Dixons Carphone - why Walgreens-Boots is different...

The Dixons Carphone merger is the latest in a series of retail unions’ response to structural change in retail…

Key metrics
The £3.8bn 50-50 partnership to be called Dixons Carphone will result in a £12bn turnover company, made up of Carphone’s £3.7bn and Dixons £8.2bn.
In terms of stock market value, Carphone's market capitalisation is £1.9bn and Dixons' is £1.87bn
Carphone's 2,037 stores worldwide and Dixons' 947 stores will overlap and synergies will result in annual cost cuts of at least £80m within three years.

Previous retail mergers
Think about the troubled history of retail unions (see Alex Lawsons’ article in the Independent for details) so far:
- Abortive Carphone - Best Buy European joint venture in 2008
- Asda's doomed merger with furniture specialist MFI in 1985
- Morrisons’ takeover of Safeway in 2004 took longer than expected to bed in..
- The Co-op – Somerfield larger store sell-off
- Asda's acquisition of Netto in 2010, sell-off of 25% stores
- Kingfisher's troubled merger of B&Q with the French DIY retailer Castorama in 1998
- Kingfisher’s attempted a merger with Asda in 1999, resulting in Walmart bid

NAMs have to ask themselves if the Dixons-Carphone merger has enough potential to survive, or is even worth the effort…

Meanwhile, the Walgreens-Boots takeover appears to have a number of advantages
- Geographically complementary in that Walgreens is US only, Boots is rest-of-world
- Broadly complementary business philosophies and product assortments
- Potential synergies re retail expertise exchange
- Purchasing synergies already realising $154m

However, the real advantage over previous retail unions arises from the two-step deal (i.e. part–purchase in 2012, final takeover by 2016) which was designed to allow Walgreens and Alliance Boots to come together gradually and integrate, while continuing to drive their independent strategies in the first years of collaboration…

Sometimes slow is better, even in FMCG retailing…

Empty shop squatting - a high-street solution for a high street problem?

A new business has been designed to protect empty shops from squatters by moving in low-paying renters.

Intuitive Guardians’ new scheme aims to close a loop hole in 2012 legislation, which made squatting in residential properties a criminal offence but does not stop squats being set-up in commercial properties.

The business model has the firm supplying basic shower block and kitchen amenities, property owners paying as little as £50 a week to have their property secured while prospective guardians can get living space in Brighton and Hove at a heavily reduced rate of just £50 a week.

Apart from space protection, the key benefit has to be that local councils, businesses and shoppers become accustomed to a more 'lived-in' high street environment, and will hopefully lead to more creative use of a dying facility...

Life after a mega-merger – some pointers for NAMs

First, the basics…

Companies merge in order to release synergies and save costs. Anything other than a 50/50 split is a takeover, resulting in a faster rate of change and a little more bias in favour of the stronger party…

Logically, as a single, combined company they now need one head office and as much rationalisation of Production, Finance and Sales/Marketing as is feasible. Any obvious overlap of key staff will be eliminated, quickly or slowly, depending upon the new corporate culture. Depending upon the scale of the deal, government will interfere in any ‘vote-losing’ moves such as factory closures in high unemployment areas.

In the interest of abiding with competition legislation there will be an obligatory sell-off of brands that would otherwise result in dominance of a category in a manner that could cause issues with the government. This will result in windfall opportunities for brand acquisition by third parties…

The above description of the process may differ a little from the official press release at the time, but such is the nature of the real world…

However, from a NAMs point of view, the real issue is how to help retail customers to cope with the transition…

Action:

1. Avoid possibility of cherry-picking of best terms and conditions by strong retail customers.
2. It is vital to conduct a total re-assessment of relative competitive appeal for each of the company’s key categories.
3. Given inevitable changes to the overall portfolio, it can be helpful to re-visit ways of growing the business.
4. Helping the new company raise its share price via ROCE improvement provides a useful starting point for a pro-active NAM.

More details in the current subscriber edition of NamNews.

Now is the discount of our winter-tents?

Aldi have launched two ranges of low-cost camping gear - for adventurers and family campers.
However, to the undoubted relief of retail camping specialists, the products - ranging from head torches to satellite TV kits - will only be available at Aldi's UK stores for a limited period and once stocks have sold out they won't be replaced....

However, if this camp-gear approach to instore theatre makes an impact.....

NIVEA Child-minder App

The app that helps you locate your kids on the beach via a sunscreen print-ad cutout bracelet.

This app is a tool for you to monitor your kid’s location, designed by Nivea Brazil and their agency FCB. Detach the bracelet from the NIVEA SUN Kids print on Revista Veja (04/23/2014 edition), download this app and use the Bluetooth 4.0 technology to monitor who is using the bracelet up to a distance of approximately 30 meters.

You can set an alarm to sound at the distance you define, within an approximate range.
See the clip here

A no-brainer for beaches everywhere, but why stop at beach-applications when kids need watching 24/7...

Shop-window pulling power?

                                                                                          pic: Girls at Her.ie desk via Joe.ie 

GSCOP – The NAM’s opportunity to influence its application

Given that NAMs operate at the supplier-retailer interface and often bear the brunt of any breakdown in the relationship, they are probably well qualified to assess the extent to which joint business objectives are being hampered by Code-related issues.

NAMs are also best placed to benefit from any improvement in trade relationships….

GSCOP and the appointment of a Groceries Code Adjudicator were obviously steps forward, but this anonymous survey gives suppliers an opportunity to give their opinion on how the Code currently works in the real world, without the possibility of adverse reaction by their customers.

The survey is being conducted YouGov, on a site that is independent of the GCA, to preserve respondents’ anonymity.

Obviously the more people that complete the survey, the more influential will be its output. It will also give respondents a personal stake in the results that will be presented at the GCA Conference on 23rd June 2014.

Negotiating domestically against hopelessly uneven odds...

Ever wondered how your kids inherited - from the other household expert - and apply high level negotiating skills without ever meeting a buyer?

How they can up-the-ante in terms of the number of bedtime-stories on the evening you arranged to go to the game… How demand levels are even determined by the way you close the car-door on arriving home...

If in doubt, think of the innate skills and insight deployed by your domestic negotiators, by reflex, in beating you hands-down every time:
- A deep and abiding knowledge of every aspect of your character
- Seemingly infallible memories of even the most trivial of events, with word-perfect recall when required
- Infinite levels of sensitivity to your verbal and non-verbal behaviour
- Keen observation and monitoring of how you ‘negotiate’ with the other family experts
- Unashamed access to, and use of, every emotion in the ‘book’

However, the real issue is that we were all expert negotiators at the same age, but somehow (too many workshops?) developed the belief that something more ‘professional’ was required when dealing with ‘real’ negotiators…

In practice, deep study and playback of our domestic encounters might provide more insight and yield even more tools for your repertoire.

Come to think of it, why not explain ROCE to family members and let them flesh out subtleties and applications that you and I can only dream about…?

From an idea inspired by Jeremy Blain