Tuesday, 20 November 2012

Bionic Mannequins are Keeping an Eye on Shoppers to Boost Luxury Sales


The EYE SEE mannequin from Almax S.p.A. (Italy) in collaboration with Kee Square makes it possible to observe who is attracted by store windows and visual displays using facial recognition software. The software, powered by IBM, uses a camera embedded in one eye that feeds data into facial-recognition software like that used by police. It can track age range, gender, race, number of people and dwell time.

Results
The €4,000 ($5,072) device has spurred shops to adjust window displays, store layouts and promotions to keep consumers walking in the door and spending.

According to Bloomberg, Benneton US are among five retailers currently trialling the mannequin camera.

A step too far?
Like all attempts to monitor shopper behaviour, the innovation raises privacy issues for both staff and shoppers. Staff issues could be managed via loading of all personnel pics into the software and eliminating them from the tracking, hopefully….

However, given that privacy tends to be less of an issue when consumer needs are being met via tailored offerings, like with Amazon’s relevant emails, providing the store can demonstrate reactive use of the insight, then size and quality of basket will deliver the ultimate endorsement.

Monday, 19 November 2012

The letter vs. the spirit of multibuy promotions

Given the media coverage of Which? latest research on ‘misleading’  promotions, the key issue is how the consumer-shopper will react to creeping realisation that no-one can be trusted…

As a person or company works to the edge of ‘right and wrong’ they might acknowledge that whilst their observation of the spirit of the law might be in question, strictly speaking they remained within the letter of the law... In an environment where loyalty to a brand or store is increasingly fragile, spirit and letter become indistinguishable, especially to a savvy consumer, and, as you know we are all becoming savvy consumers...  This means that if a deal even seems wrong, the damage is already done..

The Which? findings
Which? year-long investigation into "misleading" pricing tactics by the major chains indicated that seven out of 10 people prefer straightforward discounts to multibuy offers.

Multibuy deals have become a staple of supermarket promotions in recent years, and now apply to nearly half the goods on offer in a supermarket at any one time. Which? said that of the 115 products that it examined in the first half of this year, 46% of the time they were on multibuy, compared with 35% of the time in the first half of 2011.

Increasing suspicion
But there are signs that consumers have become increasingly disillusioned by the value on offer in supermarket promotions. Around one in 10 products on supermarket shelves increased in price when they went from the previous standard price to the new multibuy price, then decreased again when the promotion ended.

Losing the consumer...
The only real issue for suppliers and retailers is whether, having been ‘mislead’ by a promotion, the shopper associates the deception with the multibuy itself, the  brand involved or the shopkeeper…  In other words, does the shopper dismiss multibuys and revert to ‘straight’ sales, switch to another brand or change stores…

Given the upfront investment in getting the consumer-shopper to this point, it seems a pity to then kick ‘em over to the opposition….


Thursday, 15 November 2012

Happy own-brand Xmas, how Ansoff can help?

Given Sainsbury’s predictions that this will be an own brand Christmas as hard-up Britons “splash out” to enjoy a family Christmas, making their money go farther via own-brands perhaps the Ansoff Matrix can spell out the moves and help suppliers to anticipate the impact…?

As you know, Ansoff identifies four ways of growing a business by selling:
- More current products to current customers
- New products to current customers
- Current products to new customers
- New products to new customers

How Sainsbury’s could increase own-brand sales

More current products to current customers:
Essentially, as most produce sales are own-brand, coupons and keen prices and store-level assortment could encourage purchase of larger portions of Christmas meats turkey, fruit & veg, with pricing delicately balanced to avoid over-purchase/waste….making current customers happier

New products to current customers:
Here the emphasis could be on encouraging purchase of complementary Christmas items both food and non-food, brands & own-brands, with in-store promotion/theatre and linked couponing to tease custom away from branded alternatives and other mults/channels via current JS customers in the aisle – making current customers even happier....

