Jet.com: the new 'Aldi' of eCommerce?

A new US-only website, launched in July, Jet.com is offering another option for price-sensitive online shoppers: simply visit its site and it will guarantee the lowest prices across some 10 million items.

The site also offers a variety of tricks Jet.com shoppers can use to save even more, including filtering by “smart/cheaper” items, opting for a different form of payment for extra savings, accepting combined packs, slower delivery, or even agreeing not to return an item in exchange for a discount.

In other words, Jet.com are aiming at Amazon's market, but betting that online shoppers will be willing to trade high service levels for lower prices...

The business model works on a combination of a $50/annum membership fee and a real-time trading system that suggests economies such as 'combinable' products, new shipping options and price updates - cheaper! - as the shopper packs the basket, all resulting in lower prices (can you imagine the impact on B&M shopping if this facility could be incorporated into self-scanning in the aisle?).

Incidentally, given that Mr O'Leary plans to make Ryanair the Amazon of travel, aspiring to go the Jet.com route might make a better fit, and represent less of a culture-shock!

More on Techcrunch

Where are the UK Mults headed in your portfolio?

With Mike Coupe reporting better than expected results (1.1% drop in Q2 sales, and profits 19.5% down on the previous year) for Sainsbury's, coupled with Morrisons 2.4% fall in like-for-like Q2 sales, Asda's 4.7% fall in Q1 underlying sales, and fingers crossed for next week's Tesco wheel-tightening, NAMs have to ask themselves where now for their four largest customers...

Having to struggle with a perfect storm of a fundamental shift in buying behaviour - smaller, cheaper, closer, more frequent - coupled with a war on waste, and cash-strapped consumers 'making do', the mults are barely holding their own, as they experience market share drift to the discounters, convenience and online...

However, it is the structural impact of increasingly redundant large space retailing that represents the main threat.

Given their inability to trade out of the problem, the mults will have to address the issue of increasingly excessive space by progressive sell-offs of redundant outlets, fast enough to reduce the capital base (improving ROCE) but slowly enough to avoid a collapse in market values..

Meanwhile, NAMs have to keep in mind that most discounter growth will come at the expense of brands, unless branded suppliers can find ways of optimising the discontinuous relationships required in dealing with Aldi and Lidl.

In addition, those that survive the Tesco product re-sets need to anticipate the inevitable knock-on removal of overlap in other retailers as they also attempt to simplify their offerings and shore up their balance sheets.

All of this means that all stakeholders need to go back to fundamentals, before someone does it on their behalf...

In practice this means stripping your offering down to the bare essentials that satisfy consumer need, make you better than available alternatives, and allow you to demonstrate a positive, but tailored contribution to each retail player, even the mults...

Aldi Online - a contra-move that breaks the discounter-rules?

News that Aldi are going online appears to be a complete break with its traditional platform:
- Limited range
- ‘Bare-bones’ shopping experience and service
- Resulting in no-frills prices that are 15% lower

Going online pits it not against Tesco and the mults, but in direct competition with the high-service, unlimited range standards set by Amazon:
- 1-click ordering
- Returns as easy as 1-click
- And dense local coverage that drives down delivery cost

All of these go against Aldi’s core strengths…

The Dandy Lab - a merging of retail and technology

On your next store-visit to Spitalfields, why not try something really different by dropping into Dandy Lab, a new tech-enabled menswear store that stocks a small and exclusive selection of 'Made in Britain' cult brands?

NAMs will not be fooled by the superficial similarity to an innovative 'mens' outfitters that includes a selection of floppy handkerchiefs and crafted cuff-links appealing to the 'Dandy' elements of our nature.

The 'Lab' is where things get a bit more interesting. There's the 'Story Wall' - an interactive display allowing you to scan a product, which in turn activates a video with information that helps you get inside the tin, revealing details of its provenance, performance capabilities and the craftsman who produced it. The Story Wall, coupled with photographic analysis of your needs, helps you achieve that integrated look. In addition the technology gives you an insight into the story behind the products, the amount of work that went into its production and where your money goes. See more, including slideshow at Timeout

Finally, as you leave the store, you can share the results, including your photograph, with colleagues and buyers via social media, thereby adding to the productivity of your store visit...

