Monday 21 March 2016
Thursday 17 March 2016
Unit-pricing: The 'missing' ingredient in price comparison
The latest Which? Report highlights the 'up to' 4x premium shoppers pay for the convenience of pre-sliced and pre-portioned foods. The price disadvantage of buying smaller sizes of other essentials is also highlighted.
Whilst retailers can obviously point out that in most cases the unit price is displayed on the price-label to facilitate like-with-like price comparison, the only problem can be the fact that many consumers do not understand the meaning of unit pricing, apart from the mental gymnastics required in breaking down 100g, kilos and volume-equivalents in the case of liquids.
In effect, the unit-price serves little useful purpose and may even add to the confusion of the shopper...and given that confusion leads to suspicion, it can be seen that the real casualty is trust in the retailer...
On-shelf education could be applied via a standardised category league-table of price per 100g comparisons, in very simple language...
Patronising? No way. We are not talking about degrees of intelligence, merely accepting that a busy, distracted shopper is only giving 10% of their attention to true comparison, based on a reasonable level of trust in the retailer...
Allowing the current confusion to continue can lose both trust and shopper...
Of course teaching consumer-shoppers to understand unit pricing makes the consumer better-informed and more difficult to mislead...
Welcome to the new world savvy consumer!
Professional NAMs already take that risk by helping the buyer to make valid like-with-like comparisons, thereby making them more demanding, but the current climate demands a fully informed supply chain.
Helping the 'buyer' to buy can help...
Wednesday 16 March 2016
'Aldi and Lidl starting to look like 'conventional' supermarkets', but they are not...
Recent statements by Sainsbury's, Asda and Tesco implying that discounters are adopting some aspects of conventional supermarkets -including costs - but will not match them on range and service miss a point that may be worth considering.
A visit to your nearest Aldi/Lidl will confirm that 'Wow' is a significant ingredient in the discounter offering that may have been bred out of multiple offerings by EDLP and 100% availability...
Furthermore, as the mults increasingly cut prices to match the discounters, they might need to consider possible consumer-shopper reaction in each business model:
If 'wow' is now the missing ingredient, the way back for the mults is surely via customer service, something the discounters can never hope to match...
In other words, why not aim at evoking the aisle-response 'Wow, imagine them giving me this degree of personal attention on a simple request!'
A visit to your nearest Aldi/Lidl will confirm that 'Wow' is a significant ingredient in the discounter offering that may have been bred out of multiple offerings by EDLP and 100% availability...
Furthermore, as the mults increasingly cut prices to match the discounters, they might need to consider possible consumer-shopper reaction in each business model:
- When prices are lowered from the long-established 'norm' in a conventional supermarket, the reaction may be 'why are they only charging this price for such good quality?'
- ...whereas, in a discounter offering the same quality at a slightly lower or even the same price may cause a shopper to ask 'Wow, imagine this quality for this price'...!
If 'wow' is now the missing ingredient, the way back for the mults is surely via customer service, something the discounters can never hope to match...
In other words, why not aim at evoking the aisle-response 'Wow, imagine them giving me this degree of personal attention on a simple request!'
Tuesday 15 March 2016
What if Bent Veg become the New Straight?
News that Tesco has joined Asda and Morrisons this week in launching a ‘wonky veg’ range in its stores, as part of an 11 step food waste reduction campaign, raises a number of issues for stakeholders.
This initiative will obviously benefit the ever increasing needy and also reduce the pressure on farmers to meet ‘perfect shape’ specifications, resulting in less delivery-rejects.
However, suppose ‘wonky veg’ also touches a live nerve with consumers, appealing to their appetite for ‘natural’, down-to-earth food that also happens to be cheaper because of its imperfection…but tastes as good as, or even better than the ‘real thing’?
(NAMs closer to the category will know that taste and flavour were long ago compromised in the pursuit of perfection in shape).
In other words, if ‘wonky’ becomes mainstream, and even grows to say 50/50 share with ‘straight’, are we then on a road to specifying different degrees of ‘wonkyness’ in a new range of wonky sub-categories, ‘re-upping’ the pressure on farmers to meet the new specs, and also diluting retail profitability…
We are truely living in crazy times…
This initiative will obviously benefit the ever increasing needy and also reduce the pressure on farmers to meet ‘perfect shape’ specifications, resulting in less delivery-rejects.
