Sh*tbull Terrier Savages Morrisons' Board...!

Sir Ken Morrison’s one-word assessment of the company’s turnaround strategy will have come as no surprise to seasoned Morrisons’ NAMs...

Whilst KM's judgement was delivered as a major shareholder at a gathering of concerned shareholders, he was really expressing succinctly the view of the loyal, savvy, outspoken consumer-shopper, the complainer who is attempting to give a favoured retailer a second chance to get it right.., a call-for-action that deserves to be taken at face value.

However, as most NAMs know, KM has been delivering ‘bulls**t’ assessments for years...  In fact, he always expressed a down-to-earth reaction to any trade presentation that was too theoretical, and even imposed six-month bans on NAM visits. Instead, NAMs were invited to ‘send in the details and we shall decide if it is worth stocking'…

This invariably caused proactive NAMs to revisit their brand rationale and distil it down to a simple, hopefully compelling proposition that might surmount the constraints of ‘a couple of leaflets and a covering letter’.

In fact, the only real problem for Morrisons’ NAMs turned out to be how to explain to the Sales Director why their sales actually improved during non-call periods…

Getting a fix on Big Data by switching your focus from 'dot collection to dot connection' (Seth Godin)

Ideally, Big Data - the ultimate 'dot collection' - provides total knowledge, real-time, and requires optimisation via real-time action.

However, leaving aside the amount of computer firepower required to manipulate large data-sets, real-time, with the attendant costs and time implications, it is obvious that Big Data is too big for NAMs to ignore...

Apart from the need to cope with the crazy compromises of real life account management, it seems obvious that NAMs need a way into the potential insights represented by 'total knowledge'. Whilst it can be tempting when under time pressure to revert to a 'fixer' role by deciding on a solution and diving into the data in a search for facts that support our prejudice, it seems obvious that more is required.

On the other hand, awaiting the collection of all the dots can take too long...leaving time for a more pragmatic competitor to find an 'adequate fix'.

What the pragmatic NAM needs is a basic reference-point, a way of looking at the data, and some courage...

One approach can be to acknowledge that a retailer is ultimately measured by Return On Capital Employed and its attendant ratios Net Margin and Capital rotation (stockturn), driven in part by like-for-like sales performance and market share. All else is supportive of these measures...

How to help Tesco?
For instance, Tesco's latest problems with their share price arise from the fact that the global financial crisis has reduced their key results to the following:

Tesco 2013/14: ROCE 8.2%, Net Margin 3.6% and Stockturn 17.8%, whereas Walmart, in the same global climate, have managed to maintain their pre-crisis performance:
Walmart 2013: ROCE 18.2%, Net Margin 5.2% and Stockturn 10.6%

A NAM wishing to use Big Data to help Tesco, needs to access the dot collection looking for ways to improve Tesco's margin (i.e. by driving sales and cutting costs, shopper marketing etc.) and increase stock rotation (i.e. via smaller, more frequent deliveries matched to shopper need, catman etc.)

Avoid the temptation to use every dot, and focus on real creativity, the ability to connect enough of the dots to get to Tesco with a workable plan, before the next guy... 

See Seth's blog here

Tesco heading to a 25% market share...?

If a 25% market share represents a point where a retailer begins to attract the negative attentions of consumers, suppliers, special interest groups, politicians and media, this may result in a defensive mode where more energy is spent excusing behaviour than growing the business.

Given the global potential for Tesco, a return to a 25% UK market share could represent a long term opportunity for the company and its NAMs…

Positive:

• Tesco would still dominate its home market, a key criterion for global players
• Media criticism would possibly divert to other retailers growing into the space
• Tesco could focus on doing what is right for markets home and abroad, better than the competition
• UK emphasis could be placed on optimising domestic profitability to fund global growth
• Stabilised UK supplier-partnerships could be leveraged for global risk management & joint profitability

Minus:

• A high-grade domestic team would be required in order to keep the UK share ‘on hold’ at 25%
• …meaning less glory for UK managers vs their overseas colleagues
• Any UK ‘distractions’ would threaten Tesco’s ability to optimise global opportunities, meaning ‘whiter than white’ performance would be a key requirement

Interesting:

• Patently over-spaced in large scale outlets, Tesco could use that space to focus on taking shopper-marketing and in-store theatre to their limits
• The resulting learnings would mean that their UK outlets could become test-beds for execution overseas
• UK NAMs with high quality and innovative ideas could optimise potential with what could become the best retailer in town
• …a stepping-stone to global opportunity?

