Buy One Get Two Free, serious?

Running the numbers on a BOGTF suggests that if the initiative becomes as 'popular' as a BOGOF, the supplier will end up providing the two free units per deal...
...suppliers should possibly be grateful that they are not also invited to maintain retailer margins, given that the retailer will still lose approx 50% on each deal...!

Choccywoccydoodah: Making specialist retail really special…

Visitors to this Brighton cake shop and chocolatier need no reminding of the team’s design creativity in producing the cake of someone’s dreams.
However, the really creative leap has been to encourage The Good Food Channel to produce a TV series that will feature the personal stories behind some of their unique creations. Time for NAMs & KAMs to think really deeply about what makes their specialist channel special, and fuse it with a medium ravenous for interesting content?
Have an indulgent weekend, from the Namnews Team!

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…..?