However, suppose ‘wonky veg’ also touches a live nerve with consumers, appealing to their appetite for ‘natural’, down-to-earth food that also happens to be cheaper because of its imperfection…but tastes as good as, or even better than the ‘real thing’?
(NAMs closer to the category will know that taste and flavour were long ago compromised in the pursuit of perfection in shape).
In other words, if ‘wonky’ becomes mainstream, and even grows to say 50/50 share with ‘straight’, are we then on a road to specifying different degrees of ‘wonkyness’ in a new range of wonky sub-categories, ‘re-upping’ the pressure on farmers to meet the new specs, and also diluting retail profitability…
We are truely living in crazy times…
Friday 11 March 2016
Staff wages - Aldi Ireland’s hidden extra in the battle for market share
Given Aldi’s natural reticence, a surprisingly detailed 2,000 word article in today’s Irish Times gives some useful insights into the Aldi business model, much of which can be applied to its UK operation.
The article describes Aldi as a logistical and ergonomic-driven machine, a finely-tuned operating model, where “everybody knows what they have to do, and how to do it”, which helps it keep costs to a minimum.
Moreover, its emphasis on exclusive surrogate labels means the packaging, the case it arrives in, the way it gets delivered and shipped to store in shelf-ready packaging, is all under Aldi’s control.
Also, just-in-case, mystery shoppers are employed at each store to ensure that theory is reflected in practice…
However, the fact that staff are paid at, or above the living wage, and the discounter is known as the best paying retailer in the market, means if the same policy holds in the UK, Aldi will not have to absorb the additional wage cost increases that will put additional cost pressures on UK mults when they have to comply with minimum wage legislation.
Methinks the discounter's competitive edge may be sharper than we thought...?
Much more detail in the Irish Times Article
The article describes Aldi as a logistical and ergonomic-driven machine, a finely-tuned operating model, where “everybody knows what they have to do, and how to do it”, which helps it keep costs to a minimum.
Moreover, its emphasis on exclusive surrogate labels means the packaging, the case it arrives in, the way it gets delivered and shipped to store in shelf-ready packaging, is all under Aldi’s control.
Also, just-in-case, mystery shoppers are employed at each store to ensure that theory is reflected in practice…
However, the fact that staff are paid at, or above the living wage, and the discounter is known as the best paying retailer in the market, means if the same policy holds in the UK, Aldi will not have to absorb the additional wage cost increases that will put additional cost pressures on UK mults when they have to comply with minimum wage legislation.
Methinks the discounter's competitive edge may be sharper than we thought...?
Much more detail in the Irish Times Article
Thursday 10 March 2016
Amazon elevates delivery to a new level by leasing 20 Boeing cargo planes
News that its US Prime members will benefit in terms of delivery speed and availability from Amazon’s decision to in-source its bulk transportation came as little surprise to observers following its experiments with drone delivery and pre-assembly of anticipated orders.
This latest move reinforces Amazon’s determination to be a global source of anything that can be legally sold to anyone, anywhere, anytime, in any way required by the consumer.
In other words, plane-leasing should not be expected to remain a US initiative for long…
By taking more control of fulfillment, and removing middle men, the company is reducing costs from the supply chain, eliminating duplication-inefficiencies and offering virtually 100% availability via its infinite online shelving.
In the process they are setting industry standards in terms of 1-Click ordering, ever-shortening delivery times, and ‘no-quibble’ returns, in an industry that is stumbling along in their wake…
Moreover, Amazon have managed to persuade loyal users to pay for and become Prime Members, thus triggering another steady revenue stream…
When you think about it, leasing a few Boeing cargo planes is but another step on a very comprehensive journey by an ultimate practitioner of customer-centricity...
Can anyone really afford to be outside this unique business model…?
This latest move reinforces Amazon’s determination to be a global source of anything that can be legally sold to anyone, anywhere, anytime, in any way required by the consumer.