In other words, Tesco and their NAMs might be better off aiming for a 25% share of every global market than trying to prop up an unsustainable 30% share in the UK...

Besides which, a 25% grocery share would still allow Tesco to optimise all of those non-grocery channels in the UK, below the radar…

Networking departed passengers...

The supercool quiet dude nursing a vodka tonic in the next seat could be already at his final destination... This could explain the failure of your skilled efforts in trying to network with a fellow airline passenger, possibly causing you to revert to LinkedIn for a slightly higher response rate...

According to a new BBC documentary* dead passengers on British Airways flights are seated in first class and disguised using 'sunglasses and a vodka tonic' out of respect for the departed, given the limited on-board alternatives available.....

This obviously raises the issue of why networking sometimes fails.

Essentially, proactive networking is more about giving than receiving, meaning that on balance the target gains more in the short and medium term from the process.

Eventually, networking results in some reciprocation - a ratio of ten to one initiatives satisfies professional networkers - or else some other more persuasive method is required if the target is that important, and alive to your initiatives...

In the long term, the networker can begin to draw from the joint pool, whilst continuing to top up the reserve...

Anything else is selfishness, doomed to result in unproductive dead-ends...

(Let me know if you want a free copy of our networking notes for NAMs)

*A Very British Airline, BBC2 iplayer

Reality Lesson-time in easyFoodstoring?

                                                                                                                                         pic: Gizmodo

In the current climate, extending the ‘easy’ franchise to food retailing seems a no-brainer….

However, given that other easyOffers have focused on eliminating the complexity and reducing the price for the consumer-shopper, it seems odd to concentrate on simplifying the retailing…

In other words, given that the target audience is pre-occupied with satisfying basic needs cheaply and quickly, attempting to test their appetites via a mock-up ‘browse-not-buy’ difficultFoodstore seems wasteful…

Instead, in a world of 15%+ High Street vacancy-rates, why not help the idea fly by developing 100 pop-up easyShops, stock them with 100 basic lines at sustainable prices, and within a week, let the consumer determine the inevitable take-off…like in most successful retailing?

The real issue for branded NAMs is the extent to which successful easyOwnlabel will impact branded sales, whereas own label NAMs need to prepare for negotiation with a guy who normally deals in easyCapital-equipment procurement, strictly by numbers…    

Trade planning via an exit-strategy?

Given the latest Which? report indicating Apple Retail’s fall in UK public esteem from last year’s No.1 retailer slot to No.13, coupled with being overtaken by Google as the World's Most Valuable Brand, according to BrandZ Top 100 Global Brands, there is perhaps a lesson here for all NAMs’ in their approach to trade-investment…?

Because most business planning is based upon growth and moving towards the top of a league table – remember the pre-2008 days when growth was a given, and innovation guaranteed increases in consumer-shopper esteem - flat-line demand requires a change in order to factor in new realities in most markets.

Private equity companies - the ultimate pragmatists - have no trouble embarking upon a high potential takeover opportunity with an exit-strategy already worked out to three decimal places, yet they manage to pursue the acquisition goal with full enthusiasm and drive….

They simply position themselves at the exit-point - the ultimate objective - and then work out all moves that will help them reach that goal.  It goes without saying that expressing everything in financial terms makes the process easier to measure, manage and communicate..

In other words, we should invest in retail opportunities early, and with the aim of driving our business with the customer all the way to the top, and then manage its inevitable descent, all as part of the ‘life-time’ trade investment process…

In the same way, writing a clear business objective means imagining oneself at the end point, and simply describing what will have happened, as a definition of a successful outcome:

Example:
Objective: as a result of implementing the plan, the following will have happened:
- Achieved successful launch of new variant
- Sales grown by 12%
- Profits grown by 11%,
- Increased distribution to 78% by month two of new brand
- Incremental business of £450,000
- By month 7 have achieved 70% of full year target

A bit clumsy, perhaps, but it ticks all the boxes…
Or perhaps you prefer more of the old way?

Westfield's Giant touch-screens to simplify shopping, outside the store…

Digital Storefronts by Westfield Labs & eBay, Inc. from Westfield Labs on Vimeo.

A mere stepping stone to giant touch-screens...

                                                                                                                                  Pics: Westfield Labs

Following on from the launch of Digital Storefronts, Westfield Labs, the digital division of Westfield shopping centres have developed 7-foot tall, ultra-high definition (4k) touch-screens that allow visitors to discover new products offered by retailers at the shopping centre in real time.

