Return On CONVENIENCE Employed - the real reason for the Big 4 switch to convenience?

With small local stores offering higher Returns On Capital Employed - leasing rather than owning means less capital employed – allows major retailers to compensate for the diminishing ROCEs on their traditional estates. Following the global financial crisis Big 4 ROCEs have reached 10-12%, while Walmart still turn in 19%+ per annum…and as you know, ROCE drives share price performance…

Mintel forecasts Britain's convenience sector sales will grow 5 percent to £43.3bn in 2013 and jump to £54.1bn by 2018. Since the economic downturn, careful consumers now prefer to buy little and often and do so in the shop around the corner rather than out of town superstores, to save on the rising cost of petrol.

Recognising that small local convenience stores, along with the internet, will be the main driver of future sales growth, the Big 4 are all prioritising investment there.

Both convenience and online business require relatively little capital compared to developing large supermarket spaces. But crucially, while the profitability of online grocery is not yet proven, the returns from convenience stores can be, albeit without the benefits of scale economies in terms of running costs….

Apart from the obvious gains in terms of profitability and meeting more shopper-needs, this business shift, combined with supply chain efficiencies making two facings do the work of four in large space retail, has to mean increased space-redundancy in the Big 4’s larger outlets…

In practice, whilst the move to online and convenience will compensate in the short term, unless the major retailers find alternative uses for some larger outlets, overall ROCEs - and share prices - will continue to fall…

In the meantime, NAMs can help by emphasising ways in which their brands can be used to drive retail ROCEs in both formats, but this time with a ‘guarantee’ of a more attentive, share-owning buyer…

Belfast Tesco manager’s eye-watering engagement with shopper…

A fisherman grabbed a Tesco manager by the testicles and refused to let go after being stopped over an £800 shoplifting spree, a court has heard.

It was claimed he went into Tesco Newtownbreda Road on 5 December, took security tags off various goods and put them in bags.

Members of the public had to help release his grip as the victim suffered "extreme pain", prosecutors said....

Up to this point it was not clear if the initiative was opportunistic, or simply an extension of the Tesco £1bn ‘turnaround’ plan in terms of “grabbing management by the balls, and their hearts and minds will follow…”

Dying to live at home?

                                                                                                                                                     pic: BBC
The late Victorians and the Edwardians lived through a domestic revolution. Theirs was a bold and exciting age of innovation, groundbreaking discoveries and dramatic scientific changes, many of which altered life at home in profound ways - including some that were terrible and unforeseen, writes historian Dr Suzannah Lipscomb in BBC News.

1. Bread adulterated with alum
2. Boracic acid in milk
3. Exploding toilets
4. Killer staircases
5. Flammable parkesine (celluloid)
6. Carbolic acid poisoning
7. Radium (radiation poisoning)
8. The wonder material (asbestos)
9. Fridges design flaws
10. Electricity (quick & effective)

See original article for details & pics

Given our ‘progress’ in a hundred years, makes the horse-meat issue a bit passé?

Fancy a new iPad at 95% discount? - the QuiBids penny-auction model

QuiBids is the world’s largest retail website that operates as a bidding fee auction, also known as a penny auction. The price of auctioned products increase by one QuiBids penny with each bid, which are equal to $0.60, and bidding doesn't start until there is only 5 minutes left in the auction. The final price are typically much lower than other auctions, but all bidders pay $0.60 each time they bid. Losers of the auction have the option of paying the retail price, minus the cost of their bids.

Their product selection runs from the latest Apple products - iPads, iPods, and MacBooks - to high definition televisions, gift cards to top retailers, and much more. To name a few recent sale prices of items like this, a New Apple iPad recently sold for £33.77, a Kindle Fire sold for £15.83, and a HP Laptop sold for £20.83.

For an auction winner, the true cost of an item won at auction is a bit higher than the final auction price because of the amount the auction winner spent bidding to win. But it’s typically modest, and even after bids, most winners save at least 75% off retail.

The OFT have some issues with some versions of the model and offer some pitfalls and offer advice here

There are obviously issues ref. the model’s similarity to a lottery, but with care, the penny auction - via sales to losers - can represent another route to consumer, and further dilution of trade concentration…..

The 'what-if' training dilemma...

"What if we train our NAMs , and they leave...?"
"What if you don't, and they stay...?

Google voice search - the lowtech London billboard crossover?

Google wanted to change consumers' behaviour, and inject some wit and romance into a Google service that could feel cold and distant.

The solution: 
Hyper-relevant context. Google identified London landmarks, and placed relevant billboards nearby in a total of 150 different creative executions around the city. For example, a billboard that said "Ley-tist Skohrz" was placed outside Chelsea FC. Because the service is voice search, the words were written phonetically, drawing further attention, in one of the most media-saturated cities on the planet. More pic-examples here.

Why it won the Media Grand Prix:
The campaign combined the three fundamentals of advertising: technology, analytics and storytelling, with technology driving targeting driving briefing and strategy and eventually creative, a reverse of the normal sequence...

The result:
Google and Manning Gottlieb OMD shop in the U.K. won the Media Grand Prix at the Cannes Lions International Festival of Creativity in 2012

More importantly, voice search in London more than doubled. 

A sign of the times?

"The only artists making a living nowadays are dead ones"
From the movie Blue is the Warmest Colour, a compelling study of relationships....

Managing uncertainty amidst the chaos

At a time when Tesco looks worse, Sainsbury’s are racing back to former glories, Boots, a basket-case only a few years ago but now looking global, Lidl stocking lobsters, and a virtual collapse in demand-growth, most NAMs could be excused for wanting to await a settling down in the market and the emergence of familiar patterns….

However, proactive NAMs know that the ability to cope with the current conditions determines real success in account management.

In other words, treating a flatline market as normal, and factoring risk into trade strategies has to be a way forward.

This means acknowledging that any growth has to come at the expense of the competition, requiring competitive profiling via a buying mix analysis.

It also means facing up to ‘permanent uncertainty’ by conducting a risk analysis for key options and initiatives. In practice this means exploring the impact on the business (high, medium or low), and chance of occurrence (high, medium or low) and developing contingency plans where things going wrong have high impact or a high chance of occurrence, or both.

Uncertainty can then be recognised for what it is, merely a stage in market development…