'Farm' packaging - an opportunity to sell more British meat?

Given the ‘dawning realisation’ that non-UK i.e. Brazilian and Thai meat, is being sold in Britain without its country of origin being declared, two options are available:

 - Reactive: Government insistence that country of origin be declared on all meat products…
 - Proactive: UK branded meat products to emphasise local origin

Given that this situation has been known to the meat industry for years without appropriate government action, perhaps Option 2 has more appeal?

In other words, there appears to be a real opportunity for local producers – and pro-active retailers – to brand meat heavily and emphasise local sourcing, and by inference suggest that competitor products not thus labelled contain Brazilian and Thai-based meat…

In the current climate, this approach should resonate with at least 52% of the UK population – after all, if Brexit was not about nationalism…? 

NB. According to packaging regulations, the country of origin is the last place where a product is processed.... 

Post-Brexit opportunity: deck clearance vs. re-arrangement of deckchairs?

Governments’ pre-occupation with maintaining the ‘status quo’ provides us all with a temporary window where clarity of vision and a  modicum of decisiveness can help us to conduct a fundamental clear-out  of anything that does not contribute directly to business goal achievement.

In practice, this means getting back to basics, big time, while others still try to make sense of what is happening…

Essentially, despite the unprecedented Post-Brexit market conditions, in business we survive by driving sales or cutting costs, or a realistic combination of both. As we try to come to terms with Brexit fall-out, resulting in increasingly savvy consumers ‘making do’ and postponing purchase, thereby taking demand from the market, all growth will have to be achieved at the expense of competitors. In other words, we need to meet consumer needs better than the other guy, with tin contents always exceeding what it says on the label, whilst all costs that do not directly contribute to satisfying market need, have to be cut, to prevent others doing it for us…

1. Clarifying consumer and retailer needs

Despite our familiarity with the brand and an inclination not to try fixing what seems to be ‘working’, latest annual reports from both supplier and retailer show that companies are generating inadequate rewards for risk in the post-Brexit climate.

In fact, low or even negative interest rates – read between lines of Bank of England announcements – are causing companies to take false comfort from lower returns ‘in common with others in the same boat’…

In unprecedented times, random cut-backs can represent unacceptable risk. For this reason, consumer need has to be a starting point in establishing the real fit of our brand with the market, better than alternatives available, at both functional and emotional levels.

It is also crucial to keep in mind that consumers will increasingly buy easier, faster, closer, and more often, continuing to cause structural change in the retail market. In other words, given that the discounters are growing at the expense of brands, we all need to find ways of working profitably with Aldi and Lidl.

Similarly, our trade package comprising Product (brand performance) Prices and Terms, Presentation (how the offering is expressed) and Place (supply-demand chain and in-store logic) needs to be really tailored to individual customers, and demonstrably so. All excess will need to be trimmed back to release resources to augment inadequacies elsewhere, and not simply supplement margin.

Again, a cursory analysis of a customer’s latest annual report will indicate how our offering should be recast in order to show how it directly impacts and drives ROCE improvement. The fact that the buyer never mentions ROCE is not to say it is irrelevant, even in Post-Brexit times. In fact ROCE performance drives the entire business process. Those in doubt should reflect on the fate of companies that ignored this principle, even in the good times…!

2. Buying Mix Analysis – optimising competitive appeal

Our trade and consumer offerings are meaningless unless placed in a realistic market context of available alternatives, meaning related to other offerings to which retailers and consumers have access. Buying Mix Analysis can help

3. Driving Sales

Having identified degrees of competitive appeal above, a supplier is in a position to seek ways of driving sales. Again there are only four alternatives:

• Encouraging customers to sell more of our current lines via full availability, adequate facings, tailored promotions and optimising shopper marketing, better than the competition
• Selling our new products to current users, building on the trust established in our current products
• Attracting new shoppers of similar profile to our brand-consumers to the store and offering them our current brands
• ...and even selling our new brands to new traffic, who knows?

