Good job Walmart were holding them back!
Friday, 17 July 2015
Thursday, 16 July 2015
'Caveat emptor' has morphed into 'caveat venditor' - why ‘seller beware’ is the new mantra for savvy consumers..
Today’s news that the Competition and Markets Authority (CMA) plans to take action after its investigation into misleading supermarket promotions should not be news, except in that it signals a significant shift in responsibility from buying to selling…
In other words, for many years sellers have relied upon the ‘letter’ of the law in terms of leaving the responsibility for checking match with consumer need to the purchaser, rather than the ‘spirit’ of the law whereby a savvy consumer expects to receive what it says on the tin, at least…
• The real issue is why retailers need to learn about consumer trust the hard way?
• To say nothing of the basic Tell-a-friend formula in junior selling school:
- Exceed Consumers’ expectations and they will tell a friend..
- Short-change them and they will tell 10 friends…
In other words, in a world of savvy consumers, caveat emptor has truly morphed into caveat venditor…courtesy of the new Peoples' Champion - the government!
In other words, for many years sellers have relied upon the ‘letter’ of the law in terms of leaving the responsibility for checking match with consumer need to the purchaser, rather than the ‘spirit’ of the law whereby a savvy consumer expects to receive what it says on the tin, at least…
• The real issue is why retailers need to learn about consumer trust the hard way?
• To say nothing of the basic Tell-a-friend formula in junior selling school:
- Exceed Consumers’ expectations and they will tell a friend..
- Short-change them and they will tell 10 friends…
In other words, in a world of savvy consumers, caveat emptor has truly morphed into caveat venditor…courtesy of the new Peoples' Champion - the government!
Wednesday, 15 July 2015
Asda Move Closer to Walmart - the two-pat approach to ‘Save Money, Live Better’
Further to NamNews' report on Asda's Overhauling Of Its Brand To Bring It More In Line With Walmart, NAMs might benefit from a deeper dig into where Walmart are headed in coping with Aldi/Lidl, and online competition like Amazon Fresh.
In fact, Walmart Food EVP Steve Bratspies' recent presentation to the Bentonville Bella Vista Chamber’s WalStreet (sic) supplier group gives considerable insight re Walmart's food plans, and by inference, a view of where Asda is headed.
Five building blocks that will remain
Bratspies outlined five customer promises that are foundational to Walmart’s strategy in the midst of these shifts.
1. Win in fresh
2. Re-energize the centre of the store
3. Expand physical-to-digital integration
4. Win on the fundamentals
Above all, Bratspies encouraged global suppliers to bring great ideas from other markets, empowering Walmart-facing teams to make decisions and “come sell us stuff”, pointing out that that their buyers are there to buy.
In other words, make a point and back it up with the numbers...we are listening like never before...
Hat-tip to Carol Spieckerman via Pete Louree and Spencer Booz
In fact, Walmart Food EVP Steve Bratspies' recent presentation to the Bentonville Bella Vista Chamber’s WalStreet (sic) supplier group gives considerable insight re Walmart's food plans, and by inference, a view of where Asda is headed.
Five building blocks that will remain
Bratspies outlined five customer promises that are foundational to Walmart’s strategy in the midst of these shifts.
- EDLP – Price is still “the decider,” even as the bar is being raised across other customer criteria.
- Quality you can trust – Customers are smart enough to expect one-dollar quality on a one-dollar item but won’t tolerate one-dollar quality on a five-dollar item. Quality is defined by the item being purchased.
- Everything you need – Despite its forays into small formats, Walmart is still very much in the supercentre business and is invested in facilitating a one-stop-shopping experience for its customers.
- Happy to help – Of Walmart’s three sub-promises (a fast, clean, and friendly shopping experience), friendliness makes the biggest difference at the end of the day.
- Shop your way – Customers must be able to access Walmart online from any device and from multiple locations.
1. Win in fresh
2. Re-energize the centre of the store
3. Expand physical-to-digital integration
4. Win on the fundamentals
Above all, Bratspies encouraged global suppliers to bring great ideas from other markets, empowering Walmart-facing teams to make decisions and “come sell us stuff”, pointing out that that their buyers are there to buy.
In other words, make a point and back it up with the numbers...we are listening like never before...
Hat-tip to Carol Spieckerman via Pete Louree and Spencer Booz
Monday, 13 July 2015
Tesco £40 minimum delivery spend, an each-way bet on basket-size?
