The Customer's P&L - A road-map for your business?

Despite the fact that using a customer's latest P&L for guidance can be a little like driving via the rear-view mirror, five years after the global financial crisis, the effects are now truly evident in most retailer's Annual Accounts.

For instance, where retailers were producing ROCEs of 15+%, Net Margins of 5+% and Stockturns of 20 times per annum, latest results are showing performances of half these levels, or worse...

With one exception: Walmart, the retail elephant in the room.

This global player, on a low-price platform, continues to generate an ROCE of 19.6%, a Net Margin of 5.5% and a Stockturn of 10.7 times/annum, thereby demonstrating that it is still possible to achieve these results in retail... 

(incidentally, for those with an eye for detail, Walmart's 'low' stockturn reflects their mix of categories and the geographical scale of the US. When and if Walmart ever comes under ROCE pressure, they can simply insist on smaller, more frequent deliveries from 'eager-to-jump' suppliers...)

In turn, Walmart's performance puts pressure on other retailer's to revert at least to their pre-crisis performance levels in order to support their share prices.

...and as you know, a low share price encourages takeover bids, even in well-ordered, 'growing' economies...

In other words, retailers need suppliers, more than ever before.

In turn, NAMs need to be able to cost out each element of the remuneration package - margin, terms, trade-investment and deductions - and demonstrate each element's impact on the retailer's P&L and Balance Sheet, using the supplier's own P&L to measure progress...

Hopefully a little more engaging than making endless excuses ref inadequate trade investment funds...? 

(For a focused discussion on how this can work in your case, pls give me a call +44 (0)7977 273409)

UK shoppers replace loyalty cards with phones

A new survey from CloudZync via a poll of 2,000 consumers shows that while the average leather wallet now contains four loyalty cards, people have access to six schemes on their handsets.

Supermarkets are falling behind in the digital race - 92% of respondents have a physical card for Tesco, Sainsbury's or one of their rivals yet only 36% have a mobile scheme.

Furthermore, loyalty card users have on average £83 worth of redeemable points across their schemes at any point in time, and UK shoppers have cashed in on over £4 billion worth of points over the past year.

However, around £150 million in points remain unclaimed. Explaining why, 27% say that it takes too long to start earning benefits, 18% say they don't carry their cards in their wallets, and 14% don't remember to add on their points even when paying in-store.

In other words, traditional retailers are operating in ‘inertia-land’, on the assumption that low redemption rates will continue…

However, as with the infamous Hoover air-miles fiasco, if consumers are presented with more effective ways of managing their loyalty point redemption, current levels of inertia could disappear and be replaced by soaring redemption-levels, well beyond retailer expectations…

An app-nightmare in the making? 

Cocktails with aspirations - something special for the weekend?

NB. Large detailed version here

Circular outsourcing?

Source: Kevin Kelly http://kk.org/kk/ Scott Adams was ahead by a whole decade. From Dilbert, August 3, 2003

Sainsbury's taking Tesco to court over Price Promise – a definition of like-with-like?

Sainsbury’s move to obtain a judicial review is good in that it is an attempt to distinguish a legal ‘letter-and-spirit’ issue from a true like-with-like comparison of what a consumer gets for the money.

In other words, when Tesco and the watchdog's independent reviewer Sir Hayden Philips focus on function of the product, bottled water in terms of say quenching thirst, they are adhering to the letter of the law ref like-with-like comparability.

In doing so, they are not taking into account the ‘spirit-of-the law’ issues such as provenance or ethics.

However, the consumer places some value on ‘source’ and is prepared to factor some of this value into the offering when deciding that a price is acceptable, compared with available alternatives.

Consumers live by what they take to be the spirit of the law and feelings of being misled arise when a ‘letter-of-the-law’ claim is found to be wanting in practice, as any true marketer will appreciate.

The problem for the judiciary will be in trying to establish a universal value for provenance or ethics….

However, in the meantime, the media coverage will hopefully cause consumers - and retailers - to think a little more deeply about making a like-with-like comparison that goes a little closer to the spirit rather than simply the letter of the law in deciding that a given Product-Price-Presentation-Place combination is better value for money…

Baked Bean Heist via lorry-based picking?

Given the brand’s pulling power, combined with consumer click & collect trends, it should be no surprise that thieves decided to dispense with the click and help themselves to 1.5 pallets of Heinz baked beans with sausages ‘off the back of a lorry’ while the driver slept upfront in a layby on the A441 at Cookhill, near Redditch in Worcestershire.

By way of endorsement of the cab’s two-way soundproof qualities, the thieves were able to work undisturbed as they cut a large hole in the side of the white Scania vehicle and helped themselves to 6,400 tins.

"Police are appealing for information, especially about anyone trying to sell large quantities of Heinz baked beans in suspicious circumstances," a force spokesman said.

Hopefully the police have been briefed that it is quite normal for NAMs to spend their days trying to sell large quantities of product, but nonetheless it might be wise to cut down on over-generous multibuys while this one blows over… 

P.S. For those who want to double-check, the product code is 71517000 with an expiry date of 31 March 2015.

Second-guessing the Guesstimate: Getting the Unit-price Wrong at Tesco?

Following years persuading shoppers to attempt to compare like-with-like via the price-per-kilo addition to the shelf price, it would appear that a savvy shopper may also need to check the basic arithmetic of the multiplier...

According to an article in the Guardian, following the summer's 'strawberry court case', Tesco is once again allegedly getting its price-per-kilo labels on soft fruit wrong. Tesco's website apparently says its "Everyday Value" strawberries are £5.40 per kilo, but they are not. In reality they are a third more expensive at £7.14 per kilo.

The punnets are priced at £1.62 for 227g, with the label helpfully adding that the quantity of strawberries is equal to £5.40 per kilo. Now even those whose maths is pretty rusty can do a rough calculation – you get just over four 227g punnets in a kilo, so that is four times £1.62, which is rather more than £5.40
(i.e. £1.62/2.27 x 10 = £7.136).

The article lists several other instances, and quotes Tesco’s apparent replies to queries:
- “…as prices change all the time this figure is just meant to be a 'guide'."
- “…We'd like to reassure our online customers that no one has paid more for their berries than the listed price."

As often happens with corporate answers to consumer queries, answering the wrong question can be more damaging than correctly dealing with a genuine concern.

As most savvy customers increasingly familiar with price-comparison web-facilities will realise, a ‘per kilo’ conversion is a straight-forward arithmetical calculation that can presumably be locked to the SKU price in even the most basic computer systems i.e. there should be little scope for ‘human error’ once the new shelf-price is established…

Secondly, attempting to reassure the shopper that they have been charged the correct shelf-price is a reply more in keeping with the letter rather than the spirit of the law – a statement which is legally correct but misses the point that the shopper can be making a purchasing decision based upon the ‘per kilo’ comparison with other SKUs...

It might also be claimed that the ‘per kilo’ represents only pennies and should make little difference, except to a savvy consumer that has undergone years of persuasion that every little helps…

A little self-amuse in a long-haul loo...

On your next trip overseas, why not repair to the aircraft rest-room and release your inner artist....?

While on a long-haul flight, when most people would sleep, read a book or chew on complimentary snacks, Nina Katchadourian spends her time locked in the airplane’s lavatory taking 'selfies' in the style of 15th century Flemish paintings...

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Details plus ten additional examples here

Thanks to Emma Carlin and Anne Johnstone for link and application