Incremental sales to cover VAT increase?

If you absorb January’s 2.5% VAT increase, you could require 24% in incremental sales to cover the cost..

Do you really think the consumer or the retailer will share the pain?
See our inhouse bespoke Namcalc workshop for 34 similar 'day-job' calculations, with incremental sales implications, applied to your categories, customers and competition.  

Live crab vending machine

We have covered obscure vending machines in the past, but this one’s a first: a vending machine that sells live crabs. This model is located in a subway station in Nanjing, China, and keeps the crabs at 5°C at all times. In other words, the crabs inside are alive, “hibernating” in a frozen state.

A sign in front of the machine promises 100% customer satisfaction: if buyers get a dead crab, the maker, based in Nanjing, promises they will get three crabs for free.

Each crab costs between $1.50 and $7.50, depending on the size. The machine’s producer says they currently sell around 100 crabs daily, resulting in about $500 sales.
A whole new meaning for shopper engagement?
Have a careful weekend, from the Namnews Team!

Source: http://www.crunchgear.com

Oktoberfest Revellers Celebrate a 200 year anniversary Lost Weekend, bigtime…

A promo that resulted in 7million litres of beer being consumed, with the inevitable impact on memory:      lost items included a set of dentures, a live rabbit, a hearing aid, a leather whip, a tuba, a ship in a bottle, 1,450 items of clothing, 770 identity cards, 420 wallets, 366 keys, 330 bags and 320 pairs of glasses, 90 cameras and 90 items of jewellery and watches.

Seriously, with 6.4 million visitors to the 200 year Anniversary Munich Festival drinking 7m litres, there seems to be a lot of upside potential for future years (just 1 litre each?)

Have a forgetful weekend, from the Namnews Team!

Source: Andrew Sullivan

Fair-share negotiation Asda-style?

According to yesterday's Independent on Sunday an allegedly leaked memo to Asda Buyers apparently gives details of a variety of tactics recommended as ways of getting better terms from suppliers.

These include all the usual tricks and if they are a surprise, perhaps we need to talk….

However, the article lists details of how suppliers can be split into four groups, depending on their reaction to negotiations claims the document – they are "high performing, complacent, conflict and apathy." and these may provide ways of encouraging Asda to move closer to fair-share negotiation. (See free Youtube session)

Essentially, if you want to negotiate more equitably with Asda, you need to be able to calculate and demonstrate that your contribution to Asda profitability deserves classification as one of their 'high performing' suppliers. Otherwise settle for 'transaction' status…

Or let me know a number and convenient time to call

Poundland, the ultimate in fair-share negotiation….

Poundland is the High Street phenomenon which has defied the recession as it continues to expand its retail empire, selling everything from bleach to shoelaces and daffodil bulbs — all for just £1.

But where does all its stock come from and how can it be sold so cheaply?

Chief executive Jim McCarthy explains his business model:
"A supplier could come to us on a Monday with a cancelled order of a few million units of something. They would get an answer on the same day, probably at the same meeting. By Friday, the stock would be sold and their invoice paid in full. If you want something shifted, Poundland is the place to do it."

Poundland is the bargain discount store that has appeared, seemingly overnight sometimes, on High Streets and shopping malls everywhere — filling the hole left by the collapse of Woolworths in 2008.

The chain is actually in its 20th year, and boasts 299 stores throughout the UK with many more planned — much to the annoyance of some snobby town councils…..

Real issue for suppliers is making making marginally-costed bespoke £1 SKUs on a promotional basis that suddenly become a permanent part of the product portfolio, a possible drain on profitability…

Have a no-nonsense weekend, from the Namnews Team!

Buying bulk is best?

A recent survey by lovemoney.com indicates that bulk packs of branded goods can cost more per 100g than smaller packs of the same brand.

With savvy consumers paying more attention to real value, able to read unit pricing details on shelf-edge labels and making active use of price-comparison sites, real damage can be done to brand equity in the process.
The only issue is whether the damage is being done to the store or the brand.
In other words, is the shopper blaming the shop or the brand owner for the attempt to mislead?
Either way, the resulting dilution in brand equity harms both supplier and retailer.
Given that the real profit is made on repeat purchases by satisfied shoppers, perhaps it is time for both parties to make this no-brainer correction of the gap between perceived and actual value for money?

Alliance Boots To Cut 900 Head Office Jobs In Efficiency Drive

News of AB's latest move was no surprise to our workshop delegates…..
Essentially, when a company is taken over by private equity and taken private, it is important to plan an exit route for the private equity partner via reflotation on the stock market, say within 5 years. If the deal was done a short time before the unprecedented global financial crisis kicked in, it is understandable that the re-flotation timing might have to be extended for a few years….

Making a company ready for reflotation means:

- Achieving scale via global coverage (acquisition & organic)
- Extending the instore offering/assortment in goods and services
- Optimising retail and wholesale operations
- Paying down debt to reach say 30% gearing
- Increasing ROCE to 15%
- Increasing Net Margin to 5%
- Increasing stockturn to 20 times per annum

How?

- Cut & rationalise existing operations to raise/save money and improve efficiency
- Drive down purchase prices via scale buying
- Smaller, more frequent deliveries from suppliers (Just-in-time)
- Drive traffic and trade up quantity (basket-size) & quality
- Additional credit from suppliers
- Optimise space instore
- Optimise onshelf pricing (category management, build retail brand equity)
- Optimise private label instore and via retail partners

And then some….

