Is Amazon the answer?

Tesco continues to outpace rivals (Kantar)

However, behind the headlines:

Where at: Great to see Tesco on the way back, but digging beneath the surface, growth is in premium private label, echoing similar trends in other mults. Add the rapid growth of Aldi and Lidl, at the expense of brands, and a more worrying trend becomes more obvious…

Where headed: In other words, unless branded suppliers find ways into private label and into the discounters via ‘safe’ SKUs

Effect on you: Brands are under threat, or at the very least, the brand premium is being reduced

Action: Time for branded suppliers to decide whether keeping the factory going, or maintaining diminishing brand equity is more important

£2 = 1/2p, a Boots inflation-signal for 2017?

The new reality of print media at street level

                                                                                                                                  pic: Nei Valente
In 1950 there were more than 1,500 newsstands across New York City.

Today's numbers are closer to 300 units, with newspapers and magazines playing a secondary role to snacks…

See 30 pics here

Amazon Zaps the Checkout

In another first, Amazon Go have developed a new, more convenient way of shopping.

Users with the Amazon Go app on their phones simply check into a store equipped for the system, put their phones away, shop to their hearts' content, then leave when they're finished. No waiting to pay.

As each item is picked up and held (or stored in a bag) by the shopper, the price is automatically added to the shopper's Amazon account and is deducted from the user's bank account when he or she leaves the store. The store gets the same info plus a copy of the item's SKU number for inventory management and accounting purposes.

Whilst this will cut cost and no doubt increase their sales, the real impact of this lateral leap by Amazon Go will be felt at supermarket checkouts…

In other words, whilst traditional stores have laboured for years at speeding up the process, encouraging self-scanning, and in effect making the same hole deeper as in traditional thinking, Amazon have eliminated the process in a move that will of necessity be copied by the multiples, or for speed, will be leased from Amazon…

Iceland Foods hits back at Icelandic government over trademark

This latest position in the Icelandic saga raises some issues for NAMs:

Where at: A distracting stalemate, with giving-in i.e. surrendering the trade-mark rights, or fighting the case, as the only apparent options for Iceland retail?

Where headed: The retailer is unlikely to give in. This leaves the Iceland government to initiate and incur legal costs, for as long as it takes…

Effect on you: Some resulting lack of focus within the retailer, making shorter term strategies the best option for suppliers

Action: From your experience of your category in Iceland, weigh up level of risk and tailor your initiatives accordingly…

A KamBlog insight from NamNews

Tesco toying with Argos Prices?

Shrinking Grazing-shrinkage, promoting healthy snacking, a 2-for-1 no-brainer for Tesco?

Walmart needs to cut Asda loose

An interesting article published earlier this year by Bloomberg sets out why Asda should be sold off:

Aldi & Lidl have eliminated Asda’s low price advantage, resulting in falling like-for-likes, with Asda’s sales growth trailing the other mults… (graphs in the original article really spell it out).

NamNews readers will be aware that Asda has been underperforming and thus diluting Walmart’s performance in terms of ROCE and Net Margin since its acquisition in 1999.

Normally, Walmart would have solved these problems by a combination of organic growth and acquisition of say Sainsbury’s or Morrisons, but UK planning legislation limits the building of new stores and competition legislation prevents acquisition of sizable competition.

This leaves sell-off as the only option for their UK operation.

Bloomberg estimates that Asda would be worth £8bn based on current market valuations of the other mults (i.e. @ 40% of sales).

The UK, in current competitive circumstances (Discounters, large space redundancy, seismic-shifts, ‘Brexit’ currency impact…, you name it!) would be unattractive for global players, given the probable purchase price and the need to justify the move to their respective stock markets.

This leaves private equity.

In which case, we enter a whole new ball-park, where the emphasis would shift to optimising the asset-base (stores) and financial performance (ROCE), in a 5 year time-frame leading to flotation….

This would provide a new basis for NAMs in their dealings with Asda:

• Emphasis on quantifying cost & value in all aspects of the supplier-Asda trading relationship (Margin, Credit, rotation, trade investment, NAM-advice, and deductions)
• Relating trade investment directly to Asda P&L

…and all within a 5 year window….

Trump - moving from business negotiation to political negotiation...

