Wednesday 21 September 2016
Tuesday 13 September 2016
Arcadia to give online shoppers three months to pay
According to the Retail Gazette, Arcadia will offer online shoppers three months interest-free credit on online purchases.
Topshop, Dorothy Perkins, Miss Selfridge and Burton will now offer a “Buy Now, Pay Later” scheme.
Given the stresses on consumer budgets, this move will undoubtedly give the retailer access to incremental business.
The question has to be how long Arcadia will retain a competitive edge if other retailers follow suit.
Even more concerning will be the extent to which issues of loan non-performance, and retrieval of payment-default goods will lead to a degree of negative media coverage that is beyond even the levels currently enjoyed by the company…
Topshop, Dorothy Perkins, Miss Selfridge and Burton will now offer a “Buy Now, Pay Later” scheme.
Given the stresses on consumer budgets, this move will undoubtedly give the retailer access to incremental business.
The question has to be how long Arcadia will retain a competitive edge if other retailers follow suit.
Even more concerning will be the extent to which issues of loan non-performance, and retrieval of payment-default goods will lead to a degree of negative media coverage that is beyond even the levels currently enjoyed by the company…
Monday 5 September 2016
Tuesday 30 August 2016
Inflation, the next planning factor?
Given the post-Brexit fall in the pound, it follows that imported ingredients will cost more…
Add the recent BOE reduction in interest rates (0.5% to 0.25%!!), means the pound is even less attractive vs. other currencies.
Stir in the fact that UK food manufacturing costs are rising by around 10%, and you have a recipe for increased inflation, causing prices to rise in line with demand…
Except for UK retail
Already on reduced margins, major multiples cannot afford to absorb any cost increases. Equally suppliers, having stripped out any ‘excess' costs, are unable to take any more pain... Meanwhile, the price war/s make it unlikely that shelf prices will bear any significant upward movement without loss of share.
All of this means increasing pressure on the mults, loss of market share and the growing importance of alternative routes to consumer.
For suppliers it means re-balancing their customer portfolios to reflect the new realities, secure in the knowledge that at least some of the competition will await a return to normal before being forced to change…
Add the recent BOE reduction in interest rates (0.5% to 0.25%!!), means the pound is even less attractive vs. other currencies.
Stir in the fact that UK food manufacturing costs are rising by around 10%, and you have a recipe for increased inflation, causing prices to rise in line with demand…
Except for UK retail
Already on reduced margins, major multiples cannot afford to absorb any cost increases. Equally suppliers, having stripped out any ‘excess' costs, are unable to take any more pain... Meanwhile, the price war/s make it unlikely that shelf prices will bear any significant upward movement without loss of share.
All of this means increasing pressure on the mults, loss of market share and the growing importance of alternative routes to consumer.
For suppliers it means re-balancing their customer portfolios to reflect the new realities, secure in the knowledge that at least some of the competition will await a return to normal before being forced to change…
Friday 26 August 2016
Amazon and the need to second-guess
From our first tentative online steps, many of us have grown comfortable in our reliance on Amazon as a simple, transparent source of anything that can be legally sold to consumers, secure in the ease of 1-click ordering, confident that the door-bell ring signals the timed arrival of exactly what was ordered, with the option of returning an impulse whim almost as easily as making a purchase, and yet again seeking 10 friends to re-bore with our enthusiasm...
Whilst the price may not have always been as low as other sources, the extra convenience more than made up for the difference...
In a similar way, Unilever's recent purchase of Dollar Shave Club awakened many of us to the possibility of buying essentials on a regular basis, in order to maintain minimum domestic stock-cover, causing some of us to ponder 'if only Amazon offered a similar service' it would not only fill a personal gap, but it would most likely blow other subscription-models out of the water...
Well, Amazon's Subscribe and Save offering could fulfil that wish...but not according to an article in the New York Times.
