As always, when we focus on minimising the pain of redundancy, the real cut-back issues are not about those that are chosen to go, but rather those that choose not to stay…
Monday 16 November 2015
What about the non-redundant good guys?
As always, when we focus on minimising the pain of redundancy, the real cut-back issues are not about those that are chosen to go, but rather those that choose not to stay…
Black Friday: running the endgame numbers?
Whilst Black Friday presents a useful promotional and media sales surge, deep down business does not like spikes...
Asda's decision to pass on this occasion, indicates that retailers are beginning to check the numbers and are realising that Black Friday may not be worth the trouble (and cost...).
According to The Telegraph, bargain-hungry Britons are expected to spend £1.07bn on online shopping alone during Black Friday, up from £810m last year, quoting Experian-IMRG.
However, UK retailers stand to lose £130m just from handling returns of items bought on Black Friday, according to the retail intelligence company Clear Returns.
In addition, costs related to lost margins, cleaning and storing, oversupply of stock and the lost value of future custom from the shopper add a further £50m to the returns bill.
In other words, unless suppliers and retailer-partners have integrated Black Friday into a fully costed omnichannel strategy, that yields acceptable returns for the risk - think stock-shortages caused by returns-system lock-in, for a start - it is inevitable that next year other retailers will acknowledge Asda's financial pragmatism and sit this one out...
Time for suppliers to explore alternative initiatives aimed at spreading the promotional effect into a more manageable demand profile?
Asda's decision to pass on this occasion, indicates that retailers are beginning to check the numbers and are realising that Black Friday may not be worth the trouble (and cost...).
According to The Telegraph, bargain-hungry Britons are expected to spend £1.07bn on online shopping alone during Black Friday, up from £810m last year, quoting Experian-IMRG.
However, UK retailers stand to lose £130m just from handling returns of items bought on Black Friday, according to the retail intelligence company Clear Returns.
In addition, costs related to lost margins, cleaning and storing, oversupply of stock and the lost value of future custom from the shopper add a further £50m to the returns bill.
In other words, unless suppliers and retailer-partners have integrated Black Friday into a fully costed omnichannel strategy, that yields acceptable returns for the risk - think stock-shortages caused by returns-system lock-in, for a start - it is inevitable that next year other retailers will acknowledge Asda's financial pragmatism and sit this one out...
Time for suppliers to explore alternative initiatives aimed at spreading the promotional effect into a more manageable demand profile?
Friday 13 November 2015
Cable companies cut ads because of Netflix - another nail for broadcast media?
According to Business Insider, major TV networks are so scared of Netflix they've actually started showing fewer ads, often up to 50% ad-reductions during reality shows, in a bid to lure back younger viewers.
Add to this the increasing use of streaming services and ad-blockers to anticipate a future where brand owners will switch to Seth Godin's permission-marketing - the privilege (not the right) of delivering anticipated, personal and relevant messages to people who actually want to get them - to appreciate that it is time for a fundamental rethink in how we communicate brand benefits.
Those who recognise the new power of the best consumers to ignore marketing, and realise that treating people with respect is the best way to earn their attention will re-allocate funds to social media with messages that respond to real consumer need..., while the rest stick with their increasingly old fashioned knitting...
Add to this the increasing use of streaming services and ad-blockers to anticipate a future where brand owners will switch to Seth Godin's permission-marketing - the privilege (not the right) of delivering anticipated, personal and relevant messages to people who actually want to get them - to appreciate that it is time for a fundamental rethink in how we communicate brand benefits.
Those who recognise the new power of the best consumers to ignore marketing, and realise that treating people with respect is the best way to earn their attention will re-allocate funds to social media with messages that respond to real consumer need..., while the rest stick with their increasingly old fashioned knitting...
Tuesday 10 November 2015
Tesco facing profitability challenges of online retailing and evolving shopper behaviour
At yesterday's CBI Annual Conference, Dave Lewis stressed the need to make their online business of tomorrow as profitable as their offline business of yesterday.