Trump's Art of the Deal describes his 11-step approach, which is worth comparing with an article on political negotiation in the Harvard Business Review.

One question is how negotiating in business differs from negotiating through back channels, with defiant coalition partners, in war zones, and in the shadow of severe mistrust and hostility. 
(Those NAMs that see little difference compared with their day-job might care to drop me a line on bmoore@namnews.com) 

As the President-elect attempts to apply what he knows best in terms of negotiating skills, NAMs can gain more insight into their own negotiation process as Trump’s moves – and their consequences – over the coming four (or even eight?) years, are played out in global media…

Open-minded NAMs may even pick up some political negotiating tips that can be applied in the day-job…

Trump's 11-step approach

1. Think big
2. Protect the downside and the upside will take care of itself
3. Maximize your options
4. Know your market
5. Use your leverage
6. Enhance your location
7. Get the word out
8. Fight back
9. Deliver the goods
10. Contain the costs
11. Have fun

Political negotiation (more):

• Preconditions and ultimatums are usually bad ideas
• You don’t need an amazing deal - you need an implementable deal
• They lose does not equal you win
• You have to help them save face
• You have to have the courage to tell supporters what they don’t want to hear

Over to you and yours...

Meanwhile longer term, the real issue (apart from picking up valuable insights) for NAMs has to be: Will Trump will change politics, or will politics change the President?

Medieval brainstorming: auto self-portraiture

“Good idea, but how about making it smaller, and adding some extras?

-  Abbreviated auto-scribing
-  Instant letter-transmission
-  Conversing between absent friends
-  A more precise hour-glass
-  Settlement of accounts with merchants”

Great ideas are always a little ahead of their time...

Irish cross-border shopping-traffic increase..

According to the BBC, the same well-known brand of whiskey is 27 euros on shelves in the Republic of Ireland - but in Northern Ireland it is £15 - the equivalent of 16 euros, a reduction of 40.7%...

Think about the potential distortion of trade caused by uncoordinated price-hikes in the ROI:

Where at: The real issue here is the distortion to trade caused by cross-border (ROI/NI) reaction to shelf-price differentials North and South of the border, with individual shoppers but the tip of the iceberg… i.e. think third-party bulk purchases transported across a 310 mile long – i.e. unmanageable – border with the Irish Republic. There is already a 15% currency-based price differential arising from recent falls in sterling…

Where headed: Any disproportionate supplier price increases for NI and ROI will simply add to the appeal of a shopping journey North…

Effect on you: UK brand suppliers will suffer loss in brand equity in Ireland if savvy consumers perceive there to be differences that are not transparent and defensible. Paradoxically, ROI consumption of UK brands may also increase via NI, while sales are dropping in the South…

Action: UK suppliers need to think through where their brands are currently (in ROI), where they want them to be, and plan for price increases that maintain the status quo in UK and Ireland, if possible…

Still want to push through that price increase in the South, regardless?

Aldi & Lidl as problem solvers?

Unlike the redundant-space, 80/20 issues of the mults, Aldi & Lidl see online as a way of reducing car-park congestion and queueing instore.

In an interesting twist on accepted wisdom that discounters are simply trying to imitate the mults, Simon Johnstone of Kantar Retail gives details how discounters innovate to solve the problem of 'custom-bunching' resulting from Aldi's Special Buys on Thursdays and Sundays.

Developing online focused on lifestyle helped Aldi spread the traffic...

A number of other examples are given in the article, all examples of discounter-specific creativity.

Given that much discounter growth is at the expense of brands, branded NAMs that can find ways of working proactively with Aldi & Lidl have to gain an advantage over the competition.

In other words, the combination of NAM creativity and discounters' apparent willingness to innovate in terms of - their - problem solution suggests ways forward for NAMs that are prepared to put the fire-fighting on hold and trigger a brainstorming session with Aldi or Lidl...

When even £1 is too much in a pound-shop...

An article in today’s Daily Mail gives 15 examples where well-known brands priced at £1 in a pound-shop retail at approximately 85p elsewhere (worth a look to see if you are included).

Obviously we may all be moving to a position where shelf prices are the responsibility of the retailer, and any damage to brand credibility will be at the expense of the name above the shop-door…

However, even the savvy consumer may not be expert in such subtleties of pricing/branding dynamics and will simply feel conned by the brand-owner, thereby triggering the tell-10-friends reflex…

Better perhaps to reduce the retail margin on the £1 SKU in regular – i.e. non pound-shop distribution – to a level that discourages reductions in price below a pound.

