'You couldn't make it up' - Case of man accused of stealing €3 Creme Eggs from Lidl struck out

The theft was alleged to have happened at Lidl on Moore Street, Dublin on March 9.

A Garda prosecution witness having failed to show up, Judge Halpin read the charge sheet before him and said: “Three state witnesses, him, a judge and a solicitor, for a Cadbury’s Creme Egg? You couldn’t make this stuff up.” and dismissed the case.

Whilst a €3 crime seems petty, it is only fair to see this from a retailer's perspective i.e. for a retailer making a net profit of 2%, a theft of €3 is equivalent to a sale of €150...a little more worthwhile in terms of prosecution....?

Queueless shopping, the real threat of online...?

This Saturday* morning as I waited 10 minutes to buy my FT at the sole operational checkout in my local WHSmith, while the operator keyed in multiple Lotto-vouchers, allowing a queue to form and grow increasingly restless, I began to think about the nature of the online threat to Bricks & Mortar retailing.

I had to that point accepted that effective fulfilment of an infinite online assortment (300m items available on Amazon) posed the real online threat to traditional retailing. In other words, with 80% of sales coming from 20% of the 50,000 SKUs in a Tesco branch and the remaining 40,000 SKU-tail slowly soaking up profits, all adds up to a no-contest fight for our biggest retailer...

As I continued to wait 'inline' in WHS, I suddenly realised that online retailing provides queueless shopping, making us increasingly intolerant of even the 3-man queue in Tesco that triggers the opening of another checkout... And there is no way that a traditional mult can reduce that trigger-quantity without jeopardising profitability...

Anyway, following that breakthrough insight, I gave up on WHS, replaced my FT on the rack, walked over to the Tesco superstore, picked up a new FT, checked out and was on my way home in two minutes on a Saturday, mid-morning (!), that time when Tesco used to be too crowded and busy to even contemplate a shopping trip...

* Saturday being the new Sunday in newspaper reading terms...(here)

As Independent and Specialist Retailers become more important in the mix, Suppliers need to re-think the Role of the Shop…

In the drive to optimise sales, suppliers need to work more closely with independent and specialist retailers, treating them as marketing outlets as well as sales outlets.

In the case of smaller rtailers, if suppliers simply regard the shop as a sales outlet, its profitability (for the supplier) will determine the degree of attention it receives from the supplier. This can make the minimum order requirement excessive for the retailer.

However, extending the definition of the shop to marketing-outlet reduces the pressure on the bottom line. In other words, some of the cost of servicing can be written against the marketing budget.

In order for both parties to want to optimise the potential joint-opportunities that a fundamental change of this magnitude represents, it is crucial that they each understand and integrate the consumer marketing and retailer marketing programmes of their trading partners.

A Fundamental Conflict of Interest
Despite improved collaboration between suppliers and the mults, it is important to acknowledge potential conflicts of interest between suppliers and smaller retailers.

The retailer wants the consumer to shop in his store, and is less interested in what product is purchased, whilst the supplier wants to sell his product, irrespective of where it is purchased. 

Whilst the major multiples are sufficiently powerful to insist that their agendas drive joint business planning, it is especially important in the case of independent and specialist retailing that these potential conflicts of interest are resolved by a joint-understanding of the consumption-shopping process.

Essentially, this means recognising that consumers have two need-sets or appetites, consumption needs and shopping needs, that have to be satisfied in-store.

Consumption Needs
As consumers they are looking for Product performance (delivers to, or even exceeds expectation), Quality/reliability related to cost (such as premium vs. budget brands), Brand name (popular, well-known, respected product, consistent delivery), Value for money (perceived gain vs. price paid in other retailers, channels, or online), Status (peer-group respect), Pride (in owning latest version), Imitation (either doing what others do, or leading others), Possession (something for nothing, i.e. gift with purchase, BOGOF), Sense of duty (buying on behalf of other person as gift), Security (avoiding fear, such as counterfeit brands, or wasting money).

