UNSW proposes new fiancée formula for proposing marriage

Statisticians from the University of New South Wales (UNSW) may be able to help to decide the right time to propose.
Job-wise, the real pay-off for KAMs could be not only meeting the right partner, they could also find themselves developing a new love for numbers – a win-win for everyone!

Meanwhile, for those in serious need, the UNSW formula may help:

To work out when you should pop the question, follow the process below.

1. First of all, set out the last possible age by which you want to get married, for example, 39. Call this number n.

2. Then, decide the earliest age at which you‟ll start to consider potential partner material, for example, from when you turn 20 onwards. This age becomes p.

3. Subtract p from n (i.e 39- 20), then multiply the result by 0.368*. This gives you 6.992, which then needs to be added back to your minimum age (20), which more or less equals 27.

4. This result is your optimal proposal age. Ideally you should not propose to anyone before you hit this age, but afterwards you should prepare to pop the question to the very next person you date…...

* See P2 of UNSW paper

Have a high probability weekend, from the Namnews Team!

Forgotten PIN Number? (or a growing demand for Tesco DIY hole-in-the-wall banking?)

Remember the frustration when a senior moment resulted in being stuck without vital cash in the early hours?
Luckily that is the time when the police appear to be less focused, at least near the Tesco Express 'hole-in-the-wall' in Ewell, Surrey.
Apparently, an “audacious” robber was able to spend an hour smashing and dragging a cash machine from the wall of a Tesco Express in Ewell during the early hours of Monday.

Police said the machine was then forced open and a significant amount of money stolen, while the theft also left the outside of the store badly damaged.

Despite these little setbacks, nothing will deter Tesco and other grocers from taking their fair share of this 'must have' category..

Doubtful? See 'gap in banking category'

Outsourcing in China, an FMCG opportunity for whom?

Those suppliers who continue to see China merely as a source of cheaper production, should visit the Spring Fair at the NEC. The FT reports that Chinese businesses have almost quadrupled their presence at one of the UK’s biggest gift and homeware events as they seek to build international brands and to raise margins by selling directly to British retailers.
Last year just 65 Chinese businesses exhibited at the Spring Fair, held annually at the National Exhibition Centre in Birmingham. This year 244 companies are showing off their wares, in most Halls.

It is a logical move. A high proportion of the goods that British distributors and wholesalers offer to retailers at the Spring Fair are made in China anyway so the Chinese are merely seeking to cut out the middlemen.

Why not apply this approach to FMCG products, and think about opportunities for chinese producers to enter the UK via private label, whilst they build chinese brand franchise here, in appropriate categories?

Incidentally, this year the Spring Fair organisers appear to have relegated the chinese exhibitors to the back-end and least accessible locations in each hall.

Is anyone prepared to take bets on how quickly the tables are turned vs. traditional exhibitors in capturing the traffic hot-spots in next year's Fair?

Takeovers - Defining the Facts of Life?

By definition, when a stronger company takes over a weaker company, key realities apply…
a) Stronger = better than average financial performance (ROCE, Net Margin, Rotation, Gearing….)
b) Weaker = lower than average financial performance
c) Bid price = initial offer at which the stronger company believes they can release potential synergies via increased scale, and rationalisation (cuts), and thus produce an overall performance that is better than the sum of the parts. If they are forced to increase the price (by target company, shareholders, competition or the government), then the cuts have to be deeper and faster. (The stockmarket allows about 12 months to prove that the takeover was a good idea)

d) Making it work: Assets
= Pooling of assets, globally, regionally and locally
= Amalgamating production to optimise efficiency, effectiveness, and minimise duplication
= Redefine 'core' products and rationalise Product portfolios, selling off 'non-core' products to cover integration costs
= Re-assess customer-base and rationalise customer portfolios
= Re-align prices and terms to minimise disparities

e) Making it work: Corporate Culture
= Redefine and unify corporate cultures of each party (corporate culture of the takeover party and 'price-paid' tend to determine speed of integration)

f) Making it work: People
= Starting at the top (globally, regionally and locally) compare job-holders and 'de-duplicate' (See Points 4-7 below for criteria)
= (NB People are not listed as assets in the Balance Sheet, but the quality of the people determines how well the Assets and the company perform).
= The eventual success of the takeover will be determined by how well all of the people are handled, and are seen to be handled, in transition.