Their new £4 surcharge on orders below £40, in line with Asda and Sainsbury’s, means that Tesco are crossing fingers that a sufficient number of core £25-users will either pay the surcharge or raise their order-quantities to £40+…
In practice, they are taking the basket-size route to fulfillment-cost amortisation vs. the blanket-distribution approach of Amazon i.e. delivery density – try tracking your next Amazon parcel and be impressed by the number of local deliveries your driver makes en route to your door.
The Tesco numbers look like this:
Order size £25
Tesco gross margin say 25%, i.e. £6.25
Delivery charge, say £4 £4.00
Delivery surcharge - £4 £4.00
Approx. cost of order fulfillment say £20.00
An improvement, but Tesco still loses say £5.75 per order
Order size £40
Tesco gross margin say 25%, i.e. £10.00
Delivery charge, say £4 £4.00
Delivery surcharge - £4 £0.00
Approx. cost of order fulfillment say £20.00
Tesco loses £6 per order (i.e. needs incremental sales of £24 to cover the loss)
In fact, apart from increasing the base delivery charge, Tesco’s only route to break-even is via its gross margin i.e. say 25% of goods sold. This means they would need to increase the minimum basket-size size to £64, to break even on a delivery.
If Aldi enter the home-delivery race, my bet would be on them taking the localised delivery-density route, if Amazon don’t beat them all to it….
In practice, they are taking the basket-size route to fulfillment-cost amortisation vs. the blanket-distribution approach of Amazon i.e. delivery density – try tracking your next Amazon parcel and be impressed by the number of local deliveries your driver makes en route to your door.
The Tesco numbers look like this:
Order size £25
Tesco gross margin say 25%, i.e. £6.25
Delivery charge, say £4 £4.00
Delivery surcharge - £4 £4.00
Approx. cost of order fulfillment say £20.00
An improvement, but Tesco still loses say £5.75 per order
Order size £40
Tesco gross margin say 25%, i.e. £10.00
Delivery charge, say £4 £4.00
Delivery surcharge - £4 £0.00
Approx. cost of order fulfillment say £20.00
Tesco loses £6 per order (i.e. needs incremental sales of £24 to cover the loss)
In fact, apart from increasing the base delivery charge, Tesco’s only route to break-even is via its gross margin i.e. say 25% of goods sold. This means they would need to increase the minimum basket-size size to £64, to break even on a delivery.
If Aldi enter the home-delivery race, my bet would be on them taking the localised delivery-density route, if Amazon don’t beat them all to it….
Friday, 10 July 2015
Kingsmill is back on the shelves at Tesco - Life after Re-set?
News in This is Money that ABF has managed to persuade Tesco to take back its key Kingsmill 50/50 bread, a blend of white and wholemeal flour, indicates that in the right circumstances, some re-set moves can be reversed.
Given that Finance Director John Basson could only make minimal reference to the move: ‘The Kingsmill bread line was taken out of Tesco but we are not going to get into the detail because it was a sensitive commercial agreement’, it is reasonable for NAMs in other categories to assume that Kingsmill made a successful, demand-based case for re-instatement.
Given the scale of the initial cull, it was always obvious that a 30,000 SKU reduction would mainly focus on product overlap and duplication and miss some gems in the process. What is encouraging to discover is that there are ways back in, for products in genuine demand, 'packaged correctly'...
If you are still awaiting the re-set email from Tesco it might be wise to revisit your current Tesco listings, re-assess SKU appeal and prepare for a fast response.
Our guest-KamBlogger Wayne Robinson offers three ways forward:
'packaged correctly'? It can be assumed that a key criterion for a brand's success in a financially driven demand-based Tesco, has to be an appropriate combination of shelf-price, margin, support and credit period. In other words genuine consumer appeal, in a suitable financial package....
Given that Finance Director John Basson could only make minimal reference to the move: ‘The Kingsmill bread line was taken out of Tesco but we are not going to get into the detail because it was a sensitive commercial agreement’, it is reasonable for NAMs in other categories to assume that Kingsmill made a successful, demand-based case for re-instatement.
Given the scale of the initial cull, it was always obvious that a 30,000 SKU reduction would mainly focus on product overlap and duplication and miss some gems in the process. What is encouraging to discover is that there are ways back in, for products in genuine demand, 'packaged correctly'...
If you are still awaiting the re-set email from Tesco it might be wise to revisit your current Tesco listings, re-assess SKU appeal and prepare for a fast response.
Our guest-KamBlogger Wayne Robinson offers three ways forward:
- Lurch into analysis mode...deep diving in to category data...ranking ros...etc It's not only the market/consumer data that will be swaying decisions about products on the shelves; there will be a financial element to this too.
