demonstrate the value to the retailer in terms of both bottom-line result and incremental sales. This has to represent a major advantage over those who continually add cash & ‘non-cash’ concessions to their offering with little attempt to match and trade their way to a fair-share result.

Like the cash-paying savvy consumer, negotiating with real money automatically builds in the need for KPI achievement and compliance in order to provide all stakeholders with demonstrable value-for-money, besides being a constant reminder of our ability to make a profit or loss, via the use or abuse of 'our money'…  

Thursday 3 January 2013

2013: A year for realistic optimism?

With five flatline years behind us, and a high street littered with casualties, realistic NAMs should be finding it easier to factor in a further five years of the same....

If we accept that whilst politicians operate to a different agenda (re-election) and vocabulary (triple dip = flatline...) those of us still in business are here because we know that in times of zero-growth, any market gains have to be made at the expense of the competition.

This means always seeing our offering through the eyes of an increasingly savvy consumer that is unwilling to settle for anything less than demonstrable value-for-money, a consumer determined never again to outsource their purchase decision-making to marketers or retailers.

In these circumstances, it is vital to strip our offering back to the bare essentials, leaving a needs-based package that represents real value, measured by what people are prepared to pay, over and over again.
Using consumer need as the only real benchmark, realistic NAMs will assess the offering vs. what is available from competition, and will continue to cut until what remains represents true value, and more, to a consumer and ultimately the savvy retailer.

Achieving this level of confidence in our value means realistically factoring in politics, economics and banking into our business thinking, as we constantly strive to achieve acceptable financial rewards for risk in a market environment where the numbers do not appear to add up...first time.

In practice, this means realistically measuring all of our costs and being able to translate them into value that we represent to our customers, and being able to demonstrate our impact on their Balance Sheets and P&Ls...

In such unprecedented times, real opportunities exist in 2013 for those determined to be realistically optimistic, and are prepared to act decisively, while the competition await a return to the 'good old days'...

Meanwhile, a Happy and Positive New Year, from the NamNews Team! 

Monday 8 October 2012

Tesco Bank - a double-edged sword for retailers?

News that Tesco is only months away from breaking into mainstream banking with current accounts signals the arrival of real competition in the banking sector.

This is a real opportunity to heighten savvy consumers' awareness of value-for-money applied to banking services, helping  consumers to understand that voting with their feet can be an option in banking as well as all other aspects of their consumption.

Tesco tactics
The introduction of 'grocery tactics' like multi-buys, bogofs, money-off offers and, heaven forbid, loyalty points on debit cards, will all help to break down what remains of traditional banking 'mystique'.
Moreover, the inclusion of user-friendly like-with-like comparisons will encourage consumers to develop and use a basic level of numerical skills in choosing financial products, without having to second-guess the provider.

Traditional banks that do not follow suit will lose business to those that are not afraid to clarify their offerings.

The opportunity
There are 15 million Tesco Clubcard holders of whom 6.5 million are loyal and regular users. Tesco needs to converts only a fraction of them to make a sizeable dent in the other banks’ business.

All Tesco have to do is run an efficient, value-for-money service that delivers no-quibble financial products that just exceed expectation, at fractionally less than what it  costs elsewhere...

In the process, Tesco might usefully benchmark itself against the Coop Bank, a competitor that is perceived to have emerged from the global financial crisis with its reputation untarnished.

The sting in the tail is that having sharpened their ability to assess value-for-money and gained more confidence with the numbers, the savvy consumers will then apply this incremental savvy to their regular shopping, and thereby raise the retail game in the high street.

A really incremental gain for Tesco, if they play their cards right...

Friday 6 July 2012

Farmers Escalate Milk Price-Cuts Protest

The impact of the price cuts ‘amounts to a combined profit warning for the overwhelming majority of dairy farmers in this country’ and reports indicate that supermarkets are to be targeted by blockade-protests from farmers. In some cases, given the fact that cows need milking daily, farmers plan to distribute the undelivered milk free-of-charge outside supermarkets.

In fact, in 2009 continental farmers resorted to more extreme measures such as spraying three day’s supply of unused milk onto fields and at the police.

A call to action
Yesterday, an unprecedented meeting of farming unions called for the immediate reversal of milk price cuts imposed on UK farmers since 1 April. The NFU chaired the meeting of leaders from NFU Scotland, NFU Cymru, Tenant Farmers Association (TFA) and Farmers for Action who came together in an industry show of strength after a catastrophic three months for the sector.