Seriously, the Dandy Lab appears to be a genuine attempt to elevate shopping experience to new tech-enabled levels. They have set themselves high hurdle-rates by focusing on our most resistant gender...on the assumption that male-conversion will make the winning over of time-scarce savvy females a push-over...

I wonder...

...a thousand words?

..a journey barely started...

Tesco scraps 24-hour opening at two large stores - portfolio lessons for NAMs?

In the way that companies portfolio-manage brands by developing a mix of established with new products, and NAMs manage a mix of embryo and mature customers, the strong carrying the weak, so too retailers tolerate varying store profitability providing the national totals of sales and net profits are acceptable.

Thus Tesco, faced with pressures on national performance are probably re-assessing store-level viability based on individual branch P&Ls.

Whilst the obvious short-falling branches have already closed, or are on the waiting-list, marginal cases are obviously being tweaked as a last chance move.

Opening hours reduction obviously provides such an opportunity.
Tesco's original strategy of opening 24/7 was always a better option than guessing in advance whether an area around a store was likely to yield sufficient night-time traffic, given the ease of reducing the opening hours to match demand, via first-hand pragmatism.

So there should be no surprises here.

The question is where this leads, in that it seems inevitable that, should the new opening-hours window not translate into sufficient  improvement in the  bottom line, the knives will be back, in terms of executing a store-portfolio 're-set'.

In other words, Tesco will again bite the redundant-space bullet, starting with store closures, and searching for alternative usage of instore space where the outlet is retained in the portfolio.

This means that Tesco have the courage to cut, and continue to cut, until a sufficiently healthy retailer remains...(ROCE 15%, NPBT 5%, Stockturn 20+...)

And this in turn has to be a way forward for suppliers that need to shore up their bottom lines via a vigorous re-assessment of brands' and customers' portfolios, re-labeling as invest, maintain or divest in recognition of stages of business unit life-cycle evolution, and investing accordingly.

The alternative has to be continuing as usual and relying on a new owner to do it on our behalf...

How to get above-average insights from managing averages, via data animation...

A key issue for action-driven NAMs in unprecedented times is how to derive meaningful and actionable insights from well-intended but over-simplistic averages currently produced by ‘internal’ research.

A major problem with this approach, and a great deal of business reporting in general, is that it presents senior management with a host of averages:

category average margin
average space in store
average basket size
average customer spend
average shelf life etc.

We know these are important measures - the buyer keeps reminding us - but as measures, they have gone too far. In other words, they are a starting point, but we need to find ways of getting behind the averages, and data animation can help.

Guy Cuthbert, of Atheonanalytics, in a fascinating article, starts with a retailer’s average gross profit margin and shows via exploration and visualisation of underlying data, how to discover and communicate far more about the richness of shoppers' buying behaviour, helping us move towards the goal of any commercial analytical exercise – the oft-requested “actionable insight.”

In his graph-by-graph process he drills down and visualises by Customer Segment, Product Category, Sub-Category, Individual Customer, and converts a 2-variable scatter-plot to a 3-variable bubble-chart. He then adds total Profit (or Loss), using colour for this fourth variable, to highlight the variability in cash impact of the customers.

We are then in a position to loop back to the original question posed by the buyer – “How can we improve profitability?” – via a simple visual explanation of profitability, which can be explored by Customer or Product, and a recommendation to review customer discounting policy in the light of long-term customer value.

In other words, the data animation process has helped us move away from Averages of Averages, and provides a reasonable balance between simplicity and complexity, yielding actionable and communicable insight, far better than the average....

Peanut Corporation of America owner sentenced to 28 years

The ex-peanut company mogul was convicted on counts of conspiracy, obstruction of justice, fraud and other crimes in relation to the 2008-2009 salmonella outbreak which caused death of nine people and sickened more than 700. The incident caused one of the largest food recalls in US history. The QC Manager received 5 years and a food broker, 20 years, as parties to the conspiracy.

