Good job Walmart were holding them back!
Friday 17 July 2015
Thursday 16 July 2015
'Caveat emptor' has morphed into 'caveat venditor' - why ‘seller beware’ is the new mantra for savvy consumers..
Today’s news that the Competition and Markets Authority (CMA) plans to take action after its investigation into misleading supermarket promotions should not be news, except in that it signals a significant shift in responsibility from buying to selling…
In other words, for many years sellers have relied upon the ‘letter’ of the law in terms of leaving the responsibility for checking match with consumer need to the purchaser, rather than the ‘spirit’ of the law whereby a savvy consumer expects to receive what it says on the tin, at least…
• The real issue is why retailers need to learn about consumer trust the hard way?
• To say nothing of the basic Tell-a-friend formula in junior selling school:
- Exceed Consumers’ expectations and they will tell a friend..
- Short-change them and they will tell 10 friends…
In other words, in a world of savvy consumers, caveat emptor has truly morphed into caveat venditor…courtesy of the new Peoples' Champion - the government!
In other words, for many years sellers have relied upon the ‘letter’ of the law in terms of leaving the responsibility for checking match with consumer need to the purchaser, rather than the ‘spirit’ of the law whereby a savvy consumer expects to receive what it says on the tin, at least…
• The real issue is why retailers need to learn about consumer trust the hard way?
• To say nothing of the basic Tell-a-friend formula in junior selling school:
- Exceed Consumers’ expectations and they will tell a friend..
- Short-change them and they will tell 10 friends…
In other words, in a world of savvy consumers, caveat emptor has truly morphed into caveat venditor…courtesy of the new Peoples' Champion - the government!
Wednesday 15 July 2015
Asda Move Closer to Walmart - the two-pat approach to ‘Save Money, Live Better’
Further to NamNews' report on Asda's Overhauling Of Its Brand To Bring It More In Line With Walmart, NAMs might benefit from a deeper dig into where Walmart are headed in coping with Aldi/Lidl, and online competition like Amazon Fresh.
In fact, Walmart Food EVP Steve Bratspies' recent presentation to the Bentonville Bella Vista Chamber’s WalStreet (sic) supplier group gives considerable insight re Walmart's food plans, and by inference, a view of where Asda is headed.
Five building blocks that will remain
Bratspies outlined five customer promises that are foundational to Walmart’s strategy in the midst of these shifts.
1. Win in fresh
2. Re-energize the centre of the store
3. Expand physical-to-digital integration
4. Win on the fundamentals
Above all, Bratspies encouraged global suppliers to bring great ideas from other markets, empowering Walmart-facing teams to make decisions and “come sell us stuff”, pointing out that that their buyers are there to buy.
In other words, make a point and back it up with the numbers...we are listening like never before...
Hat-tip to Carol Spieckerman via Pete Louree and Spencer Booz
In fact, Walmart Food EVP Steve Bratspies' recent presentation to the Bentonville Bella Vista Chamber’s WalStreet (sic) supplier group gives considerable insight re Walmart's food plans, and by inference, a view of where Asda is headed.
Five building blocks that will remain
Bratspies outlined five customer promises that are foundational to Walmart’s strategy in the midst of these shifts.
- EDLP – Price is still “the decider,” even as the bar is being raised across other customer criteria.
- Quality you can trust – Customers are smart enough to expect one-dollar quality on a one-dollar item but won’t tolerate one-dollar quality on a five-dollar item. Quality is defined by the item being purchased.
- Everything you need – Despite its forays into small formats, Walmart is still very much in the supercentre business and is invested in facilitating a one-stop-shopping experience for its customers.
- Happy to help – Of Walmart’s three sub-promises (a fast, clean, and friendly shopping experience), friendliness makes the biggest difference at the end of the day.
- Shop your way – Customers must be able to access Walmart online from any device and from multiple locations.
1. Win in fresh
2. Re-energize the centre of the store
3. Expand physical-to-digital integration
4. Win on the fundamentals
Above all, Bratspies encouraged global suppliers to bring great ideas from other markets, empowering Walmart-facing teams to make decisions and “come sell us stuff”, pointing out that that their buyers are there to buy.
In other words, make a point and back it up with the numbers...we are listening like never before...
Hat-tip to Carol Spieckerman via Pete Louree and Spencer Booz
Monday 13 July 2015
Tesco £40 minimum delivery spend, an each-way bet on basket-size?