Risking a de-listing?
Question is whether you really want/need mainstream listings of your £1 SKUs?

UK Budget 2016 – how it works in household English

'Back in 10 minutes', a study in communication....

Following my walk to a local convenience store for the Sunday papers, I was confronted by a locked door and a notice: 'Back in ten minutes'

This phrase followed all the guidelines of clear simple communication, bar the key element that mattered...  As a result, I was left pondering whether we were at the end, middle or start of the 10-minute waiting period'. Given all the freedom of a deadline-free Sabbath, I was able to further ponder if time could be taken literally in such cases.

In other words, in our working lives we are often confronted by millisecond put-offs such as 'With you in a second' from a shop assistant busy finishing a text... Or even closer to home, 'Dave, got a minute to OK our response to the Marmite price-hike?'

Anyway, by that time, Ahmed the shop owner arrived, reopened the door and following a brief discussion re the problem of simple communication being the most difficult, handed me my change with an invitation to 'Get a life, Brian' and returned to his Sabbath-free deadlines.....

Post-Marmite Negotiation 2016?

In an Amazonian world, Just-in-time is no longer adequate...

Walmart chase Amazon, catch up not guaranteed...

News that Walmart are accelerating their roll-out of warehouses, robotising logistics, randomising warehouse shelf- placement, speeding up delivery and devouring a host of e-startups all points to the fact that they have simply applied to enter a race with the advantaged innovator...

However, satisfied users of Amazon's service already take for granted infinite choice, 1-click ordering, 100% availability, 1-day (Prime-free delivery) and no-quibble returns.....

In other words, Amazon's entry requirements need to be met before Walmart can start running...

However, they will add interest to the race, and provide suppliers with a little more choice in what was beginning to seem like a 1-horse contest.

Suppliers that want to optimise online, also need to start with these Amazonian entry-standards, or move back to the sidelines...

How has Asda responded to Morrisons’ ‘Price Crunch’ campaign?

Asda's round of price cuts of the 9th September suggests the following implications:

Where at: From a supplier’s point of view, the issue centres on the 609 products (73% on branded items) that Asda reduced in terms of shelf-prices on 8th September, by up to 34%

Where headed: Key will be the extent to which other retailers price-cut on these SKUs, if seen to drive incremental traffic into Asda

Effect on you: Suppliers of these SKUs will be impacted by consumer perception of ongoing perceived value, whilst suppliers of competitive SKUs will need to consider their options…

Action: Either way, worth digging into the Brandview analysis and exploring its potential impact on your mults business

A Retailing No-brainer: Give the people what they want...

Waitrose Hove, Sunday 02-10-2016, 1130

Weight-loss and Shrink-reduction, a two-way gain for all?

Deliveroo lunchbox direct to your desk - a hundred years later!

Deliveroo have launched a new service to provide ready-to-eat restaurant food for office workers. Whilst this may spur Amazon to develop an equivalent revenue stream, both would limp way behind India’s 100-Year-Old Lunch Delivery Service.

For instance, every day in Mumbai, some 5,000 deliverymen - called dabba wallahs - hand deliver 200,000 hot meals to doorsteps across the city. It's an intricate network that requires precise timing and numerous hand-offs from courier to courier, there and back.

Apart from split second timing and 100% reliability, and to make sure each lunch pail ends up at the right place, each container has a hieroglyphic-like coding system painted on the lid.

More details here, and some will have seen ‘The Lunchbox’ a popular movie that immortalised the process.

Back in the UK, it remains to be seen how speed of uptake and the emergence of competition (plus a 'higher-tech' coding system that is more than a pale imitation of the Indian method) leads to the development and optimisation of yet another 1:1 route to consumer in food service, at the expense of traditional ‘on & off’ consumption. 

Supermarket Price War Hits Sales At Sainsbury’s Whilst Argos Sees Robust Growth

Sainsbury’s has reported another fall in quarterly sales after it was forced to cut prices to remain competitive.

