Alliance Boots To Cut 900 Head Office Jobs In Efficiency Drive

News of AB's latest move was no surprise to our workshop delegates…..
Essentially, when a company is taken over by private equity and taken private, it is important to plan an exit route for the private equity partner via reflotation on the stock market, say within 5 years. If the deal was done a short time before the unprecedented global financial crisis kicked in, it is understandable that the re-flotation timing might have to be extended for a few years….

Making a company ready for reflotation means:

- Achieving scale via global coverage (acquisition & organic)
- Extending the instore offering/assortment in goods and services
- Optimising retail and wholesale operations
- Paying down debt to reach say 30% gearing
- Increasing ROCE to 15%
- Increasing Net Margin to 5%
- Increasing stockturn to 20 times per annum

How?

- Cut & rationalise existing operations to raise/save money and improve efficiency
- Drive down purchase prices via scale buying
- Smaller, more frequent deliveries from suppliers (Just-in-time)
- Drive traffic and trade up quantity (basket-size) & quality
- Additional credit from suppliers
- Optimise space instore
- Optimise onshelf pricing (category management, build retail brand equity)
- Optimise private label instore and via retail partners

And then some….

Marks & Spencer experiments with standalone beauty shop in Mumbai

The retailer has in the past acknowledged its weakness in the category compared with department store rivals, but a spokeswoman said the Indian shop was an opportunistic use of space near an existing store, and not a prototype for roll-out.

Nevertheless, if successful, a pointer for other countries…..?

Savvy-consumers howling for more 'fizz' for less?

Caulier, a family-owned brewery in Belgium has produced its first batch of specialist beer brewed by the light of a full autumnal moon.
"We made several tests and noticed that the fermentation was more vigorous, more active," explained CEO Roger Caulier.
"The end product was completely different, stronger, with a taste lasting longer in the mouth," was the response for researchers courageous enough to interview consumers that are allegedly mad about the new product….

Meanwhile, publicly owned water company Eau de Paris have installed a new public drinking fountain in Paris offering sparkling water free and in unlimited supply, aimed at weaning savvy consumers off bottled water and onto tap. The fountain injects carbon dioxide into regular tap water to make it bubbly, and chills it before delivering it to consumers
Just two savvy-driven potential wake-up calls for the drinks category…
Have a mad sparkling weekend, from the Namnews Team!

Tesco 1p mark-downs of discontinued goods

In a simple stroke, Tesco have captured several customer-delighters that resonate with consumer interests.

Their surprise checkout charges of 1p for products that would have been junked, have capitalised on a global concern with avoiding waste, besides adding a feel-good bonus to an impulse purchase on a routine shopping trip. Keeping the discount secret until payment means that the initiative and shopper expectation can be easily managed. Another application that might stimulate their banking offer might be the issuing of random 'double-your-money' payouts at their ATMs…

However, the real breakthrough will be in finding a way to apply the surprise deep-discount idea to food near its sell-by date, thereby touching an anti-waste live nerve that would transform impact their social image, with no appreciable downside….

Tesco Banks on Financial Services

This autumn Tesco will launch a high-profile advertising and mailshot campaign to tell its 20m customers that it wants to be their bank of choice as well as their favourite supermarket.
It will be trying to get its shoppers to sign up to its new savings account as it seeks to expand its 6.3m account base. Sir Terry Leahy has promised to build a “people’s bank” by capitalising on public disillusionment with traditional lenders. Next year it will expand its offering to mortgages and current accounts.

Whilst no one underestimates the infrastructure requirements (putting together regulatory teams, risk teams, compliance teams) necessary to operate as a trustworthy bank, Tesco has been helped by the fact that the global financial crisis has caused competing banks to level the playing field via a series of own-goals that have destroyed any residual trust by the public in financial service providers and banks in particular. Moreover, the savvy consumer is becoming more financially astute, and can appreciate the fact that banks charging 4 per cent for a fixed-rate mortgage when Bank of England base rate is 0.5 per cent and they pay just 0.23 per cent on consumer savings is a major abuse of power. This has to provide a major window for Tesco in the sector.