Doubtful? (re-read above)

Pre-emptive action:
1 Make your company stronger (better than category average in ROCE, Net Margin, Rotation, Gearing…)
2 This drives your share/stock price up to a point where the company becomes too expensive to buy, and too good to improve
3 Sharpen your competitive edge: better than available competition from the point-of-view of retail customers and consumers in terms of Product, Price, Presentation and Place
4 Clarify your role and how it impacts corporate financial performance
5 Then apply Points 1-3 to your role i.e. make your contribution stronger (better than average impact on ROCE, Net Margin, Rotation, Gearing…)
6 This makes you more valuable, and less easy to replace
7 If you still don't fit, then by definition your personal market appeal will have been enhanced

Still Doubtful?
Why not ask anyone who has been at the receiving end?

Asda's Plans for an Auction Website To Shift Stock To Grey Market

The Grocer's reports that Asda is planning to launch its own eBay type auction website raises a number of issues for traditional retailers in these categories:
1. What will be the cut-off point where clothing, homeware and electricals move from being 'current stock' to
'residual' stock?
2 Asda's efficiencies and narrower ranges could mean that their 'residual' stocks are competing via auctions with traditional retailers' 'current' stocks
3 Will suppliers follow Asda's lifecycling of their products or the slower seasonal sales profile of traditional retailers in launching new products?
4 Will suppliers schedule range changes to suit Asda or traditional retailers?
5 If the Asda initiative works, how about other mults?

Action:
- Opportunity for all parties to reassess the definition of range and lifecycle stages, by channel
- Opportunity for suppliers to focus upon better merchandising of current stock instore, each channel
- Opportunity for traditional retailers to focus upon parts of ranges not stocked by the multiples

Morrisons - a Question of Courage?

Dalton Philips Source: Daily Telegraph

Morrisons had the courage to go outside, fast….

Marc Bolland, with no retail experience, had the courage to go back to the core Morrisons offering, and focus on making it work, fast.

Given the sky-high expectations, Dalton Philips, with an enviable track record in local and global retail (Brown Thomas, Walmart International and Loblaws), hopefully has the courage to keep it simple, focus on maintaining that Morrisons' momentum, and resist the impulse to fix anything before being absolutely certain it is broken, fast…

Needing a strong No 4 player in the UK, hopefully we all have the courage to help him succeed, fast?

Have a fearless weekend, from the Namnews Team!

Tesco- the (private-label) movie!

Weekend news reports indicate Tesco are in collaboration with Amber Productions in the launch of a multi-million-pound production arm poised to make films of books by a slew of bestselling authors.
Films under the joint venture will be initially available exclusively as DVDs through Tesco stores, online and through Tesco Direct. Tesco will focus solely on marketing and sales of the films under the partnership and will have no say in the content of the screenplays.

Tesco's new venture offers the usual blend of opportunities and threats for those involved.

Tesco can bring the following to private-label moviemaking: a fully segmented and databased audience via Clubcard, ability to package book, film & snacks, guaranteed distribution and facings, with minimal third party restrictions ref coordinated POS and instore merchandising
Tesco-partnership offers authors: "We are able to involve the writers at every stage, even with the casting decisions. And Tesco sells an enormous amount of books, of course; so for an author to have his DVDs on the shelf alongside his books and to sell them simultaneously sounds like a very good thing,"

Trade Issues for:
- Partner-studios: Tesco will provide security of financial backing, effective distribution, detailed feedback on audience reaction
- Competitors studios and distributors: big-hit movies possibly becoming a means of attracting movie-goers to the store, there to be confronted in the movie-aisle by Tesco private-label, as-good-as but cheaper alternatives.. Need to treat the independent HE retailer as a 'living billboard', fast! (See Cue Entertainment, January issue)
- Traditional Home Entertainment retailers: watch and learn from Tesco!
- Traditional cinemas: possibility of Tesco instore cinemas above stores in key areas?
- Suppliers of other categories: with its novelty and the impact of its instore theatre to support its private label movies, Tesco's new venture means suppliers need to fight even harder for Tesco mind-space (i.e. more need to analyse and demonstrate the contribution of traditional brands to Tesco profitability)

Finally, how soon will Tesco's new venture morph into Generation 4: Tesco Finest, better than national brands, but 20% cheaper?

Coping with the Savvy Consumer in 2010

Consumers are now beginning to make some sense of the past 18 months of financial turmoil, are developing increasing confidence in their common sense when making purchasing decisions, and those who still have jobs are working longer and harder, and possibly for less money.

As a result, they are relating every £1 of ‘discretionary’ expenditure to their current and future earnings, assessing the opportunity-cost in terms of alternative uses of the money, like never before…and providing major opportunities for pro-active suppliers.