Given that Tesco traditionally delivered 5% net margins and ROCE of 15%+, whilst online delivery has to be losing £15/drop, the scale of the challenge is obvious...
In effect, Tesco have to cope with consumers shopping smaller, nearer and more frequently vs. big, weekly, out-of-town of yesteryear...
This means that Tesco and the other mults, have to consider dealing with the resulting 'large space redundancy' by closing those branches that fail to deliver adequate profits.
In addition, while the retailer appears to be attracting shoppers to its Extra /Superstore outlets, over 75% of these visits are convenience shopping trips. This means that Tesco needs to persuade such shoppers to shop bigger, before they factor the cost of fuel into their out-of-town trips...
Meanwhile, to increase the profitability of their online business, Tesco need to achieve the saturation coverage of Amazon - or intensify their coverage locally - in order to drive down domestic delivery costs. Increasing the delivery charges and attempts to increase online basket-sizes to make sufficient difference are not really options..
Action for suppliers
Given that Tesco traditionally delivered 5% net margins and ROCE of 15%+, whilst online delivery has to be losing £15/drop, the scale of the challenge is obvious...
In effect, Tesco have to cope with consumers shopping smaller, nearer and more frequently vs. big, weekly, out-of-town of yesteryear...
This means that Tesco and the other mults, have to consider dealing with the resulting 'large space redundancy' by closing those branches that fail to deliver adequate profits.
In addition, while the retailer appears to be attracting shoppers to its Extra /Superstore outlets, over 75% of these visits are convenience shopping trips. This means that Tesco needs to persuade such shoppers to shop bigger, before they factor the cost of fuel into their out-of-town trips...
Meanwhile, to increase the profitability of their online business, Tesco need to achieve the saturation coverage of Amazon - or intensify their coverage locally - in order to drive down domestic delivery costs. Increasing the delivery charges and attempts to increase online basket-sizes to make sufficient difference are not really options..
Action for suppliers
- Focus on initiatives that can use out-of-town convenience shopping as a basis for additional ' 'convenient' purchases
- Spell out the financial impact on basket profitability of each element of the brand's offering
- Tie your online strategies to Tesco's need to optimise basket size and attract new online users, in your best local areas..
Amplify
Why not consider increasing the impact of your Tesco strategies by outlining the above approach to colleague-NAMs?
Monday 9 November 2015
How Singles Day eclipsed Black Friday and Cyber Monday
According to The Telegraph, an annual celebration known in China as “bare sticks holiday” – see appearance of date: 11.11 – Singles Day began as an anti-Valentine’s Day (1 child policy = male surplus) in the 1990s when students at Nanjing University started celebrating their single status, online.
The chart says it all, don’t you think?
Chart: Highcharts.com via The Telegraph
Driven by Alibaba, in the 24 hours of Singles Day last year, and in spite of economic re-sets, Chinese consumers spent a record-breaking 57.1bn yuan (£5.86bn, or almost $9bn) across Alibaba’s platforms, more than double what American consumers spent online across the 48 combined hours of Black Friday and Cyber Monday.
Opportunities for suppliers?
Worried about limited ‘singles potential’ following the recent abandonment of 1-child policy? No worry, China will take a generation to begin to recover from that particular interference in the natural order, at least…
The chart says it all, don’t you think?
Driven by Alibaba, in the 24 hours of Singles Day last year, and in spite of economic re-sets, Chinese consumers spent a record-breaking 57.1bn yuan (£5.86bn, or almost $9bn) across Alibaba’s platforms, more than double what American consumers spent online across the 48 combined hours of Black Friday and Cyber Monday.
Opportunities for suppliers?
- A no-brainer for global brands
- Scope for innovative niche brands, providing you can meet the demand..