- Use your research and insight to bring products to market that are focused on consumers' needs and have a true usp that add value to the category...otherwise known as innovation. In other words, try to identify the 'gems' in your assortment
- Channel diversification. No manufacturer should be overly reliant on any one customer. In other words, anticipate the obvious and try to optimise other routes to consumer, for products that are worth it.
'packaged correctly'? It can be assumed that a key criterion for a brand's success in a financially driven demand-based Tesco, has to be an appropriate combination of shelf-price, margin, support and credit period. In other words genuine consumer appeal, in a suitable financial package....
Thursday, 9 July 2015
Retailers have yet to truly connect with mobile shoppers - traditional retail missing another trick?
An article by Samanta Edwards over at The Wallblog examines new research on mobile-shopper optimisation (Window on Connected Shoppers - a free 20 page report on converting connected shoppers into buyers).
With one in three of the 30% of smartphone owners that have used their smartphone to shop in the last month, only one in ten of them regularly use apps as part of the purchase process – suggesting that retailers are failing to provide the right content.
In fact, according to the research, in-store smartphone users utilised their devices for:
In other words, these physical retailers have managed to get live mobile-consumers into their stores, and are failing to see that online completion of the mobile journey is still a retail sale....
With one in three of the 30% of smartphone owners that have used their smartphone to shop in the last month, only one in ten of them regularly use apps as part of the purchase process – suggesting that retailers are failing to provide the right content.
In fact, according to the research, in-store smartphone users utilised their devices for:
- sharing ideas (47%)
- comparing prices (29%)
- product information (20%)
- sharing photos, taking pictures as a reminder, store location and browsing (with no intention to purchase) were all cited by 17% of respondents
In other words, these physical retailers have managed to get live mobile-consumers into their stores, and are failing to see that online completion of the mobile journey is still a retail sale....
Tuesday, 7 July 2015
Offline limits to online growth: Is click-and-collect 'cannibalising' retailers?
Given that the cost of fulfilling an online order is approximately £20, and market willingness-to-pay appears to have an upper limit of £5 per delivery, it is obvious that a retailer loses £15 per online order.
Charging for Click & Collect merely addresses the 'front end' of this problem in terms of covering some of the real cost of the 'final mile'. It also means that John Lewis introduction of a £2 charge is possibly adding to the problem by giving the impression that a home delivery option is worth the difference - £3...
Meanwhile, for a Bricks & Mortar retailer in a virtually zero-sum flat-line environment, any scale advantages will be neutralised by increasing redundancy of physical space.
With Click & Collect growing at 20-30% per annum, the real issue for retailers is that the growth of their online business not only cannibalises their regular in-store sales but also causes them to lose more money as online sales increase.
In a flat-line demand environment with market share increases having to come at the expense of the competition, it would appear that major physical retailers are in a race to the bottom in terms of profitability.
Meanwhile, Amazon and other pure-play online retailers will grow at the expense of physical players until a point is reached where even their growth is limited by consumers' refusal to pay adequate rates for order fulfillment.
For suppliers, this means that having managed to take the GSCOP-route out of the extremes resulting from dealing with the Big 4 multiples, we may be unconsciously accepting the even tighter harness of the online route to consumer...
In other words, with the benefit of hindsight, it might be wise to anticipate, prepare for and negotiate fair share dealings from the start, rather than require a Mk.2 GSCOP rescue sometime in the future...
Charging for Click & Collect merely addresses the 'front end' of this problem in terms of covering some of the real cost of the 'final mile'. It also means that John Lewis introduction of a £2 charge is possibly adding to the problem by giving the impression that a home delivery option is worth the difference - £3...
Meanwhile, for a Bricks & Mortar retailer in a virtually zero-sum flat-line environment, any scale advantages will be neutralised by increasing redundancy of physical space.
With Click & Collect growing at 20-30% per annum, the real issue for retailers is that the growth of their online business not only cannibalises their regular in-store sales but also causes them to lose more money as online sales increase.
In a flat-line demand environment with market share increases having to come at the expense of the competition, it would appear that major physical retailers are in a race to the bottom in terms of profitability.
Meanwhile, Amazon and other pure-play online retailers will grow at the expense of physical players until a point is reached where even their growth is limited by consumers' refusal to pay adequate rates for order fulfillment.
For suppliers, this means that having managed to take the GSCOP-route out of the extremes resulting from dealing with the Big 4 multiples, we may be unconsciously accepting the even tighter harness of the online route to consumer...
In other words, with the benefit of hindsight, it might be wise to anticipate, prepare for and negotiate fair share dealings from the start, rather than require a Mk.2 GSCOP rescue sometime in the future...
