In April 2008 the government introduced a new rate on empty properties (to generate additional revenue streams in the downturn!!), thus providing the final nail in the coffin for stressed landlords of shops in the high street. (See regional picture in latest Property Week report)
Add to this the fact that the ongoing demise of the high street is part of a continuing out-of-town trend, with no going back to normal.
Meanwhile, the consumer-shopper re-entering the market is being confronted by increasing numbers of empty shops, a constant reminder of recession and the need for cutting-back.
This means that more landlords will go bust, effectively walking away from the vacant properties, leaving the government with little or no empty property tax receipts, and the additional burden of maintaining vacant property. They then have to find alternative uses for the property, possibly via reconversions to domestic use, for those unwilling or unable to shop out-of-town…
Either way, for suppliers in impulse and related top-up categories, this represents significant loss of High Street presence. A need therefore to cultivate and build upon what remains of your High Street customer-base, realistically. This means budgeting for say at least a 15% reduction on High Street sales of 2007, permanently ( unless you can anticipate a direct transfer of this business to tour out-of-town customers, or alternative channels…??)
Friday, 31 July 2009
Wednesday, 29 July 2009
Answering to the Queen on the credit crunch?
Economic experts at the Bank of England have written to the Queen explaining why the credit crunch had not been predicted, a newspaper reported on Sunday. The reasons given can be a warning for KAMs in recession, and also point a way forward for those prepared to seize the opportunity.
Essentially, the three-page letter explained that apart from how cheap borrowing had encouraged a "feel-good factor", masking a global imbalance in savings and debt, wishful thinking combined with excessive pride had convinced financial wizards they had come up with a way to spread risk throughout financial markets," it added. "Everyone seemed to be doing their own job properly on its own merit. And according to standard measures of success, they were often doing it well," the letter said. "The failure was to see how collectively this added up to a series of interconnected imbalances over which no single authority had jurisdiction."
In other words, all of the colleagues involved in multilevel and multfunctional management of major customers, in a well-organised supplier-company can each be doing an expert job 'proudly' in difficult market circumstances. However, unless a collective view of management of the customer is taken by a respected KAM, a series of collective imbalances and knock-on effects could compromise the bottom line of the customer P&L.
The way forward is to achieve a risk-reward balance between supplier and customer ROCE aspirations, via effective coordination by the KAM.
As finance is the only language-in-common for all functions, it provides a way for a KAM to really take a collective view, and formulate a team-based customer strategy. This can be made more effective in terms of commitment by translating all aspects of the supplier-customer relationship into financial language. It is then essential to relate the conclusions to the needs of multifunctional and multilevel team members, in terms of cost and value, building respect and influence in the process…
Alternatively, why not allow all the 'customer-experts' to excel at their own 'thing', and await a call from the Palace?
Essentially, the three-page letter explained that apart from how cheap borrowing had encouraged a "feel-good factor", masking a global imbalance in savings and debt, wishful thinking combined with excessive pride had convinced financial wizards they had come up with a way to spread risk throughout financial markets," it added. "Everyone seemed to be doing their own job properly on its own merit. And according to standard measures of success, they were often doing it well," the letter said. "The failure was to see how collectively this added up to a series of interconnected imbalances over which no single authority had jurisdiction."
In other words, all of the colleagues involved in multilevel and multfunctional management of major customers, in a well-organised supplier-company can each be doing an expert job 'proudly' in difficult market circumstances. However, unless a collective view of management of the customer is taken by a respected KAM, a series of collective imbalances and knock-on effects could compromise the bottom line of the customer P&L.
The way forward is to achieve a risk-reward balance between supplier and customer ROCE aspirations, via effective coordination by the KAM.
As finance is the only language-in-common for all functions, it provides a way for a KAM to really take a collective view, and formulate a team-based customer strategy. This can be made more effective in terms of commitment by translating all aspects of the supplier-customer relationship into financial language. It is then essential to relate the conclusions to the needs of multifunctional and multilevel team members, in terms of cost and value, building respect and influence in the process…
Alternatively, why not allow all the 'customer-experts' to excel at their own 'thing', and await a call from the Palace?
Friday, 24 July 2009
Camel's Milk, for a real difference?
Your Chocolate-free Diet Giving You the Hump?
Why not have a break and try Dubai's Al Nassma, the world's first brand of chocolate made with camels' milk?
Camels' milk is seen as healthier than cows' milk, containing five times more vitamin C, less fat, less lactose and more insulin, making it a good option for diabetics and the lactose intolerant, a company spokesman said. With 3,000 camels on its Dubai farm, the company sells chocolates through its farm-shop as well as in luxury hotels and private airlines. It plans to launch an online shopping facility within a month.
Have a hump-free weekend, from the Namnews Team!
Why not have a break and try Dubai's Al Nassma, the world's first brand of chocolate made with camels' milk?
Camels' milk is seen as healthier than cows' milk, containing five times more vitamin C, less fat, less lactose and more insulin, making it a good option for diabetics and the lactose intolerant, a company spokesman said. With 3,000 camels on its Dubai farm, the company sells chocolates through its farm-shop as well as in luxury hotels and private airlines. It plans to launch an online shopping facility within a month.