For suppliers this means understanding how their target consumers behave as shoppers in different channels and retail formats. They then need to use this insight to develop shopper-based strategies that will grow categories to the benefit of products, consumers, retailers and shoppers.

It can thus be seen that suppliers face a very complex challenge in influencing and managing consumers’ consumption needs, all wasted unless shopping needs are effectively addressed.

Shopping Needs
As shoppers, consumers are looking for Choice, Availability, Price, Convenience, Opening hours, Atmosphere, Display, and opportunities for Impulse purchase, all wasted unless the product performs to expectations. Moreover, it is vital that, following purchase, the contents exceed the expectation created by the on-tin description…

This need to satisfy shopper and consumer appetites simultaneously means that suppliers and retailers have a high degree of mutual dependency, particularly in independent retail.

Traditionally, suppliers focused upon satisfying the consumer’s consumption needs, leaving the retailer to meet the consumer’s shopping needs. However, in the current economic climate, state-of-art suppliers and retailers can achieve more by understanding and influencing consumption and shopping needs.

The Need for Collaboration
In practice this means independent and specialist retailers can excel by understanding more about the consumption process. This means that suppliers should prioritise and actively partner with those retailers that have a high proportion of the target consumer in their store traffic. They should collaborate with partner-retailers in order to produce an in-store environment that is conducive to maximising the basket-size of every store-visit by the consumer, via effective satisfaction of their shopping needs. In the case of independent and specialist retail, in-store theatre can play a uniquely intimate and effective role in a way that the supermarkets can never match, given their scale.

Major retailers will have their own marketing agendas, making it more difficult for suppliers to influence the retailer’s in-store management of their target consumer. This may possibly result in some compromising of the consumption marketing programme, in-store.

On the other hand, it is obvious that the supplier can exert more influence within the independent and specialist retail environment. Here the retailer can need help in evolving a consistent marketing mix, and because of their scale purchasing of in-store promotional materials, suppliers can afford to provide and manage point-of-sale display materials that precisely match the needs of the product and can elevate the quality of in-store theatre at outlet level, in return for total compliance by the retailer.

This degree of consistent execution of a supplier’s product marketing message, tailored to outlet needs, across most of the independent and specialist retail sector cannot but benefit both parties in terms of profitable satisfaction of consumer need.

All else is detail....

Poundland Launches Rival To Toblerone Bar

At 180g, Poundland said its Twin Peaks is 20% heavier than its branded equivalent, and offers “a double mountain in every packet”.

 It officially goes on sale in the first week of July at the chain’s famous £1 price point.

NAM Implications:

• Twin peaks, and more of them…
• A self-inflicted no-brainer…?

Amazon 'patents' a new definition of a shop...

Amazon's latest patent, aimed at preventing alien showrooming in store (!) could be another nail in the coffin of a traditional shop.

In fact Bezos' patent, combined with his Whole Foods snack, raises some fundamental questions:

What is a shop? (Sales outlet?, showroom?, sales aid?)

• Maximum assortment (needs to offer everything, even long-tailed SKUs, selling less than a SKU/month...)
• Online can offer ‘infinite’ selection (‘Amazon 300m items…’)
• Tesco cull 90,000 SKUs to 60,000 SKUs (Cull 1), enough is not enough?
• Tesco discovery of 80/20: 80% sales via 20% SKUs, what really counts instore?
• Sales/sq. ft. (Standard £1,000/sq. ft.) but should we include all sales of the SKU by the retailer, including their ‘show-roomed’ sales, providing they capture these sales on their online facility (but every little blocking of 'alien' sites helps...)
• Redundant space: ‘large space redundancy’ (can franchisees produce adequate returns even with a mix of rental and share of sales?). If not, instore theatre has to generate £1k/annum/sq. ft. or the store performance goes down to say £750/sq. ft./annum, thereby diluting value of the real estate…
• UK mults own a high proportion of their stores, and are locked into the space (because 2% depreciation per annum means 50 years of the same (in this retail climate?)

This just shows how the fundamentals are being challenged…(by Amazon)

Who in the supplier or retail company is doing this degree of fundamemntal and open-ended thinking?

