Bloomsday 16th June?

A non-stop account of a 24hr storecheck by an elderly KAM

Ocado delivering too much?

Despite not having made any profits in 10 years of trading, it is understandable that the owners of Ocado want to establish the latent value of their operation via a partial flotation. In other words, if initial investors, including loyal customers, take up the offer as expected, it will value the operation at £1bn.

According to the Evening Standard, Ocado has 1 million customers and sales of £427m. The only problems are lack of profit, possibly unsustainable service levels and the multiples playing online catchup…

Key issue will be customer alienation if service levels are reduced or charges increased to move EBITDA to acceptable levels of net profit and dividend payouts for shopper-shareholders…

Have a deliverable weekend, from the Namnews Team!

Tesco - The Key Changes

With Terry Leahy's surprise announcement of his retirement in March 2011,
Changes at Board Level from March 2011

Philip Clarke (50) will become Chief Executive of Tesco plc in March 2011. Philip has worked at Tesco throughout his career spending many years in retail and commercial. He joined the Tesco Board in 1998 and currently has responsibility for the group’s growing international operations in Asia and Europe as well as group IT.

Tim Mason (52), President and CEO of our Fresh & Easy business in the USA, will be given the additional group responsibility for branding, our values and climate change and will become Deputy CEO of Tesco plc. He will continue to be based in the US.

David Potts (53) will become the first CEO of our growing Asia business. He is currently Retail and Logistics Director in the UK, as well as having responsibility for the Republic of Ireland.

Richard Brasher (49), currently Commercial Director, will assume the newly-created role of CEO of the UK business and take responsibility for the Republic of Ireland.

Andrew Higginson (52), will continue as CEO Retail Services (comprising Tesco Bank, Tesco Telecoms, Tesco’s internet business and Dunnhumby).

Laurie McIlwee (48), will continue as Finance Director.

Lucy Neville-Rolfe (57) will continue as Corporate and Legal Affairs Director.

Other Matters

Trevor Masters will continue as CEO Central Europe and Turkey.

Gordon Fryett will head up Property across the group.

A new group Commercial role will also be created.

Independent retailer grows veg on Budgens roof

North London independent retailer Andrew Thornton has started growing vegetables on the roof of his Budgens store in Crouch End.
'Food from the Sky' is the brainchild of Thornton and Azul Thome of the Positive Earth Project, and makes Budgens the first supermarket in the world to grow food on its roof.

He said: "We need to grow more food in cities; with millions of square metres of suitable growing space on the roofs of London, we want to inspire others to follow suit."
As one of the key reasons for the project is to inspire and educate people on growing their own food, Thome will be running workshops on the Budgens roof garden in the near future.

This obviously raises raises the question of why confine this initiative to spare space outside the store, when it can be a way for multiples to bring the shopper even closer to the product via natural instore theatre?

Tesco re-defining the used-game market?

According to Thisismoney in the Daily Mail, Tesco is to offer customers second hand goods for the first time with shoppers able to sell their old computer games to the supermarket, which will then offer them for sale at a bargain price.


In what appears to be an attempt to attract customers from Game and HMV, Tesco will pay a good price ( i.e. better than the games competition) for pre-used games in good condition and resell at a discount to the new version price.

Given that any price above zero represents a gain for the owner of a 'redundant' game, and the games shops appear to offer little for second hand purchases, then Tesco simply has to offer £10-£20 for a game retailing new at £40, and apply a 50% markup to resell at a worthwhile discount to normal new prices. Offering much less will do more harm than good...

Applied to best-sellers only, this has to be a new business model for the games industry, and a no-brainer for Tesco.

Only issue in setting up a new renewal market-model will be copyright owners wanting to share the resale gains, as per moves in 're-selling' pre-owned books….

Asda's step towards phone-in-aisle price comparison

pic: FT

According to the Financial Times, under Asda’s scheme, with their price guarantee service, the shopper pays for products in store and then enters receipt details at home into Asda’s website to compare if anything was cheaper elsewhere. If a customer could have saved more by shopping elsewhere, the Asda site, operated by Mysupermarket.co.uk, will print out a coupon against future purchases to cover the difference, plus a penny.

According to Asda, about 15,000 people a day are now checking prices on the site, which covers about 70 per cent of Asda’s comparable products, and demand had “surpassed expectations”.

The real issue here is that Asda are beginning to undermine one of the fundamentals in Multiple retailer price perception. Consumer-shoppers traditionally relied upon a handful of KVIs to make a broad price comparison between prices charged by the multiples.

Asda have just opened up this decision process to include fact-based comparison across every SKU in the store…next step has to be phone-in-aisle price comparison.

Now although unit pricing never really took off, and shoppers are unlikely to leave a store for one lower-priced SKU, we are nowadays dealing with the 'savvy consumer' who demands demonstrable value for money.

Asda have just taken a step towards handing them the tool….

Are we now heading for replacement of 'state-of-art' grocery retailing a new, digital version of the oldest markets – where rival retailers call out their prices, offer their customers cups of tea and are always prepared when necessary to haggle?

Raising the Vending Game?

Emirates Palace hotel in Abu Dhabi, a cash machine dispenses gold (Pic: Mosab Omar/Reuters)


According to the New York Times, vending machines in Tokyo have electronic eyes that evaluate customers’ skin and wrinkles to determine age, for access to age-sensitive categories. In bathrooms at upscale Canadian bars, vending machines with flat irons enable women to defrizz their locks. In Abu Dhabi, the lobby of a luxury hotel has a vending machine that dispenses gold bars and coins at more than $1,000 an ounce.
Changing consumer preferences about shopping and the high cost of operating brick-and-mortar stores are inspiring premium brands to rethink how they sell their wares.

With vending machines costing less than an employee, a company called U*tique will begin selling high-end beauty products in machines that light up when customers approach — a better reception than shoppers see from most retail employees….

Moreover, merchandise in U*tique machines will be arranged and lighted like works of modern art in a series of dainty portals, evoking a neon honeycomb (see above)

For those of us wanting the numbers, a Zoom vending machine in Duty free retail can outsell average airport sales per sq.ft. by 10 to 1…

A pointer or a pain for classic vended categories?

Next Asda backhaul?

Following yesterday's Netto snap at £778m, how about Asda adding Home Retail Group to their new market-share basket?
- Netto adds £0.8bn sales to Asda
- Home Retail would add £5.9bn sales (of which Argos = £4.3bn, a nice addition to the Asda catalogue)
- At a market capitalisation of £2bn, Home Retail would be a snip
- This would bring Asda sales from £18.6bn to £25.5bn vs. Tesco UK sales £42bn
- Presuming Tesco is now sitting on its hands...
- Resourcewise, Walmart market capitalisation = £130bn = 4x Tesco £33bn mkt cap.

Meanwhile, economywise, Homebase matching green livery means minimal expenditure on outlet paint-conversion...

Have a restful long weekend, from the Namnews Team!