Tuesday, 30 June 2015
Retail queue optimisation - or how to burn a mink coat safely...
According to The Telegraph, the UK population is losing the ability to form an orderly line, in that companies are developing new technology to make queuing more efficient or eliminate waiting altogether.
In fact, dedicated tennis fans join the famous (or infamous) Wimbledon queue every year and, for many, waiting in line has become almost as enjoyable as the tennis itself.
However, this may become increasingly exceptional.
In fact it is estimated that British retailers lose almost £4,000 a day because people are put off making purchases by queues.
The article goes on to detail initiatives by John Lewis aimed at to shortening queues for "click & collect" parcels, sensors embedded in trolley wheels, Barclaycard Anywhere’s device that eliminates the need for receipts and cash protection in-store, and provides a number of pictorial examples of potentially redundant traditional UK queueing…
Speaking of which, despite having a low tolerance limit for any form of queueing, I did spend 15 minutes in a sale-queue outside a major London store, back in 1979..
A neighbour of mine had decided to queue for 5 days to secure a mink coat reduced from £795 to £79, which she planned to burn in an animal rights protest.
Details here & here
I was working in Oxford St on Fay's fourth day and decided to join her in line and keep her company for a while. She was delighted to see me (!) as she apparently had some technical issues to resolve i.e. how to ensure the coat burned quickly. I assured her that my expertise was limited to retail buying and selling, but decided to practice my listening skills for a moment…
I asked her what she planned and she told me about a bottle of petrol she had about her person, intending to sprinkle it liberally, etc.
I cautioned her that unless she intended to make the ultimate sacrifice, perhaps draping the coat over a nearby wire waste-bin (pic) would suffice…thus ensuring a 100% success in terms of media coverage, and my little place in history…
Monday, 29 June 2015
Sunday, 28 June 2015
Friday, 26 June 2015
The case for Shopper Marketing, packed in a conundrum?
We somehow break through the apathy - at great expense in terms of time, money and people - in unprecedented times, within a flat-line demand environment, at a significant price disadvantage in a cut-throat environment, manage to get our brand considered as a fleeting alternative, and motivate the potential consumer to move towards the nearest store.....
Only to leave them to their own devices at the door.
They then have to find their way to our part of the store, cope with the confusing appeals of the category's competing offers, including private label, all subject to the inevitable 'cool-off', even if our offer presents on-shelf as intended...
"I cannot forecast to you the action of the brand owner. It is a riddle, wrapped in a mystery, inside an enigma; but perhaps there is a key. That key is the brand's need for 110% consumer satisfaction."
(with apologies to Mr Churchill)
Only to leave them to their own devices at the door.
They then have to find their way to our part of the store, cope with the confusing appeals of the category's competing offers, including private label, all subject to the inevitable 'cool-off', even if our offer presents on-shelf as intended...
"I cannot forecast to you the action of the brand owner. It is a riddle, wrapped in a mystery, inside an enigma; but perhaps there is a key. That key is the brand's need for 110% consumer satisfaction."
(with apologies to Mr Churchill)
Tuesday, 23 June 2015
The GCA-GSCOP five-issue approach to optimisation of supplier-retailer relationships.....
Some indication of the steady progress being made by the GCA can be gleaned from the latest YouGov survey (here), but nothing beats participating in yesterday's 2nd Annual Conference, a unique mix of Sales, Finance and Legal stakeholders, all sharing a common interest in optimising the supplier-retailer relationship.
(NamTip: key for NAMs to have a detailed knowledge of GSCOP in order to fulfill their co-ordinating role re the major customer)
At the start of the GSCOP process, the GCA was faced with what could have been an overwhelming number of potential issues. However, by focusing on a rolling five-issue 'hit-list', Christine Tacon was able to help both suppliers and retailers focus on a manageable set of issues within GSCOP as follows:
Top Five Issues:
1. Consumer complaints (processing charges by retailer) - New (in discussion)
2. Delays in payment (failure to pay suppliers within agreed time periods) - New (in discussion)
3. Forecasting/service levels (issues arising re forecasting and call-off/delivery) - Live (currently under discussion with each party)
4. Requests for lump sums: (see GSCOP) - Live (currently under discussion with each party)
5. Packaging & design charges (possible excess over market rates) - Live (currently under discussion with each party)
Forensics: third party audits (2 year limit on claims) - Closed (meaning agreement has been reached on process and interpretation. Any further instances will be regarded as in breach)
Drop and drive - delivery performance:
(issues around possible discrepancies between deliveries and receipts - Closed (see Forensics)
As can be seen above, given that two issues are 'Closed', five issues remain. At yesterday's conference it was announced that the Consumer complaints issue is now closed. This means the GCA is now in the process of prioritising a new issue, to be determined by degree of relevance to suppliers/retailers i.e. your opportunity to submit details of perceived breaches either directly to the GCA, or via your trade association.