Not being an experienced retailer, Bezos does not know what does not work, and goes on to make it work…while expert retailers continue to search for the tram-tracks…

Amazon-Whole Foods, a small step with a big pay-off…

Moon-landing

Yesterday's agreement to buy Whole Foods for $13.7bn marks a drop-in-the ocean step-change in grocery retailing everywhere…

More details here, but the immediate knock-ons include:

• A synergistic foot in Bricks & Mortar food retail for Amazon…
• With lots to offer Whole Foods but even more to gain
• More of a challenge in terms of online execution…short term (no sweat for fast-learners)…
• …but meanwhile, every little helps

Why 'shrink-flation' hurts the loyal consumer, and the brand

A brand owner that reduces the amount of product in the package, without an equivalent reduction in the price (‘shrink-flation’) is not only 'short-changing' the consumer (the supplier meets the letter-of-law requirement via the on-pack weight declaration, but misses entirely the spirit-of-law impact on the consumer, especially those that know the  brand), but is in fact altering the accepted combination of the 4Ps, thereby reducing the competitive appeal of that brand compared with competing brands that have not made similar changes....

A pity to undo in a stroke, the work of years in brand-building... 

Making the Numbers Count at the Supplier-retailer Interface…

Operating at the financial edge needs real-number usage by finance-savvy NAMs.

Given the continuing global credit-squeeze and the resulting slowdown in UK retail, account management will have to be played very close to the financial edge for the remainder of 2017…  This makes it crucial that suppliers quantify and demonstrate key aspects of the risk-reward relationship at the supplier-retailer interface.

Creative use of numbers can help.

However, whilst robust calculating methods can often reveal usable insights, the confidence and ability to lead a reluctant buyer to ‘obvious’ conclusions requires a little more… Working confidently at the financial-edge requires a constant willingness by NAMs to reduce issues and situations to numbers, to the point that the resulting moves seem instinctive. This means building up a repertoire of calculating-tools that can be adapted to most aspects of a trading relationship, and by continuous application, internally and with the customer, a level of confidence and credibility is built up over time.  

Essentially, optimising the supplier-retailer relationship is about working towards and maintaining a fair balance of relative risk and reward between trade partners. It is crucial to understand both supplier and retailer business models in terms of how money works within each organisation, using latest open-domain accounts as a basis for comparison.

This means isolating every type of financial transaction with the customer, calculating its cost to the supplier, and then its value to the customer based on respective business models.

In other words, a supplier making a net profit of 9% (!) has to achieve incremental sales of £11.1k for every £1k ‘trade -invested’ with the customer. Meanwhile, a retailer making a net profit of 3.5% has to generate incremental sales of £28.6k to generate that same £1k received from the supplier. Thus it can be seen that a £1k investment by supplier is ‘twice as valuable’ to Sainsbury’s (net profit 1.9%, incremental sales of £52k) than to Asda, with its net profit of 4.4%, incremental sales of £22k, thereby requiring differing levels of emphasis and support in negotiation.

In this way, it is possible to use incremental sales as a measure of the value of trade funds investment to the retailer, thereby impacting two important buyer KPIs, margin and sales growth. In practice, the buyer is measured on gross margin, but is increasingly affected by the resulting net margin as a driver of ROCE and ultimately the share price.  

Apart from helping in day-to-day negotiation, working the latest numbers at the supplier-retailer interface is really about identifying relative risk in the total pipeline, and allocating rewards appropriately to all members of the demand-supply chain. Because of a reluctance or inability to factor in different parts of the relative remuneration package over the years, the risk-reward balance has become tilted in favour of the retailer. This means that gross margins, and credit periods currently enjoyed by retailers do not reflect improvements in delivery frequency over the years.

This additional insight added to average payment periods of over 40 days, coupled with daily delivery, means that eventually, an indefensible and politically damaging position will emerge. In other words, whilst the recent moves to pay smaller suppliers in 14 days are encouraging, it would be beneficial to extend this to all suppliers as part of a move to more of a fair share, reward-for-risk model.

