Retail Political Power…a Force for Change?

As we are currently undergoing great political change worldwide, including a significant step forward in the development of the EU following the ‘yes’ result in the Irish Lisbon Referendum, a return to Mr Blair's care and attention, and radical repercussions as economies everywhere attempt to pull out of the global financial crisis, it is perhaps useful to explore the growing political influence of major retailers on the provision of consumer choice in their markets.

Given their sensitivity and ability to respond rapidly and cost-effectively to consumer-shopper needs, based upon their intimate knowledge of their target audience in terms of name, address, income, shopping behaviour, hobbies, family circumstances, financial exposure, and state-of-health it is obvious that they are accumulating a powerful marketing tool. Moreover, Tesco’s Clubcard penetration of over 50% of UK households, measuring 45 pieces of data on each product, and with an additional 12m members in Ireland, Poland, Slovakia, Thailand, China, Malaysia and South Korea means that the retailers are moving way beyond the collection of basic numbers to deep insight on consumer behaviour as a basis for focused need-satisfaction. This constant attention to the meeting of consumer need, coupled with a determination to encourage repeat purchase as a test of need-satisfaction can build a degree of consumer loyalty that can only be envied by those hanging onto political power.

Anyone doubting the potential power of retailers should bear in mind their ability to exercise real political power in two ways, direct influence on the consumer-shopper-voter in-store, and via direct impact upon the economy.

In the current economic climate, major retailers can use price, the ultimate persuader, to modify the entire value-set of individuals, whilst they can directly affect the economy via their leverage in terms of influencing/controlling inflation, the balance of payments, direct employment of significant numbers of wage-earners, and especially their ability to control access to in-store traffic-flow. Their impact on shopper behaviour can be seen in the way shoppers have traded down in their purchase of top-end toiletries, and embraced quality private label as household budgets have come under increasing pressure.

Specifically, doubters should reflect upon retailers’ track record in unilaterally dismantling restrictive and out-of-date legislation in the EU and UK relating to limited shopping hours, Sunday trading, Resale-Price-Maintenance, and the Net-Book-Agreement, in recent years.

On balance it could therefore be said that major retailers have more political power than the politicians…

'Kind of Blue' on the UK High Street - Fulham Rd, Kings Rd & Henley

Money Machines That Happen To Sell Groceries, (and Financial Services)…

Given the succession of own-goals scored by traditional bankers over the years, it is surprising that the grocery multiples have taken so long to enter the financial services arena.
These ‘unsophisticated money-shopkeepers’ will make a major impact on the sector by simplifying finance for the layman-shopper, removing the mystique and over time they will educate their public in the appreciation of financial value-for-money, in a refreshingly transparent environment.

The grocery multiples have the capability of becoming money-shops where speed-of-transaction drives efficiency and cost reduction, reflected in competition-based lower prices. Apart from reaping the benefits of anti-banking media coverage, the multiples’ efficiencies and their ability to negotiate good wholesale terms will ensure that they can always compete on price with traditional banks.
This will be in marked contrast with traditional banking, with their opaque business offerings, where ‘slowness’ is regarded as a virtue, deadlines are measured in weeks rather than minutes, where secrecy prevails over openness and transparency, all at the customer’s expense, in a cosy club of like-minded practitioners, all intent on maintaining parity in the provision of financial services.

Thankfully, this year’s virtual collapse of the banking system coupled with unprecedented economic turmoil has violently de-stabilised the status quo, creating in the process one of the largest windows of opportunity ever made available to good money-shopkeepers…

Apart from the distraction of competing in an exciting new category with little real opposition, the multiples’ development of the financial services category will bring with it a fundamental change in their corporate culture. The renewed focus upon money and financial performance will not only help in presenting a competitive offer on shelf, but it will also cause the retailer to reassess all aspects of the supplier-retailer relationship in financial terms, to an unprecedented degree of detail. In practice, all members of the decision-making-unit will become more financially aware, measuring input-output in financial terms, constantly.

In other words, suppliers will need to become adept at demonstrating the financial impact of the brands on the customer's profitability…

More of this in September edition of Namnews

Cash-Cows, a whole new meaning?

Running the numbers on investment in cattle, indicates that yields of 4-5% can be expected on a £1000 investment per animal, based on the sale of the herd's calves.

The cows are rented out for milk production, helping dairy farmers to cut their initial outlays and freeing up cash for buildings or high-tech machinery, a practice going back to Richard the Lionheart….

Be warned that the only anti-environmental issue is with their excessive production of Methane, but then no gain without pain…

Have an upwind weekend from the Namnews Team!

Legal Services Range Extension....

Grocers' range extension to include legal services..

This is not about a race between Tesco and the Co-op for legal customers, but more about the multiples constant search for categories that can give them an edge over traditional providers.
In other words, all grocers eventually need to provide anything that can be legally sold to existing and new shoppers, or suffer share-loss.

Vested interests will present many arguments as to why including legal requirements in a weekly shop is 'inappropriate' (legal language!)
However, this misses the essential point that in the absence of alternative suppliers, the public having had to settle for the only level-of-service available, are now in the market for a provider that is focused on shopper-need, is passionate about efficiency, thinks and acts in seconds rather than 'working weeks', reflects the result in demonstrable value-for-money, and aims for up to 25% shares of categories.

Traditional lawyers should instead try to adapt (not copy) grocery business process and KPIs to the provision of legal services.
They might also keep in mind the fact that having cherry-picked the key parts of the legal range, Tesco, JS, Asda, Morrisons and the Coop will probably want to outsource the more complicated legal services to appropriate trade partners…

In which case, lawyers should perhaps seek advice from key FMCG suppliers on how to optimise trade partnerships with some of the best negotiators in the world…perhaps even bartering advice on the Law of Supplier-Retailer Contract, the next 'Big Thing'….

"Putpockets" give Londoners a Little Extra Cash

Aware that people are suffering in the economic crisis, 20 former pickpockets have turned over a new leaf and are now trawling London's tourist sites slipping money back into unsuspecting pockets
Anything from £5 to £20 is being surreptitiously deposited in unguarded pockets or open handbags in Trafalgar Square, Covent Garden and other busy spots.
Following a trial run in London ending this weekend, a national roll-out of the £100,000 giveaway will start next week …..Presumably, some of the budget is being set aside to rescue those 'not-quite-reformed' donors who get caught 'un-picking' the wrong pocket!

Hopefully, this injection of funds will not only stimulate shopping activity over the weekend, but will also compensate somewhat for the money being picked from the other pocket by those real experts, the bankers and the tax-man…

Have a long, wallet-held weekend, from the Namnews Team!

LEGO stop-motion 8-bit music video (1500 man-hours in prep, 870,000 visits)

A level of brand-engagement some of us can only dream about…