Essentially, building on their dynamic pricing model whereby the price you pay depends on time of ordering, supply and other variables, the resulting price fluctuations - in some cases up to 170% differences, according to NYT article - Amazon are uncharacteristically going against general consumer perception that subscription means 'same price until next year'.
Whilst Amazon give the option of cancelling/modifying the repeat order, thus meeting the letter of the 'contract' with its loyal users, the very essence of Amazon-consumer relationship is based on never having to think about the 'machinery', much less second-guess our basic assumption re the contents of the tin...
Subscribe and Save, in its present form, thus provides an opportunity for a competitor to do it better...
Whilst the price may not have always been as low as other sources, the extra convenience more than made up for the difference...
In a similar way, Unilever's recent purchase of Dollar Shave Club awakened many of us to the possibility of buying essentials on a regular basis, in order to maintain minimum domestic stock-cover, causing some of us to ponder 'if only Amazon offered a similar service' it would not only fill a personal gap, but it would most likely blow other subscription-models out of the water...
Well, Amazon's Subscribe and Save offering could fulfil that wish...but not according to an article in the New York Times.
Essentially, building on their dynamic pricing model whereby the price you pay depends on time of ordering, supply and other variables, the resulting price fluctuations - in some cases up to 170% differences, according to NYT article - Amazon are uncharacteristically going against general consumer perception that subscription means 'same price until next year'.
Whilst Amazon give the option of cancelling/modifying the repeat order, thus meeting the letter of the 'contract' with its loyal users, the very essence of Amazon-consumer relationship is based on never having to think about the 'machinery', much less second-guess our basic assumption re the contents of the tin...
Subscribe and Save, in its present form, thus provides an opportunity for a competitor to do it better...
Thursday 25 August 2016
Tesco Same day Click & Collect makes Time the only variable?
Following tests that began in November 2015, Tesco’s Same-Day Click & Collect service is available in 261 Tesco stores and 36 off-site locations. Online orders before 1pm can be collected by 4pm for £2 Monday to Thursday, and £3 on Fridays and Saturdays, for orders of £40.
With other mults at various stages of similar test-mode, this is all pointing to the emergence of Time as a key Amazonian differentiator in serving shoppers...
In other words, serious online ordering and fulfilment is about matching Amazon, at least, given that having a competitive edge is supposed to means being ‘better-than’..
...which means:
- 100% availability, 24/7
- 1-Click ordering
- Returns even easier
- Delivery and Click & Collect options
- Zero-defect service
- Competitive charges
...leaving Time as the only variable (Cutting delivery/collect charges on services that already lose money becomes a race to the bottom)
Where is this heading?
As soon as retailers fully integrate online ordering and Click & Collect with their total offering, attempting to neutralise/eliminate price differentiation, then ways of optimising the time variable will be top of the agenda.
This means transferring some of the pressure back up the pipeline…
…resulting in smaller, more frequent, zero-defect deliveries that result in 100% ‘on shelf’ availability, or else…
Saturday 20 August 2016
Friday 19 August 2016
Tesco To Mark Night Tube Launch With 24hr Openings
Tesco has announced that several of its stores across London will remain open for 24hrs, in line with the new Night Tube schedule. The move, which is effective from today (19 August), offers to making shopping more convenient for late night and early morning travellers.
Tesco said it will trial opening seven additional stores for 24hrs on Friday and Saturdays along the Victoria and Central lines.
To mark the launch, Tesco will set up ‘Hydration Stations’ at the front of stores running from 3am-7am on 19 and 20 August, where its staff will hand out Tesco’s Finest freshly squeezed orange juice and cold bottled water to passersby.
Martin Smith, Tesco’s London Convenience Director, said: “At Tesco we’re always looking for new ways to serve London’s customers whenever it is most convenient to them. That’s why we’re delighted to announce these new opening hours at select store, helping to make life easier for those either working late or enjoying London’s nightlife.”
NAM Implications:
- Good lifestyle convenience-link, scope for appropriate brand owners to join in?
