Wednesday, 29 January 2014

US shops that only offer food past its sell-by date

According to today's news in the Guardian that a man is to be put on trial in February after he was allegedly caught stealing from the bins behind an Iceland store in London, it appears that Freegans, or bin scavengers, are becoming a feature of the current flatline environment.

Paul May, a freelance web designer, is expected to argue in court that he does not consider taking the mushrooms, tomatoes, cheese, and cakes from the garbage outside of Iceland as illegal, because the food was  going to be disposed of and he needed it to feed himself, the Guardian reported.

Given that the Freegan movement started in New York a decade ago, it follows that the US should be first in opening stores that only offer food that is past its sell-by date.

Doug Rauch’s new venture The Daily Table, due to open in May, in Dorchester, Massachusetts, will be part grocery store and part cafe, specializing in healthy, inexpensive food and catering to the underserved population in Dorchester, Mass. What makes it controversial – at least at first glance – is Rauch’s business model: His store will exclusively collect and sell food that had crept past its “sell-by” date, rendering it unsellable in other, more conventional supermarkets.

But the real challenge, in Rauch’s vision, isn’t just getting that excess food to the people who need it. It’s convincing them that it’s worth eating.

Rauch is looking for a market-driven solution to food waste. The store will be a non-profit, but after an initial round of funding gets it started, he intends for it to be self-sustaining.

Interesting to see how long after the Freegan Garbage theft trial, the UK follows the US example with shops offering past sell-by food...

...and as an extension of consumers' tendency to 'make do', how much demand will be taken out of the market...

NB Update on Iceland Three case:
Following an outcry on Twitter and questions about the public interest value in pursuing a prosecution – with even bosses at Iceland expressing doubts – the Crown Prosecution Service today announced that it was dropping the case.

Tuesday, 28 January 2014

When online meets real world - how import restrictions are raising the bar...

With different motives, some governments are trying to slow down the development of imported online purchases.

As reported in the Financial Times, Russia, one of the world’s fastest-growing e-commerce markets, has imposed new customs regulations - submission of some original documents and credit card payment records - to hinder courier deliveries to private customers. DHL and FedEx are reported to have suspended express deliveries from abroad to individuals in Russia because of extra paperwork on all parcels for personal use, regardless of shipment value.

Currently just 2% of Russian retail sales are conducted online, but that is expected to rise to 5%, more than tripling the size of the online retail market by 2015, according to Morgan Stanley.

Incidentally, if you think the Russian restrictions are bad, Argentina goes one better, albeit in an attempt to cope with falling levels of foreign currency reserves…  Under the new rules, shoppers can make just two purchases each year from foreign online and mail-order companies. Any purchases beyond that will be treated as imports, and will require extensive paperwork such as a signed declaration to the customs office in advance, before they can collect their packages, for each international purchase.

Given their pragmatism, it is probable that Amazon will escalate their operation in Russia to restore the simplicity of its business model, and possibly an aggregator role to provide an Amazon  route into Russia for those who cannot, or will not, play in the customs ball-park…

…while the authorities have full access to internal traffic for tax purposes…

Optimising your next conference call



These conferences call experiences will probably strike a chord...

Given the potential savings on travel time, conference calls are worth getting right so why not check out Seth Godin's seven key principles?

And with a bit of the correct practice, perhaps even worth experimenting on the buyer?

Monday, 27 January 2014

Hedge Funds move on Major Multiples Store Portfolios

According to reports in The Sunday Times (p1 Business section, 26-01-2014) hedge funds have taken stakes in Tesco, Sainsbury’s and Morrisons with a radical plan to hive off their property empires.  In other words, American activist investors (Elliott, and apparently other activist funds have acquired small stakes in the three retailers) believe that, especially following disappointing Christmas results, the stock market undervalues the properties and that hiving off and flotation of the new property companies would release some of that value by appealing to a new type of ‘property-focused’ investor..

The plan is based upon a similar move last year by Loblaw.
(Morrisons are already exploring some property release, and Dalton Philips includes Loblaw on his CV...)

The ‘hidden’ value:
Retailer          Market capitalisation  Estate value   'Surplus'
Tesco                      £26bn                      £38bn             £12bn                                                                              
Sainsbury’s              £6.9bn                    £11.5bn          £4.6bn                                                                          
Morrisons                £5.7bn                     £9bn              £3.3bn

More details are available in The Sunday Times article.

Incidentally, for those in H&B, Elliott recently forced US drugs distributor McKesson to raise its bid for Celesio, in a deal now concluded.