The key issue here is the escalation of accountability to the highest level in a company, along with the key players involved, and appropriate levels of punishment.

This development has to cause other companies and their teams to re-visit responsibilities re legislation and impact, everywhere.

Whilst in this case there appears to be no doubt as to culpability, it would be a pity if it caused business leaders and their teams to be over-cautious in terms of innovation and optimising resources in the marketplace.

Success in business is still about responsible risk-taking, working within existing rules and regulations, and this success will result from playing within the full ball-park, in full knowledge and observance of the legal and moral limits, while competitors seize this excuse for risk-avoidance in the centre of the pitch…

UK mults maxed out on space, losing 1m sq ft, a first cut in a decade

According to Financial Mail On Sunday, this represents a 1% space reduction, a long over-due combination of close-downs and sell-offs, in response to structural changes in the market.

Eight years of falling profits and flatline sales, combined with increased online efficiencies and consumer insights, have caused major retailers to re-assess their assortments. They have realised that, whilst overlap and duplication can be tolerable sources of back margin in good times, these surpluses become liabilities in a persistent downturn…leading to major range re-sets such as Tesco’s 30% SKU cull, in turn revealing that in large stores, upwards of 20% of retail space can be surplus to requirements….

The same navel-gazing by major mults has revealed that 80% of sales are made by 20% of the range, with ‘20% of SKUs selling but one pack per week’ in some cases.

Why the hesitation in making the cuts?
‘Normal’ businesses faced with these excess space issues would quickly sell-off unprofitable stores, but UK retail is special. As you know, the price of prime retail space is driven by sales/sq. ft. but no other business (except global Apple @ £4k/sq. ft./annum) can sell £1,000/sq. ft./annum.

Moreover, by applying a 2% depreciation rate per annum to their stores, retailers are saying that their assets have a 50 year lifespan - a 50yr lock-in - all leading to the fact that any sell-off of spare space could be at a loss, or drive down property values…

Whilst in good times, assumptions of 50 years of unchanging market conditions was understandable and even re-assuring, with the benefit of 20/20 hindsight, the structural changes resulting from closer, smaller, faster and more frequent shopping can be seen as inevitable, fundamental, and permanent… (in City terms, anything longer than a year is ‘permanent’ i.e. see long term debtors in the balance sheet..).

Limited options for B&M retailers
Thus it can be seen that Bricks & Mortar retailers have limited options available in attempting to restore historic levels of profitability, making online development - a major and compelling route back to profitability for the mults - even more appealing. And besides,online, space is not an issue, a place where long tails are irrelevant, and selling 1SKU a week, even a month, is still ok…

All that matters is exceeding consumer expectations 24/7 in terms of availability, speed, accuracy and contents of the tin…

The clarity vs. accuracy trade-off...

Wrong, but perfectly understandable, like watching the Rugby World Cup on TV (with aids) vs. in the ground...
The London tube map is a design classic, relying on equal spacing between the stations. This recent edition - produced to help engineers plan Crossrail - is a geographically accurate map showing the distance between the stations.

So now you know, it's quicker to walk the (almost) 329 yards between Covent Garden and Leicester Square stations than it is to get on the train.

Mouth-money indicators for Mult's CEOs?

According to The Business Desk, CEO David Potts has increased his £800k stake by investing £500k in Morrisons shares following a 10% drop in share price.  This has to be a major show of confidence and evidence of commitment in his new role, especially if other members of the board and staff are encouraged to do likewise.

Nothing beats a stake in the business to focus the mind…

Scope for NAMs to follow suit?
Now there’s commitment!

Seriously, Potts' latest move is bound to put additional pressure on the Tesco Board, with recent reports of City disquiet in The Guardian for their holding unusually low numbers of shares in company, and CEO Dave Lewis yet to invest any of his own money in the company…

This is being regarded as an indication that the Tesco executives have not been willing to back their turnaround plan by putting their own money into the retailer.