During the 16 weeks to 24 September, the chain’s like-for-like retail sales were down 1.1%, worsening from a 0.8% fall in its first quarter. However, Chief Executive Mike Coupe blamed the weak sales performance on food price deflation and said it had delivered like-for-like transaction growth across all channels and total volume growth.

The group added that it had now removed the vast majority of multi-buy promotions in favour of lower, regular prices which was helping it generate its highest-ever customer satisfaction scores. During this quarter, Sainsbury’s highlighted that it had made significant cuts in the price of broccoli, onions, Margherita pizza and its own-brand nappies.

Sainsbury’s convenience business and general merchandise offer continued to outperform its supermarkets with growth of 7% and 4% respectively. Its online grocery service also delivered 8% sales growth and nearly 12% growth in customer orders.

Meanwhile, the group’s newly-acquired Argos business posted robust growth for its second quarter to 27 August. Total sales grew 3% whilst like-for-like sales were up 2.3%.

Coupe commented: “Our ambition is to help customers live well for less. We have made further investment in everyday low prices and continue to improve the quality of our products. Our general merchandise and clothing offer is popular with customers and the acquisition of Home Retail Group will accelerate our multi-product, multi-channel strategy.”

He added: “We expect the market to remain competitive and the effect of the devaluation of sterling remains unclear. However, Sainsbury’s is well positioned to navigate the changing marketplace and we are confident that our strategy will enable us to continue to outperform our major peers.”

Commenting on the results, John Ibbotson, director of retail consultancy Retail Vision, said after outperforming its peers in recent years, Sainsbury’s has come down to earth with a bump. “The speed with which the tables have turned says much about the intensity of the competition in the market. A year ago Sainsbury’s was congratulating itself for retaining its middle-class clientbase while the German discounters decimated their rivals at Tesco and Morrisons,” he said.

“Now Tesco and Morrisons have staunched their losses and are fighting back with aggressive price cuts and some fundamental reforms to their structure. By contrast Sainsbury’s abolition of multi-buy promotions, and its introduction of simpler pricing, look distinctly underwhelming in the current brutal market conditions.”

However, he added that Argos should help boost Sainsbury’s bottom line in the short-term as well as improve its internet offer and logistics capability, adding: “But integrating the two firms will be time-consuming and distracting, and in the current environment Sainsbury’s cannot afford to take its eye of its core grocery business, even for a second.”

NAM Implications:

• Where at: Sainsbury’s obviously on the way back, with the added complication of combining two business models – Sainsbury’s Food and Argos Non-food – and also B&M and online, with the City judging the company by total group performance, especially financials, in a market still influenced by discounter growth and convenience
• Where headed: All of this in a run–up to an unprecedented Christmas price-war
• Effect on you: Financial performance will colour Sainsbury’s relationships in terms of the lens through which they see supplier partnerships i.e. they will be particularly sensitive to financial impact on their performance in all business models
• Action: From latest annual returns try to identify where your categories fit, then work out cost and value to Sainsbury’s of each element of your offering, and re-engineer where necessary

DIY Cashback From a Hole-in-the-wall?

Arrests made after JCB used to steal cash-machine from the Co-op
More

What if Amazon Entered the UK Wholesale Sector?

Following an insightful day at last week's IGD Wholesaling Summit, I dared to temporarily step into Mr. Bezos’ shoes and wondered to what extent the UK Wholesaling sector might represent a potential revenue stream for Amazon.

Given the ongoing retail structural changes taking place in unprecedented times, where every route to consumer counts, suppliers are now even more reliant on wholesalers to service medium and smaller independent grocers in the UK.

The cost of personal callage at say £50k annual cost of a ‘salesman’ making 20 calls per day, 200 days per annum @5% Net Profit margin, means that a 100% strike rate at £250 ordered per call to break even, means that direct supplier coverage via a field sales force is only viable at the upper end of the retail trade.