These consumers are raising their own performance standards, and using them as a measure against which to evaluate every product and service offering, refusing to outsource their decision-making to marketers and retailers, ever again.

Welcome to the new savvy consumers, the professional shoppers, discerning buyers who are simply seeking to obtain satisfaction of their needs in an open market, at a price that compares well with alternatives available, based upon simple common sense.

As the newly emerging primary driver of demand, the savvy consumers have to be persuaded that their needs are being met, for a fair price, and that their purchases deliver more than expected in practice.

In other words, this new consumer, if willing to spend, is unwilling to accept anything short of good value for money.

Opportunities for pro-active suppliers

1. The savvy consumer is providing an entirely new basis for suppliers to re-evaluate every SKU in their portfolios against available alternatives


2. Ruthless elimination of anything that does not clearly demonstrate a total match with latest consumer need


3. Make it available in a way that shoppers want to buy, better than the competition.


4. Re-assessment of the customer portfolio from the same point-of-view


5. Aim at identifying and cultivating trading partners that are capable of expressing the brand offering in a way that can meet consumer-shopper needs at point-of-sale, profitably.


6. In the same way, building trade partnerships with like-minded retailers has to present joint-opportunities to optimise common-sense market need, while others await a return to ‘normal’…
   
   

Today's KAMtip: Size of Deal on Table?

Trying to plan and manage a negotiation session without a clear idea of context for the deal can be like being out on the ice, in the dark, with little idea of the depth of the water.
Calculating the following deal ingredients will help to establish the scope for concessions on each side
Size of Deal on the Table
• Customer’s share of the category?
• The customer’s share of our business (£, %)
• Our share of their business (£, %)
• Our share of their category (£, %)
• Size of the deal for them (Sales, Gross Profit)
• Size of the deal for us (Sales, Gross Profit)

The size of the deal for the customer in terms of gross profit on the amount sold will indicate the 'pool' of money from which they can make concessions.
Similarly. the supplier's sales and gross margin on the deal shows the potential size of concessions that can be made to the customer.

The rest is about matching, trading and fair share negotiation…

A Gap in the Banking Category?

“Banks have tended to treat loyalty not as something to be rewarded but essentially as something that can be exploited. They trade on inertia”
"Every business talks about putting customers first, but this really is at the heart of everything Tesco does"

Ex RBS, HBOS and Standard Life Benny Higgins, Head of Tesco Banking, in an article in The Sunday Times, sums up why Tesco and the grocers are going to capture a sector that still thinks banking is about banking. Bankers should reflect on the formerly 'specialist' petrol sector, where the 'shopkeepers' now have a 40% share…anyone still in doubt should check out the French petrol market where over 60% is sold via grocers.

Since buying RBS’s half-share in the Tesco-RBS joint venture in 2008, Tesco has set its sights on creating a fully fledged bank that will generate higher profit margins than its core grocery business. In a short time Tesco has attracted more than 6m financial-services customers, taken 8% of the credit-card market and become the UK’s sixth-biggest motor insurer. It also has more than 2,700 cash machines and says that they provide £1 in every £8 in circulation in the UK. In the past year, savers’ deposits have increased by 28% to about £4.5 billion.

Still small fry, but dangerous for bankers to underestimate Tesco's banking potential. The target market is Tesco’s supermarket customers. The stores get 20m visitors a week and there are 15m people in the UK with a Clubcard loyalty card…..

However, there are cautions here for suppliers in food and non-food categories.

Tesco are now competing with traditional bankers that have never had to compete, in a category that is more profitable and exciting than traditional grocery categories. Tesco's other key focus is upon overseas development.

This means that UK suppliers now need to analyse and demonstrate the financial impact of their brands on retailer profitability, in order to grab and hold a share of Tesco's mind-space…more than ever before, and fast.

GSCOP: Something for the final Weekend of 2009?

With the real 2010 finally kicking off next Monday (snow, etc?) the effect of the most fundamental change-agent in supplier-retailer trading relationships will begin to make an impact.
To help you hit the ground running, we have analysed 3 pages of the new GSCOP and added 3 pages of calculation pointers to help show that the parts dealing with Prices & Payments, Promotions and Other Duties can have a positive outcome, given the right tools…

Make the most of your last real reflective opportunity to put the GSCOP onto the 2010 Agenda, by downloading a personal copy of our free analysis

Have a reflective Weekend, from the Namnews Team!

A question of scale, or sale?

