Price maintenance via content reduction

Given the difficulties in passing on escalating ingredient and energy cost increases to the consumer because of a combination of trade resistance and breaches of price-points, some brand owners have resorted to pack-content reduction to mask price increases. Whilst they obviously preserve their legal integrity by updating the weight indication on the label, the real issue is consumer perception

To my mind this is one of the fundamental issues in the brand-consumer relationship in the current climate. As we know, a consumer buys a combination of Product, Price, Presentation and Place when choosing a brand. A consumer consciously or unconsciously compares this offering with alternatives available in the market. Good brand management is about maintaining these 4 Ps in harmony, and meeting the expectation of the consumer.

Brand equity is thus about preserving this trust of the consumer in the brand, in effect when they open the pack, the contents meet or even exceed their expectation.

Even being open and honest with the consumer when making changes to the offering may not prevent the consumer’s perception that they have been short-changed, causing them to second-guess all changes to the brand, thus damaging brand equity

When a brand owner changes one element of the package i.e. increases the price, or reduces the amount the consumer receives for the price, this balance is disturbed, and can cause the consumer to ‘re-compare’ the offer with alternatives available.

The real problem is that the consumer may then switch to a competitor brand without complaining to the brand owner, thus resulting in loss of market share…

( It used to be said that a complaining consumer was a loyal user trying to give the brand a second chance! )

As far as price-points are concerned, brand owners need to ask themselves if the savvy consumer is really influenced by ‘5s and 9s’ in this ‘post’ financial-crisis era…?.

Perhaps brand owners should allow cost-price increases to flow through to the retail price, hoping that eventually the same ingredient cost-increases will affect the competitors’ retail prices, given that legislation rightly prevents any price-coordination in the market.

If the brand’s offering is changed without resulting in equivalent changes in competitive offerings, then the result has to be loss of market share until 4P equilibrium is restored in the category..

Perhaps the real answer is to use a price increase as an opportunity to fundamentally re-assess the total offering vs. alternatives available, and update the offering to suit the savvy consumer…?

Flexirents in the High Street, New Study

According to a new study from the Investment Property Databank, independent retailers are seeing increasingly flexible leases and a rent drop by a third (in real terms) over the past two decades.

Key findings from the IPD include:

-Average lease length of 5.7 years; 


-Significant increases in break clauses ‘as retailers look to hedge against economic uncertainty’;


-34 per cent of new leases for High Street shops have a break clause, up from 3.9 per cent in 1999.

-Retailers have an average ‘rent free’ period of ten-months on a rent-weighted basis;


-The separate IPD data on standard shop rents shows that while inflation has risen by 94 per cent since 1989, rents for standard shops have only risen by 24 per cent, and in real terms fallen by 37 per cent.

“The issues facing our High Streets are extremely complex with recession, structural changes caused by the internet and consumer preference all in play,” said Liz Peace, chief executive of the British Property Federation. “In such times of change it is important that leases adapt.”

The traditional ‘institutional lease’, i.e. 20 years plus, with upward only rent reviews and no breaks, was inconsistent with many retailers’ needs.

With this barrier removed, independent retailers now need to up their game to match multiples processes, or lose the lot…

Jerry Leiber, hound-dog pragmatist, 1932-2011

Songwriter Leiber was extremely irritated by the changes that Presley made to the original lyrics of Hound Dog. He said in 2009. "The song is not about a dog; it's about a man, a freeloading gigolo. Elvis' version makes no sense to me, and, even more irritatingly, it is not the song that Mike Stoller and I wrote. Of course, the fact that it sold more than seven million copies took the sting out of what seemed to be a capricious change of lyrics."

A pointer for those of us who can feel precious about our routes to market…we may not like the fact that the price-orientated supermarkets may not fully represent our brand nuances, but the sales uplift can provide some consolation… 

Morrisons planning in-store GP surgeries

Morrisons has revealed it is considering following the lead of Sainsbury's and opening GP surgeries in store, in a move that will fuel the debate over the commercialisation of primary care.

Sainsbury's offers free space to GPs wanting to run a surgery in their supermarkets, and has two GP surgeries in place – in stores at Heaton Park, Greater Manchester, and Colne, Lancashire. It announced in June it would be opening six new in-store GP surgeries across the UK.

It appears that Morrisons are looking at the possible provision of GP services in the store environment.