Meanwhile, independent retailers need retailing advice, guidance and support like never before. As small, understaffed and over-worked businesses, living from hand to mouth, literally, they are under many of the pressures being experienced by the multiples in terms of red-tape, legislation, narrowing margins, fluctuating demand, unpredictable cash-flows and cost-price increases in a flat-line demand environment. And, by the way, many have an Aldi or Lidl nearby, a constant temptation for their regulars…

They choose their assortments by a combination of instinct and experience, with mistakes ending up in their freezers for later consumption by their families. As the son of a Mom&Pop grocer, I can still remember coming in from school with my siblings, each complaining about ‘salmon cutlets again for tea’, following a glut in the Dublin fish markets…

It can be seen that wholesalers provide a vital service in accessing those parts of the trade suppliers cannot afford to reach…

In the case of delivered trade, wholesalers have improved speed of response and moved towards 100% availability whilst Cash & Carry are making it easier and faster to shop, all at significant cost to the bottom line in narrow margin businesses that are faced with increasing pipeline pressures such as National Minimum Wage and Sugar Tax…

From Amazon’s point-of-view, small independent grocers could simply look like big consumers. 

In practice, an added benefit would be that independent retailers are capable of aggregating the demand of consumers that are too currently too small even for Amazon…

Amazon has all the necessary machinery - infinitely scalable - already in place.

Meanwhile, in the current climate, a small retailer would benefit from being able to buy even one pack of a single SKU i.e. no minimum order, access an infinite range, avail of auto-analysis of purchasing behaviour via the Amazon machinery, all with the ease of 1-Click ordering, 1-Day delivery and no-quibble returns. In effect, a fully comprehensive delivered wholesale service, with Click & Collect serving as an equivalent to a Cash & Carry service…

And merely a step away from allowing Amazon to place some consumer Click & Collect lockers in the store as further evidence of the Amazon-retailer trade partnership…

In terms of promotional help, Amazon could make a case to suppliers that promo-kits containing materials and guidance could be packaged as ‘products’ and offered to appropriate retailers via the Amazon portfolio, with YouTube demos complementing and enriching the supplier-retailer virtual relationship. Amazon would thus have a means of offering suppliers a cost effective means of supporting smaller independent retailers, and all without a salesman having to cross the threshold…

In the process, a convenience store, given access to infinite variety, fast, could easily morph into a general store capable of meeting micro-demands from local consumers, cost-effectively, the ultimate convenience outlet.

In terms of timing and sequence, Amazon could offer this service on the back of Prime Fresh in the London area almost immediately. Thinking about it, many of the retailers/sole-proprietors are probably Amazon subscribers anyway, paying cash, so little or no vetting would be required. Most branded goods suppliers will already have existing links with Amazon, so little change would be required by either party.

In greater London Amazon would be faced with their most intense competition from wholesalers, so any success resulting from adapting their business model in this market could be rolled out to other parts of the UK, as fast as Amazon chooses to move…

In other words, a very real threat to wholesalers that are unable or unwilling to recognise the need to anticipate and react to competition from a company whose mission statement includes selling anything that can be legally sold to anyone, anywhere, anytime in whatever way they choose to buy…

All else is detail...

P.S. If you would like a copy of our companion paper: How UK Grocery Wholesalers could pre-empt Amazon… Please email me on bmoore@namnews.com

Sainsbury’s Ramps Up Online Operations With Opening Of First Purpose-Built Fulfilment Centre

Upping the online ante gives Sainsbury's an edge in London

• Where at: Given that Amazon have made time and 100% availability the key online differentiators, Sainsbury’s are in a position to comply 100%, in what is the most concentrated online market in the UK
• Where headed: Fulfilment (speed & availability) in the London area will become a key online driver
• How it affects you: This zero-defect criterion will challenge any systems that are less than perfect
• Action: Set this standard for your business in the London area, and apply as much as possible elsewhere

Promotions Failing To Ignite Sales For Retailers - IRI

Given that IRI's research re effectiveness of promotions shows that reality does not match expectation when it comes to sales, this study of over 85,000 promotions in UK supermarkets, convenience stores and health and beauty outlets raises the following issues for NAMs:

• Where at: Essentially, vital to examine your specific categories/brand performance, but it looks like any gain for retailers is via trade investment rather than margin on incremental sales
• Where headed: Eventually, more enlightened retailers will realise that specific brands appear to be growing at expense of competitors, thus in breach of basic principles of category optimisation, rather than incrementally growing the category. Short term retailers will simply grab the money
• How it affects you: Not good for building brand equity
• Action: Best to revert to fundamentals, assessing each part of the marketing mix and emphase any real advantage vs. alternatives available

Promotional Cut-backs - a reduction in Superstore appeal?

