What if easyFoodstore decide to sell paint?

Given the initial success of easyJet's venture into discount food retailing, it might be interesting to explore the possible application of airline pricing to selling paint…

Customer: Hi. How much is your paint?

Clerk: Well sir, that depends on a lot of things.

Customer: Can’t you give me an approximate price?

Clerk: Our lowest price is our introductory special at $12 a gallon. After that we have dozens of different prices up to $199.

Customer: What’s the difference in the quality of the paint?

Clerk: Oh, there’s no difference. It’s all exactly the same stuff.

Customer: Well, in that case I’ll take your $12 paint.

Clerk: Well actually the $12 variety is only available on our website. If you want to buy it here at the store you’ll be charged an additional $20 Customer Convenience Fee

Customer: So if I go home and get it off the website, its only $12?

Clerk: That’s correct sir – plus a Credit Card Usage Fee of $6 and then there’s standard Shipping and Handling of $15.

Customer: What? So in other words buying online would cost me almost exactly the same as what I’d have to pay here in the store?

Clerk: I suppose so, but if you buy it here you get to use it immediately. Online purchases take ten business days to get to you – unless you pay the optional $25 Express My Paint Fee.

Customer: You’ve got to be kidding me!

Clerk: Well no sir, but it’s academic anyway as right now the $12 paint is completely sold out in both places.

Customer: That’s BS. I’m looking at shelves full of the stuff!

Clerk: Ah, but that doesn’t mean it’s available for sale. We sell only a certain number of introductory priced cans on any given day. Oops, look at that! It just became available again – at $17.50.

Customer: C’mon! You mean to say it went up while I’m standing here?!

Clerk: ‘Fraid so. Inventory control changes our prices all the time.

I strongly recommend you purchase your paint as soon as possible as it could go up again. How many gallons do you want?

Customer: Well, maybe three gallons. No, make that four, I don’t want to run out. I assume I can return anything I don’t open?

Clerk: Certainly sir. The $12 paint is non-refundable, but if you return it within 48 hours you will be entitled to a $5 credit towards the future purchase of another gallon of the same color at the same or higher price.

Customer: That’s crazy. In that case I’ll just give any unopened cans to my brother as he’s planning to repaint his home soon.

Clerk: Sorry sir, no-can-do! Our terms and CANditions – that’s a little in-house joke – prohibit paint transfer. It is strictly for the use of the original purchaser.

Customer: But wait a minute, I hadn’t spotted those “Paint Sale – $9.99* a Can” signs over there? That sounds like a much better deal.

Clerk: Ah yes, that’s from our low cost paint division. The asterisk denotes that the cans are actually half-gallons and the price is based on a minimum purchase of two. There is also an additional Environmental Fee of $5 per can, a non-refundable Can Deposit of $3.50, a Paint Facility Charge of $5 and if you want more than one color, the second has a $25 surcharge and the third is $50 extra.

Customer: This is utterly ridiculous. To hell with this! I’ll buy what I need somewhere else!

Clerk: Well sir, you may be able to buy paint for some rooms from another store, but you won’t be able to find paint for your connecting hall and stairway anywhere but here. And I should also point out that if you want Uni-Directional paint it is priced at $249 a gallon.

Customer: I thought your most expensive paint was $199!

Clerk: That’s only if you paint non-stop all the way around the room and back to the point at which you started. Stairways and hallways are considered one-way exceptions to the rule.

Customer: So, if I buy the $199 paint and use it in my hallway what are you going to do about it – send some goons in to paint over it?

Clerk: Wow, I believe you’re getting it now sir. But no, please, that would be plain silly. We’ll simply charge you a Direction Adjustment Fee plus the difference to $249 on your next purchase.

Customer: Next purchase? No way! I’m out ‘a here

Clerk: At Skyhigh Paints we never forget you have a choice, so thanks for shopping with us. Have a nice day!

Credits: 
Appears to have originated in Travel Weekly, October 1998, by Alan H. Hess

Where next for Sainsbury's-Argos?