…thereby begging the question re how much suppliers can reasonably be expected to invest via trade funding…?

Retailer P&Ls: why 'contexting' helps....

Given normal pressures in the NAM day-job, one of the problems with firefighting is its tendency to prevent us stepping back to think... and place our data in context...

Take Morrisons latest annual results, and focus on the Net profit margin, before tax 

NAM's internal monologue:
Morrisons 2014 NPBT = (4.7%)...."almost a 5% loss.. "
"Panic, send for another an extra fire-engine!"

"Hang on, how about the other mults?"

Sector context:

Mults Sector 2014/5:
Tesco             (10.2%)  "Probably write-downs, but Trading Profit showing 1.1%, still a problem.."
Asda               3.9%  "Asda is probably a blip, forget"
Sainsbury's     (0.3%)
"That's a relief, everybody's down..." 

"But wait, how about other players in the UK?"
UK context:
Co-op               1.7%  "Better than 'non-profit' I guess..."
Waitrose          5.4%
Aldi                  4.9%
"Oops, this could be a mults' problem! Asda still a niggle...but the 'squeezed middle & and fundamental structural change' now making some sense..."

"Time for a continental view?"
EU context:
Carrefour          2.6%
Metro               1.1%

"All EU players low, but were never great anyway, time for a global look?"
Global context:
Walmart           5.1%

"Wow! Walmart are demonstrating that even in unprecedented, post-global financial crisis times, it is still possible to make net profit margins of 5%!"

"I now understand why the stock market is piling the pressure on the UK mults' share prices..."

"(I can also see that Asda's results, although better than other UK mults are still diluting Walmart's performance...)"

"Now, how can I help Morrisons?"

In other words, placing your customer's results in as big a context as possible, does not add further distraction, but can provide actionable insight, even in fire-fighting conditions....
NamNews - for big context...

Remember when monthly shopping breached the limit?

                                                                                                                                     pic: belgeinfo.com

Matt McKeown exceeds 70mph on his jet-powered shopping trolley in 2013, unconsciously signalling a return to weekly, then daily shopping trips, dragging large-space redundancy in its rear....

"Buyer's Office? Sorry, I'm running a bit late..."

                                                                                                                               pic: The Independent

26-lane gridlock photographed outside the capital New Delhi this week.

Last year’s trade strategy still feel right?

                                                                                         HT to Julian Barker via Stuart Green

What is going on in UK retail?
Retailers and pundits are calling it ‘structural change’ meaning an economic condition that occurs when a market changes how it functions or operates, making yesterday’s forecasts and decisions inappropriate.

In practice, as you now know, this is one of the most fundamental retail changes in career history for most people.

• Radical changes in how people shop: need to buy anytime, anywhere, any way they choose, or else..
• Major mults locked into large space outlets – their retail estates at least 20% over capacity - that cannot be released via sell-off without compromising the balance sheet (the value of a store is based on sales of £1k/sq ft/annum, which no other business can legally deliver, +2% annual depreciation means a lifetime expectation of 50 years, all contributing to lower sell-off prices..
• Long tail of instore SKUs: with 80% of sales produced by 20% of the SKUs, means that current stores are at least 20% too large, a gap too great to cover via instore theatre and alternative usage, putting more pressure on the £1k/sq ft/annum KPI. This means that the Tesco cull has to be just the start…
• Online still indicating an unknown upside, and an equally unmeasurable downside for traditional retail

Where is it headed?
Radical change has to result in a re-alignment of market shares, only issues are how long and how fundamental... Pragmatic business people have to plunge in and commit now, in order to optimise resources and profitability, while others ideally await a return to normal...

Taking Nielsen market shares as a basis, why not ‘what if’ the possible re-alignment – crude, but probably better than assuming share maintenance or even reversion to better times?