The representatives called for all milk price cuts imposed on farmers since 1 April to be restored by 1 August. They also plan a crisis summit in London on Wednesday 11 July.

Impact on consumer-retailer-supplier relationship
As savvy consumers, we need to run the numbers and realise that constant pressure on shelf-prices pushes back up the supply chain and in the case of clothing can eventually end with child labour abuses in third world countries. In a similar way, relentless pressure on milk prices can result in farmers going bust.

As savvy retailers, we need to run the numbers to ensure that in attempting to meet real consumer-needs, on-shelf availability is not traded off against the need for competitive pricing.

As savvy suppliers, we need to run the numbers to ensure that the total-offer-package meets consumer need better than available competition. In other words, we need to strip back any aspect of Product, Presentation and Place that may be superfluous to consumer need, and sell at a Price that represents better value than the competition.

Going forward
We then need be able to apply a similar numbers-based rationale in assembling a needs-based trade package that enables us to negotiate ‘fair-share’ deals with trade-partner retailers. These are retailers that can appreciate, and accommodate, the realities of each stage of the demand-supply chain in running efficient and effective routes to savvy consumers, in an open, needs-based market environment, offering a package that represents better value than the competition…..

All else is detail.

Tuesday 27 March 2012

Same-price pack-size shrinkage, a con or what?

Given the status of the brands and companies involved, it is obvious that the letter of the law is being adhered to, in that weights and measures are all accurately displayed on the pack. It is not even about the spirit of the law, in that it not the job of the legislature to maintain consumer trust in a brand. It is not about economics in that most research will prove that prices of ingredients, energy and labour have consistently risen faster than improvements in NAMs' ability to negotiate trade price increases of equivalent value…

'Everyone doing it'?
Moreover, it is not about the fact that 'everyone is doing it', in that the degree of collusion required to accurately preserve market/category equilibrium would be in clear breach of the law.
It is not even a new phenomenon, given that many of us cherish memories of our first bar of Cadbury’s Milk Flake, when it seemed so large one did not even object to sharing it with a younger brother..

Perception is the problem
No, pack size shrinkage is really about perception, the fact that a brand that has worked so hard and so long on convincing me that their combination of Product, Price, Presentation and Place is better than the competition in terms of value for money, suddenly, without consultation, destabilises that trust by allowing me to conclude that I am no longer getting what I thought it said on the tin… Moreover, if the brand’s marketing mix previously offered only a marginal advantage over the competitor’s offering, then the competitor suddenly becomes a serious contender for my attentions and even loyalty, at least until the next price rise.....

We are all savvy consumers

It is especially an insult to my intelligence as a savvy consumer, a person who has survived by learning never again to outsource product and service decision-making to marketers and retailers, and has set demonstrable value-for-money as a prerequisite for any purchasing decision.

What to do about it?
In fact, all the clues are available in the notes above:
If a brand makes a fundamental change in the Marketing Mix, it destabilises the market/category’s status quo, and needs to ‘re-sell’ me on its advantages over available alternatives, (via an up-to-date Buying Mix Analysis). 
I am not interested in boring stuff about ingredient, energy and labour cost increases, the media are full of it, in between the bits about political and financial corruption. 
I don’t want to know about those nasty retailers unfairly refusing to allow adequate and logical price increases.
I simply want assurance (and increasingly, proof) that the brand’s combination of Product, Price, Presentation and Place is so overwhelming that I would not even dream of considering alternatives…
Seemple, uh?       (Seemple = Shorthand for 'seems simple' ; Uh? = please read again )

Monday 27 February 2012

Store of the future: 80:20 towards 20:80 in store-level assortment?