Their new £4 surcharge on orders below £40, in line with Asda and Sainsbury’s, means that Tesco are crossing fingers that a sufficient number of core £25-users will either pay the surcharge or raise their order-quantities to £40+…
In practice, they are taking the basket-size route to fulfillment-cost amortisation vs. the blanket-distribution approach of Amazon i.e. delivery density – try tracking your next Amazon parcel and be impressed by the number of local deliveries your driver makes en route to your door.
The Tesco numbers look like this:
Order size £25
Tesco gross margin say 25%, i.e. £6.25
Delivery charge, say £4 £4.00
Delivery surcharge - £4 £4.00
Approx. cost of order fulfillment say £20.00
An improvement, but Tesco still loses say £5.75 per order
Order size £40
Tesco gross margin say 25%, i.e. £10.00
Delivery charge, say £4 £4.00
Delivery surcharge - £4 £0.00
Approx. cost of order fulfillment say £20.00
Tesco loses £6 per order (i.e. needs incremental sales of £24 to cover the loss)
In fact, apart from increasing the base delivery charge, Tesco’s only route to break-even is via its gross margin i.e. say 25% of goods sold. This means they would need to increase the minimum basket-size size to £64, to break even on a delivery.
If Aldi enter the home-delivery race, my bet would be on them taking the localised delivery-density route, if Amazon don’t beat them all to it….
In practice, they are taking the basket-size route to fulfillment-cost amortisation vs. the blanket-distribution approach of Amazon i.e. delivery density – try tracking your next Amazon parcel and be impressed by the number of local deliveries your driver makes en route to your door.
The Tesco numbers look like this:
Order size £25
Tesco gross margin say 25%, i.e. £6.25
Delivery charge, say £4 £4.00
Delivery surcharge - £4 £4.00
Approx. cost of order fulfillment say £20.00
An improvement, but Tesco still loses say £5.75 per order
Order size £40
Tesco gross margin say 25%, i.e. £10.00
Delivery charge, say £4 £4.00
Delivery surcharge - £4 £0.00
Approx. cost of order fulfillment say £20.00
Tesco loses £6 per order (i.e. needs incremental sales of £24 to cover the loss)
In fact, apart from increasing the base delivery charge, Tesco’s only route to break-even is via its gross margin i.e. say 25% of goods sold. This means they would need to increase the minimum basket-size size to £64, to break even on a delivery.
If Aldi enter the home-delivery race, my bet would be on them taking the localised delivery-density route, if Amazon don’t beat them all to it….
Friday 10 July 2015
Kingsmill is back on the shelves at Tesco - Life after Re-set?
News in This is Money that ABF has managed to persuade Tesco to take back its key Kingsmill 50/50 bread, a blend of white and wholemeal flour, indicates that in the right circumstances, some re-set moves can be reversed.
Given that Finance Director John Basson could only make minimal reference to the move: ‘The Kingsmill bread line was taken out of Tesco but we are not going to get into the detail because it was a sensitive commercial agreement’, it is reasonable for NAMs in other categories to assume that Kingsmill made a successful, demand-based case for re-instatement.
Given the scale of the initial cull, it was always obvious that a 30,000 SKU reduction would mainly focus on product overlap and duplication and miss some gems in the process. What is encouraging to discover is that there are ways back in, for products in genuine demand, 'packaged correctly'...
If you are still awaiting the re-set email from Tesco it might be wise to revisit your current Tesco listings, re-assess SKU appeal and prepare for a fast response.
Our guest-KamBlogger Wayne Robinson offers three ways forward:
'packaged correctly'? It can be assumed that a key criterion for a brand's success in a financially driven demand-based Tesco, has to be an appropriate combination of shelf-price, margin, support and credit period. In other words genuine consumer appeal, in a suitable financial package....
Given that Finance Director John Basson could only make minimal reference to the move: ‘The Kingsmill bread line was taken out of Tesco but we are not going to get into the detail because it was a sensitive commercial agreement’, it is reasonable for NAMs in other categories to assume that Kingsmill made a successful, demand-based case for re-instatement.
Given the scale of the initial cull, it was always obvious that a 30,000 SKU reduction would mainly focus on product overlap and duplication and miss some gems in the process. What is encouraging to discover is that there are ways back in, for products in genuine demand, 'packaged correctly'...
If you are still awaiting the re-set email from Tesco it might be wise to revisit your current Tesco listings, re-assess SKU appeal and prepare for a fast response.
Our guest-KamBlogger Wayne Robinson offers three ways forward:
- Lurch into analysis mode...deep diving in to category data...ranking ros...etc It's not only the market/consumer data that will be swaying decisions about products on the shelves; there will be a financial element to this too.