News of Steinhoff’s last minute counter-bid for Argos, from a company with a market capitalisation of €19bn vs. Sainsbury’s €6.2bn (£4.9bn), and taking into account Sainsbury’s top limit vs. Steinhoff’s opening bid, it is probable that Sainsbury’s will ask for, and receive, an extension of the bidding process to 18th March to consider their options.

However, given that they are at the limit of a cash & shares combination, it is unlikely that Sainsbury’s will enter, much less beat Steinhoff in a bidding war.

This means that Sainsbury’s NAMs need to factor in a period (until 18th March) of uncertainty and distraction. Barring accidents - some outside development by government or counter bidder - Steinhoff will be successful...

In practice the inevitability of a failure by Sainsbury's to diversify via Argos means either a re-focus on optimising the current operation ‘as is’ or a new search for further diversification opportunities. Making the best of the existing mix means growing at the expense of the other mults, sharpening its competitive edge, with the help of suppliers

NAMs need to drill down to the level of their Sainsbury’s categories in order to best position their offerings within the retailer’s competitive platform, whilst maintaining the harmony of their trading relationships with other mults.

Meanwhile, Argos NAMs need to prepare for a radically different approach to their major customer, under new ownership. This means, treating the 'new' Argos as a new customer, going back to basics and re-profiling the retailer within their customer portfolio....

Exploring how Steinhoff's other UK operations are managed might also help...

Straight croissants? But what about the magic, guys?

News that Tesco have decided to de-list crescent-shaped in favour of the less-messy 'straight' option causes me to think this move could represent another crisis in the making...

Has anybody considered the ceremony associated with the purchase of a warm buttery croissant, the breaking into bite-sized chunks, applying a knob of jam - or even more unruly honey - to each, and all the while dripping flakes and spread onto plate, table and even front of clothing, while taking minimal sips of double-expresso, and conducting a business deal simultaneously...

This display of multi-tasking nearly always impresses business partners, themselves almost resisting the temptation to pinch-up the flakes and mop up the drippings in a final flourish...

On a domestic level, the traditional crescent-shape allows the family to practice the required dexterity - with enthusiastic participation by the toddler recently graduating from a milk-diet - and the added benefit of being able to recover all 'spillings' without a hint of social embarrassment. Somehow, a straight version does not have the same appeal...

Deep down, consumers, whilst conforming on perceived value-for-money, can be diverse in their needs re other aspects of a retail offering...
Personally, I struggle with the idea of tubular hard-boiled eggs..., while patiently waiting for wonky vegetables to outsell the 'straight' variety..

All of which reminds me of my early ventures in giving business advice to a Danish dairy company re the fact that their UK butter offering might prove confusing to UK shoppers because of its 'haphazard' changes in colour from yellow to white and back again during the year.

Despite my farming and Mom 'n Pop store upbringing in less politically-correct times, I persisted in recommending a purist marketing approach to this farmers' cooperative in that a consumer-test was essential in establishing whether white or yellow was the preferred colour. This insight would then determine whether the product should be bleached or coloured yellow to match consumer need...

The client politely pointed out that theirs was a natural product whose colour reflected the cow's seasonal diet, and told me they did not think much of my reservations re the brand name either...

I often wonder what ever became of Lurpak over the years....

Need for more transparency? Moi?….

Competitive forces, increasing trade pressures and endless price reductions are combining to make relative power a key issue in unprecedented times…

Because running a business, supply or retail, means achieving and managing a delicate balance of the conflicting interests of shareholders, lenders, customers, workers, management, government and perhaps even the consumer-shopper, knowing the inevitability of compromise diluting profitability, and being measured via 20/20 hindsight, it is understandable that those ‘in charge’ are often tempted to respond more readily to the most powerful demands.

In a trading relationship, it is relatively easy to shift from assertion to aggression in dealing with an up-the-line partner when attempting to meet the demands of the more powerful of the internal stakeholders. Acknowledging that consumer power is the key driver, then logically this means the system only works if power diminishes as one moves back up the supply chain…

Starting with consumer-shoppers’ ability to vote with their feet, or their ability to command the help of government if their needs/rights are being ignored, the real power resides on the shop floor (or rather the floor of the shop), and cannot be ignored…

Given retailers’ ability to aggregate and apply buying muscle, they can appear to have more focused and usable power, which they then apply further up the supply chain. The finished goods supplier by definition has more power than the ingredients supplier and proceeds/needs to apply that power in driving down costs…

Governments come on board when they perceive that a shift in the power balance could result in votes being lost as they struggle with their compromises… Hence their interference when the farmers are under pressure, retailers are ‘over consolidating’, or a detrimental change in the health of the consumer-shopper is in danger of driving up healthcare costs…

Suppliers and retailers need to anticipate these inevitabilities, plan for appropriate change and prepare plausible explanations for the lead-times required.