4. Cutting costs

While driving sales, knowing our competitive appeal and using customer/shopper need as the ultimate benchmark, we need to eliminate any redundant attributes of the offering, anything that is not actively contributing to customer and brand profitability. We thereby strip away anything that will not jeopardise the appeal of the offering, but will reduce cost…

In practice, this means reducing manufacturing, packaging and distribution costs by sourcing locally, lowering ATL expenditure to match actual consumer usage of media and redeploying where necessary. It also means communicating one-to-one with actual and potential users, and eliminating anything that is not fit for that purpose. In the same way, all trade terms and investment need to be related to expected performance via 100% compliance, with partners that adhere to the spirit rather than just the letter of the regulations, with trust as the essential ingredient…

5. Driving retailer ROCE

Using the output from 1-4 above, all moves should be incorporated into the retailer’s ROCE model, demonstrating how the brand is increasing net margin and improving capital rotation, taking overall ROCE from latest Annual Reports to where it needs to be (In spite of near zero interest rates, ROCE 15%, Net Margin 5%, Stockturn to 20 times/annum and Gearing 30% or below) without jeopardising the supplier’s own ROCE, in order to preserve their autonomy for both companies, better than the competition.

Post-Brexit survival will allow for nothing less…

First things first, post-Brexit?

Publicis - Walmart's New Primary Agency of Record

According to yesterday's NamNews, Walmart has entered into what is being described as a strategic partnership with Publicis Groupe that will give the retailer “unfettered access” to all of the holding company’s agencies and resources.

In practice this means Publicis becomes Walmart's Primary Agency of Record i.e. an advertising agency authorised by an advertiser to buy advertising space and/or time on its behalf.

More than that, it gives Walmart access to all agency resources, globally, in managing Walmart’s US advertising and in-store creative giving the retailer access to resources outside of marketing, including capabilities to support corporate reputation and technology that builds relationships with customers.

In other words, think state-of-art, uniform, co-ordinated, creative  management of all communication with customers..

Add whatever it takes in terms of deep-cut EDLP to regain and maintain market share, big time, and you have a new dynamic in the market..

Asda has to be part of this…

More here

Time for NAMs to conduct some what-ifs in exploring the impacts on their categories…?  .

Price-wars challenging ALL routes to consumer?

UEFA Euro Final, Paris, Sunday 10th July – urgent appeal from Wales…!

Amidst mounting anticipation re this evening’s match, a Welsh NamNews reader who had bought tickets to the UEFA Euro Final in Paris on Sunday 10th July, has contacted us.

The problem is that his bride-to-be, appreciating his passion for football, agreed to avoid possible Saturday clashes by settling for a Sunday wedding.

However, he completely forgot that Sunday 10th is his wedding day as he bought the tickets a few months before agreeing to the wedding date.

So he wants to know if anyone is interested in getting married......?

HT to AB

Smartphone shopper-tracking, a privacy-value trade-off?

Presumably, smartphone tracking in the High Street will yield more information than 'standard' security cameras, albeit some inevitable under-counting because of opt-out moves by privacy-sensitive shoppers and non-phone citizens...?

According to The Daily Mail, retailers so far signed up to take part include Pret a Manger, Aldi, Oxfam, Pizza Hut, Superdrug, Thorntons, Dixons Carphone, Patisserie Valerie, Jack Wills, Tortilla, The Entertainer, Eurochange, Itsu, and Ed’s Easy Diner, via 1,000 sensors that will be placed in 81 towns and cities.

The issue for all stakeholders will be the nature of the additional insights harvested - other than names - via wifi linkage, and the use in terms of consumer benefits...

In other words, to escape labelling as 'another 'Big Brother' move, it is important that changes are made in shopper service levels are demonstrably related to the information gathered.

The question is whether the risk of negative reaction by post-Brexit savvy consumers and their representatives, is worth the trouble...

If you thought the Savvy Consumer was demanding in 2010, wait 'til Brexit kicks in...

Brexit for NAMs - Where Now?

In what will be seen to be one of the most fundamental and far-reaching developments affecting how we conduct the NAM Job, Brexit is sending a signal that the savvy consumer has added politics and trust to what defines being a stakeholder in today’s markets, bringing with it the realisation that politics is too important to be delegated  to the politicians.

...and we are all savvy consumers under the skin...

Business is still about reward for risk, fair share dealings, and above all, a need to build and maintain a consumer's trust that the contents will always exceed the description on the tin...

In this inevitable period of uncertainty, we need to revert to basic principles that in some cases can seem like cliches:

• If the numbers don't add up, they probably don't
• If I don't understand my business idea, what can I expect from a distracted buyer?
• If I cannot make the product for less than the consumer is prepared to pay, why bother?
• Continuous Satisfaction of consumer need has to be a fundamental driver, with trust an integral part of the equation...