                       Current share    Share end 2017?
Total Mults          90.6%              88.0%
Tesco                 27.9%              25.0%
Sainsbury’s         15.9%              14.0%
Asda                   15.6%              14.5%
Morrisons            10.8%               9.5%
Aldi                       6.2%               9.0%
Co-op                     5.8%               5.0%
Waitrose               4.2%               5.0%
Lidl                       4.2%                6.0%

Key dynamics: 

• Drift of business away from large space retail, with lock-in + long tail causing profitability issues/write-offs
• Smaller, closer, more frequent shopping trips benefiting small local convenience players
• Growth of online - no space/tail issues - with click & collect diluting fulfilment costs

How does it affect you?
These changes represent both opportunities and threats. Threats for those who ‘wait & see’, but opportunities for the few who act now on incomplete information but can anticipate the inevitable consequences of fundamental change in their markets. The unprecedented forces unleashed in the market will not be limited to the market-share ‘tweakings’ indicated above – we are talking about fundamental change in market composition, the degree of which change will be determined by your category-customer-competitor mix…

What to do about it?
Back-to-basics review of relative competitive appeal vs. available alternatives – by definition this will re-evaluate brand capabilities vs. real consumer need, set against your company expectations of brand growth, time window, and appetite for risk, all assessed within a realistic – and objective – assessment of a current market context and its probable development

In other words, if your current trade strategy pinches a bit, perhaps our 3.5hr bespoke session can help secure a better fit?

More: contact me bmoore@namnews.com

More on compliance = Less on trade investment..........You're kidding, right?

That's Not My Job!

Co-op reforms not quite paying Dividends, but...

For years the training ground for young, ambitious NAMs, with a typical two year tenure 'to understand how it works', anyone claiming 100% insight at the end of the induction-period was promptly sent back for another two years, to appreciate the extent of their naivety in presuming to make sense of this unique business model, ever...

In practice, it took a crisis that would have destroyed normal PLCs to demonstrate the inner strengths of an organisation that for years aimed at breaking even, and obviously came in with a 3% loss at year end, in contrast with 'normal' retailers that aim for a 5% Net Profit that inevitably results in 2.5%...

Having bitten this particular bullet - aiming for and delivering a moderate profit, and even mentioning ROCE in despatches - the organisation  last year addressed the cumbersome governance structure and made it more merit-based, and even more democratic via a 1 man, 1 vote modification.

This made it more tolerable to adopt other normal retailer moves aimed at cutting waste and improving profitability. In fact this morning's Independent lists the jettisoning of non-core businesses, such as the pharmacy chain and the much-loved farming business, using some of the savings to fund an 8.5% pay rise for staff.

Even the 'Divi' appears to have been replaced by the immediacy of discount vouchers at point of sale...

In fact, anyone that has heard Richard Pennycook's IGD presentation of the turnaround, realises that the Co-op is truly on the way back, in part evidenced by their ability to survive the current price wars in UK retail, better than most...

All that said, perhaps it is time for Co-op NAMs to step back a little from the fire-fighting, and consider using the ROCE, Net Margin and Capital Rotation tools that provide an effective working platform for their Big Four colleagues, all adapted to the realities of a Co-op attempting to morph into responsible capitalism.

At the very least, this approach will provide practical career-move training in how to optimise one of the mults a few years later. However, in the meantime, this change in MO will pay dividends in terms of job satisfaction... 

Tesco PLC's Balance Sheet Re-set: why selling South Korea may not be enough

Following today's confirmation of the sale of its South Korean operation to MBK Partners, and according to The Motley Fool, Tesco is now in the final stages of its asset sell-off aimed at reducing its adjusted net debt of £8.5bn by the £5bn Moody’s rating agency believes is necessary to meet stock-market expectations.

Ideally, asset sales will yield: 
- South Korea £4.2bn
- Dunnhumby between £700k and £1bn

Given global stock-market uncertainties it is possible that these sales may not yield sufficient sums, in which case Tesco will have to resort to seeking more cuts within the business and/or attempt a Rights Issue to raise cash.