Have a hump-free weekend, from the Namnews Team!
A Sporting Chance in Retail?
Suppose Tesco had significant shareholdings in JS, Asda and Morrisons, supplied Morrisons and other retailers, owned Pepsi and Coca Cola, and if the chairman of Tesco had loaned the chairman of Morrisons £1.5m?
Now flip over to the Sporting Goods category…
SportsDirect, the lead player in the sector, has
- 29% of Blacks Leisure
- 13% of JD Sports Fashion
- 4.76% of JJB Sports (recently sold?)
SportsDirect supplies JJB and other retailers
They also own Dunlop and Slazenger brands (Dunlop-Slazenger Ltd)
Finally, the chairman of Sports Direct is at odds with JJB re the timing of a loan of £1.5m he made to the current chairman of JJB.
Watch this space…!!
Now flip over to the Sporting Goods category…
SportsDirect, the lead player in the sector, has
- 29% of Blacks Leisure
- 13% of JD Sports Fashion
- 4.76% of JJB Sports (recently sold?)
SportsDirect supplies JJB and other retailers
They also own Dunlop and Slazenger brands (Dunlop-Slazenger Ltd)
Finally, the chairman of Sports Direct is at odds with JJB re the timing of a loan of £1.5m he made to the current chairman of JJB.
Watch this space…!!
Wednesday, 22 July 2009
Making money with passion, and all that jazz…
Jazz, despite its seemingly free-wheeling style, operates to passionately-felt and carefully defined disciplines that provide an essential context for high levels of improvisation and creativity.
It just seems loose...
Some time ago, the tenor-saxophonist, Frank Foster (Count Basie Band), was playing a street concert from the Jazzmobile in Harlem. He called for a blues in b-flat. A young tenor player began to play "out" from the first chorus, playing sounds that had no relationship to the harmonic progression or rhythmic setting. Foster stopped him.
"What are you doing?"
"Just playing what I feel"
"Well feel something in B-flat, motherfucker"
(Source Wynton Marsalis, The Guardian)
In the same way, running a business in the current economic climate requires basic disciplines to encourage and guide highest levels of innovation to ensure survival.
Setting and working within the core discipline of an acceptable level of Return on Capital Employed, allowing sufficient freedom to innovate and improvise with optimum energy, has to provide a basis for survival and growth, even enjoyment, despite the impossible odds.
However, if creative initiatives cause you to ignore the reality of ROCE KPIs, don't be too surprised if someone else reminds you of the basics, passionately...!
It just seems loose...
Some time ago, the tenor-saxophonist, Frank Foster (Count Basie Band), was playing a street concert from the Jazzmobile in Harlem. He called for a blues in b-flat. A young tenor player began to play "out" from the first chorus, playing sounds that had no relationship to the harmonic progression or rhythmic setting. Foster stopped him.
"What are you doing?"
"Just playing what I feel"
"Well feel something in B-flat, motherfucker"
(Source Wynton Marsalis, The Guardian)
In the same way, running a business in the current economic climate requires basic disciplines to encourage and guide highest levels of innovation to ensure survival.
Setting and working within the core discipline of an acceptable level of Return on Capital Employed, allowing sufficient freedom to innovate and improvise with optimum energy, has to provide a basis for survival and growth, even enjoyment, despite the impossible odds.
However, if creative initiatives cause you to ignore the reality of ROCE KPIs, don't be too surprised if someone else reminds you of the basics, passionately...!
Wednesday, 15 July 2009
Aldi to apply a 5% Cut In Suppliers' Prices from 1st August 2009 - the knock-on effect
The cost to you: the incremental sales required to restore your cash profit
A supplier making a 10% net profit, needs an incremental sales increase of 100% to restore cash profit.
Two questions:
The value to Aldi: the incremental sales required by Aldi to generate the same benefit via the bottom line:
With gross margins of say 15% on 2008 UK sales of £2.15bn, Aldi could generate £90m, if all suppliers complied.
Assuming a UK net profit margin of 2%, Aldi would need incremental sales of £4.5bn to generate £90m.
Every little helps…
The fall-out for branded goods suppliers
This is not about Aldi. Aldi are simply attempting to raise funds to optimise share growth potential in the current climate. However, a 'one-sided' change in the supply 'contract' is really a fundamental issue that goes to the core of the supplier-retailer ' fair-share' relationship, particularly for their non-branded suppliers (Aldi's relatively few branded products are by definition category leaders, usually limited to 1/2 SKUs and their suppliers have the strength to refuse).
The real problem is that other multiples, already under pressure from Aldi's growing share, could use this move as a precedent, and try to take equivalent steps with their branded suppliers…With more branded choice, the other multiples could afford to lose key brands, replacing them with competitor equivalents…
UK: Aldi Calls On Suppliers For 5% Cut In Prices
The Grocer reports that Aldi is facing a revolt by its suppliers after telling them it will pay 5% less for their products from the end of this month. Suppliers are said to have received a letter from Aldi’s MD of Buying, Tony Baines, telling them it required “a 5% cost reduction on the range of products you supply.” In the report by the trade magazine, one supplier described the tactics as “bullying” with several companies said to be threatening to stop supplying the discounter as a result. Aldi said it deserved better prices because it was offering suppliers increased volumes and a chance to share in its growth. “We are looking to improve our cost base to support our activity and that will benefit all our suppliers,” Baines told The Grocer.