Arcadia to give online shoppers three months to pay

According to the Retail Gazette, Arcadia will offer online shoppers three months interest-free credit on online purchases.

Topshop, Dorothy Perkins, Miss Selfridge and Burton will now offer a “Buy Now, Pay Later” scheme.

Given the stresses on consumer budgets, this move will undoubtedly give the retailer access to incremental business.

The question has to be how long Arcadia will retain a competitive edge if other retailers follow suit.
Even more concerning will be the extent to which issues of loan non-performance, and retrieval of payment-default goods will lead to a degree of negative media coverage that is beyond even the levels currently enjoyed by the company…

Optimising social media?

Inflation, the next planning factor?

Given the post-Brexit fall in the pound, it follows that imported ingredients will cost more…
Add the recent BOE reduction in interest rates (0.5% to 0.25%!!), means the pound is even less attractive vs. other currencies.

Stir in the fact that UK food manufacturing costs are rising by around 10%, and you have a recipe for increased inflation, causing prices to rise in line with demand…

Except for UK retail

Already on reduced margins, major multiples cannot afford to absorb any cost increases.  Equally suppliers, having stripped out any ‘excess' costs, are unable to take any more pain... Meanwhile, the price war/s make it unlikely that shelf prices will bear any significant upward movement without loss of share.

All of this means increasing pressure on the mults, loss of market share and the growing importance of alternative routes to consumer.

For suppliers it means re-balancing their customer portfolios to reflect the new realities, secure in the knowledge that at least some of the competition will await a return to normal before being forced to change…

Amazon and the need to second-guess

From our first tentative online steps, many of us have grown comfortable in our reliance on Amazon as a simple, transparent source of anything that can be legally sold to consumers, secure in the ease of 1-click ordering, confident that the door-bell ring signals the timed arrival of exactly what was ordered, with the option of returning an impulse whim almost as easily as making a purchase, and yet again seeking 10 friends to re-bore with our enthusiasm...

Whilst the price may not have always been as low as other sources, the extra convenience more than made up for the difference...

In a similar way, Unilever's recent purchase of Dollar Shave Club awakened many of us to the possibility of buying essentials on a regular basis, in order to maintain minimum domestic stock-cover, causing some of us to ponder 'if only Amazon offered a similar service' it would not only fill a personal gap, but it would most likely blow other subscription-models out of the water...

Well, Amazon's Subscribe and Save offering could fulfil that wish...but not according to an article in the New York Times.

Essentially, building on their dynamic pricing model whereby the price you pay depends on time of ordering, supply and other variables, the resulting price fluctuations - in some cases up to 170% differences, according to NYT article - Amazon are uncharacteristically going against general consumer perception that subscription means 'same price until next year'.

Whilst Amazon give the option of cancelling/modifying the repeat order, thus meeting the letter of the 'contract' with its loyal users, the very essence of Amazon-consumer relationship is based on never having to think about the 'machinery', much less second-guess our basic assumption re the contents of the tin...

Subscribe and Save, in its present form, thus provides an opportunity for a competitor to do it better...

Tesco Same day Click & Collect makes Time the only variable?

A little over-eager response to Tesco's new same-day Click & Collect service?

Following tests that began in November 2015, Tesco’s Same-Day Click & Collect service is available in 261 Tesco stores and 36 off-site locations. Online orders before 1pm can be collected by 4pm for £2 Monday to Thursday, and £3 on Fridays and Saturdays, for orders of £40.

With other mults at various stages of similar test-mode, this is all pointing to the emergence of Time as a key Amazonian differentiator in serving shoppers...

In other words, serious online ordering and fulfilment is about matching Amazon, at least, given that having a competitive edge is supposed to means being ‘better-than’..

...which means:

- 100% availability, 24/7
- 1-Click ordering
- Returns even easier
- Delivery and Click & Collect options
- Zero-defect service
- Competitive charges

...leaving Time as the only variable (Cutting delivery/collect charges on services that already lose money becomes a race to the bottom)

Where is this heading?
As soon as retailers fully integrate online ordering and Click & Collect with their total offering, attempting to neutralise/eliminate price differentiation, then ways of optimising the time variable will be top of the agenda.

This means transferring some of the pressure back up the pipeline…

…resulting in smaller, more frequent, zero-defect deliveries that result in 100% ‘on shelf’ availability, or else…

In a price-war, every droplet helps...