In other words, plane-leasing should not be expected to remain a US initiative for long…
By taking more control of fulfillment, and removing middle men, the company is reducing costs from the supply chain, eliminating duplication-inefficiencies and offering virtually 100% availability via its infinite online shelving.
In the process they are setting industry standards in terms of 1-Click ordering, ever-shortening delivery times, and ‘no-quibble’ returns, in an industry that is stumbling along in their wake…
Moreover, Amazon have managed to persuade loyal users to pay for and become Prime Members, thus triggering another steady revenue stream…
When you think about it, leasing a few Boeing cargo planes is but another step on a very comprehensive journey by an ultimate practitioner of customer-centricity...
Can anyone really afford to be outside this unique business model…?
Wednesday 9 March 2016
A space race, but not as we know it....online retailers could be hit by warehouse space shortage
According to a new report by property consultancy LSH in International Business Times, Amazon, Tesco, Argos and other online retailers could be hit by shrinking warehouse space. In fact, logistics space fell from a peak of 360 million sq. ft. in 2012 to 200 million sq. ft. in 2015 (Reuters).
Lambert Smith Hampton (LSH) predict that demand will exceed supply by 25 million sq. ft. by the end of the decade.
Given these retailers use a network of warehouses to ensure faster delivery of goods to customers, the shortage of storage space will affect their delivery capabilities.
Knowing that the retailers involved - and their online shoppers - don’t do waiting, it is unlikely that they will await the 1-year construction time of new-builds, and will instead race to buy available space.
Ironically, given the planning legislation, and different prices/rentals for retail vs. industrial usage, those B&M retailers with redundant large-space cannot simply switch some of their outlets over to online warehousing, although some may compromise, and ‘make do’ in the short term...
More likely we are probably going to see more consolidation/takeovers of any source of suitable warehousing, and even inter-retailer collaboration as stakeholders demonstrate their determination not to compromise the potential of the only growth-channel in town…
For suppliers, this means more complicated and rapid response logistics arrangements in a fast changing logistics landscape.
It is hopefully obvious that they will not be allowed to compromise online retailers’ ability to meet online-shopper need, as speed and availability become the only real differentiators in the online race…
Lambert Smith Hampton (LSH) predict that demand will exceed supply by 25 million sq. ft. by the end of the decade.
Given these retailers use a network of warehouses to ensure faster delivery of goods to customers, the shortage of storage space will affect their delivery capabilities.
Knowing that the retailers involved - and their online shoppers - don’t do waiting, it is unlikely that they will await the 1-year construction time of new-builds, and will instead race to buy available space.
Ironically, given the planning legislation, and different prices/rentals for retail vs. industrial usage, those B&M retailers with redundant large-space cannot simply switch some of their outlets over to online warehousing, although some may compromise, and ‘make do’ in the short term...
More likely we are probably going to see more consolidation/takeovers of any source of suitable warehousing, and even inter-retailer collaboration as stakeholders demonstrate their determination not to compromise the potential of the only growth-channel in town…
For suppliers, this means more complicated and rapid response logistics arrangements in a fast changing logistics landscape.
It is hopefully obvious that they will not be allowed to compromise online retailers’ ability to meet online-shopper need, as speed and availability become the only real differentiators in the online race…
Tuesday 8 March 2016
Supermarkets Fastest Growth In Five Months - Source & Impact?
Taking the latest results from Nielsen and Kantar, it is encouraging that some of the mults appear to be coming back (possibly at the expense of other multiples?)…no-one ever wanted these guys to fail, and besides so much of the supplier business model is built upon growth and the mults having a major slice of the action.
However, brand-owners might usefully think about the split between brand and private label of the market data. Add to this the high rate of discounter market share growth, again at the relative expense of brands’ demand and a different picture of recovery emerges..
All pointing to the fact that brand premia are being eroded, hopefully triggering a return to basics, real basics, by the realists…
However, brand-owners might usefully think about the split between brand and private label of the market data. Add to this the high rate of discounter market share growth, again at the relative expense of brands’ demand and a different picture of recovery emerges..
All pointing to the fact that brand premia are being eroded, hopefully triggering a return to basics, real basics, by the realists…
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