Rights Issue Risks
Whilst the latest share price is a daily reminder of stock market opinion re Tesco’s potential, actually asking shareholders to invest more in a falling share price - via a Rights Issue - would not only cause investors (and analysts) to take a really fundamental view of Tesco’s prospects of a successful turnaround in terms of re-balancing the business, but also question the retailer's ability to regain market share in a flat-demand market, re-assess their competitive edge vs. available alternatives and question their ability to compete with newer retail players.

And this apart from a Rights Issue yielding less as their share price falls in the current stock-market turmoil…

This leaves further cost-cutting in the business, a possible re-set of the product re-set, and a more aggressive approach to selling off redundant space, at any price…with no sign of a fat lady singer anywhere…

Germany moves towards credit card usage in retail - at a price!

                                                                                   Pic: Brian Moore - Berlin tourist shop 30-08-2015

Cashback cull: Tesco halves Clubcard points for 2.8m credit card holders

According to The Telegraph, EU rule changes on the fees paid by retailers accepting payments via Third Party credit cards has been halved to 0.3% of purchases to reduce shelf prices.

In practice, credit card owners like Tesco either have to reduce the reward points on usage of their card in non-Tesco outlets, or absorb the losses on such deals.

Tesco have decided to reduce the rewards from £1 per £400 spend (0.25%) to £1 per £800 spend (0.125%), whilst retaining the £1/£400 spend in Tesco stores. 

In practice, being a lead player, other retailers will follow Tesco, and savvy shoppers will probably switch to a more rewarding card for their non-Tesco purchases. This means that the viability of retailer credit-card schemes built on the assumption of access to the entire market, will become less profitable and/or will result in additional charges/points reduction to claw back losses...

However, the real downside is that any attempt at detailed explanation will only heighten consumer awareness of the miniscule rewards available via credit-card and loyalty schemes, with questions asked re what costs are involved and how much is distributed via rewards, in an increasingly suspicious mode on the part of consumers, especially those returning from their first holiday trip refusals to show boarding cards at checkout...  

Contexting global stock markets - mapped by size of market cap.

Helps explain who talks vs. who listens…?
More here

A Get-away weekend for NAMs?

Tesco setting a new KPI in fine wine appreciation?

The Guardian’s report on the retailer’s decision to close the Tesco Wine Community website on 28 August, and the slimming down of its in-store and online wine range are all part of chief executive Dave Lewis’s re-set quest to reduce the overall product range.

The key issue for suppliers is how these moves by the UK’s biggest wine retailer will impact alcoholic drinks’ off-trade sales, particularly as the website focused on blending wine-loving customers with other experts and wine-bloggers. 

Therefore, the resulting vocal response should come as no surprise as disappointed members urge more enlightened retailers like Lidl to leap into the gap…

Think also of the tell-a-friend implications resulting from alienation of this special-interest network…

Seriously, whilst Tesco’s current priority has to be profit performance, its buyer-led drive to educate UK palates to more subtle appreciation of what really matters in wine selection may result in unintended consequences in terms of how discerning shoppers view the retailer's other post-cull categories… 

Boarding passes - still a storm in a glass tea-cup?

Any airport operators and retailers in any doubt as to the depth of consumer feeling need only read the comments-section of the many news reports that continue to cover the issue. Unfortunately for airport retailers, it does not stop at the checkout... 

This tip-of-iceberg boarding pass issue is now causing savvy consumers to bring their normal high street shopping behaviours into the airport. In other words, when mobile phones might have been left off as part of the pre-holiday wind-down process, price-comparison apps are being consulted to reveal price-gaps that are even wider than the ‘same as high street prices’ assurances being issued by airport  retailers, as the issue escalates...

More importantly, with plenty of time to spare, airport travellers are able to indulge themselves in texting their feelings to friends. In practice this means applying the tell-a-friend rule: If a brand exceeds my expectations, I tell one friend, if short-changed, I tell ten friends... 

Then think plane-loads of passengers continuing to spread the word at destination airports currently unaffected by this uniquely UK issue... 