Tesco To Mark Night Tube Launch With 24hr Openings

Tesco has announced that several of its stores across London will remain open for 24hrs, in line with the new Night Tube schedule.  The move, which is effective from today (19 August), offers to making shopping more convenient for late night and early morning travellers.

Tesco said it will trial opening seven additional stores for 24hrs on Friday and Saturdays along the Victoria and Central lines.

To mark the launch, Tesco will set up ‘Hydration Stations’ at the front of stores running from 3am-7am on 19 and 20 August, where its staff will hand out Tesco’s Finest freshly squeezed orange juice and cold bottled water to passersby.

Martin Smith, Tesco’s London Convenience Director, said: “At Tesco we’re always looking for new ways to serve London’s customers whenever it is most convenient to them.  That’s why we’re delighted to announce these new opening hours at select store, helping to make life easier for those either working late or enjoying London’s nightlife.”

NAM Implications:

• Good lifestyle convenience-link, scope for appropriate brand owners to join in?
• A pointer for other mults on the new night lines?

i.e. simply collect data that will help the shopper to make HER choice, period!

RIP ROI: Time-To-Market is the New Indicator of Success

A great article by Jonathan Becher SAP makes a convincing but disturbing case for replacing Return On Investment with Time-To-Market, based on some concrete examples.

Essentially, Jonathan makes the point that traditionally we explored strategic options by changing some key variables and assumed that all other factors remained equal, or ‘as is’, for the purpose of the exercise…

Thinking about it, the only problem with the traditional approach in a digital economy is that things, especially markets, have accelerated in rate-of-change, to such an extent that little ‘remains equal’…

He quotes Ben Thompson, author of Stratechery in that P&G’s 2005 ROI analysis of the opportunity to take over Gillette probably assumed a few fundamentals of the razor industry were immutable: brands would be expensive to build; razor cartridges would command very high margins; in-store real estate was a competitive advantage; and high distribution and R&D costs would be a constant for all players in the industry.

And then Dollar Shave Club came along with a brand built cheaply by clever creative, with blades imported from lower-cost manufacturers, with no R&D costs, and no presence in stores whatsoever. Dollar Shave Club figured out how to undercut Gillette’s pricing model by 50-75%.

In a similar way, many years ago, an early client Clark's Shoes managed to dominate an unpredictable labour-intensive market carrying high raw material costs, by starting with invitations to buyers to view designs for the new season at local hotels, and taking - unchangeable - orders up front, resulting in highly accurate sales forecasts, minimal waste, and a solid basis for negotiating the purchase of the necessary hides of leather...

Meanwhile, we traditionalists were committed to holding back brand launches until 'everything was ready...'

In a digital economy, speed to market is really the only way to stay ahead in terms of optimising a market opportunity...

Even more is it important that traditional thinking and assumptions be re-assessed, ideally before a new entrant does it on your behalf.

If the prospect of such a radical re-think of the basis of your business model represents a step too far, why not try a realistic ‘what-if’ on the possibility of a Dollar-Shave-Club subscription model entering your category, fast?

How GenZ represent a way back for Bricks&Mortar stores

The digital dependency of Generation Z (GenZ) could present a technological ticking ‘time-bomb’ for brands and retailers, according to new research by Vodat International, reported in NetImperative.

Apart from the potential represented by the 38% GenZ who say they will continue to make most of their purchases in-store, other research findings from the report include:

• Top motivations for GenZ consumers to shop in-store – validation (68%), immediacy (43%) and social interaction (42%)
• Top technologies that GenZ say drive them into store now – free WiFi (48%) and self-checkouts (38%)
• Top tech that would encourage them into store in 2021 – fast-track ‘scan and shop’ apps (18%), augmented reality fitting rooms (18%) and virtual queue ticketing systems (17%)

Lots more detail in the article, but in essence, the research shows a way back for Bricks&Mortar stores, providing they build in the right incentives for GenZ.

Not meeting this need, for a generation that will succeed the millennials, means GenZ’s growing digital reliance could drive a gap between shopper expectations and the reality of what the store can deliver over the next five years.

A pity, for the want of a little digital savvy, to allow GenZ to morph into GenZZZZZzzzzzz, as far as traditional stores are concerned…

Walmart Jetting to No.2 Online?

