Muhammad Ali - an inspiration to Ovaltine and the team

News that an exhibition dedicated to the great man is opening today at the O2, calls to mind his first product-endorsement tour of the UK.

Back in 1971, Ali agreed to work for a week promoting Ovaltine via an extended train trip around the UK, stopping at every station that was near a supermarket, inviting the local managers on board to meet the champ and disembark at the next station, inspired for life, in many cases.

We even managed to secure an interview on the new Michael Parkinson TV chat show, an episode that has been repeated many times since.

To our surprise, we found Ali to be a modest, even shy man, with immense presence, whose can-do attitude proved to be an inspiration personally and to other members of the team.

As fans will know, because of illness, Muhammed Ali will not be able to attend the opening session, but he has sent a mock-epilogue to commemorate the event:

'I would like to be remembered as a man who won the heavyweight title three times.

Who was humorous and who treated everyone right.

As a man who never looked down on those who looked up to him.

And who helped as many people as he could.

As a man who stood up for his beliefs no matter what.

As a man who tried to unite all humankind through faith and love.

And if all that's too much then I guess I'd settle for being remembered only as a great boxer who became a leader and a champion of his people.

And I wouldn't even mind if folks forgot how pretty I was.

Be cool and look out for the ladies!'

Guest Blog: Are your customers taking the….funding??

By Ian Yates, Director at Barcanet

Ever had one of those days? Just as you finalise the sales and growth forecast, your key customer (or someone on their behalf) sends you that email….

‘Some years ago, your predecessors, predecessor agreed a promotion on the product you no-longer manufacture.  We have been going through our records and found that we sold a lot, but didn’t ask you for all the funding, therefore you owe us lots of money (we haven’t added loss of interest as I think we can settle this quickly ;-).  Please find attached 200 pages of documentation that substantiates what we are saying.  We will knock the value off the next payment to you.  I don’t anticipate this will impact the funding you are offering on future promotions.  Have a nice day.’

Let me explain the chain of events that got you here:

1. Three years ago, the buying team at the customer did some analysis on what was sold during the agreed promotion, calculated what funding you owed and you paid the invoice.
2. Around 6-months later, the customers internal finance team found that a whole bunch of sales hadn’t been included in the original calculation.  Did a new calculation and raised another invoice – you paid that as well.
3. Another 6-12 months later, an external ‘recovery-audit’ company (specialising in retail funding/promotions) trawled through the transactions and found yet more discrepancy.  The customer had forgotten to include in the calculation all stock that was bought for the promotion (i.e. before the promotion actually started), not just what was sold.  They sent a claim to your predecessor, he hadn’t time to review it so agreed a settlement.
4. Two years later (now), a different ‘recovery-audit’ company is doing another review.  They think they have found more errors, they aren’t altogether sure, but it kind-of looks like there are some mistakes, so they have raised a series of claims with a lot of back-up documents and sent them to you for review.

And here we are, the onus on you to fix a mess from before you even joined the company.  What do you do now?

My guess, is negotiate another settlement?  Finance and IT haven’t the time (or inclination) to get you the data, and lets be honest you don’t have the time or inclination to analyse it – so its easier to negotiate with the customer.

And that is exactly what these audit companies want.  They are remunerated by taking a share of whatever they are able to recover from you for the customer - so the more claims they raise, the more likely a negotiated settlement, the more they get paid.

Not only does this cost your business money (and cold cash at that), but it impacts on this year’s marketing budget, which means less promotions and reduces your chances of achieving target – lets start again on the sales plan!

OK, yes we can help you analyse and, where appropriate, rebut those claims (and that is a worthwhile exercise freeing your time and money).  More importantly, how do you manage this whole promotional funding process better?

Of course, utopia is for your ERP system to connect with the various promotional, ordering and AR systems to effectively manage this – but that will cost – both in time and £’s.

Quicker and cheaper – introduce a process where the relevant data is taken from these disparate systems and centrally stored and analysed on an ongoing basis, so you know your exposure at any given time (if you like, the reverse of what the recovery-audit companies do).

