Rare Pied Wagtail gives Tesco the bird

                                                                                                                         pic: Wild About Britain

The Telegraph reports that for the past few weeks a Pied Wagtail has been resisting all Tesco attempts at capture in their Gt Yarmouth store.

The company was even granted a licence by Natural England to bring in a sniper to kill the protected bird, prompting outrage from customers, environmentalists and a BBC wildlife presenter.

Because of the reaction, Tesco have decided to revert to more old fashioned means of trapping and releasing the ‘unwelcome’ shopper-bird into the wild….

Given their large-space redundancy and shopper attrition, a more lateral-thinking approach might be to optimise the traffic-building potential of the situation via innovative instore theatre.

In other words, why not set up a series of gentle faux-attempts to capture the bird, stretching over several weeks, shooting it photographically, and posting the ongoing results on YouTube? 

Incidentally, for those NAMs that cannot work a visit to Gt. Yarmouth into their  store-check schedule, a comprehensive BBC treatment of the Pied Wagtail is available here.

Update 23-09-2014: for bird lovers everywhere.
Apparently, the Tesco wagtail has now  been caught and released into the wild.
In other words it would appear that Tesco will not be pursuing the photo-opportunity route suggested above, and are probably preoccupied with other issues...

Hat-tip to Richard for pointing us at the article

Tesco's fall in share price - why should NAMs bother?

Market capitalisation i.e. value of the company in the open market falls and impacts all stakeholders, including NAMs. For instance in early February, Tesco was valued at £23.58bn whereas today it is valued at £18.23bn…a fall of 22.7% in 7 months!

Why does it matter?
Senior management on share options suffer a direct impact on their personal wealth. Employees on performance-related bonuses via shares become demotivated and begin to consider their options...
In extreme cases (!), there is a negative impact on company reputation i.e. good guys leave, good guys not attracted, while the less-able remain less able… 

Shareholders may force change like splitting the company, replacing board members, etc.

Meanwhile the cost of financing rises
- Loans from banks become more expensive via higher interest rates
- Rights issues i.e. the proceeds and ease of raising new money from shareholders obviously depends
  upon the share price

The growing threat of takeover becomes distracting, at least, and/or may even amplify the above effects..

Impact on suppliers
The resulting bad press can unsettle conservative suppliers, and their shareholders, resulting in pressure to re-balance the customer portfolio (in which case, think also re Sainsbury’s and Morrisons falls in share price?)

Suppliers then reconsider their options and may reclassify the retailer in terms of invest/maintain/divest criteria, ideally following a fundamental re-think…

Meanwhile, given the increased risk:
- A 44 day credit period looks increasingly vulnerable…and even a 2.5+% settlement discount
  seems cheap…
- Trade investment of up to 20% of turnover requires more justification
- 100% compliance becomes a ‘must-get’
- Deductions become challengeable...

Still think a retailer’s share price is simply something for the institutional shareholders?

In other words, Tesco is now in a position to appreciate the benefits of dealing with strong, profitable brands that can help them restore their profitability, and share value..

All it takes is for NAMs to be able to calculate the costs of their offering and demonstrate its value to Tesco’s Balance Sheet and P&L….fast

An ROCE recipe for Dave...?

On his first day at the other side of the Tesco checkout, Dave Lewis will have no shortage of advisers explaining what has gone wrong, a few less saying what to do about it and perhaps a handful indicating a way forward…

Given that scenario, and with some humility, we offer a few pointers for Tesco and its NAMs.

Essentially, Dave Lewis has been parachuted in to restore the share price

Incidentally, much is being made of their loss of market share, but when you think that 30+% of a market seems to translate into market abuse in the minds of politicians, special interest groups and can give the public the impression that ‘Tesco are everywhere’, then perhaps allowing their share to drift down to 25% and keeping it there, would allow  Tesco to focus on growth outside the UK, whilst fulfilling the basic principle of global retailing – profitable dominance of the home market…

Improving the share price:
Given that ROCE drives the share price, then improving ROCE and its elements could provide a way forward

ROCE = Return/Sales i.e. Net Margin  x Sales / Capital Employed i.e. Capital turn
       
1. IMPROVING Tesco R/S
     -  Maintain sales (i.e. see market share issue above), cut costs via reductions in admin and operational costs
     -  Rationalise brand/Private label balance to reflect real market demand and optimise profitability

2. IMPROVING Tesco S/CE i.e. capital rotation
     - maintain sales, cut capital employed i.e. reduce Fixed Assets, Current Assets and increase Current Liabilities

Fixed Asset reduction:
- Sell off land-bank as fast as the property market will allow i.e. without crashing land prices.
- Assess profitability of existing stores, with a view to selling off those that are compromising overall profitability

Current Asset reduction: 
- Reduce stocks by rationalising  ranges and encouraging closer supplier collaboration to increase stockturn
- Reduce debtors (being a retailer, advance payments are parked in the Debtors box…)
- Cash reduction

Current Liabilities increase:
- Move to a gearing level of 30% to remove bank pressure from the mix
- Check the trade-off between extra days credit and settlement discount, and contact the suppliers

This should provide a breathing space to apply some marketing skills…

How about the NAMs?
Consider a ‘what-if’ re Tesco applying the above recipe, and assess the cost to you, and the value to Tesco of your collaboration…

Something for the weekend: Optimising price-pints via the 99 pack of beer!