Current products to new customers:
By studying the profile of their current customer, JS could seek out new shoppers of similar profile, and try to attract them to the store via the own-brand products that appear to appeal to current JS customers, given that they probably have similar appetites. These new customers will need to be attracted and retained by a combination of virtually one-to-one communication and coupon-swaps to encourage a first-time switch from their traditional Christmas destination. To achieve an acceptable ROI, this has to result in an unprecedented and compelling experience, well suited to the JS approach.

This will probably be the most competitive segment as Tesco tries to recover lost share/customers and retain its current customers via its £1bn investment programme…

New products to new customers:
This high risk alternative means trying to attract new shoppers and sell them new products, targeting consumers that are unaccustomed to the JS experience, with products that are new to JS, a double-whammy that may attract the risk-seekers, but will probably play a small part in own-brand Christmas..

So, from a supplier’s point-of-view, this is all about own-brand, wrong!
This is about how a skilled and systematic retailer is going to make this an unforgettable own-brand Christmas, using differentiation to build and hold an enlarged customer-base, at the expense of brands…unless suppliers make Ansoff work even better for their brands…
PS  For insight on the subtle moves see our free paper : 4 generations of private label

Wednesday, 14 November 2012

Delivery leverage for on-time supply - Walmart pays upfront

Mexico's leading retailer Walmex has made early payments totalling US$326 million to its suppliers to make sure they deliver products on time for Thanksgiving and for the Christmas season. This has to be an indicator that when the circumstances are right, even the world’s biggest retailer will pay for goods in advance.

When you take into account that retailers in Mexico pay in 60-90 days, it can be seen that Walmart are in fact paying up to 6 months earlier than suppliers would normally have been paid…

Why a retailer can pay upfront
In practice, being cash-rich in that the consumer pays on receipt of goods, a retailer is capable of, and willing to pay in advance, on delivery or up to 90 days later, with or without settlement discount. In the case of private label, a retailer can even contribute to the investment in special plant, buy the raw material and ingredients and even contract to purchase at a given price for up to five years in order to help the supplier to amortise investment.

It all depends on the deal….
For this reason, it is vital that suppliers always have a clear idea of the financial dimensions of their relationship with individual retailers. This means being realistic about the pulling-power of their brand vs. available alternatives in the eyes of both consumer and retailer.

Running the numbers, both ways...
Based on this potential leverage, it is essential to calculate each element of the deal in terms of actual/estimated cost and also the incremental sales to the retailer in order to break even. It is then necessary to calculate what the retailer ‘gets’ from the brand in terms of margin, free credit, settlement discount, trade funding and above-the-line support in addition to service level, rotation, availability, exclusivity and priority when stocks are scarce, all set against their sales equivalent required to generate this total investment.

In other words, by listing the brand, a retailer on 5% net profit needs sales of £20k for every £1k received from a supplier…this needs bringing out in negotiation!

Going to ‘see’ the buyer without having run the numbers in this manner is worse than going in blind, especially if your competitor, without your brand benefits, knows and can use the financials, has eyes wide open…

Incidentally, before emailing the Asda buyer, it might be prudent to keep in mind that with planned purchases of $6.4bn in Mexico for Q4, Walmex are in fact paying for $326m in advance, i.e. 5% of purchases…

Monday, 12 November 2012

Making more of existing traffic in supermarket convenience….

With more than 1-in-20 shoppers are leaving supermarket convenience stores having failed to spend all they intend, according to him! research & consulting, it follows that improved availability will optimise existing traffic, without adding another shopper...

At a time when every little helps, it seems a no-brainer to respond to the 5,000 shoppers surveyed at supermarket convenience stores, including Tesco Express, Sainsbury’s Local, M-Local and Little Waitrose, that report the main reason for these failed purchases is poor availability. Moreover, failure to buy one product in smaller format stores, when shoppers only need two or three, means a significant proportion of a shopper’s needs are left unfulfilled.

Losing business in the aisle
As you know, a brand’s consumers exhibit different need-sets as they shop different store formats, and retailers need to tailor both the offering and layout to suit, or suffer business drift…

In the current climate, suppliers and retailers invest heavily in presenting the offering to the consumer. It seems a pity to discard that consumer as shopper when they respond via a more convenient store of their choice…

Moreover, any additional traffic arising from more satisfied shoppers ‘telling a friend’ will be truly incremental.. 