It has taken many years to reach this point in the evolution of supplier-retailer relationships. The application of GSCOP is now gathering momentum but still requires 'proof of purchase' in order to access the benefits
Your input can help...
(NamTip: key for NAMs to have a detailed knowledge of GSCOP in order to fulfill their co-ordinating role re the major customer)
At the start of the GSCOP process, the GCA was faced with what could have been an overwhelming number of potential issues. However, by focusing on a rolling five-issue 'hit-list', Christine Tacon was able to help both suppliers and retailers focus on a manageable set of issues within GSCOP as follows:
Top Five Issues:
1. Consumer complaints (processing charges by retailer) - New (in discussion)
2. Delays in payment (failure to pay suppliers within agreed time periods) - New (in discussion)
3. Forecasting/service levels (issues arising re forecasting and call-off/delivery) - Live (currently under discussion with each party)
4. Requests for lump sums: (see GSCOP) - Live (currently under discussion with each party)
5. Packaging & design charges (possible excess over market rates) - Live (currently under discussion with each party)
Forensics: third party audits (2 year limit on claims) - Closed (meaning agreement has been reached on process and interpretation. Any further instances will be regarded as in breach)
Drop and drive - delivery performance:
(issues around possible discrepancies between deliveries and receipts - Closed (see Forensics)
As can be seen above, given that two issues are 'Closed', five issues remain. At yesterday's conference it was announced that the Consumer complaints issue is now closed. This means the GCA is now in the process of prioritising a new issue, to be determined by degree of relevance to suppliers/retailers i.e. your opportunity to submit details of perceived breaches either directly to the GCA, or via your trade association.
It has taken many years to reach this point in the evolution of supplier-retailer relationships. The application of GSCOP is now gathering momentum but still requires 'proof of purchase' in order to access the benefits
Your input can help...
NB GCA Conference: Speaker presentations now available here
Sunday, 21 June 2015
Tesco Express-cashback?
Police hunt robbers after supermarket cash machine blown off wall with explosives at Newtonhill Tesco, Aberdeenshire
Friday, 19 June 2015
Restructuring for the new UK retail trade environment
With all attention focused on the structural changes occurring in UK retail, in particular the growth of the discounters and Waitrose at the expense of the Big 4, in a flat-line market, very little attention is being paid to the most obvious of knock-on implications, the need for some adjustment in how we manage this new mix of retail routes to consumer…
At current rates of large space redundancy, the economics of selling off ‘spare’ space – at a rate that forces buyers of the property to achieve sales intensities of £1,000/sq. ft.+ to justify the investment, the resulting property lock-in prevents major retailers from scaling down to the smaller, closer convenience outlets demanded by consumers shopping more often in smaller quantities.
This has to result in a gradual loss of market share from Kantar’s current levels of 73.5% for the Big 4, to a combination of the discounters, Waitrose, online and emerging formats. Incidentally, even if the Big 4 retain their fair share of online growth, online success does little or nothing to address their bricks & mortar surplus issues…
This has to result in losses in market share for the Big 4 – the only issue is the point of settlement..
All of this means that the requirements of the UK NAM role are changing, along with the relative importance of the Big 4 in supplier portfolios.
Time for a market-led change of emphasis at NAM level?
Subscribers can access the implications and options for NAMs in the June issue of NamNews.
At current rates of large space redundancy, the economics of selling off ‘spare’ space – at a rate that forces buyers of the property to achieve sales intensities of £1,000/sq. ft.+ to justify the investment, the resulting property lock-in prevents major retailers from scaling down to the smaller, closer convenience outlets demanded by consumers shopping more often in smaller quantities.
This has to result in a gradual loss of market share from Kantar’s current levels of 73.5% for the Big 4, to a combination of the discounters, Waitrose, online and emerging formats. Incidentally, even if the Big 4 retain their fair share of online growth, online success does little or nothing to address their bricks & mortar surplus issues…
This has to result in losses in market share for the Big 4 – the only issue is the point of settlement..
All of this means that the requirements of the UK NAM role are changing, along with the relative importance of the Big 4 in supplier portfolios.
Time for a market-led change of emphasis at NAM level?
Subscribers can access the implications and options for NAMs in the June issue of NamNews.
Subscribe to:
Posts (Atom)