Kegworth air disaster - some personal memories

At about 9pm on the evening of Sunday, 8th January 1989, I was driving northwards on the M1 to a workshop venue in Kegworth chosen because of its proximity to the M1 and airport, when a radio newsflash announced an air-crash. The plane had come in low, narrowly missed some buildings and crash-landed on the motorway embankment on the approach to the main runway of East Midlands airport.

My immediate concern was for my 12 delegates that I knew were assembling that evening for the workshop.

The motorway was closed soon afterwards and I made  my way to the hotel across country via smaller roads, no mean feat in those pre-satnav days…

On arrival I found that all of the team had been in the hotel when the plane flew overhead, obviously in trouble and seeming to narrowly miss the hotel roof before crashing nearby.

We all rang our families to reassure them that we were safe and after much discussion agreed to proceed with the workshop.

There followed a night and two days of frantic activity by the emergency services in the area, punctuated by media updates.

We finally finished the session and returned home.

In the circumstances I am not sure how much of the content sank in, but the over-riding lesson to my mind was that, despite the raw immediacy of a disaster that claimed 47 lives, life – and business – goes on… 

Consumer mood - how Asda's Gimmick-free Christmas touched a reality-nerve

Never known for flights of fancy, Asda – and its parent – decided to focus on gimmick-free, simple everyday low price transparency for their customers and to hold their nerve when it came to the sales, a strategy that resulted in a record footfall over the Christmas period, and results to boot....

Whilst it could be said that a group with a turnover of $356bn and a 19.6% ROCE - unique in key retail - could afford to ‘ignore sales’ they have some of the hardest taskmasters on Wall Street and some financially-beefy shareholders working internally.

I shall never forget sitting in a 20-man Walmart merchandising strategy meeting in Bentonville - the only non-millionaire in the room - a couple of years before their UK entry, and being ‘scared’ by their degree of focus on the simple approach when most other retailers were developing ever-increasing levels of sophistication and are now struggling to hit 10-12% ROCE.

The oldies amongst us will remember that Asda began as Associated Dairies and was launched by 'two milkmen that got lucky' (thanks Tony), and it has never really wavered from the simple approach to business perfectly suited to the current mood...

I am convinced that what we saw in Asda’s version of Christmas was the fundamental Walmart approach adapted for a company fully tuned - except for the big stores! - to the realities of the UK economy.

We can only recommend having the courage to join them at the realistic, basics coal-face, our minds and offerings stripped to the essentials of demonstrable value-for-money… It works!

Online Betting via Grocery Dark Stores

Whilst grocers are cutting back on megastores, rising internet food sales will see supermarkets sign up for twice as much online warehouse space in 2014.

Tesco, Asda and Waitrose will this year commit to doubling the space devoted to internet dark stores, according to property agent Jones Lang LaSalle. Around 1.8m sq. ft. of warehouse space is devoted to dark stores, but that is set to increase as online shopping transforms the retail sector.

Tesco is expected to open its seventh dark store in Didcot, Oxfordshire, later this year. They opened two dark stores in 2013 and have previously said they are scouting for further sites in Birmingham and Manchester. Their newest centre in Erith, south east London, can process 4,000 orders a day and offer 30,000 different items, 50% more than the average store. The site has also been designed to help Tesco launch same-day deliveries, a service already offered by Asda and Ocado.

The combination of faster picking, more delivery slots and increased use of ‘click & collect’ means acceleration of online growth, mainly at the expense of less efficient competition.

However, faster online supply of goods – especially bulky items – has to also accelerate the redundancy of large space retailing, and given that there are no obvious alternative use options – i.e. selloff- available, then the major retailers will seek to optimise available space via a combination of instore theatre and franchising.

Providing the numbers add up, this new availability of space has to represent a major opportunity for suppliers and retailers to fundamentally re-think the application of shopper marketing, a process conceived at a time when retail space was at a premium….

The Empty Shop – A retail innovation in Manchester launching January 23rd

As we head into a year where growth will come at the expense of the competition and especially via innovation, then being open to new ‘reversal’ ideas could be one way of kick-starting our creative juice production after the long break…

For example, based on a success in Sao Paulo that raised 3.2 tonnes of unwanted clothing, instead of customers buying clothes, The Empty Shop will encourage shoppers to become givers by offering clothes to the shop instead of taking them away.

In return, the shop is set to make a real event out of giving back by getting local fashion stylists and bloggers to turn second hand clothes into key looks for the season, all on display in what is set to be a rather upmarket space in Manchester Arndale's central square, just near Next. The space will then be emptied each evening with clothes going to a local homeless charity leaving The Empty shop ready to receive new donations again the following day.