Transparency can help.

With so many of the company’s systems/models designed for internal consumption and to meet internal needs, then accidental or forced exposure to outside eyes reveals their ‘bias’ and renders them indefensible…

The question of whether one should have to explain is not the issue (i.e. whilst refusal to explain can be interpreted an attempt at concealment, willingness to explain does not necessarily imply weakness).

It is perhaps better to accept the inevitability of total transparency, and design policies, systems and process that are fully defensible, internally and externally. Only then can we have the courage to be transparent.

In the process of attempting to fully understand partners’ views as we strive towards greater transparency from their perspective, our position can become more defensible, and result in our ability to build and use expert power, to the disadvantage of less transparent competitors…

As more transparent key influencers accumulate more power in the market, then this wish for a less opaque trading environment may even become self-fulfilling…..

'Smell-by' dates adding to the usable-life of food?

Essentially, as uncertainty continues to be the norm for many families, resulting in consumers limiting spending to essential items, it is perhaps useful to consider the impact of financially-stretched consumers attempting to extend the usable life of food in these uncertain times.

When smaller, closer, faster, more convenient shopping becomes the norm, consumers are in a better position to monitor fridge contents, will rotate stocks more effectively, and thereby waste less via 'on-time' usage.

If we couple this with major multiples attempts to limit instore food wastage, and political pressures to donate surplus produce to charities, then it becomes obvious that significant demand is being taken out of the market.

However, if consumers are also beginning to revert to Granny’s method of judging food quality by its smell, they will in effect add even more to a product’s usable life, thus taking more demand from the market.

The result will be flat-line demand for fresh produce, at best, with any growth coming at the expense of available competition, based on a savvy assessment of Product, Price, Presentation and Place….

NB. NAMs closer to the fresh food sector will immediately appreciate that increased use of ‘smell-by’ dating may result in unintended consequences based on irradiation of foodstuffs, whereby media attention will be re-directed at food processing in a search for clarity…

Winning In FMCG - How Brands Can Win in the Age of the Discounters

Guest blog by Richard Nall, The Brand Garden

Pop over to Germany and drop into a Real or V-Markt and you’ll glimpse a possible future: stores that feel more like B&Q with the typical superstore range we take for granted tacked on at the side.  On a more forensic examination, you might note a seemingly odd allocation of space for FMCG categories and brands (just how do Milka or Tempo deserve all that space?) with few promotions.  You realise that this might be more about survival than coherent FMCG retailing in the sense we have known it.  You might also note something about those brands that are flourishing...  

In short they must have done, and continue to do, the basics very well.  It’s the only explanation in a world of limited differentiation and marginal gains.  Their consumer segmentation and clarity on the leading category/brand insights will be sorted.  Brand and architecture models will be powerfully crystalised and executed ‘through-the-line’ with a long-term view of innovation requirements.  They will align this to a flexible approach to promotions and tactical SKUs within a pragmatically commercial framework.  In negotiations, they recognise the value they bring their customers’ as distinctive brands & category builders.  

This is the key.  

Through building distinctive, relevant brands, these brand owners help rescue these retailers.  They support the rationale for shoppers to return rather than head for Aldi and Lidl.  And herein lies the problem for many brands in this Brave New World.  If it is there in the first place, the clarity of proposition and discipline in consistent execution is quite often lost through fragmented commercial teams.  Weak P&L management means that margin/trade spend has been conceded over the years to the extent that many brands struggle to receive the investment they need.  Rather than being concentrated or, at the very least, aligned, awareness-generating monies are split between sales, category, shopper and consumer marketing teams, and used to meet their respective, turf-driven agendas.  