In these circumstances, Tesco simply has to build and maintain a financial competitive-edge ( i.e. offer slightly better rates, and gradually improve these rates as traditional banks are forced to follow, in their efforts to recover inevitable loss of share to Tesco). The rest is a no-brainer in terms of the provision of levels of personal service that will easily differentiate Tesco from any retail bank in the country…

However, the real challenge for Tesco will be to manage consumer expectation by growing their banking service slowly rather than at high speed (i.e. resist 'knock-out' interest rates).This opportunity will continue to be available as long as traditional banks remain in denial, and patently out-of-touch with customer-need.

Sometimes a cut too far?

Following on from travel bans, dust clouds and general cut-backs, NAMs and KAMs may have been forced to consider the budget airlines alternative. Here the search for cheap-flights will have revealed a culture more akin to their dealings with some major customers.
This has led the budget airlines to consider 'standing-room only', replacement of co-pilots with suitably-trained stewardesses (could help by making the tea between crises) and shorter-seats, apart from the obvious 'paying a pound to spend a penny'.
Incidentally, it may not be well-known that  airline-chiefs can have outside interests such as classical music that may benefit from their attentions using a  similar approach to cost-cutting.
Pls see the following letter allegedly written by a high profile CEO....
Schubert’s No.8 in B Minor

To the Chairman, The London Symphony Orchestra

After attending a rehearsal of this work, we make the following recommendations

1 We note that the twelve first violins were playing identical notes, as were the second violins. Three violins in each section, suitably amplified, would seem to us to be adequate.

2 Much unnecessary labour is involved in the number of demisemiquavers in this work. We suggest that many of these could be rounded up to the nearest semiquaver, thus saving practice time for the individual player and rehearsal time for the entire ensemble. This simplification would also make more use of trainee and less-skilled players with only marginal loss of precision.

3 We could find no productivity value in string passages being repeated by the horns; all tutti repeats could also be eliminated without any reduction in efficiency.

4 In so labour-intensive an undertaking as a symphony, we regard the long oboe tacet passages to be extremely wasteful. What notes this instrument is required to play, could, subject to a satisfactory demarcation conference with the Musicians’ Union, be shared out equitably with the other instruments.

Conclusion
If the above recommendations are implemented, the piece under consideration could be played through in less than half an hour, with concomitant savings in lighting, heating and overtime, wear and tear on the instruments and hall rental fees. Also had the composer been aware of modern cost-effective procedures, he might well have finished this work…

Seriously, budget airlines, in response to market demand are simply trying to cut to the bone, and are offering the customer what they want to pay for.
Being criticised by their customers for the resulting cut-down package is unfair when they are simply delivering a slightly more abrupt version of the indifference provided by mainstream airlines…

Have a high-value weekend, from the Namnews Team!

German farmer's 24/7 hour milk filling station a hit !

News of a new "Milchtankstelle" near Cologne dispensing the output of 78 cows from a stainless steel vending machine into customers' own empty containers could represent a potential breakthrough in partner-bypass by farmers. Given the freshness and customers' willingness to pay 70 cents per litre direct vs the 20 cents paid by grocers to the farmer, the business model has appeal, besides upping the negotiation ante….


Have a savvy weekend, from the Namnews Team!

When getting away means staying in touch

Reports that sunshine as a key criterion for choice of holiday-location may have been replaced by ability to keep in touch. This means that NAMs & KAMs routinely check mobile phone coverage and international data plans before travelling. A survey by Amex indicates that 77 per cent of Americans intend to stay connected while on vacation via Internet, phone, social media and other channels.
In fact, Bhutan, landlocked between India and Tibet, is one of the most isolated nations in the world. However, in the country's Amankora lodges there are no TVs, no radios, but if a guest needs it you can get high-speed internet access….
Whilst much of this traffic-watching is allegedly social, most of us know that the odd job-related holiday email, can be a career-maker, or breaker….


Have an intouch weekend, from the Namnews Team!