Sunday, 24 April 2016
Thursday, 21 April 2016
The supermarket war heats up the multiples' approach to media, too
Whilst the multiples’ reductions in media spend could mean everything is going into price, in practice significant monies are still being invested in driving us to our favourite store…
Essentially, Media Week reports that during the recession of 2008-2009, traditional grocers were among the best advertisers as consumers continued to buy food while cutting back elsewhere. But that has changed in that Asda, Tesco and Morrisons have collectively cut spend on press, TV, outdoor, radio and cinema by nearly £100m, or about a third, since 2011, according to Nielsen – although some of that has gone into online.
Meanwhile, Sainsbury’s doing better financially, increased its spend by 2% to £59m (More details in the Media Week article)
All of this highlights the fact that the mults are competing with one another on price for a diminishing share of the action, and need to do so via differentiation - own label - and increasingly instore via the shopping experience.
This has to represent opportunities for suppliers that are capable of, and prepared to service regional and even store-based assortments, tailored to local need, and optimised via tailored shopper-marketing initiatives…
Finally, the main causes of it all, those ‘downmarket, common, limited-choice upstarts’ Aldi boosted ad expenditure by 160% to £69m from £26m and Lidl by 275% to £83m from £22m.
A message for your marketing colleagues?
Given that any growth is being driven by Multiples own label and Discounters’ surrogate brands, it is vital that your marketing colleagues increase brand alignment with retail offer-communication, while you find non-compromising ways into Aldi and Lidl…
Essentially, Media Week reports that during the recession of 2008-2009, traditional grocers were among the best advertisers as consumers continued to buy food while cutting back elsewhere. But that has changed in that Asda, Tesco and Morrisons have collectively cut spend on press, TV, outdoor, radio and cinema by nearly £100m, or about a third, since 2011, according to Nielsen – although some of that has gone into online.
Meanwhile, Sainsbury’s doing better financially, increased its spend by 2% to £59m (More details in the Media Week article)
All of this highlights the fact that the mults are competing with one another on price for a diminishing share of the action, and need to do so via differentiation - own label - and increasingly instore via the shopping experience.
This has to represent opportunities for suppliers that are capable of, and prepared to service regional and even store-based assortments, tailored to local need, and optimised via tailored shopper-marketing initiatives…
Finally, the main causes of it all, those ‘downmarket, common, limited-choice upstarts’ Aldi boosted ad expenditure by 160% to £69m from £26m and Lidl by 275% to £83m from £22m.
A message for your marketing colleagues?
Given that any growth is being driven by Multiples own label and Discounters’ surrogate brands, it is vital that your marketing colleagues increase brand alignment with retail offer-communication, while you find non-compromising ways into Aldi and Lidl…
Tuesday, 19 April 2016
KAMClinic Q22: Buyer wants to put us ‘on consignment’
Q22: Brian, a quickie: Buyer wants to put us ‘on consignment’ i.e. we invoice on sales out (Ian, St Albans 4th Feb 2016)
A: Thanks Ian,
‘On consignment’ always seems like increased collaboration, but strictly speaking, unless you build in some conditions, it can end up diluting your account P&L.
As you know, most retailers have shrink levels of approx. 2%, meaning that for every 100 cases you deliver, 98 actually goes through the checkout. This means that by agreeing to invoice based on sales out, you are absorbing the shrinkage issue (and cost!).
If the buyer is acting in good faith, your condition that checkout sales be restored to 100% (volume sales out/98 x 100) for invoicing, should be accepted. If not, then not…
Hope this helps.
Brian
P.S. Despite your having to refuse ‘on consignment’ your buyer may be simply wanting more money.
Best to continue with ‘obviously we cannot agree to unconditional on consignment invoicing, but we may have other ways of increasing our trade investment, depending on getting equivalent value in return... Now what type of money are we talking about?’
Disclaimer:
Your Query?
A: Thanks Ian,
‘On consignment’ always seems like increased collaboration, but strictly speaking, unless you build in some conditions, it can end up diluting your account P&L.
As you know, most retailers have shrink levels of approx. 2%, meaning that for every 100 cases you deliver, 98 actually goes through the checkout. This means that by agreeing to invoice based on sales out, you are absorbing the shrinkage issue (and cost!).
If the buyer is acting in good faith, your condition that checkout sales be restored to 100% (volume sales out/98 x 100) for invoicing, should be accepted. If not, then not…
Hope this helps.
Brian
P.S. Despite your having to refuse ‘on consignment’ your buyer may be simply wanting more money.
Best to continue with ‘obviously we cannot agree to unconditional on consignment invoicing, but we may have other ways of increasing our trade investment, depending on getting equivalent value in return... Now what type of money are we talking about?’
Disclaimer:
Your Query?
For a KAMClinic reply, simply email me ( bmoore@namnews.com ) giving as much detail you are comfortable with...
Auto-storecheck: Supermarket robot creates product maps as it takes stock
A great article in Gizmag tells of the development of the stock-taking, store-mapping 4D Space Genius robot by Toronto's 4D Retail Technology Corp.
In less than an hour, the self-guiding Segway-based Space Genius can reportedly move along every aisle of a 40,000 sq. ft. supermarket or other large store, scanning all of the products and barcodes on display in HD and 3D. In the process, it produces a 3D map of the store, showing SKUs, OOS, pricing & placement anomalies.
(The Gizmag article gives more detail, including links to a Tally Robot).
Apart from the obvious advantages for mults and consumer-shoppers, NAMs - via an app - can conduct indepth storechecks 'from the comfort of their own homes'..., but we all know that nothing beats mingling with the aisle-travellers, live...