                                                                                                                                            pic Jet.com
Walmart's purchase of Jet.com may impose too big a payload on a 1-year start-up.

At Check-in:

• Walmart are paying $3.3bn for an online fellow-passenger that has generated sales of $1bn in its first year, but no profits, to complement their current $13.6bn digital revenue
• They gain access to a young team of digital talent that has thrived in a small company environment, now transferring to the world's biggest retailer
• They are hoping to access the cheapest way to ship online
• Walmart can offer Jet.com access to their global sourcing and buying power...and cash

At Check-out:

• Walmart's bricks & mortar estate, too big and slowing...
• Jet.com sells in bulk to a young audience - ability to pay?
• Transactional bulk-buying in an era that is increasingly about smaller, faster, closer, more convenient, cheaper shopping? Contrast this with Dollar Shave Club, who have found a way of shipping monthly at $1/basket, on a subscription model...

However, being Walmart, although No.2, they will try harder...

But are No.1 Amazon flying so high, No.2 becomes irrelevant?

Amazon Prime Air - Taking off via its new 40 Boeing fleet

In its continuous search for pipeline cost savings, Amazon have commissioned 11 of what will be a 40 plane fleet that will complement their drones and van network, raising the distribution bar even higher in online fulfillment.

Longer term, NAMs will need to think about how far up the supply-chain  Amazon will reach in their search for economies and faster response-times...

For instance, how about product design and manufacture, absorbing private label on the way? 

...thereby taking us back to their ultimate mission statement incorporated into their logo, 'everything from A to Z', selling anything anyone wants anywhere, whenever and however they choose to buy, within normal legal limitations, of course...

Dark Stores in Practice?

Copyright EMR-NamNews 

Lidl - the real threat?

The discounter as change-maker:

This week, why not visit your nearest Lidl and think about the threat to the major mults? Even better, follow it with a call on a nearby Tesco to heighten the contrast…

See how long it takes for you to appreciate that the hard discounters becoming more like supermarkets is not the issue... Of course they will add to their offering, especially to cater for upmarket clients…

But suppose their real impact is in making the consumer-shopper value a simpler, more limited choice, and in the process convincing us that we cannot perceive – and don’t always need – the ‘extras’ provided by equivalent brands at 30% more…

Causing us to ponder whether we are changing the discounters, or they are changing us?

Now that’s the type of competition the mults – and their branded suppliers - don’t need…

NAM-Tales: Winning and losing in Job interviews

The above* reminds me of a pal in a NAM-job interview who was handed a Biro by the Sales Director saying 'Sell me that'.

The interviewee examined it, snapped it in half and threw it into the waste-basket...

He then said: 'John, a man in your position should not use rubbish like this, what you need is one of these', taking a Mont Blanc pen from his pocket with a flourish...

No, he did not get the job...

Perhaps a lesson therein for both parties?

* HT to Gabi Ajulah

Public Wi-Fi hotspots and NAMs: Busting the many legal myths

Given the NAMs' dual roles of road-warrior and adviser to the retail trade, knowing the legal implications of using public wi-fi spots can help.

Nothing beats taking the time to read the full article by Ars Technica UK, but by way of encouragement, the following key points may whet your appetite:

-  "If there is no stated legitimate purpose for the processing of individual user information, the default position is that it must not be processed."

-  Some hotel Wi-Fi software records the URLs accessed by each guest (Held for legislative purposes, in case there’s a copyright breach or it’s requested by law enforcement or whatever).

-  Collecting and storing personal information brings responsibilities under the Data Protection Act 1998 (DPA), soon to be updated. The more data collected, and the further its purposes diverge from what’s strictly necessary to provide a service, the more responsibilities the collector incurs.

-  A user "cannot be obliged to accept something that isn’t a necessary part of the service, and they especially cannot be expected to accept marketing as part of something else."


Note: The article deals specifically with the legality of public wi-fi in the UK. The rules and laws can vary wildly in other countries around the world.

NB. The article also adds much useful detail - and relevant links - for retailers setting up and managing a public wi-fi spot, a useful addition to a NAM's advisory repertoire.

A New Savings-account for unprecedented times?

A Shelf Half-Full, or Half-Empty....?

pic: Brian Moore