Counting the latest numbers can help in achieving this balance… 

What Value Colour Supplements?

Pic: Brian Moore, Waitrose Hove, Sunday 11-6-17, 1300

Sunday-papers ritual under further threat as fire prevents full distribution?

A weekend fire near a SmithsNews warehouse prevented distribution of colour supplements in the South East yesterday.

Even heavy post-election analysis content was apparently not sufficient to encourage sales of The Mail, Sunday Times and Observer, resulting in on-shelf rejection…

Given that supplements carry most of the advertising, a double whammy for publishers...

Apart from a trend towards Saturday consumption of weekend press, paying full price for supplement-less newspapers perhaps drew attention to the cover-price, and thereby value-for-money…

...besides possibly making online alternatives more attractive?

How to compete alongside the competition…When growth in flat-line can only come at the expense of competitors

With product, company and customer all going through different stages of different lifecycles, and the competitive profile changing in respect of all three, simultaneously, in a flat-line demand environment, it is little wonder that companies are tempted to evolve a policy of ‘ignoring’ the competition and marketing to a customer as if it were the only route to the consumer, with each customer receiving this ‘exclusive’ treatment in the name of a ‘tailor-made’ approach.

Moreover, given the consumer’s current degree of media and data saturation, it has become increasingly difficult to help the consumer to appreciate the subtle differences in a brand’s ability to meet individual need better than the competition.

These difficulties can be compounded by a fixation upon the competitor, amounting in some cases to face-to-face confrontation, with the only result being a dilution of energies and reduced focus upon the satisfaction of consumer need.

The competitor is not, and should not, be treated as the enemy. Each is competing for the mind of the consumer, and a focus upon consumer perception of the available alternatives will be more productive in terms of the optimisation of supplier resources.

Thus competing alongside, within a realistic acknowledgement of the competitor’s relative appeal, will be more productive. The supplier is thus merely using the competitor’s offer as a reference-point, focusing upon usable differences and then demonstrating to customer and consumer how the brand offer can more effectively meet the target consumer’s need, cost effectively.  The emphasis should be upon how one can capitalise upon the short period which a market allows before a better, cheaper, more effective alternative offer is thrown up in opposition…

Incidentally, if a competitor fails to emerge as a threatening alternative, a more fundamental question has to be asked regarding the assumed ‘unique advantage’ over the competitive offering in attempting to meet real need in the marketplace…

In expressing the offer to the customer it is only realistic to bear in mind that the buyer is merely interested in maintaining a competitive advantage over other categories and departments, and perhaps with other retailers in a macro sense. The buyer wants to maintain a fair-share balance within the category that is generally ‘right’ and allows the category to compete as a whole with other categories and with other retailers’ version of the category as part of the total shopping experience.  The buyer should not be expected to operate at SKU level. It is therefore a pity when availability shortfalls provide a negative trigger that detracts from appreciation of the overall proposition.

Within this set of priorities, expressions of ‘petty’ differences between brand propositions become a waste of effort and are ineffective in terms of providing a basis for securing instore compliance.
Equally, it is important to keep the buyer focused upon the category within a total aisle experience versus that of competing retailers. Again the emphasis should not be upon merely copying or attempting to neutralise the competing retailer’s approach, but instead, the competitor’s offer should be used as a reference point from which to establish a ‘unique’ shopping experience, instore.

Focusing upon getting the Marketing Mix basics right will then allow the supplier to take advantage of inevitable out-of-stocks, changes in brand-switching rate by consumers and any performance shortfalls of even the most daunting of competition, within an agreed ‘fair share’ balance of brands and own-label in the retailer’s version of the category.

On balance, competing successfully is less about seeking and exploiting ‘secret’ information or matching a competitor’s moves blow by blow, and more about identifying real points of difference between perceived alternatives available to the consumer wanting to satisfy a need.

Success is then about meeting that need faster and in a more effective manner than the competition, operating alongside comnpetitors, SKU by SKU, in the aisle….