As a very quick starting point, here are 4 tips you should consider implementing to reduce the promotional funding administration processes:

1. Consider inserting additional clauses into funding arrangements;
   a. ‘claims for funding’ must be made within 6-months of the promotion finishing.
   b. in the event any ‘claims for funding’ submitted are found to be illegitimate, we will charge you (the customer) at a rate of £150 per hour for the time taken to investigate and reject the claim.
   c. informing suppliers that any disclosure of ‘pricing’ or agreements to any 3rd parties will contravene the agreement or deal, this should include ‘Audit Recovery’ firms.
2. Agree that calculations and submissions made by the customer will be treated as full and final - request a declaration from the customer before settling any funding or any cessation of supply of any product or service, confirming they have received the correct payment for goods or services to date.
3. Build a centralised ‘log’ of claims received by customer and the settled value – showing a high % of ‘false’ claims makes negotiating the next one a little easier.
4. Identify (internally or with the help of a 3rd party) underpayments, payments not within ‘agreed terms’ and over deductions made and submit as ‘Counter Claims’. These will at least reduce the value of any claim and may result in the customer not pursuing their claims further.

For further information or a confidential discussion, contact Ian Yates, Director at Barcanet 
Email: ian.yates@barcanet.com or Tel. +44 7868-745705

Queueless, Cashierless Convenience, 24/7 - a Swedish Smartshop

According to Associated Press reports in Gizmodo, a 480 sq. ft. store that operates via smartphone has opened in Viken, Sweden.

A door-opening app-scan registers and allows access to creditworthy customers 24/7, goods are purchased by scanning the barcode, and the bill is paid monthly.

Behold the convenient convenience outlet of the future… 

BTW, six security cameras and a ‘crow-bar wielding’ human owner ensure the shrink-proofing of a business model that aims to bring small shops back to many communities in Sweden that have been swallowed up by supermarkets and big chain stores.

As the son of Mom ‘n Pop grocers, I would caution against the 1-month credit facility, but otherwise this Smartshop looks scaleable, exportable, and is possibly a way of diluting the minimum living wage issue for major retailers?

More here

Morrisons-Amazon Supply Arrangement implications

News that Morrisons aim to supply Amazon Prime Now and Amazon Pantry customers with a wide range of Morrisons ambient, fresh and frozen products will obviously impact UK multiples' business.

NAM Implications:

• Prime Pantry Partnership is a leap forward for Morrisons, besides optimising spare capacity in their factories...
• Morrisons, by continuing to work with Ocado, can have little objection to Ocado offering their fulfilment services to other mults...
• By which time, as Amazon-Morrisons coverage increases, so will Morrisons begin to compete with itself via Ocado-Morrisons
• Meanwhile, although charging £2.99 for Prime Pantry delivery, if Prime customers ‘forget’ the annual fee, Amazon will have set a new low in delivery charges, increasing pressure on other multiples
• …While Amazon then tightens the delivery-speed option…
• Finally, Argos fulfilment had better be as good as is hoped…

Zero-sum collaboration: Every £1 checking compliance, is one less building joint equity...

Amazon Fashions Some Private Label

News that Amazon is introducing at least seven private label fashion brands in early 2017: Franklin & Freeman, Franklin Tailored, James & Erin, Lark & Ro, North Eleven, Scout + Ro and Society New York, represents a significant breakthrough.

These surrogate labels may not shake the foundations of Food and H&B brands - yet - but if Amazon strengths are applied to the concept, then the possibility of some real incremental competition may warrant a place on the NAM agenda.

For instance, Amazon could optimise its data-collection capabilities to read consumer trends and deliver products to match them; fill gaps in its merchandise selection that leading brands won’t supply, and, most importantly perhaps, ride the sea-change taking place in retail and fashion toward the see-now, buy-now, wear-now movement. 

Adding speed and efficiency o these strengths make them unique to Amazon…and migrating them over to private label Food and H&B would be a small step for Amazonkind…apart from revealing and filling range gaps of which even brand owners are currently unaware.

So there are advantages for all in monitoring Amazon’s early moves, however distant from a NAM’s remit...

Or why not wait until it becomes a proper threat?

What if easyFoodstore decide to sell paint?

Given the initial success of easyJet's venture into discount food retailing, it might be interesting to explore the possible application of airline pricing to selling paint…

Customer: Hi. How much is your paint?

Clerk: Well sir, that depends on a lot of things.

Customer: Can’t you give me an approximate price?

Clerk: Our lowest price is our introductory special at $12 a gallon. After that we have dozens of different prices up to $199.

Customer: What’s the difference in the quality of the paint?

Clerk: Oh, there’s no difference. It’s all exactly the same stuff.

Customer: Well, in that case I’ll take your $12 paint.

Clerk: Well actually the $12 variety is only available on our website. If you want to buy it here at the store you’ll be charged an additional $20 Customer Convenience Fee

Customer: So if I go home and get it off the website, its only $12?