Whilst the activist-investor route may well be resisted by the retailers, the idea of releasing value that could be part-returned to shareholders might appeal, thus propping up the share price…

However, in doing so, the retailers would lose some control, and also pick up an additional KPI based on maintaining the value of their retail properties, at a time when all three are focused on optimising like-for-like sales… However, if the hedge funds increase their stakes, then increasing shareholder value moves up the agenda, along with the aggravation...

For NAMs, all of this means that a renewed emphasis on financial performance, the value of trade investment and especially the ability to calculate and demonstrate the impact of all supplier-support on the retailer’s share price, becomes a critical requirement in the day-job…



Friday, 24 January 2014

Amazon Anticipatory Shipping, before you order...

                                                                   pic: Retail Wire
Following their Christmas drone-delivery idea, Amazon gained a patent last month for what it calls "anticipatory shipping,'' the Wall Street Journal reports.

Amazon, the Journal reported, says it may box and ship products that it expects customers in a specific area will want, based on previous orders and other factors it gleans from its customers' shopping patterns, even before they place an online order.

Among those other factors: previous orders, product searches, wish lists, shopping cart contents, returns and other online shopping practices.

Once in transit, the packages would theoretically wait at the shippers' or Amazon's warehouse hubs or on trucks until (and if) an order arrives. In some cases, partial street addresses or zip codes will be filled out with the remaining pertinent details — name, rest of address — completed once the order arrives.

Amazon has worked to cut delivery times as a way of encouraging more orders and satisfying customers, such as by expanding its warehouse network and making some overnight and even same-day deliveries.

Amazon didn't estimate how much delivery time it expects to save, or whether it has already put its new system to work, but the initiative clearly provides a new hurdle for those who regard Amazon as competition – and anyone who thinks that they are in the game by simply setting up an online service…


Tuesday, 21 January 2014

Tesco eyes Mothercare, and more?

Tesco is eyeing up Mothercare after its shares took a tumble following a shock profits warning, according to City sources quoted in the Sunday Times. It claims that Tesco had already examined a bid six months ago.

Such a move would bolster Tesco’s plan to turn its out-of-town shops into destinations. This has seen the nation’s biggest grocer buy the Giraffe restaurant chain and take a major investment in the start-up Harris + Hoole coffee business.

The key issue for Tesco is to ensure that any such acquisition would help to optimise space in their large space formats, not only generating incremental traffic, but also equaling or exceeding their average selling intensity levels of £1,000/sq. ft.  Apart from the incremental traffic/sales, by taking well known retail brands in store, Tesco will dilute the 'Tesco domination' effect, rather in the way Aldi makes itself look like a 'normal' retailer through the use of surrogate labels...

Making acquired categories work to these levels means reconfiguring the category's original offer to focus more precisely on consumer-shopper need, fully factor in online potential and piggyback on supply chain efficiencies... In doing so, Tesco will so enhance category performance that they will draw share from independent, specialist retailers...

Taking these possibilities into account, NAMs in all categories not currently optimised by Tesco now need to assess the potential for similar acquisitions, and the consequent impact on their retailer portfolio balance...

Also bearing in mind that Tesco is in no mood to take prisoners...

Monday, 20 January 2014

Lidl switches from hard to soft discounting in France - an inevitable move in the UK?

With increases in outlet size from 6,000 to 12,000 sq. ft., Lidl is offering a new range of regional products and extending its offering to include many more national brands to attract a wealthier clientele.

This is a real breakthrough for the French subsidiary of Lidl in its second largest market. According to Deloitte, it is the world's seventh largest distributor, with an estimated $87.8 billion in 2011 sales and 12,000 stores worldwide. In Germany, it has 3,300 stores and achieved a turnover estimated at €16.2 billion in 2012.

Lidl has operated their classic German model in France since 1988, and grown to 1,500 stores. It is the largest of the hard discounters (Netto, Leader Price, Aldi, Dia). But, like its competitors, it has stalled for four years in overall seventh place with a market share of 4.6%.

Whilst this Lidl move in France will provide useful insights on priority brands and eventual brand/surrogate-label balance, it gives time for UK suppliers to explore their options as Lidl UK, and possibly other discounters, embark on the next evolutionary stage in order to capitalise on the continuing flat-line conditions in retail.

Time for ALL NAMs – and retailers  to pop into a local Lidl, and reflect on where the offering  and their brands – could go, as they follow the French lead…? 

Might also be worth dusting down your EU network and monitoring progress via your French colleagues....

(Thx Joe)