Yet, as always in the gloom, there are rays of light.  Challenger brands’ growth has been the success story of the last 15 years, bringing interest to homogenised categories, and offering a recipe for success for the future.  You do not need to be big today to succeed tomorrow, and being in a rush to grow might do you a dis-service as consumers take time to evolve their shopping habits.  The well-travelled phrase ‘more haste, less speed’ is very apt here.  

Be clear regarding the market in which you are competing.  Define it narrowly and you will miss growth opportunities; be too broad and it will be meaningless.  Be ruthlessly clear on your brand proposition, and leverage that through innovation and distinctive communication.  Make sure you really do understand the available consumer touch points, and be creative in your solutions.  You don’t need a big spend to have impact but you must maximise the value of each and every part of the marketing mix you can afford.  

Think Innocent and Tyrrell’s and start with packaging and SRP.  Learn from Williams Murray Hamm’s packvertising design approach.  Think ‘less is more’ and ‘concentrate for effect’.  Market size and creative power are two of the biggest drivers of exponential sales gain so use them to your advantage.  Make sure you have proper and mutual challenge and debate with your agencies.  You don’t need stand-up rows but you should encourage the creative tension of passionate conversation and short-term disagreement.  

If you’re still wedded solely to traditional communications techniques, be creative in your negotiations with the broadcasters and expand your horizon.  Take advantage of the opportunities that digital media represent, always remembering that the consumer journey is like a funnel so ‘mass awareness effect’ should remain your ultimate goal even if it might take time to get there…don’t waste your money on gimmicks, and make your digital choices wisely.  On the other hand, if you aren’t using some of your marketing spend to test the RoI of alternatives then you are missing a trick so strike a balance.  Be clear on the investment and communications decision-maker (one!).  

Next, remember that your customers need you brand owners now more than ever before, but only if your brands, large or small, are fit to fight on their behalf.  Fail this test and you will be deservedly culled.  The reality is that it does not matter how good you are today, it will not be good enough tomorrow.  A tricky race is only going to get trickier...

To see how we can help you irrigate your business, contact Richard Nall on +44 (0) 7796 930 228 © The Brand Garden 2015

BOGOF R.I.P. - A sideways swipe at waste?

With Asda re-discovering its Walmart roots by ditching multi-buys, and Sainsbury’s clearing the multi-buy shelves by Summer, Tesco and Morrisons will not risk looking odd by comparison, meaning 'Hello EDLP....'

Eliminating multi-buys, means less scope for waste, matching purchase with need, simpler pricing helping shoppers identify real value, prices moving to EDLP, with Stelios establishing new levels of Low @25p…

In fact, best to see it as part of a war on waste, coupled with a move to supermarkets donating excess produce to charity, people eating less, in a move to healthier living…

Meanwhile, consumer-shoppers have to sharpen their savviness by getting their heads around Unit Pricing - you really think they all understand it? - with supermarkets playing their part by emphasising price per unit, AND PRINTING IT BIGGER…

Finally, joining all the above dots, NAMs, having been spared the task of trying to make a multi-buy seem profitable, now have to focus on growing at the expense of competition within the resulting flatline - or even falling - demand in many categories…

Confusing promos morphing into savvy-shopper alienation

If making promos difficult to compare is the objective, then stakeholder efforts are working well, in that Watchdog deal-quizzing of consumers found that just one in 50 was able to choose the cheapest option....

If driving sales in flat-line markets is the objective, then, according to the Daily Mail, then such confusion is causing shoppers to spend an extra £1,200/annum.

                                                                                                                    Source: The Daily Mail

What no one is measuring is the negative impact on brand equity amid the creeping suspicion of being misled. Even more serious is the fact that, in the absence of effective self-regulation - last year, the Competition and Markets Authority (CMA) said it had found evidence of misleading supermarket promotions following investigations into a super-complaint submitted to the regulator by consumer watchdog Which? - the government could intervene in order to clarify the position for shoppers...

Think bureaucracy and 'government language' to explore the implications.

How much better if suppliers and retailers worked together to attempt to retrieve some of their respective brand equity by aiming at clarity and sustainable like-with-like comparison of promos, before the government is forced to assist...