Brexit, albeit a monumental leap in the dark, means the following:

•  A fall in the value of the pound, meaning that exports will be cheaper, i.e. If your company is UK owned, there will be a positive impact, an advantage vs. imported competitors
• However, brands that rely on imported ingredients will incur higher costs
• Given the inevitable period of uncertainty, many major investment decisions will be put on hold, at least while the numbers are re-run...
• Companies that set up in the UK to ensure 'easy' access to the EU will probably place relocation at the top of the agenda, although it is likely that a new UK government line-up will introduce lower corporation taxes by way of being an offer that few can refuse...
• Above all, running the numbers will become a way of life i.e. The ability to calculate real cost and demonstrate value to the buyer will become increasingly important amidst the uncertainty...
• A NAM's ability to calculate and factor in the risk associated will all business decisions will become a way of life... (even the ability to label ourselves, our company and the customer as risk-averse, risk-neutral or risk-seeking, and acting accordingly, will help...)

Given a reasonably open mind, Brexit will restore our faith in our common sense, and the use of that common sense as a criterion for making decisions.

In these unprecedented times, we the suppliers, retailers and consumers need to work together, using trust as our most valuable resource, keeping to the spirit rather than just the letter of the law or regulation, always aiming to deliver more than it says on the tin, recognising that opportunity lies available now for those that attempt to move forward using basic principles of acceptable reward for risk in business, while others await a return to normal…

Above all, using a slogan that worked well in other times, NAMs need to keep calm and carry on….

Maslow reality check....?

HT to Morten Overbye

When Big Sister knows better.....

What the future of the petrol station looks like

Given the fact that, according to The Economist, although combined petrol and diesel consumption has grown by over 75% since 1970, the number of petrol stations has fallen by nearly 80%, with oil companies first replacing independent operators, in turn oil firms were undercut by supermarkets, which sold petrol at near cost to attract shoppers to their out-of-town sites.

Now that consumers are shopping faster, smaller, closer and more often, another threat looms, in that shoppers are less willing to shop out of town...  These changes probably account for the fact that the petrol stations that remain are selling twice as much fuel.

However, the problem remains for forecourt owners of how to maximise revenue streams from forecourts.

And therein lies the opportunity for NAMs...

Selling more to existing users:  
Apart from the obvious fuel, including super-charging of electric cars, and motor requisites and services, 'feeding' the driver comes second, with goods and services for passengers next.

Then comes food-to-go and top-up shopping for drivers and foot-traffic, as required. And not forgetting Amazonian facilities like click & collect, where appropriate.

In fact, according to The Telegraph, Shell are part of a joint venture with Daimler and others to commercialise hydrogen gas for powering hydrogen fuel cell vehicles, and have spent “quite a bit of money” since 2012 revamping 400 of its UK petrol stations – making them larger, adding parking spaces, installing DHL pick-up points – with plans to upgrade 50 more this year.

The company has two sites in Bangkok that sell only V-Power, Shell’s highest quality fuel, alongside a luxury cafe. Each customer gets two attendants – one to serve them and one to service their car. In Luxembourg, Shell operates the world’s largest petrol station, servicing up to 25,000 customers per day (Details and pics on The Telegraph site).

In other words, all possible ways of meeting all possible needs, to optimise the space...

However, one key limitation has been the flat-site heritage where the original (lateral?) thinking - in an era of plenty of low-rent space - decreed that petrol stations had to be single storey, drive-in/out locations.

What is now required is the application of some vertical thinking, in terms of a re-modelling of the site in terms of underground car-parks, and multi-storey buildings, thus allowing the unit to become a multi-service pod that really serves the local market...

So some short term, medium and long term opportunities for creative NAMs...that can combine the best bits of lateral and vertical thinking, without missing a beat...

Head Of Walmart China Taking Over at Asda

This morning's surprise news that Sean Clarke has been appointed CEO from 11 July, indicates a probable change in stance for Asda in its dealings with suppliers:

*   Sean started his retail career in 2001 with Asda where he served as Commercial Finance Director. He then served as Chief Financial Officer in Japan and Germany before moving to Walmart Canada, where he also worked in a CFO role
*   …any doubts about the importance of financed-based argument to the new CEO?
*   …and the rest of the team…?

Sales per Sq Ft as a Primary Retail Indicator?

Given that rental levels and Business Rates are based on sales area, and with retail rents in prime spots in London’s Oxford Street reaching £1,000/sq ft/annum – equal to best-in-class grocery sales/sq ft/annum – it could be said that selling intensity i.e. sales/sq ft/annum is a pretty good indicator of retail effectiveness…

In other words, in the case of Oxford Street, a store achieving sales of £1,000/sq ft/annum is using all of its sales revenue to pay the rent, leaving costs of business rates of say £300+/sq ft/annum, cost of goods say 75% of net sales, overheads and store maintenance etc to be met from other parts of the business..

