Political Retailing in Times of Unprecedented Change?

As we continue to undergo fundamental political change worldwide, the impact of politics upon retailers and retailers influence upon political change is becoming a more important factor in supplier-retailer relationships. Moreover, the political climate is changing in ways that complicate the supplier-consumer relationship. These changes include the significant step forward in the development of the EU following the ‘yes’ result in the Irish vote on the Lisbon Referendum, continuing fall-out from the UK MPs’ Expenses scandal, a complete loss of confidence in the banking system that is seemingly obvious to all but the banks themselves. Incidentally, this resulting loss of consumer loyalty will become more obvious as Tesco banking begins to gather momentum at the expense of traditional banking, everywhere….

Given the resulting challenges to consumers’ ability and willingness to spend as economies everywhere attempt to pull out of the global financial crisis, it is perhaps useful to explore the growing political influence of retailers on the provision of consumer choice in their markets.

The focus upon consumer-shopper need-satisfaction
Given their sensitivity to consumer need and their ability to respond rapidly and cost-effectively to consumer-shopper behaviour, using insights derived from 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 the retailers are evolving a powerful marketing tool.

For instance, 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 in their use of deepening insight into 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 proof of need-satisfaction, can build a degree of consumer loyalty that can only be envied by those in political power.

If politics is meant to be about bringing about willing change in citizens’ behaviour, it could be said that retailers have more political power than the politicians…

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

In the current economic climate, they 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, and even 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. For instance, their impact on shopper behaviour can be seen in the way they have responded to shoppers trading down in their purchases of top-end toiletries, and embracing quality private label as household budgets have come under increasing pressure, all without negatively impacting retailer profitability.

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, the Net-Book-Agreement and the provision of banking services, in recent years.

Even if it takes a few ‘failed’ legal cases and prosecutions to make the point that a particular law has passed its ‘sell-by’ date - so be it; especially when the publicity resulting from a £1,000 fine not only reinforces their image as the peoples’ champion, but would probably cost more than £250,000 via prime-time TV in the real world.

Real political contact
Meanwhile, whilst politicians attempt to sway the public every five years via direct dialogue in the run-up to elections, a retailer manages to persuade most of the population to come to a store and pay hard-earned cash for ideas, sometimes several times a day, in unprecedented economic conditions.

Whilst they may have slightly different perspectives in that retailers see store traffic in terms of consumers and shoppers, and politicians see voters carrying shopping baskets…the potential for influencing change via shopping behaviour soon becomes obvious to both sides. And bearing in mind that all voters are shoppers, whereas not all shoppers are voters, ‘captive’ store-traffic can represent a fruitful target and potential source of votes for a political party…

So what if retailers are effectively running the country? Perhaps suppliers should be more concerned about the possibility of the politicians upping the ante on trade funding by competing for access to the consumer-voter in the aisle….

KAM-trading too emotionally? Dutch device may help

If emotions are getting the better of you while dealing with the buyer, The Rationalizer may be just the thing to tell you when it's time to take a break. The prototype unveiled by Netherlands-based Philips Electronics and ABN AMRO aims at sensing traders' stress levels so they can, given the buyer's consent, "time-out, wind down and re-consider their actions."

If your face and bodylanguage are a bit sluggish in transmitting the message, or the buyer is a little less than sensitive to your inner turmoil, then wearing a device called the EmoBracelet that senses stress and makes an accompanying lighted bowl, or EmoBowl, change colour and flicker from yellow to red as emotions become more intense, may help. If not, why not let rip once and for all…….

Researchers at Philips, Europe's biggest consumer electronics maker, say online traders often do not act purely rationally. "Their behaviour is influenced by emotions, most notably fear and greed, which can compromise their ability to take an objective, factual stance," they said.

Although not in production, Geert Christiaansen, chief of business development at Philips Design, says the prototype is part of a broader effort by Philips to help people cope with stress and the technology could be used in an array of other products.

Have a really emotive weekend from the Namnews Team!

IGD Convention - The hardest hitting IGD event in my experience

Yesterday, celebrating their 100 year anniversary, the IGD Convention fielded a hard-hitting line-up of industry speakers, encouraging a 750-delegate audience to face up to the realities of the global economic crisis, and emphasised the need for Leadership in Adversity.

Joanne Denny-Finch set the tone of the day by punching home some key economic facts as a basis for 'realistic optimism', echoed and built upon by other speakers adding to the impact, as evidenced by the extensive mainstream and business media coverage this morning.

Some key points below, but nothing beats hearing it first hand, on the day.

Joanne started with the following:

• Institute of Fiscal Studies … the time it will take to bring public debt back down to the level before the Credit Crunch … is 20 years.
• They estimate by 2018 reducing this debt will cost the average household almost £3,000 a year.
• The public sector pension deficit … around £19,000 per UK citizen.
• Moody’s credit rating agency … has said the banks have written off less than half of their bad debts.
• Government Chief Scientist... Over twenty years, world food demand will rise by 50%, energy by 45% and water by 30%.

Full speech on IGD site

Paul Polman outlined Unilever's recession-beating strategy:

• Closer to Consumer
• More investment in R&D
• Sharpen the Value Equation
• Cover all price points
• Work with all partners to optimise cost
• Doing what is right long-term

Terry Leahy summarised lessons from previous recessions that are guiding Tesco through the current crisis:

• Follow the customer
• Change demands innovation (innovation never an excuse for complexity)
• Don't lose sight of the long term trends
• Making process better and cheaper = simpler

Andy Clarke made a passionate and moving plea for equal opportunities in youth employment on behalf of Asda.

If the IGD's second 100 years continues in this vein, we have an interesting future ahead….

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....