As with all creativity, premature criticism can obviously stifle any idea, and hopefully, the above innovation in charitable giving will have a positive outcome.

However, from a NAM’s point of view, the reverse-thinking process may help by taking your 2014 objectives, considering the reverse for a moment, and see where it leads?

For instance:
- Reducing sales instead of going for growth
- Reducing instore space instead of…
- Reducing share, range, distribution, footprint in order to focus via concentration...
- Increasing cost via more creative investment

Scope for a little creativity before the 2014 fires flare up and become too distracting?

Is nothing sacred? Amazon predicts record Christmas day sales

Amazon is predicting record sales on Christmas day this year, as the online retailer kicks off its Boxing Day sale early. The sale will begin on Christmas itself and transactions are expected to peak at around 8.30pm as customers log on after the day's festivities.

It is not know how many purchases result from the discovery that expected presents from loved ones did not materialise…

In other words, if one had one’s heart set on a certain item, why not conduct a ‘selfie’ present-wise, from the closest one of all…

Seriously, have a really funny Christmas and a New Year with a difference!

Bottom Line: Aldi and Lidl are not just for Christmas

Despite the fact that 50% of the UK population have 'discovered' the discounters, and the insight is spreading across the whole social spectrum {If in doubt, why not add to the stats by going to your nearest Lidl and noting the variety of cars in the packed car-park?}, and into the upper reaches of the product portfolio (the Norwegian smoked salmon and reindeer meat are particularly good!), the key issue is permanence rather than pre-Christmas novelty.

Penetration
In fact, ABC1s (the traditional middle classes) made up just 25 per cent of discounter shoppers in 2011.
Last year that rose to 41 per cent – Aldi is no longer the preserve of the cash-strapped student stocking up for a house party.

With a combined UK market share of 6.9% (whilst in Ireland they have reached 14.3% share of market, and growing), it is worth remembering that this was not meant to happen, in the retail-sophisticated UK market...

However, the unprecedented global financial crisis has created the right place and time for the discounters, permanently...

Think about it, the savvy consumer is now in play, with a determination not to accept anything less than demonstrable value-for-money, all hard-wired into their psyche, not to be forgotten when the economy begins to rise above flatline..

In other words, it is unlikely that the discounters will sacrifice share in the post-Christmas 'hangover'...

However, if we all stick to high-end discounter alcohol, the negative after-effects should be minimal, allowing us to look forward to optimising flat-line 2014, hand-in-hand with Lidl old Aldi...

Google Glass Selfie...?

Debenhams ‘little help’ from suppliers...

If you have received notice of an alleged discount  of 2.5% on invoices outstanding on 17th December, you will have already calculated the incremental sales you need via Debenhams to cover the cost…?

Workings: (simply substitute your figures below)

• Suppose Sales to the customer £2m/annum, average payment period 45 days, i.e. 365/45, i.e. 8 times /year
• Suppose your Net Profit, before tax on customer’s business is 5%
• Average amount outstanding is £250k i.e. £2m/8
• 2.5% of £250k  is £6.25k i.e. by allowing an additional 2.5% off invoice, you are giving £6.25k from your net profit, before tax, to the customer
• Therefore, £6.25k/5 x 100 = £125k = incremental sales you require to cover the cost of making an additional investment of £6.25k in the customer…

This raises several issues:

• Creation of a precedent in terms of similar retrospective demands from customers in the future – ‘remember that new store we opened in ’93?’
• One more step towards ‘common industry practice’ quotable by other retailers requiring similar help from suppliers
• A reminder that in  buying and selling, one is dealing with independent legal entities, making what should be legally enforceable agreements…
• A deal is a deal, or should be… i.e. a retrospective demand without consultation undermines an agreement, and should be a trigger for renegotiation, or walkaway…

Opportunity
Given these unprecedented times, this type of request should be an opportunity to check out the consequences of each customer wanting similar help i.e. if your total UK sales are £50m, a 2.5% ‘one-off’ discount on outstanding invoices would require incremental sales of £3,125k, in a flat-line environment…. However, if all suppliers stand firm on existing agreements, causing some customers to eventually go bust, then perhaps running a ‘what if’ calculation on the financial consequences of a customer going into liquidation should form part of a reassessment of your total relationship with major customers, on the way to fair share negotiation…

Eventually, all suppliers will have to face up to the reality of 'what business they are in', the reward-for-risk balance required to make it worthwhile, with the Debenhams Christmas initiative presenting an opportunity to scope out the options available, before the banks do it for you…