High grade images rotate on the screens, and visitors are able to approach and engage with the displays with the touch of a finger. By scrolling, zooming and rotating through the retailer curated collections, visitors can find shopping inspiration and even display a map of exactly where individual products are found in the shopping centre so they can go experience them first-hand.

Currently available on level 2 in the common area of the new Premium Fashion District of Westfield Garden State Plaza in Paramus, New Jersey.

A giant leap for Westfield, and a small step ahead of Amazon*,  for the moment.....

* See 'Aggressive' Amazon a real threat to retail – says Westfield’s chief digital officer today in London here

Walgreens likely to bid for early Boots takeover?

Alliance Boots could be wholly owned by America’s largest drug-store chain within eight months. Walgreens, owners of a 45% stake, have an option to buy the remaining 55% between February and August next year.

Meanwhile, Alliance Boots already has 2,487 shops in the UK which includes 2,385 pharmacies and an additional 750 pharmacies could turn it into the 800 pound ‘gorilla in the market’.

However, an attempt to buy the whole of the Co-op’s pharmacy business would be likely delayed by the UK’s Competition and Markets Authority (CMA), probably leading to a prolonged sell-off of overlapping outlets. 

The key issue for NAMs is ‘Why the rush?’
Given that an advantage of the move would allow Walgreens to re-domicile its tax base to the UK or more likely Switzerland, thus reducing its corporation tax rate from the US 37% to the UK 21%, and even less in Switzerland, the decision is a no-brainer…

Also, as such a move would be the latest in a succession of tax inversion moves by leading US companies, it is likely that the US government will try to limit potential losses to their exchequer by interfering in the process before long…

So, the sooner, the better…especially as the partial merger has already yielded $154m in synergies, more than the anticipated $150m, i.e. the merger is patently working, in stock-market terms…

Unfortunately, such moves added to the possible Co-op bid, have placed Walgreens and Boots above government radar in a number of tax jurisdictions, likely to cause much potential distraction when the company simply wants to achieve global scale as soon as possible.

Meanwhile, NAMs and the retail competition could be advised against ‘waiting to see what happens’ instead of anticipating that Walgreens–Boots will simply take these ‘distractions’ in their stride.

In other words, time for NAMs to climb aboard now and incorporate WB into their global trade strategies, before WB does it on their terms…

Dixons-Carphone: Fingers crossed or uncrossed?

The morning after, opinion seems divided on whether Dixons-Carphone is a marriage made in heaven, or a countdown to divorce...

The issue revolves around a definition of show-rooming. In other words, is show-rooming a means of learning to buy by touching, or simply a way of accessing advice?

Historically, a shopper wanting comprehensive advice on anything more than operating the on/off button in Dixons has allegedly been left wanting… Indepth advice on any gadget is now more comprehensively, objectively and effectively accessed via the internet.

In the same way, category context i.e. a fully comprehensive range of products from which to focus shopper-choice is physically difficult to provide at store level, compared with browsing Amazon.

However, if the function of ‘gadgets’ stores is now intended to provide an opportunity to ‘buy’ by touch, then it is vital for a retailer to provide a seamless wifi instore opportunity for shoppers to complete their online product assessment in the aisle, and reduce prices to a point that makes the switch to online purchase less attractive…or provide an online facility better than Amazon…

Even if the shopper can be brought to this point without leaving the store (to await the delivery now due from Amazon?), Dixons-Carphone will require highly skilled floor-staff to then gently facilitate the completion of the purchase, without the anticipated tussle ref warranties…

All told, NAMs need strong customers and probably have high hopes of a successful merger, fingers crossed….

However, given the multichannel hurdles involved and their real-world experience, NAMs may decide to invest in alternative options, fingers uncrossed…

Dixons Carphone - why Walgreens-Boots is different...

The Dixons Carphone merger is the latest in a series of retail unions’ response to structural change in retail…

Key metrics
The £3.8bn 50-50 partnership to be called Dixons Carphone will result in a £12bn turnover company, made up of Carphone’s £3.7bn and Dixons £8.2bn.
In terms of stock market value, Carphone's market capitalisation is £1.9bn and Dixons' is £1.87bn
Carphone's 2,037 stores worldwide and Dixons' 947 stores will overlap and synergies will result in annual cost cuts of at least £80m within three years.