In an article in The Guardian
- Wal-Mart, as China's seventh largest trading partner, outranks the UK, spending more than $18bn annually on Chinese goods
- The best-selling wine in the whole of Japan is an own-label Asda Bordeaux
- "It's important for us to be in one of the top three positions," says Wan Ling Martello, chief financial officer of Wal-Mart's international operation. "We have to have scale – otherwise it doesn't quite make sense."

At what stage will Asda's limited growth potential become too much of a liability, and yield more via disposal?

World’s Leading Retailers Grow Despite Recession, But Profits Take A Hit….

2010 Global Powers of Retailing, from Deloitte Touche Tohmatsu, shows that the global recession affected retailers' profitability at the largest 250 retailers in the world fell from 3.7% in fiscal 2007 to 2.4% in 2008.
Threat 1: Anyone managing these major customers knows that they don't do 'reduced profitability'.

The Report said, "2008 has been a tumultuous year for the global retail industry. Sales growth slowed and profitability fell, sharply for some. Many retailers 'bought' sales with heavy promotions which hit the bottom line hard. However, we are already seeing evidence that as economic recovery takes hold around the world retailers should be able to return to a path of improving profitability."
Threat 2: Retailers don't always 'buy' sales via their own pockets
Threat 3: Retailers don't always await economic recovery to improve profitability

The composition of the Top 10 retailers in the world remained the same this year. This group now accounts for over 30% of the total retail sales of the Top 250 retailers. Wal-Mart Stores remained the world's largest retailer, ahead of Carrefour. Despite Tesco’s better sales growth rate, relative currency strength against the US dollar enabled Metro to climb above Tesco, back into third place.
Threat 4: Tesco did not get where they are today, to meekly surrender global third place to Metro

Add to these four threats the implementation of the Groceries Supply Code Of Practice due on 4th February 2010 where UK retailers will need to recoup losses on payments no longer allowed…
Threat 5: This means that concessions on margins, credit periods, settlement discounts, rebates, promotional support, trade funding will be probably be re-negotiated to replace any retailer losses on payments no longer allowed (such as shrinkage allowances, space-costs, retros, etc.)

Now ask yourself if it is likely that it will be 'negotiation as normal' over the coming months?

Action:

1. Revisit the Cost & Value of every aspect of your trading relationship with major customers
2. Re-assess your team's ability to calculate and demonstrate the financial impact of your brand offering on the customer's profitability
3. Prepare for your toughest negotiations ever…
4. If in any doubt, please re-read Threats 1-5 above…
5. Find some short-cuts via NamCalc

Nigel's BOGOF: Something for the weekend?

Nigel's BOGOF?
Given the inclement weather throughout the UK and Ireland, possibly causing many of you to be confined to home for the weekend, and realising that our normal Namnews fare may be insufficient to occupy you for the next two days, we offer you something slightly different, based upon our mutual interest in shops and shopping behaviour….
Welcome to the cautionary tale of BOGOF-Nigel, a gentle man who simply tried to play by the retail rules..
Have a slightly different weekend, from the Namnews Team!

New Groceries Supply Code Of Practice (GSCOP) due for implementation on 4th Feb 2010

Given that the New Ombudsman has yet to be appointed, and with a Government focused upon more important matters like getting re-elected, it means that suppliers will be on their own until after May 2010, minimum….
This means that suppliers are headed for some of the toughest negotiations ever on every aspect of the supplier-customer relationship.

Think about it: Even better, check out the original document on the CC website, factor in the lack-of-readiness on both sides, the usual emphasis on consumer-first, strongest players allowed to win, add a normal dose of cynicism, and capture the result in terms of negative impact on supplier profitability…

In other words, the major multiples have a window in which new ‘norms’ can be established, before a test-case sets realistic and more practical ground rules. This means that concessions on margins, credit periods, settlement discounts, rebates, promotional support, trade funding will be probably be re-negotiated to replace any retailer losses on payments no longer allowed ( such as shrinkage allowances, space-costs, retros, etc)

Add in the costs (and risks!) of putting everything in writing, together with the need for new retailer Code Compliance Officers to report regularly on retailer compliance with the GSCOP, and you begin to see the inevitability of a legally enforceable contract between suppliers and retailers. For guidelines on trade contracts, check with your colleagues in France handling the Carrefour Account.

All of this adds up to a need to quantify every aspect of the supplier-retailer business relationship, counting every penny before, rather than after the negotiation session.
See Namcalc for 34 different ways of calculating cost to you and value to the retailer
Drop me a note on bmoore@namnews to discuss implications for you