Friday, 9 November 2012

'Boots the Grocer' - How Walgreens and Musgrave are helping them become a force in UK convenience…

Given that Walgreens, Boots 45% partner’s experience of food in pharmacy, give c15% of their store space to food, coupled with the Musgrave trial of food-to-go in Boots’ branches means that ‘Boots the Chemist’ could become a big competitor in the UK convenience landscape.

A new report from him! focuses on the Boots / Musgrave food range trial, and new exclusive shopper feedback shows that shoppers are excited about the extended range of food products being trialled in 11 Boots stores.  Looking to Boots to provide healthier alternatives, 58% said that they are likely to buy from this new food range at Boots in the future.

Why this initiative matters to everyone...
Given their track record, traditional suppliers to Boots will not underestimate the ability of this global player to expand synergistically via the right partners. Moreover, this logical brand-stretch via healthy food from a quality convenience retailer, combined with Boots retail footprint and regular traffic, has to represent a major breakthrough in the convenience sector, for both retailers.

Implications in a zero-sum market
The obvious implications in terms of relative space, ease-of-access and increased buying muscle means that it is important therefore that all suppliers tap into the Walgreens food background and link this with Musgrave’s quality convenience-experience in order to adequately factor this innovative food range trial into your trade strategies…

Full details of the Walgreens-Boots merger, the Boots-Musgrave trial and shopper reactions in the him! report

Thursday, 8 November 2012

Morrisons losing share - what would you do?

According to latest results with a 2.1% fall in like-for-like sales, Morrisons are losing share vs. the other mults, apparently due to insufficient presence in convenience and online….

Essentially, they are doing the right things, promoting no-nonsense value for money to a hard core of loyal users, who are perhaps hurting more than most in the current climate.  However, the company needs to drive its share price in order to remain autonomous, and independent…

How to help
Every salesman, myself included, ‘knows’ how to run a hotel, a pub, and even a shop.
So what would you do if you were in Dalton Phillips’ shoes?  All ideas and suggestions welcome, at least in Kamblog…

For starters: 
The one-to-one approach with existing customers, the most valuable asset
  • Work on the core users: a basic business-building principle, they are already sufficiently satisfied to visit your store regularly, presumably in preference to other retailers
  • Find out who they are, where they live and look after them (social marketing/media, networking, online)
  • Treat them well as individuals and they may even tell their friends. In other words, find out why they came in and make sure their needs are satisfied (store-level assortment, availability, instore theatre, shopper-marketing )
  • In effect, sell more of their current requirements, where feasible
  • Attempt to help them buy appropriate new products, rather than selling to them
  • ‘Follow them home’: after-sales checking for satisfaction via e-networking
Attracting new customers
  • Ideally via recommendations from current customers (back to rewarding satisfied current customers)
  • Attracting ‘spontaneous’ new custom is too costly and takes longer than you have…
Optimising supplier support
  • Shop staff look after 450 categories, a supplier NAM manages three, maximum
  • NAMs can generate 20 ideas per category, all they need is access..
  • NAMs represent pan-market breadth, in that they know how their categories are sold in most types of outlet, a wealth of insight, available on tap..
  • Many suppliers are willing to shopper-market, and want to influence the shopper in the aisle
Any more ideas from you guys, the NAMs who actually do the job, unlike myself, a mere describer of the process….?

Wednesday, 7 November 2012

Effective projects – the vital ingredients…


                                                                                                                          pic: Austin Kleon
Effective projects start with an exit strategy, in turn becoming the basis for the project objective, a description of the end result…

Criteria for Practical Objectives: 
Definition of basic purpose, Timed, Measurable, Worthwhile, Achievable, Compatible, Agreed, Communicated clearly, Reviewed regularly...

Example Objective: 
As a result of implementing the plan, the following will have happened:

-  Achieved successful launch of new variant
-  Sales grown by 12%
-  Profits grown by 11%,
-  Increased distribution to 78% by month two of new brand
-  Incremental business of £450,000
-  By month 7 have achieved 70% of full year target

Anything less is simply hope masquerading as achievement….