- Use your research and insight to bring products to market that are focused on consumers' needs and have a true usp that add value to the category...otherwise known as innovation. In other words, try to identify the 'gems' in your assortment
- Channel diversification. No manufacturer should be overly reliant on any one customer. In other words, anticipate the obvious and try to optimise other routes to consumer, for products that are worth it.
'packaged correctly'? It can be assumed that a key criterion for a brand's success in a financially driven demand-based Tesco, has to be an appropriate combination of shelf-price, margin, support and credit period. In other words genuine consumer appeal, in a suitable financial package....
Thursday 9 July 2015
Retailers have yet to truly connect with mobile shoppers - traditional retail missing another trick?
An article by Samanta Edwards over at The Wallblog examines new research on mobile-shopper optimisation (Window on Connected Shoppers - a free 20 page report on converting connected shoppers into buyers).
With one in three of the 30% of smartphone owners that have used their smartphone to shop in the last month, only one in ten of them regularly use apps as part of the purchase process – suggesting that retailers are failing to provide the right content.
In fact, according to the research, in-store smartphone users utilised their devices for:
In other words, these physical retailers have managed to get live mobile-consumers into their stores, and are failing to see that online completion of the mobile journey is still a retail sale....
With one in three of the 30% of smartphone owners that have used their smartphone to shop in the last month, only one in ten of them regularly use apps as part of the purchase process – suggesting that retailers are failing to provide the right content.
In fact, according to the research, in-store smartphone users utilised their devices for:
- sharing ideas (47%)
- comparing prices (29%)
- product information (20%)
- sharing photos, taking pictures as a reminder, store location and browsing (with no intention to purchase) were all cited by 17% of respondents
In other words, these physical retailers have managed to get live mobile-consumers into their stores, and are failing to see that online completion of the mobile journey is still a retail sale....
Tuesday 7 July 2015
Offline limits to online growth: Is click-and-collect 'cannibalising' retailers?
Given that the cost of fulfilling an online order is approximately £20, and market willingness-to-pay appears to have an upper limit of £5 per delivery, it is obvious that a retailer loses £15 per online order.
Charging for Click & Collect merely addresses the 'front end' of this problem in terms of covering some of the real cost of the 'final mile'. It also means that John Lewis introduction of a £2 charge is possibly adding to the problem by giving the impression that a home delivery option is worth the difference - £3...
Meanwhile, for a Bricks & Mortar retailer in a virtually zero-sum flat-line environment, any scale advantages will be neutralised by increasing redundancy of physical space.
With Click & Collect growing at 20-30% per annum, the real issue for retailers is that the growth of their online business not only cannibalises their regular in-store sales but also causes them to lose more money as online sales increase.
In a flat-line demand environment with market share increases having to come at the expense of the competition, it would appear that major physical retailers are in a race to the bottom in terms of profitability.
Meanwhile, Amazon and other pure-play online retailers will grow at the expense of physical players until a point is reached where even their growth is limited by consumers' refusal to pay adequate rates for order fulfillment.
For suppliers, this means that having managed to take the GSCOP-route out of the extremes resulting from dealing with the Big 4 multiples, we may be unconsciously accepting the even tighter harness of the online route to consumer...
In other words, with the benefit of hindsight, it might be wise to anticipate, prepare for and negotiate fair share dealings from the start, rather than require a Mk.2 GSCOP rescue sometime in the future...
Charging for Click & Collect merely addresses the 'front end' of this problem in terms of covering some of the real cost of the 'final mile'. It also means that John Lewis introduction of a £2 charge is possibly adding to the problem by giving the impression that a home delivery option is worth the difference - £3...
Meanwhile, for a Bricks & Mortar retailer in a virtually zero-sum flat-line environment, any scale advantages will be neutralised by increasing redundancy of physical space.
With Click & Collect growing at 20-30% per annum, the real issue for retailers is that the growth of their online business not only cannibalises their regular in-store sales but also causes them to lose more money as online sales increase.
In a flat-line demand environment with market share increases having to come at the expense of the competition, it would appear that major physical retailers are in a race to the bottom in terms of profitability.
Meanwhile, Amazon and other pure-play online retailers will grow at the expense of physical players until a point is reached where even their growth is limited by consumers' refusal to pay adequate rates for order fulfillment.
For suppliers, this means that having managed to take the GSCOP-route out of the extremes resulting from dealing with the Big 4 multiples, we may be unconsciously accepting the even tighter harness of the online route to consumer...
In other words, with the benefit of hindsight, it might be wise to anticipate, prepare for and negotiate fair share dealings from the start, rather than require a Mk.2 GSCOP rescue sometime in the future...
Subscribe to:
Posts (Atom)