A Scandinavian Scotland – simply an export-opp for other major mults?

                                                                                                               map: The Copenhagen Post

To be or not to be Scandinavian, that might be the question soon enough for Scotland, if it decides to become independent. In which case, JS, Asda, Morrisons and the Co-op would join Tesco in having to factor in a balance of UK and overseas presence into their business strategies.

What they have in common
Scotland and its northern neighbours have geographic proximity, shared access to the same body of water, and the resultant multitude of historical links between Scotland on the one side, and Iceland, Norway and Denmark on the other. (More on social,political & religious similarities)

Advantages for Scotland

One final, crucial advantage of a Scandinavian over a British Scotland: it would no longer be in the Far North of the UK, but in the Southwest of the Scandinavia. The place would not have to move an inch, not even a centimetre, but it would sound less cold, dark and at the end of everything. Scotland’s new orientation could finally allow it to ditch some of the negative stereotypes that have been dogging it for far too long. It would no longer be colder, emptier and darker than England.

Key learnings for UK mults
Indeed, this new perspective might then begin to influence the multiples’ approach to the UK consumer-shopper. Think of all the ethnic food and non-food enjoying a new appeal down south… The multiples’ management would surely benefit from a foreign tour of duty, with no disruption of the family, competing with Tesco from a totally new geographical perspective. Management would no longer have to fight for recognition of local need in UK policy, and store-based assortment would surely become a natural output of the new thinking…

Supplier benefits
Meanwhile, UK NAMs, apart from adding ‘foreign’ experience to their CVs, would surely benefit from having to conduct periodic store visits to deal with their newly vocal ‘scandinavian’ customers, until eventually their companies see the wisdom of appointing a dedicated team to operate at local level…

Buyer's birthday coming up, and short of ideas?

An app for the FT’s ‘How to spend it’ magazine (the Argos catalogue for the hedge fund classes, according to Atticus, The Sunday Times) is now available from the iTunes store. The free app helps you access a Gift Guide: 700 inspirational ideas via searchable content of 75 issues.

Alternatively, given these austere times perhaps a link to the free app might suffice?   

Sofa King Silly?

After nine years and one police investigation cheeky Northampton retailer The Sofa King has been told by the advertising watchdog that it must ditch its catchphrase "Where the Prices are Sofa King Low!"

In banning the advert, the ASA have fallen foul of the Law of Unintended Consequences, in that the Internet is now awash with references to the initiative (Google Sofa King and see the 24m results for yourself) In fact I hope that Northampton traffic authorities are ‘Sofa King well prepared’ that this weekend’s inevitable shopper invasion will not pose a problem…

This all puts me in mind of schooldays in Ireland when ‘rude’ books were guaranteed massive sales boosts as soon as they were banned by the authorities…

In fact, Ronnie Drew of The Dubliners folk group used to say that instead of making the Irish language compulsory in schools, the government should ban it, thus ensuring its enthusiastic application 24/7…

Have a couch-bound weekend, from the Namnews Team!

Making Settlement Discount Work

With the major multiples collectively owing UK suppliers approx. £10bn at any time and paying on average in 43 days, this free credit represents both cost and risk. With banks unwilling to lend, retailers can be a source of finance. As cash-machines that happen to sell groceries, retailers can even be willing to pay on delivery, if the price is right

Money-saving tips from America … road-tested by penny-pinching UK consumers

Ranging from eating beans rather than meat to filling up the car early in the morning when the air is cool, and the gas is dense, the Guardian Team give twenty tips a reality-check by running the numbers and evaluating any real saving…

Impact on the consumer

Whilst not all money-saving tips will yield real savings, in practice the act of re-evaluating all expenditure coupled with comparison-shopping is bound to heighten consumer appreciation of value-for-money and cause them to reduce/postpone their ‘excessive’ purchases.

How the Buyer will react

In the same way, buyers being consumers are likely to apply the same disciplines in the day-job. Whilst it is tempting for suppliers to react via defensive mode, realistically pro-active NAMs can benefit by being able to calculate and demonstrate the financial impact of their support package on the retailer’s P&L.

Calculating the cost and value of their free trade credit can be a useful first step….  

The death of games retail, a pointer for other 'directable' FMCG categories?

Last year, according to Digital Spy, the UK games industry saw a 7% year-on-year decline in the sales of physical software in 2011, and this slump is said to have deepened by a further 25% this year. Major retailer GAME saw a whopping 90% wiped off its share price last year after a string of troubles, and this week the firm announced plans to close 35 UK stores and shut down gameplay.co.uk.