Marks & Spencer experiments with standalone beauty shop in Mumbai

The retailer has in the past acknowledged its weakness in the category compared with department store rivals, but a spokeswoman said the Indian shop was an opportunistic use of space near an existing store, and not a prototype for roll-out.

Nevertheless, if successful, a pointer for other countries…..?

Savvy-consumers howling for more 'fizz' for less?

Caulier, a family-owned brewery in Belgium has produced its first batch of specialist beer brewed by the light of a full autumnal moon.
"We made several tests and noticed that the fermentation was more vigorous, more active," explained CEO Roger Caulier.
"The end product was completely different, stronger, with a taste lasting longer in the mouth," was the response for researchers courageous enough to interview consumers that are allegedly mad about the new product….

Meanwhile, publicly owned water company Eau de Paris have installed a new public drinking fountain in Paris offering sparkling water free and in unlimited supply, aimed at weaning savvy consumers off bottled water and onto tap. The fountain injects carbon dioxide into regular tap water to make it bubbly, and chills it before delivering it to consumers
Just two savvy-driven potential wake-up calls for the drinks category…
Have a mad sparkling weekend, from the Namnews Team!

Tesco 1p mark-downs of discontinued goods

In a simple stroke, Tesco have captured several customer-delighters that resonate with consumer interests.

Their surprise checkout charges of 1p for products that would have been junked, have capitalised on a global concern with avoiding waste, besides adding a feel-good bonus to an impulse purchase on a routine shopping trip. Keeping the discount secret until payment means that the initiative and shopper expectation can be easily managed. Another application that might stimulate their banking offer might be the issuing of random 'double-your-money' payouts at their ATMs…

However, the real breakthrough will be in finding a way to apply the surprise deep-discount idea to food near its sell-by date, thereby touching an anti-waste live nerve that would transform impact their social image, with no appreciable downside….

Tesco Banks on Financial Services

This autumn Tesco will launch a high-profile advertising and mailshot campaign to tell its 20m customers that it wants to be their bank of choice as well as their favourite supermarket.
It will be trying to get its shoppers to sign up to its new savings account as it seeks to expand its 6.3m account base. Sir Terry Leahy has promised to build a “people’s bank” by capitalising on public disillusionment with traditional lenders. Next year it will expand its offering to mortgages and current accounts.

Whilst no one underestimates the infrastructure requirements (putting together regulatory teams, risk teams, compliance teams) necessary to operate as a trustworthy bank, Tesco has been helped by the fact that the global financial crisis has caused competing banks to level the playing field via a series of own-goals that have destroyed any residual trust by the public in financial service providers and banks in particular. Moreover, the savvy consumer is becoming more financially astute, and can appreciate the fact that banks charging 4 per cent for a fixed-rate mortgage when Bank of England base rate is 0.5 per cent and they pay just 0.23 per cent on consumer savings is a major abuse of power. This has to provide a major window for Tesco in the sector.

In these circumstances, Tesco simply has to build and maintain a financial competitive-edge ( i.e. offer slightly better rates, and gradually improve these rates as traditional banks are forced to follow, in their efforts to recover inevitable loss of share to Tesco). The rest is a no-brainer in terms of the provision of levels of personal service that will easily differentiate Tesco from any retail bank in the country…

However, the real challenge for Tesco will be to manage consumer expectation by growing their banking service slowly rather than at high speed (i.e. resist 'knock-out' interest rates).This opportunity will continue to be available as long as traditional banks remain in denial, and patently out-of-touch with customer-need.

Sometimes a cut too far?

Following on from travel bans, dust clouds and general cut-backs, NAMs and KAMs may have been forced to consider the budget airlines alternative. Here the search for cheap-flights will have revealed a culture more akin to their dealings with some major customers.
This has led the budget airlines to consider 'standing-room only', replacement of co-pilots with suitably-trained stewardesses (could help by making the tea between crises) and shorter-seats, apart from the obvious 'paying a pound to spend a penny'.
Incidentally, it may not be well-known that  airline-chiefs can have outside interests such as classical music that may benefit from their attentions using a  similar approach to cost-cutting.
Pls see the following letter allegedly written by a high profile CEO....
Schubert’s No.8 in B Minor

To the Chairman, The London Symphony Orchestra

After attending a rehearsal of this work, we make the following recommendations

1 We note that the twelve first violins were playing identical notes, as were the second violins. Three violins in each section, suitably amplified, would seem to us to be adequate.

2 Much unnecessary labour is involved in the number of demisemiquavers in this work. We suggest that many of these could be rounded up to the nearest semiquaver, thus saving practice time for the individual player and rehearsal time for the entire ensemble. This simplification would also make more use of trainee and less-skilled players with only marginal loss of precision.

3 We could find no productivity value in string passages being repeated by the horns; all tutti repeats could also be eliminated without any reduction in efficiency.

4 In so labour-intensive an undertaking as a symphony, we regard the long oboe tacet passages to be extremely wasteful. What notes this instrument is required to play, could, subject to a satisfactory demarcation conference with the Musicians’ Union, be shared out equitably with the other instruments.

Conclusion
If the above recommendations are implemented, the piece under consideration could be played through in less than half an hour, with concomitant savings in lighting, heating and overtime, wear and tear on the instruments and hall rental fees. Also had the composer been aware of modern cost-effective procedures, he might well have finished this work…

Seriously, budget airlines, in response to market demand are simply trying to cut to the bone, and are offering the customer what they want to pay for.
Being criticised by their customers for the resulting cut-down package is unfair when they are simply delivering a slightly more abrupt version of the indifference provided by mainstream airlines…

Have a high-value weekend, from the Namnews Team!