Amazon's nine steps to success - Bezos' formula

A great article in Londonlovesbusiness.com spells out Jeff Bezos’ secrets in driving a $48bn company growing at 26% CAGR.

Amazon's formula
Ranging from taking a long term view of 7 rather than 3 years, reducing customer service by getting it right first time, use of lower margins to build loyalty, managing detail, starting with consumer need and working backwards, innovating rather than copying, working hard to charge less, and rocking-the-boat to make a difference, the Amazon checklist provides a practical basis for optimising your relationship with the world’s largest online operator.

More importantly, by applying the same principles in-house, realistic NAMs will not only achieve a better match with Amazon, but could also evolve a simple, but effective customer-focused  strategy going forward…

Tuesday, 6 November 2012

'Making do' taking demand out of the market...?

With hopes for a continuing pre-Christmas sales revival dashed today amid signs that consumers are still limiting spending to essential items, it is perhaps useful to consider the impact of people ‘making do’ with existing products and postponing purchases of replacements in these uncertain times.

Housing demand
Essentially, taking big purchases first, how many householders are trading refurbishment and ‘extending’ for the purchase of a ‘new house’ that is a better match for growing family needs. Think of even a third of homeowners, with unprecedented access price–comparison facilities on sales costs, legal fees, removal charges and especially property values, deciding to postpone a house purchase for even a year, taking 33% out of the market

Cars & home entertainment
Similarly making do with the family car for a third year may add a little to upkeep costs, but takes another slice from new car demand. And what if large companies decide to apply the same logic to fleet replacement…?

The same with (age permitting), mobile phones, laptops, home entertainment, etc, etc, etc.

Austere eating...
When it comes to food, the impact of ‘making do’ on out-of-home eating is already obvious as people increasingly retire indoors, hopefully via a ready-meal+wine upgrade... Meanwhile, if consumers are stretching sell-by limits and not binning meal left-overs but are in fact re-heating for even one meal in three, we again have at least a third of demand removed from our sales forecasts…

The way forward...
Realistically, in an environment where only politicians and vested interests are optimistic, we need to factor these ‘making do’ drivers into business budgeting, accepting that our business models are based on ever increasing demand, and realise that in a zero-sum game, any growth is coming at the expense of the other guy.

In other words, assume that a third is knocked off your next year's sales, and seek ways of replacing those sales at the competition's expense, via a better match with consumer need...

Accordingly we need to find a way of identifying what the consumer thinks is important in our category, and communicating (and delivering ) the real difference our brand represents, better than, and at the expense of, our competitor, in a way that makes a savvy consumer come back for more…

Monday, 5 November 2012

The 'average' citizen vs. the bleeding differences that make for individualism



The move from broadcast to narrow-cast, even one-to-one media marketing and social networking is a reflection of the fact that increasingly savvy consumers demand to be treated as individuals by suppliers and retailers. Combined with the increasing availability of one-to-one consumer feedback, marketers risk dilution and dissipation of the brand message in refusing to acknowledge that the traditional use of ‘average’, apart from being  increasingly out-of-step with reality, is verging on becoming an insult, compared with the relative awkwardness of  ‘individualism’,

In other words, ‘average’ is easy, but ‘individual’ can be a nuisance…
However, even in Japan where being the same is considered a good thing, much of the population are said to enjoy finding little differences that distinguish people, blood type being the latest example.

What blood groups show
According to popular belief in Japan, type As are sensitive perfectionists and good team players, but over-anxious. Type Os are curious and generous but stubborn. ABs are arty but mysterious and unpredictable, and type Bs are cheerful but eccentric, individualistic and selfish.
In fact a whole industry of customised products has also sprung up, with soft drinks, chewing gum, bath salts and even condoms catering for different blood groups on sale.

By the same token, NAMs that are individual, whatever the blood group, tend to make a difference, despite being something of a nuisance...