Meanwhile, spare a thought for what the Space Genius could do for instore compliance...
Monday, 18 April 2016
Buy Now, Pay Less Later
An article in this week’s Sunday Times details an unusual price promotion in a German Furniture chain: Who’s Perfect, which could provide UK NAMs with a way of understanding some of the consequences of Negative Interest Rates.
Essentially, its Frankfurt store offers a white Halma corner sofa – the company’s bestseller – for €2,700, buying and paying now at full price, or have a 1% discount if paid after two years…
This is because the store gets charged negative interest rates on its bank deposits, so it is preferable to leave the cash with customers for two years at a cost of 0.5% per annum…!
Logical to a point, but the promotion ignores the risk-factor involved with credit extension.
For example, can you imagine if, after all these years of begging, or even paying for earlier payment, you were to offer your buyer a discount for taking even longer to pay, at increasing risk to you, in these Imperfect times…?
Tailoring your brand portfolio to new retail realities...
As the multiples struggle to adjust to the consumer's shift to smaller, cheaper, faster, closer, more convenient and online shopping by selling surplus outlets and trying to manage lower productivity caused by redundant space in their estates by culling SKUs, the consequences for brands are hopefully obvious.
In other words, with less shelf space available, only strong brands can maintain their facings, unless you can prove otherwise....
Moreover, brands are further threatened by the fact that much of the multiples' growth is via private label (if in any doubt, why not dig into your in-house Kantar data?), and discounters' via surrogate labels.., all adding to the need for new retail strategies..
In the face of these 'permanent' market changes, it follows that branded suppliers need to re-set what may be a pre-2008 approach by re-evaluating the relative appeal of their brand portfolios to suit current retail realities.
Essentially, this means fundamentally re-assessing consumer appeal, by brand, by retailer, vs. available competition to ensure each SKU of each brand has a defensible rationale to justify its on-shelf presence in each of the multiples.
In practice, this will mean you will have a different brand portfolio for each of the multiples, with possible regional variations to match local need.
Finally, any of your brands that do not meet these criteria should be diverted to other channels, before the multiples do it on your behalf...
In other words, with less shelf space available, only strong brands can maintain their facings, unless you can prove otherwise....
Moreover, brands are further threatened by the fact that much of the multiples' growth is via private label (if in any doubt, why not dig into your in-house Kantar data?), and discounters' via surrogate labels.., all adding to the need for new retail strategies..
In the face of these 'permanent' market changes, it follows that branded suppliers need to re-set what may be a pre-2008 approach by re-evaluating the relative appeal of their brand portfolios to suit current retail realities.
Essentially, this means fundamentally re-assessing consumer appeal, by brand, by retailer, vs. available competition to ensure each SKU of each brand has a defensible rationale to justify its on-shelf presence in each of the multiples.
In practice, this will mean you will have a different brand portfolio for each of the multiples, with possible regional variations to match local need.
Finally, any of your brands that do not meet these criteria should be diverted to other channels, before the multiples do it on your behalf...
Friday, 15 April 2016
Demonstrating your impact on Tesco averages
How your brand drives Tesco performance in latest figures
Latest results indicate that:
1. Tesco Group sales £54.4bn vs. Inventories of £2.4bn suggest a stockturn of 22.6 times/annum
Given your twice weekly delivery, and assuming smooth sell-through, has to suggest your SKUs are turning 100 times /annum, thereby driving Tesco stockturn...!
2. Tesco UK sales of £37.2bn vs. UK sales area of 41.5m sq. ft. showing selling intensity of £900/sq. ft./annum
Calculating your SKU footprint (Average number of facings x number of units of facings backup on shelf x numbers of stores stocking) and then dividing the result into Tesco sales of your SKU per annum, has to show that your SKU is generating sales per sq ft of at least 2x Tesco average...
Just two ways of demonstrating your value in negotiation...
Latest results indicate that:
1. Tesco Group sales £54.4bn vs. Inventories of £2.4bn suggest a stockturn of 22.6 times/annum
Given your twice weekly delivery, and assuming smooth sell-through, has to suggest your SKUs are turning 100 times /annum, thereby driving Tesco stockturn...!
2. Tesco UK sales of £37.2bn vs. UK sales area of 41.5m sq. ft. showing selling intensity of £900/sq. ft./annum
Calculating your SKU footprint (Average number of facings x number of units of facings backup on shelf x numbers of stores stocking) and then dividing the result into Tesco sales of your SKU per annum, has to show that your SKU is generating sales per sq ft of at least 2x Tesco average...
Just two ways of demonstrating your value in negotiation...
Thursday, 14 April 2016
Tesco's latest result: the stand-out numbers for NAMs
Tesco’s return to profitability means that proactive NAMs can now incorporate latest operating profit into their discussions with buyers.
With UK sales of £37.2bn and operating profit of £505m, this means that Tesco is generating 1.4% operating profit on sales.
This can help in demonstrating the value of your trade investment, in that every £10k you give Tesco is equivalent to £714k in sales i.e. £37.2/1.4 x 100
This has to help for starters, while we await the full detail of the latest annual report...
With UK sales of £37.2bn and operating profit of £505m, this means that Tesco is generating 1.4% operating profit on sales.
This can help in demonstrating the value of your trade investment, in that every £10k you give Tesco is equivalent to £714k in sales i.e. £37.2/1.4 x 100
This has to help for starters, while we await the full detail of the latest annual report...
Saturday, 9 April 2016
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