Rise of networked gaming

According to Tiga, 71% of games start-ups launched between 2008 and 2011 in Britain were focused exclusively on networked gaming over digital, mobile, online and social channels, while just 10% intended to work on both network and retail titles. Overall, 67% of the UK games development sector is working either exclusively or in part on network gaming. Tiga quote: "A lot of (games developer) start-ups are focusing entirely on digital distribution and networked gaming. There is only around 20% that are focused on retail, which really shows that the tide has turned quite dramatically in distribution."

Initially driven by the advantage of eliminating ‘packaging’ the developers are obviously seeing financial advantages in going direct…

Application to FMCG

In terms of other non-digital categories, whilst the potential for going direct may not be as great as in gaming, the fact remains that a new generation of consumers are becoming accustomed to dealing direct with suppliers, and the delivery infrastructure is falling in place to facilitate the process cost-effectively.

All that remains is attitude, and perhaps a generation gap, or two…

Action for suppliers

Perhaps the time is now right to reconsider adding a little more facilitation to the firm’s web site, incorporate micro-payments, blend in all of those one-off social-networking initiatives , dust down the ‘consumer-advice’  department and use some of that retail margin to integrate the lot, rather like those ‘amateurs’ in home entertainment that have stumbled upon the most obvious approach to monetising a one-to-one dialogue with some of the most demanding and savvy consumers around..

Or instead, perhaps upping last year’s trade spend might be more effective? 

Optimising the Value of Trade Credit

How to calculate cost to you and value to the customer, of free trade credit
Make trade credit an integral part of the negotiation process, and not just another trade term...

Store of the future: 80:20 towards 20:80 in store-level assortment?

Last week’s article on the IGD-Coca Cola research into the store of the future was the item most passed on to friends and colleagues by NamNews readers.

Key findings:

The report raised a number of issues in terms of the convergence of different trends such as shopper demand for more personalisation, with communication, promotions and deals tailored to their individual values and needs, pre-purchase advice from social media and online forums, in-store use of smartphones and ‘intelligent trolleys’, fully transparent supply chains in  terms of provenance and traceability, and environmental and social impact, with all of this information communicated on-shelf, on-pack and online through smartphones. The report also predicts that online generally will grow in prominence not only because it will continue to grow faster than the consumer goods market as a whole, but it will also form part of the wider store experience with some shoppers purchasing online and picking up in store..

Store-level assortment, the ultimate need

Essentially, we see all of this resulting in increased use of store-level assortment to satisfy savvy consumers unwilling to compromise on demonstrable value-for-money, with important knock-on impacts for suppliers and retailers.

If we assume that large stores currently offer a range comprising say 80% must-stock brands available nationally, and 20% available locally in response to historical demand, this one-size-fits-all approach will become increasingly out-of-step with market need as the above trends develop. 

How retailers will adapt their buying approach

Pragmatic retailers will want to restore the consumer-appeal of their large stores by stocking products more in tune with local need, to avoid shoppers voting with their feet in the search for satisfaction.

Superstores (say sales of £150m p.a., 450 employees with a CEO and organigram to match) will demand more autonomy, becoming increasingly unwilling to simply accept head-office response to a demand demonstrated daily in their stores by live shoppers, speaking with local accents…. They will want to optimise  increased buying expertise at branch level. 

How suppliers will have to re-organise...
In practice this means that suppliers will no longer see national distribution as a prerequisite for success in the launching of new brands, while their focus on existing  brands will concentrate on those parts of the country where brand-appeal is worth the effort. 

Equally, when successful retailers inevitably find ways of devolving increased decision-making power to local level, suppliers will need to extend their influence to branch level or risk being left out of local assortment. This does not mean a return to the days of large scale national salesforces, but rather what is required are small teams of high grade but possibly junior NAMs/KAMs operating at regional/local level, each capable of distilling corporate trade strategies, category management and marketing /promotional initiatives to local level…while their senior NAM colleagues fight for inclusion in the national 20% at retailer's head office...

For those of you taken with the idea, think one KAM business-managing 25 superstores, working 24/7, and work up the numbers…on in-house vs.outsourcing...   

Unless we all change locally in response to new local insight provided by increasingly articulate and demanding consumers, we are bound to sacrifice share to those who are already working in a ‘20:80  assortment’ mind-set, capitalising on local-niche brands, already comfortable with a mere 20% of brands having profitable national distribution