Clerk: That’s correct sir – plus a Credit Card Usage Fee of $6 and then there’s standard Shipping and Handling of $15.

Customer: What? So in other words buying online would cost me almost exactly the same as what I’d have to pay here in the store?

Clerk: I suppose so, but if you buy it here you get to use it immediately. Online purchases take ten business days to get to you – unless you pay the optional $25 Express My Paint Fee.

Customer: You’ve got to be kidding me!

Clerk: Well no sir, but it’s academic anyway as right now the $12 paint is completely sold out in both places.

Customer: That’s BS. I’m looking at shelves full of the stuff!

Clerk: Ah, but that doesn’t mean it’s available for sale. We sell only a certain number of introductory priced cans on any given day. Oops, look at that! It just became available again – at $17.50.

Customer: C’mon! You mean to say it went up while I’m standing here?!

Clerk: ‘Fraid so. Inventory control changes our prices all the time.

I strongly recommend you purchase your paint as soon as possible as it could go up again. How many gallons do you want?

Customer: Well, maybe three gallons. No, make that four, I don’t want to run out. I assume I can return anything I don’t open?

Clerk: Certainly sir. The $12 paint is non-refundable, but if you return it within 48 hours you will be entitled to a $5 credit towards the future purchase of another gallon of the same color at the same or higher price.

Customer: That’s crazy. In that case I’ll just give any unopened cans to my brother as he’s planning to repaint his home soon.

Clerk: Sorry sir, no-can-do! Our terms and CANditions – that’s a little in-house joke – prohibit paint transfer. It is strictly for the use of the original purchaser.

Customer: But wait a minute, I hadn’t spotted those “Paint Sale – $9.99* a Can” signs over there? That sounds like a much better deal.

Clerk: Ah yes, that’s from our low cost paint division. The asterisk denotes that the cans are actually half-gallons and the price is based on a minimum purchase of two. There is also an additional Environmental Fee of $5 per can, a non-refundable Can Deposit of $3.50, a Paint Facility Charge of $5 and if you want more than one color, the second has a $25 surcharge and the third is $50 extra.

Customer: This is utterly ridiculous. To hell with this! I’ll buy what I need somewhere else!

Clerk: Well sir, you may be able to buy paint for some rooms from another store, but you won’t be able to find paint for your connecting hall and stairway anywhere but here. And I should also point out that if you want Uni-Directional paint it is priced at $249 a gallon.

Customer: I thought your most expensive paint was $199!

Clerk: That’s only if you paint non-stop all the way around the room and back to the point at which you started. Stairways and hallways are considered one-way exceptions to the rule.

Customer: So, if I buy the $199 paint and use it in my hallway what are you going to do about it – send some goons in to paint over it?

Clerk: Wow, I believe you’re getting it now sir. But no, please, that would be plain silly. We’ll simply charge you a Direction Adjustment Fee plus the difference to $249 on your next purchase.

Customer: Next purchase? No way! I’m out ‘a here

Clerk: At Skyhigh Paints we never forget you have a choice, so thanks for shopping with us. Have a nice day!

Credits: 
Appears to have originated in Travel Weekly, October 1998, by Alan H. Hess

Where next for Sainsbury's-Argos?

News of Steinhoff’s last minute counter-bid for Argos, from a company with a market capitalisation of €19bn vs. Sainsbury’s €6.2bn (£4.9bn), and taking into account Sainsbury’s top limit vs. Steinhoff’s opening bid, it is probable that Sainsbury’s will ask for, and receive, an extension of the bidding process to 18th March to consider their options.

However, given that they are at the limit of a cash & shares combination, it is unlikely that Sainsbury’s will enter, much less beat Steinhoff in a bidding war.

This means that Sainsbury’s NAMs need to factor in a period (until 18th March) of uncertainty and distraction. Barring accidents - some outside development by government or counter bidder - Steinhoff will be successful...

In practice the inevitability of a failure by Sainsbury's to diversify via Argos means either a re-focus on optimising the current operation ‘as is’ or a new search for further diversification opportunities. Making the best of the existing mix means growing at the expense of the other mults, sharpening its competitive edge, with the help of suppliers

NAMs need to drill down to the level of their Sainsbury’s categories in order to best position their offerings within the retailer’s competitive platform, whilst maintaining the harmony of their trading relationships with other mults.

Meanwhile, Argos NAMs need to prepare for a radically different approach to their major customer, under new ownership. This means, treating the 'new' Argos as a new customer, going back to basics and re-profiling the retailer within their customer portfolio....

Exploring how Steinhoff's other UK operations are managed might also help...