A logical development in that leading-edge supermarkets need to optimise the store visit by enriching the shopping experience. In effect, selling any goods and services that can legally be sold to shoppers…

Any provider of primary care experiencing drift of ‘business/custom’ to the multiples needs to up their game to equivalent levels of appeal in order to reduce or even reverse the flow.. unlikely in the case of the NHS, given current inefficiencies and attitudes to their ‘customers’… 

Supermarket space-race brewing?

Sainsburys buying the Twaites brewery site in Blackburn is merely the latest in a supermarket space-race in a diminishing pool of large-space locations that in many cases already have planning permission.

For breweries to survive in a competitive market, they need to optimise all routes to consumer…, including supermarkets. This results in lower prices, leading to a need for increased efficiencies, tending to make old, town-centre sites less fit for purpose… i.e.


Hertford brewer McMullen has sold its Victorian brewery site to Sainsbury’s

Old Harveys/Robinsons brewery in Ulverston, Cumbria, is also due to be turned into a supermarket.

The Young’s brewery site in Wandsworth, south-west London, is scheduled for redevelopment

The old Vaux Breweries in Sunderland, owned by Tesco but selling to regional development agency.

Meanwhile retail watchers are also keeping an eye on what happens at the Tetley brewery in Leeds, which closed its doors in June after 189 years. 

However, unlike other land grabs by supermarkets, the reaction to the brewery takeovers has been generally positive. 

Selling the site to one of the major multiples provides cash for purpose-built premises out-of-town.

Heritage-wise, the supermarkets can perhaps satisfy some of the people some of the time by attempting to preserve as much as possible of the original site, efficiencies permitting…..

A win-win-win for all?

The ultimate Gen Y office-pod

If you look at the NAM’s workspace of 10 years ago, you will find a cabinet with lots of files, a big desk with mounds of paper on it, bookshelves with reading material, and a lot of general clutter.

Today, all of this is replaced with just one tool: a laptop.

To optimise NAM output, Kogan Technologies have created new work pods which they believe will be the future of office spaces around the world. The chairs are unbelievably comfortable, and they have built-in heating, massage, speakers, and even SD and USB slots to play music.

In fact they look so comfortable it might be worth experimenting with the possible addition of a steering mechanism and four road-wheels for ultimate productivity…

Have a 24/7 ‘working weekend’ from the Namnews Team!

First UK click ‘n collect drive-tru

Tesco are launching Britain’s first drive-thru store at the Tesco Extra store in Baldock, Hertfordshire, tomorrow as a pilot.

The service is aimed at customers who do not want to carry out their weekly shop themselves, but who also do not have time to wait at home for an internet delivery.

Instead they will be able to drive to a dedicated area in a Tesco store at a set time and pick up their shopping without having to leave their car.

The service will be run by the Tesco dotcom team, with customers ordering their groceries online as if they were doing an internet shop, only they will then choose the Click and Collect option.

This will enable them to book a two-hour collection slot and they can pick up their shopping any time within this window.

They will then go to a reserved area in the car park, show a member of staff their shopping reference details and have their goods loaded into their car boot.

The charge for the service is £2, compared with a sliding scale of charges for internet deliveries which starts at £3.
Namtip: Scope to combine with a simultaneous petrol top-up by also offering the pick-up facility at Tesco forecourts?

Like-for-unlike Sales?

The way retailers report their like-for-like sales should be streamlined to reflect factors including the growth of online sales, or risk obsolescence of the measure, according to the KPMG/Synovate Retail Think Tank (RTT).

Currently there are no guidelines to how retailers should report like-for-like sales, which aim to provide a measure of underlying performance by taking out the impact on sales of new or closed stores. Retailers can choose whether they include figures on stores that are being refurbished, whether they include VAT, changes to products, discounts or promotions. That makes it difficult, says the RTT, to compare figures for different retailers.

There is also need for a consistent approach to reporting sales online and from other emerging channels.

RTT recommendations in new white paper:

-       website sales be included in like-for-like sales, except in the case of new website launches

-       trading updates for like-for-like sales should cover a standard period of time, especially over Christmas

-       excluding new and closed stores from like-for-like figures but including stores that are being refurbished

-       like-for-like sales figures should be provided both including and excluding VAT

-       any discounts should be reflected in like-for-like sales at the value that the customer paid

-       future money-off vouchers should only be taken into account at the point of redemption

Assessment of the health and value creation of a retailer requires a balanced view across a much broader set of metrics covering cash generation, profitability, and productivity.

Real issue is whether a retailer is attempting to clarify or obscure its real comparability with competition.

All else is detail….