Incidentally, on a macro level, sales/sq ft/annum, can also steer a balance between investment in Bricks&Mortar and online – where space is infinite, and ‘free’ – helping to temper corporate  online enthusiasm as one begins to realise that fulfilment costs make online less profitable than well-run B&M…

Given that online space is infinite and ‘free’, a retailer contemplating switching resource to online development needs to have one foot firmly anchored to its Bricks & Mortar base, with its costs, in order to constantly re-evaluate the opportunity costs of developing its online channel vs traditional retail.

By the same token, Amazon’s decision to take the ‘retro-step’ of opening B&M bookshops can be seen to be state-of-art in that, using online sales results as a basis for B&M assortment, allows them to stock the most–demanded 4,000 titles – in 10% of the space a traditional bookshop needs in order to carry a minimum assortment of 40,000+ titles…

In terms of personalising the shopping experience here on earth, as shopper perception of shop-floor assistance can be based on staff numbers/sq ft,, minimum wage legislation can make adding people to the aisle an increasing burden. However, if a retailer hopes to go even further in terms of being different to online – using real people – by employing demonstrators and sales assistants, it is imperative not only that a non-pressured balance be arrived at in terms of salary and commission, but also that the combined costs of these expensive resources be calibrated against square footage…see GMROS and GMROL in KamTips.

Having calculated the sales and sales costs per sq ft for the whole organisation, it is then possible to examine different components of the business in terms of their relative contribution to overall performance.

For instance, a store by store comparison of sales/sq ft/annum will indicate which outlets are merely ‘showing off’, while others do the real work…

Seriously, it is obviously important to have show-room outlets in key parts of the country as  physical anchors for the online business, but if these outlets generate lower than average sales/sq ft, they become a drain on the business, besides starving other outlets of necessary upkeep and maintenance.

Think about it, the greater the difference between a flagship outlet and a ‘worker-store’ the more confusing for the shopper, besides raising the problem of which version to feature in the advertising, with a local real-life store visit possibly contradicting shopper expectations generated via national media…

Moving from store by store to in-store department by department comparison, adds more insight, making category comparisons a no-brainer in terms of determining a balance of resource and investment.

In fact, using this approach of developing a basis for measuring the sales/sq ft of the entire organisation, and then tracking the contribution beyond category to every SKU, on & offline to that overall performance becomes possible, even essential…

Having done so, tracking supplier Trade investment by sq ft performance allows a retailer to rank individual brands/categories and suppliers, whilst Gross Margin by the same measure shows relative contribution by SKU, eventually justifying the calculation of net profit/sq ft.

In fact, with GMROII barely out of the closet following 15 years of ‘digestation’, it is perhaps time to explore the possibility of the next phase of the process, Net Margin Return On Inventory Investment, providing even deeper insight into the retail value of brands.

Finally, if suppliers se major customers moving towards everyday use of these measures, it follows that incorporating a similar approach to assessing brand contribution per sq ft/annum, has to provide a joint-basis for possible synergies…

All else is detail… 

Muhammad Ali R.I.P. - A Personal Memory

Saturday morning's sad news of the death of Muhammad Ali, calls to mind my personal encounter with this great man, on his first product-endorsement tour of the UK.

Back in 1971, Ali agreed to work for a week promoting Ovaltine (his first product endorsement) via an extended train trip around the UK, stopping at every station that was near a supermarket, inviting the local managers on board to meet the champ and disembark at the next station, inspired for life, in many cases.

We even managed to secure an interview on the new Michael Parkinson TV chat show, an episode that has been repeated many times since.

To our surprise, we found Ali to be a modest, even shy man, with immense presence, whose can-do attitude proved to be an inspiration personally and to other members of the team.

As fans will know, an exhibition dedicated to the great man opened in March 2016 at the O2, and because of illness, Muhammed Ali was not able to attend the opening session, but he sent a mock-epilogue to commemorate the event, which can now serve as a memorial I believe he would have wanted:

'I would like to be remembered as a man who won the heavyweight title three times.

Who was humorous and who treated everyone right.

As a man who never looked down on those who looked up to him.

And who helped as many people as he could.

As a man who stood up for his beliefs no matter what.

As a man who tried to unite all humankind through faith and love.

And if all that's too much then I guess I'd settle for being remembered only as a great boxer who became a leader and a champion of his people.

And I wouldn't even mind if folks forgot how pretty I was.

Be cool and look out for the ladies!'

Muhammad Ali R.I.P. - Saturday 4th June 2016