                                                                                                 Youtube clip via Jake BC

Austin brewers Anytimeale website says it all: “It’s not only real, it’s an amazing deal: ninety-nine beers for $99. That’s 82 pounds of craft beer! Over seven feet of crisp, flavorful Peacemaker!”

Given the Amazonian logistics issues re getting the pack home from the store, perhaps there might even be an alternative route to consumer via some online provider?

Have another long weekend from the NamNews Team!

(Hat tip to Mike Anthony for the pointer to the Adweek article)

The Medium is the Message? (or, using a garbage-truck to re-invent a toothbrush)

                                                 Pic:  via Lars Poulsen, Birgitte Kold Ingwersen, & Eduard Hoogendijk

Marshall McLuhan caused us all comprehension-headaches in the 60’s (the bit I do remember…!) when he introduced his idea: The Medium is the Message, in his ground-breaking work, Understanding Media 

Nothing beats going back to the original (great explanation here), but essentially McLuhan was saying that we tend to focus on the obvious. When we create an idea, its main properties are obvious, but following its application, our in-use experience should cause us to look backwards and realise that we perhaps missed a trick at the time…or we did not anticipate the effect our invention would have on users, in terms of elevating their expectations..

For instance, the creators of the above truck advert were simply combining the physical characteristics of the Oral-B brush and the garbage-truck in a brilliant stroke of insight and execution.

However, if I read McLuhan correctly, this end result could cause us to look backwards at the original design of the Braun toothbrush, a breakthrough at the time, and realise that we had simply ‘motorised a toothbrush’…i.e. like making the hair of a broom rotate for increased efficiency in terms of moving dirt.

But the truck-idea causes us to see what is missing in the original design, the idea of somehow sucking up the dirt in addition to cleansing…

In other words, is there some way of sucking up displaced residue, instead of spitting the result into the hand-basin…?

Time for the Braun Oral-B guys to get in touch with Mr Dyson, or the patent-office, fast?

Request-based vs. Demand-based pricing?

Pic: Michael Ebbesen LEGO, via Mark Anderson LEGOLAND, Windsor

Degree of 'dislike' as a KPI in unprecedented times...

Whilst traditionally we used degree-of-satisfaction, or the consumer’s regard for a brand as a key measure of brand health, unprecedented times may cause us to have to work at the other end of the spectrum - degree of dislike - for guidance on retaining consumers…

Incidentally, perhaps this subconscious need of brand owners to explore all growth-avenues is a reason why yesterday’s Birds Eye survey of Top Foods that British Consumers Dislike Eating, attracted our highest readership of the week.

Cost-management as a driver
In the case of a well-known ‘Liver salts’ brand, if the manufacturer still used the original 1930’s ingredients, the product would cost upwards of £3k per tin onshelf, and would probably remain there… Given this escalating cost, the key driver of product innovation was a search for less expensive ingredients that tasted the same and produced the same physical effect on the consumer… i.e. a need to avoid known dis-satisfaction limits for regular users.

On a more personal level, many years ago in the marketing department of a well-known milk-based beverage, we faced similar issues with ingredient-cost and had to search for less expensive substitutes. We fed the ‘revisions’ to our captive audience via the canteen, and I was charged with spending break-times there, monitoring the ‘degree-of-grimace’ on the faces of colleagues as they unknowingly tasted the modified brew…

Whilst we may have risked losing an employee or two, this testing-model ensured that little risk was taken with our precious consumer franchise…

Although we should always aim to delight the consumer by ‘over-delivering’ on performance, perhaps we are in danger of moving beyond satisfying the needs of the consumer if carried to excess... In other words, we are ‘contracting’ with the consumer to deliver a combination of Product-performance, Price, Presentation and Place that compares well with - i.e. is marginally better  than- equivalents available in the category.

Delivering significantly more than the consumer is ‘buying’ by ‘over-engineering’ the product runs the risk of confusing the consumer, costing more, and may even make us uncompetitive.

The real issue therefore is to fundamentally understand and manage the expectations of the consumer, thereby releasing resources for communicating the proposition and innovation.

…and if that approach causes us to monitor ‘degree-of-dislike’ of the brand, perhaps it is preferable for us to explore and avoid that point, before the consumers vote with their feet…? 

Having had your lunch, Lidl are coming for your clothes…

Having taken a slice of the multiples’ action - including some top-end delicacies - and dipped their toe into the rag trade via basics like underwear, vests and childrens’ wear, Lidl have moved into what it describes as "high-end, on-trend" mainstream fashion to capitalise on its growing UK foot-print…

The unbranded clothing range – manufactured in China and Bangladesh – will compete head-on with Asda's  George brand, Tesco's F&F and Sainsbury's Tu, as well as discount clothing specialist Primark.

In doing so, they and the mults are pushing at the open door of traditional clothing retailing...

Given that clothing retailers need retail margins of up to 60% to cover difficult-to-forecast demand, especially in fashion, and to finance end-of-season 50% price-cuts, the Lidl move represents a major threat to a sector already struggling for survival.

Try matching the highlight of the collection, "leather" jackets – two in faux leather and a biker-style design with leather piping – which will go on sale at £14.99 each, while stocks last (see pics at The Guardian),

Meanwhile, back at the branch, Lidl will attract, and keep a new stream of all-age, all income customers who will invariably be tempted to top up on foodstuffs…

Then having ‘done’ clothing, Lidl will busy themselves coming to a category near you…