Previous retail mergers
Think about the troubled history of retail unions (see Alex Lawsons’ article in the Independent for details) so far:
- Abortive Carphone - Best Buy European joint venture in 2008
- Asda's doomed merger with furniture specialist MFI in 1985
- Morrisons’ takeover of Safeway in 2004 took longer than expected to bed in..
- The Co-op – Somerfield larger store sell-off
- Asda's acquisition of Netto in 2010, sell-off of 25% stores
- Kingfisher's troubled merger of B&Q with the French DIY retailer Castorama in 1998
- Kingfisher’s attempted a merger with Asda in 1999, resulting in Walmart bid

NAMs have to ask themselves if the Dixons-Carphone merger has enough potential to survive, or is even worth the effort…

Meanwhile, the Walgreens-Boots takeover appears to have a number of advantages
- Geographically complementary in that Walgreens is US only, Boots is rest-of-world
- Broadly complementary business philosophies and product assortments
- Potential synergies re retail expertise exchange
- Purchasing synergies already realising $154m

However, the real advantage over previous retail unions arises from the two-step deal (i.e. part–purchase in 2012, final takeover by 2016) which was designed to allow Walgreens and Alliance Boots to come together gradually and integrate, while continuing to drive their independent strategies in the first years of collaboration…

Sometimes slow is better, even in FMCG retailing…

Empty shop squatting - a high-street solution for a high street problem?

A new business has been designed to protect empty shops from squatters by moving in low-paying renters.

Intuitive Guardians’ new scheme aims to close a loop hole in 2012 legislation, which made squatting in residential properties a criminal offence but does not stop squats being set-up in commercial properties.

The business model has the firm supplying basic shower block and kitchen amenities, property owners paying as little as £50 a week to have their property secured while prospective guardians can get living space in Brighton and Hove at a heavily reduced rate of just £50 a week.

Apart from space protection, the key benefit has to be that local councils, businesses and shoppers become accustomed to a more 'lived-in' high street environment, and will hopefully lead to more creative use of a dying facility...

Life after a mega-merger – some pointers for NAMs

First, the basics…

Companies merge in order to release synergies and save costs. Anything other than a 50/50 split is a takeover, resulting in a faster rate of change and a little more bias in favour of the stronger party…

Logically, as a single, combined company they now need one head office and as much rationalisation of Production, Finance and Sales/Marketing as is feasible. Any obvious overlap of key staff will be eliminated, quickly or slowly, depending upon the new corporate culture. Depending upon the scale of the deal, government will interfere in any ‘vote-losing’ moves such as factory closures in high unemployment areas.

In the interest of abiding with competition legislation there will be an obligatory sell-off of brands that would otherwise result in dominance of a category in a manner that could cause issues with the government. This will result in windfall opportunities for brand acquisition by third parties…

The above description of the process may differ a little from the official press release at the time, but such is the nature of the real world…

However, from a NAMs point of view, the real issue is how to help retail customers to cope with the transition…

Action:

1. Avoid possibility of cherry-picking of best terms and conditions by strong retail customers.
2. It is vital to conduct a total re-assessment of relative competitive appeal for each of the company’s key categories.
3. Given inevitable changes to the overall portfolio, it can be helpful to re-visit ways of growing the business.
4. Helping the new company raise its share price via ROCE improvement provides a useful starting point for a pro-active NAM.

More details in the current subscriber edition of NamNews.

Now is the discount of our winter-tents?

Aldi have launched two ranges of low-cost camping gear - for adventurers and family campers.
However, to the undoubted relief of retail camping specialists, the products - ranging from head torches to satellite TV kits - will only be available at Aldi's UK stores for a limited period and once stocks have sold out they won't be replaced....

However, if this camp-gear approach to instore theatre makes an impact.....

NIVEA Child-minder App

The app that helps you locate your kids on the beach via a sunscreen print-ad cutout bracelet.

This app is a tool for you to monitor your kid’s location, designed by Nivea Brazil and their agency FCB. Detach the bracelet from the NIVEA SUN Kids print on Revista Veja (04/23/2014 edition), download this app and use the Bluetooth 4.0 technology to monitor who is using the bracelet up to a distance of approximately 30 meters.

You can set an alarm to sound at the distance you define, within an approximate range.
See the clip here

A no-brainer for beaches everywhere, but why stop at beach-applications when kids need watching 24/7...

Shop-window pulling power?

                                                                                          pic: Girls at Her.ie desk via Joe.ie