Namnews - Tuesday 14th July 2009
A supplier making a 10% net profit, needs an incremental sales increase of 100% to restore cash profit.
Two questions:
- Is it likely that you could double your Aldi sales?
- What impact would increased scale have on your costs? (say for 10%, 20%, 30% sales increments)
The value to Aldi: the incremental sales required by Aldi to generate the same benefit via the bottom line:
With gross margins of say 15% on 2008 UK sales of £2.15bn, Aldi could generate £90m, if all suppliers complied.
Assuming a UK net profit margin of 2%, Aldi would need incremental sales of £4.5bn to generate £90m.
Every little helps…
The fall-out for branded goods suppliers
This is not about Aldi. Aldi are simply attempting to raise funds to optimise share growth potential in the current climate. However, a 'one-sided' change in the supply 'contract' is really a fundamental issue that goes to the core of the supplier-retailer ' fair-share' relationship, particularly for their non-branded suppliers (Aldi's relatively few branded products are by definition category leaders, usually limited to 1/2 SKUs and their suppliers have the strength to refuse).
The real problem is that other multiples, already under pressure from Aldi's growing share, could use this move as a precedent, and try to take equivalent steps with their branded suppliers…With more branded choice, the other multiples could afford to lose key brands, replacing them with competitor equivalents…
UK: Aldi Calls On Suppliers For 5% Cut In Prices
The Grocer reports that Aldi is facing a revolt by its suppliers after telling them it will pay 5% less for their products from the end of this month. Suppliers are said to have received a letter from Aldi’s MD of Buying, Tony Baines, telling them it required “a 5% cost reduction on the range of products you supply.” In the report by the trade magazine, one supplier described the tactics as “bullying” with several companies said to be threatening to stop supplying the discounter as a result. Aldi said it deserved better prices because it was offering suppliers increased volumes and a chance to share in its growth. “We are looking to improve our cost base to support our activity and that will benefit all our suppliers,” Baines told The Grocer.
Namnews - Tuesday 14th July 2009
Friday, 10 July 2009
" Spotlight on German Retail", a new English Blog by Mike Dawson
Starting this week Lebensmittel Zeitung launched a new English Blog, written by international editor Mike Dawson.
Well worth a visit.
For instance see his interesting interview with Bart Becht, CEO Reckitt Benckiser
If you have any questions/feedback, email Mike at mike.dawson@lz-net.de
Well worth a visit.
For instance see his interesting interview with Bart Becht, CEO Reckitt Benckiser
If you have any questions/feedback, email Mike at mike.dawson@lz-net.de
Thought for Today: “Can we really afford this green legislation?”
‘It’s one of the few good things to come out of this recession,’ says Professor Ian Plimer. ‘People are starting to ask themselves: “Can we really afford this green legislation?”’
Professor Ian Plimer, the Australian geologist, whose new book Heaven And Earth shows that ‘anthropogenic global warming’ is a dangerous, ruinously expensive fiction, a ‘first-world luxury’ with no basis in scientific fact.
Reading Plimer’s Heaven And Earth is at once an enlightening and terrifying experience. Enlightening because, after 500 pages of heavily annotated prose (the fruit of five years’ research), you are left in no doubt that man’s contribution to the thing they now call ‘climate change’ was, is and probably always will be negligible. Terrifying, because you cannot but be appalled by how much money has been wasted, how much unnecessary regulation drafted because of a ‘problem’ that doesn’t actually exist.
For the rest of this fascinating Spectator interview with Professor Plimer see current issue of the magazine
(worth a thought about how your bottom-line would look without the Green burden….)
Ian Plimer’s Heaven And Earth: Global Warming — the Missing Science is published by Quartet (£25).
Professor Ian Plimer, the Australian geologist, whose new book Heaven And Earth shows that ‘anthropogenic global warming’ is a dangerous, ruinously expensive fiction, a ‘first-world luxury’ with no basis in scientific fact.
Reading Plimer’s Heaven And Earth is at once an enlightening and terrifying experience. Enlightening because, after 500 pages of heavily annotated prose (the fruit of five years’ research), you are left in no doubt that man’s contribution to the thing they now call ‘climate change’ was, is and probably always will be negligible. Terrifying, because you cannot but be appalled by how much money has been wasted, how much unnecessary regulation drafted because of a ‘problem’ that doesn’t actually exist.
For the rest of this fascinating Spectator interview with Professor Plimer see current issue of the magazine
(worth a thought about how your bottom-line would look without the Green burden….)
Ian Plimer’s Heaven And Earth: Global Warming — the Missing Science is published by Quartet (£25).
Subscribe to:
Posts (Atom)