Last week’s article on the IGD-Coca Cola research into the store of the future was the item most passed on to friends and colleagues by NamNews readers.
Key findings:
The report raised a number of issues in terms of the convergence of different trends such as shopper demand for more personalisation, with communication, promotions and deals tailored to their individual values and needs, pre-purchase advice from social media and online forums, in-store use of smartphones and ‘intelligent trolleys’, fully transparent supply chains in  terms of provenance and traceability, and environmental and social impact, with all of this information communicated on-shelf, on-pack and online through smartphones. The report also predicts that online generally will grow in prominence not only because it will continue to grow faster than the consumer goods market as a whole, but it will also form part of the wider store experience with some shoppers purchasing online and picking up in store..
Store-level assortment, the ultimate need
Essentially, we see all of this resulting in increased use of store-level assortment to satisfy savvy consumers unwilling to compromise on demonstrable value-for-money, with important knock-on impacts for suppliers and retailers.
If we assume that large stores currently offer a range comprising say 80% must-stock brands available nationally, and 20% available locally in response to historical demand, this one-size-fits-all approach will become increasingly out-of-step with market need as the above trends develop. 
How retailers will adapt their buying approach
Pragmatic retailers will want to restore the consumer-appeal of their large stores by stocking products more in tune with local need, to avoid shoppers voting with their feet in the search for satisfaction.
Superstores (say sales of £150m p.a., 450 employees with a CEO and organigram to match) will demand more autonomy, becoming increasingly unwilling to simply accept head-office response to a demand demonstrated daily in their stores by live shoppers, speaking with local accents…. They will want to optimise  increased buying expertise at branch level. 
How suppliers will have to re-organise...
In practice this means that suppliers will no longer see national distribution as a prerequisite for success in the launching of new brands, while their focus on existing  brands will concentrate on those parts of the country where brand-appeal is worth the effort. 
Equally, when successful retailers inevitably find ways of devolving increased decision-making power to local level, suppliers will need to extend their influence to branch level or risk being left out of local assortment. This does not mean a return to the days of large scale national salesforces, but rather what is required are small teams of high grade but possibly junior NAMs/KAMs operating at regional/local level, each capable of distilling corporate trade strategies, category management and marketing /promotional initiatives to local level…while their senior NAM colleagues fight for inclusion in the national 20% at retailer's head office...
For those of you taken with the idea, think one KAM business-managing 25 superstores, working 24/7, and work up the numbers…on in-house vs.outsourcing...   
Unless we all change locally in response to new local insight provided by increasingly articulate and demanding consumers, we are bound to sacrifice share to those who are already working in a ‘20:80  assortment’ mind-set, capitalising on local-niche brands, already comfortable with a mere 20% of brands having profitable national distribution

Monday 23 November 2009

An Offer You Cannot Refuse?

Picture: Pacemaker

Cross-border shopping in Northern Ireland can not only offer €/£ parity, but also cheaper prices on goods that are 18-20% dearer in the South, according to the Irish Times.(See article for more extreme examples)

Whilst Irish politicians' pleas to shoppers not to travel North are obviously falling on deaf ears, the real issue for retailers and suppliers is the growing demand for UK multiples and suppliers to reveal the profitability of their Irish operations in their annual reports.

Otherwise their claims that the price discrepancies are simply due to the higher costs of doing business in the Republic will be increasingly undermined.

Ultimately, a government under unprecedented domestic pressures could attempt to force disclosure via the tax route…..

Thursday 22 October 2009

Pack size reductions and the consumer, the short-change perception….

Recent press reports re pack-size reductions whilst maintaining shelf-prices raises several issues:
  • By the time mainstream media pick up the problem the damage has been done…
  • Consumers' criticise-praise ratio remains 10-1, when 'telling a friend'
  • Never underestimate the consumer's ability to spot a downsize of a regular purchase
  • 'Healthy eating' Telling them that content-reduction without price reduction is in the interest of healthier eating insults the intelligence of a savvy consumer, and can alienate the junk-food shopper...
  • Consumer need: Telling the consumer that 'content reduction without price reduction' meets their need ignores the fact that a given-quantity-for-a-given-price represents the consumer's view of 'value for money'. Anything less for the same price, especially without explanation, can represent 'short-changing'...
  • Consumers do not distinguish between imported vs. locally produced goods, unless importation is offered as a cause of higher prices...
  • Perception, rather than fact remains a major driver of purchasing, especially in FMCG marketing
  • When an explanation is required (like from day one), why not refer to the fact that 4 years of rising costs without a shelf-price increase has forced suppliers to reduce pack size to maintain shelf prices?
Cynical? Then think what the consumer has gone through in the past couple of years, from all sides……

Thursday 19 March 2009

Recession-beating retailers: preppy, edgy or just cheap

Superdry is a fast-growing (+31%) British retailer (More) in recession with booming sales, no debt and a store opening programme in the UK and abroad. It has never advertised, never held a sale and has celebrities like David Beckham modelling its clothes not because they are getting paid to do so, but because they seem to like them.
Superdry is just one of the relatively upmarket retail brands (like Jack Wills, Reiss, All saints and Joules) aimed at teenagers and twentysomethings who are unhampered by the financial challenges currently facing their parents.
In other words, revisiting your consumer need-set, and your ability to meet it better than the competition, has to be a way to join the recession-busters..
And cut out anything surplus to consumer need, before the market does it on your behalf...