- A pointer for other mults on the new night lines?
Saturday 13 August 2016
Thursday 11 August 2016
RIP ROI: Time-To-Market is the New Indicator of Success
A great article by Jonathan Becher SAP makes a convincing but disturbing case for replacing Return On Investment with Time-To-Market, based on some concrete examples.
Essentially, Jonathan makes the point that traditionally we explored strategic options by changing some key variables and assumed that all other factors remained equal, or ‘as is’, for the purpose of the exercise…
Thinking about it, the only problem with the traditional approach in a digital economy is that things, especially markets, have accelerated in rate-of-change, to such an extent that little ‘remains equal’…
He quotes Ben Thompson, author of Stratechery in that P&G’s 2005 ROI analysis of the opportunity to take over Gillette probably assumed a few fundamentals of the razor industry were immutable: brands would be expensive to build; razor cartridges would command very high margins; in-store real estate was a competitive advantage; and high distribution and R&D costs would be a constant for all players in the industry.
And then Dollar Shave Club came along with a brand built cheaply by clever creative, with blades imported from lower-cost manufacturers, with no R&D costs, and no presence in stores whatsoever. Dollar Shave Club figured out how to undercut Gillette’s pricing model by 50-75%.
In a similar way, many years ago, an early client Clark's Shoes managed to dominate an unpredictable labour-intensive market carrying high raw material costs, by starting with invitations to buyers to view designs for the new season at local hotels, and taking - unchangeable - orders up front, resulting in highly accurate sales forecasts, minimal waste, and a solid basis for negotiating the purchase of the necessary hides of leather...
Meanwhile, we traditionalists were committed to holding back brand launches until 'everything was ready...'
In a digital economy, speed to market is really the only way to stay ahead in terms of optimising a market opportunity...
Even more is it important that traditional thinking and assumptions be re-assessed, ideally before a new entrant does it on your behalf.
If the prospect of such a radical re-think of the basis of your business model represents a step too far, why not try a realistic ‘what-if’ on the possibility of a Dollar-Shave-Club subscription model entering your category, fast?
Essentially, Jonathan makes the point that traditionally we explored strategic options by changing some key variables and assumed that all other factors remained equal, or ‘as is’, for the purpose of the exercise…
Thinking about it, the only problem with the traditional approach in a digital economy is that things, especially markets, have accelerated in rate-of-change, to such an extent that little ‘remains equal’…
He quotes Ben Thompson, author of Stratechery in that P&G’s 2005 ROI analysis of the opportunity to take over Gillette probably assumed a few fundamentals of the razor industry were immutable: brands would be expensive to build; razor cartridges would command very high margins; in-store real estate was a competitive advantage; and high distribution and R&D costs would be a constant for all players in the industry.
And then Dollar Shave Club came along with a brand built cheaply by clever creative, with blades imported from lower-cost manufacturers, with no R&D costs, and no presence in stores whatsoever. Dollar Shave Club figured out how to undercut Gillette’s pricing model by 50-75%.
In a similar way, many years ago, an early client Clark's Shoes managed to dominate an unpredictable labour-intensive market carrying high raw material costs, by starting with invitations to buyers to view designs for the new season at local hotels, and taking - unchangeable - orders up front, resulting in highly accurate sales forecasts, minimal waste, and a solid basis for negotiating the purchase of the necessary hides of leather...
Meanwhile, we traditionalists were committed to holding back brand launches until 'everything was ready...'
In a digital economy, speed to market is really the only way to stay ahead in terms of optimising a market opportunity...
Even more is it important that traditional thinking and assumptions be re-assessed, ideally before a new entrant does it on your behalf.
If the prospect of such a radical re-think of the basis of your business model represents a step too far, why not try a realistic ‘what-if’ on the possibility of a Dollar-Shave-Club subscription model entering your category, fast?
Subscribe to:
Posts (Atom)