Historical signals...
Incidentally, those of you with Type AB blood of a poetic bent might have picked up this need for individualism as far back as 1939, via W.H Auden in The New Yorker.
It is the epitaph of a man, identified only by a combination of letters and numbers, described from the point of view of government organizations i.e. the "Bureau of Statistics."
The poem satirises bureaucracy and standardisation of people (the average citizen) at the expense of individualism, and perhaps explains much of what has gone wrong in the last few years....

To optimise the individualism of your next coffee break we attach Auden’s poem below   -  vive la difference!

The Unknown Citizen
He was found by the Bureau of Statistics to be
One against whom there was no official complaint,
And all the reports on his conduct agree
That, in the modern sense of an old-fashioned word, he was a
saint,
For in everything he did he served the Greater Community.
Except for the War till the day he retired
He worked in a factory and never got fired,
But satisfied his employers, Fudge Motors Inc.
Yet he wasn’t a scab or odd in his views,
For his Union reports that he paid his dues,
(Our report on his Union shows it was sound)
And our Social Psychology workers found
That he was popular with his mates and liked a drink.
The Press are convinced that he bought a paper every day
And that his reactions to advertisements were normal in every way.
Policies taken out in his name prove that he was fully insured,
And his Health-card shows he was once in a hospital but left it cured.
Both Producers Research and High-Grade Living declare
He was fully sensible to the advantages of the Instalment Plan
And had everything necessary to the Modern Man,
A phonograph, a radio, a car and a frigidaire.
Our researchers into Public Opinion are content
That he held the proper opinions for the time of year;
When there was peace, he was for peace: when there was war, he went.
He was married and added five children to the population,
Which our Eugenist says was the right number for a parent of his
generation.
And our teachers report that he never interfered with their
education.
Was he free? Was he happy? The question is absurd:
Had anything been wrong, we should certainly have heard


Friday, 2 November 2012

Jumpy suppliers leave Comet on brink?


Press reports that jumpy suppliers are somehow to blame for Comet's business issues are missing some fundamental aspects of the supplier-retailer relationship.

What a supplier contributes:
  • With daily deliveries of some SKUs, often at zero-defect service level, a retailer can run the business on two weeks stock, or less
  • With an average retail margin of 25% and store running costs of 15% the retailer is left with 10% to cover head office costs and profit, with a potential net margin of 5%
  • With up to 45 days of free credit, and a shopper paying cash the retailer, allowing 5 days to to turn cash around, the retailer is left with 40 days money to place on deposit, or more creatively build new stores
  • With suppliers contributing up to 15% of their sales in trade funding, most of the promotional risk is being carried by the supplier
  • With suppliers carrying most of the innovation and brand development risk, the retailer simply has to make it available to consumers
  • A buyer's mistakes can be sent back sale-or-return, a supplier puts theirs on prime time TV
Comet's mistake 
Comet failed to anticipate the inevitable impact of online and Amazon on white-goods and home entertainment categories and were unable to re-engineer their business model fast enough to compete, in unprecedented times.
Developing an online offering means having to compete directly with Amazon's 1-click convenience, zero-defect service level and 'no quibbles' returns policy. There is no halfway alternative.

Amazon is growing at 26% CAGR, not via incremental business (they have not even started yet!), but by siphoning business from traditional retail, via pricing, convenience and great fulfillment. Again their 1-click process optimises almost every impulse urge of the consumer, never missing  a trick because of lack of availability...
But essentially they are simply another competitor in a free market.....and no government is going to legislate to make it any different.

Meanwhile, suppliers making 5% net profit on their Comet business, need incremental sales of £3m for every £150k that is is owed, to cover the cost of the inevitable...

Jumpy?  I can think of better words....


Thursday, 1 November 2012

Bad customer service - the downside of social networking...?

UK shoppers seek customer service support by email (49%) or phone (43%), younger shoppers are highly likely to turn to social channels when these touch points fail, with 46% of under 25s and 33% of 25-33 year olds using social networks to air their grievances more publically.  A new study, commissioned by Rakuten’s Play.com, consisted of an independent survey of 1,000 UK consumers.