- Deep down, an incentive to seek out emerging trends and learn how to engage imaginatively, before the event become as obvious as Singles Day…
Worried about limited ‘singles potential’ following the recent abandonment of 1-child policy? No worry, China will take a generation to begin to recover from that particular interference in the natural order, at least…
Thursday 5 November 2015
Wormwood Scrubs Click & Collect beta test
HM Prisons,Youtube viaTomo news US
Karl Jensen, 27, the 'delivery-man' outside the jail, liasing by mobile, tied a bag containing drugs, a knife and a McMuffin sandwich to a fishing line that was pulled into a cell.
Karl will now have time to practice this version of click & collect from the inside, as he serves his new 2.5 year sentence...
P.S. For those not visiting via government transport, the sat-nav details are Du Cane Rd, London W12 0AE
Wednesday 4 November 2015
Amazon moves back to the future of traditional book-shopping
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| pic: Amazon via The Atlantic |
Being Amazon, key disrupting innovations include:
- Inventory: 6,000 titles (Amazons top selling online books), vs the over-crowded inventory of traditional book-stores
- Merchandising: Books are displayed face-out to maximise appeal (at last, publishers' cover designs get an onshelf-viewing, a step forward from spine-displays of traditional booksellers)
- Product information: under each book is a review card with the Amazon.com customer rating and a review
- Availability: Online access to every book in print, most deliverable in hours... Compare with '...two weeks, Sir, if the wholesaler has it in stock?'
- Freed-up space instore: Opportunity to hang out, or according to The Atlantic: Amazon Books is trying to be a place of community - a place where people will meet and hang out. A place that celebrates both introspection and extroversion. A place much like Apple’s buzzing, light-flooded, free-wifi-enabled temples - only with the tech gadgets on display being, for the most part, books.
- Scaleability: an unlimited selection of closed-down shops...need I say more?
Where next?
Given the inevitability of revolutionising retail book-selling, again, think specialist-shops in most worthwhile categories, given the Amazon insight, like toys, for a start.
Action: Why not try a what-if re your category, and hopefully gain some time?
Amplify: How about the benefits of a 'group-think' by sharing the above?
Tuesday 3 November 2015
Starship-robot home delivery – a new threat for the mults?
Former Skype co-founders have announced the launch of auto-buggies that are capable of carrying the equivalent of two grocery bags, and complete local deliveries within 5-30 minutes from a local hub or retail outlet, for £1.50 a drop, 10-15 times less than the cost of current last-mile delivery alternatives.
Thus in one stroke, they will become the latest market disruptor, meeting consumer needs to shop smaller, faster and more conveniently, with a delivery cost that undermines the traditional £20 cost that causes major retailers to lose £15 on a £5 delivery charge…
Starship Technologies is currently testing and demonstrating prototypes and plans to launch the first pilot services in cooperation with its service partners in the US, UK and other countries in 2016.
Customers can choose from a selection of short, precise delivery slots, and during delivery, shoppers can track the robot’s location in real time through a mobile app. On arrival only the app holder is able to unlock the cargo. Integrated navigation and obstacle avoidance software enables the robots to drive autonomously, but they are also overseen by human operators who can step in to ensure safety at all times, and where necessary converse with pedestrians.
Forgetting for a moment all the reasons why robot-delivery is not going to work, move into just-suppose mode and survey the post-success scene:
- Reductions in traditional home delivery charges…consumers already twitchy
- Mults/Ocado adopt robot-delivery, possibly leasing from Starship Tech?
- Or mults leave the small-delivery field and focus on ‘big deliveries’
- Just think applications in other categories/services…and don’t expect Jeff Bezos to sit this one out…
One thing is certain, the ‘fundamental re-structuring’ of the grocery market still has a mile to go…
Action for suppliers:
Starship Technologies are unlikely to attempt the additional risk of setting up of product-aggregation hubs and will probably form alliances with a wholesaler/s and/or possibly a major multiple..
If a wholesaler, expect that wholesaler to grow, and become more profitable and powerful.
In other words, time to reshuffle your customer portfolio deck, again!
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