Corrective Action?
One approach can be to consider Omotenashi – a Japanese customer service style to deliver enhanced customer service. Meanwhile, for pointers, see how Rakuten approaches customer service using Omotenashi by stepping  away from the vending machine retail model and aiming to go the extra mile when delivering great customer experience.

Why this is important…
As any branded NAM will appreciate, the cost of persuading a consumer to try a new product is so high, unless they are delighted/surprised at what they find in the tin (see Aldi Xmas pud) and thus require less investment to encourage a return visit, the upfront marketing investment never achieves payback mode.

The survey indicates key influences of a second visit:
o 39% – Loyalty programs & rewards
o 20% – Strong after sales support
o 14% – Personalised offers shared after purchase

Moreover, it is only on the third visit to the brand that consumer satisfaction may result in them telling one of their friends…

Alternatively, if the experience is not satisfactory (i.e. we don’t meet their needs) the disaffected consumer will complain to 10 of their friends, and that was before the arrival of social networking…

P.S. See here for details of the survey’s key findings

Wednesday, 31 October 2012

Debenhams: calling a coffee a coffee….

Debenhams launches plain English coffee menu which describes coffee in simple terms has been created in direct response to customer feedback that revealed over 70% of coffee drinkers have experienced ‘coffee confusion’ in cafes, bars and restaurants. No longer will coffee-lovers be in a muddle over mocha, caught out by cappuccino or embarrassed about espresso thanks to a plain English coffee menu launched by Debenhams on 29 October 2012.

The new Debenhams coffee menu:
Translating Fancy name (usually seen in high street coffee shops) into Plain English version (as seen on the new Debenhams menu)

Black coffee  = Simple coffee – with or without milk

Caffe latte      = Really really milky coffee

Cappuccino   = Frothy coffee

Caffe mocha  = Chocolate flavoured coffee

Espresso shot = A shot of strong coffee

Chrissie Maher, Founder Director of Plain English Campaign also welcomes the new menu: “Whether it is coffee, tea or hot chocolate, it needs to be in plain English so customers can make an informed choice. If they can read the menu clearly, they are more likely to try something new – and who knows – they may come back for more.”

The current status quo
Over 100,000 coffees are sold each week in more than 160 Debenhams cafes and restaurants across the UK and Ireland, selling double the amount of tea. Coffee now represents 67% of sales compared to tea which is only 33%. Of the three major hot beverage categories (coffee, tea and hot chocolate), coffee is the only one to have seen volume growth over the past three years. This suggests that it has stolen share from both hot chocolate and tea.

At risk of sounding pretentious (pretentious? Moi?) it remains to be seen whether confusing mystique is a key driver in out-of-home coffee consumption……


Tuesday, 30 October 2012

Late payments improving – Action for NAMs

The latest Late Payment Index from Experian®, the global information services company, reveals that UK businesses paid their bills nearly 1.3 days earlier in Q3 2012, compared to the same period last year.  In July to September this year, firms paid their overdue invoices 24.88 days after agreed terms, compared to 26.17 days during the previous year (Q3 2011).

Food retailers showed the most significant improvement, paying their invoices 29.15 days after agreed terms, compared to 34.21 days in the same period last year.

Still a way to go...
Whilst suppliers will obviously be grateful for this average 5-day improvement by retailers, your finance department will remind you that invoices are being paid 29.15 days later than agreed. Think about it, you are delivering some SKUs daily, the retailer is holding average stocks of 2 weeks, and is getting cash from the shopper...

In other words it is vital, especially in this ‘post-recession’ era, to keep up the pressure for on-time payment.

Action: 
  • Quantify the cost of financing agreed credit days
  • Calculate the cost-benefit of paying settlement discount
  • Calculate the cost of the additional late days (checking that you have had your fair share of the five day average improvement in days sales outstanding, from all customers!)
  • Calculate the total cost of financing the credit you give your customer, and work out the equivalent in incremental sales required to cover the cost
    (i.e. if you make 8% net on your customer’s business, you need incremental sales of £12,500 sales to cover each £1,000 you give the customer )
Now join the queue outside the buyer’s office….(why not optimise the queuing time by checking out NamCalc?)