In other words, what was meant to be a shop-window for leading-edge retailers and brands is morphing into an outlet for pent-up frustration by vocal savvy passengers that fall out with the staff and vote with their feet...

Meanwhile, suppliers have to ask whether their brands’ presence in airport shops, and possibly the innocent target of consumer anger, is worth the damage, cost and growing inconvenience of travelling by air... 

Morrisons sale of C-Store Chain - a phoenix chicken under new ownership?

Details are obviously sparse at this stage, but logically, at breakeven on sales of say £300m, it is probable that the 160-outlet chain will change hands for no more than £250m - a financial relief for Morrisons, and an exciting convenience-challenge for the new owners.

The issue for suppliers has to be where the M local chain goes from here. 

Morrisons have already addressed the viability issue by selling off unprofitable outlets, but it is probable that some branches in high-rent areas will be prioritised in terms of driving footfall and basket-size to improve the bottom-line, before decisions are made re lease-forfeiture/closure, with attendant write-off costs.

The key will be to establish a consumer-franchise to capitalise on small, local and more frequent shopping. This means that, having refined the formula, the focus will be on extending into neighbourhood areas, ideally with lower rentals and possibly going a franchise route…?

Either way, suppliers might usefully support a chain that will make an interesting 160-outlet investment-backed convenience chain customer firing on all cylinders, and possibly even realise a ground floor opportunity in what could become a significant player as it rises from the ashes of structural change in the grocery sector…   

Kids born in the 60s & 70s, and their clean dinner-plate neuroses?

His mother's insistence that no food went to waste has stayed with Colm O'Regan all his life. The ritual of dinnertime shaming and being made to finish his dinner will inevitably be repeated when he has his own children, he writes in this week’s BBC Magazine.

Some great insights but key was the fact that days spent in unsupervised outdoor pursuits soon burned off any excess calories resulting from clean plate ‘over-eating’, and more importantly, were vital in helping us manage uncertainty in a world without patterns...

First, we survived being born to mothers who smoked and/or drank while they carried us.

They took aspirin, ate blue cheese dressing, and tuna from a tin.

Then after that trauma, our baby cots were covered with bright coloured lead-based paints.

We had no childproof lids on medicine bottles, doors or cabinets and when we rode our bikes, we had no helmets, not to mention the risks we took hitchhiking.

As children, we would ride in cars with no seat belts or air bags.

Riding in the back of a van - loose - was always great fun. We drank water from the garden hosepipe and NOT from a bottle.

We shared one soft drink with four friends, from one bottle and NO ONE actually died from this.

We ate cakes, white bread and real butter and drank pop with sugar in it, but we weren't overweight because......

WE WERE ALWAYS OUTSIDE PLAYING!!

We would leave home in the morning and play all day, as long as we were back when the streetlights came on. No one was able to reach us all day. And we were O.K.

We would spend hours building our go-carts out of scraps and then ride down the hill, only to find out we forgot the brakes. After running into the bushes a few times, we learned to solve the problem .

We did not have Playstations, Nintendo's, X-boxes, ipads,  had no video games at all, no 200 channels or catch-up on TV, no DVDs, no surround sound, no mobile phones, no text-messaging, no PCs, no Internet or social networking.......... WE HAD REAL FRIENDS and we went outside, found them and talked to them!

We fell out of trees, got cut, broke bones and teeth and there were no lawsuits from these accidents.
We played with worms and mud pies made from dirt, and the worms did not live in us forever.
Made up games with sticks and tennis balls and although we were told it would happen, we did not poke out any eyes. We rode bikes or walked to a friend's house and knocked on the door or rang the bell, or just yelled for them!

Local teams had try-outs and not everyone made the team. Those who didn't had to learn to deal with disappointment. Imagine that!?

The idea of a parent bailing us out if we broke the law was unheard of. They actually sided with the law!

This generation has produced some of the best risk-takers, problem solvers and inventors ever. The past 50 years have been an explosion of innovation and new ideas.

We had freedom, failure, success and responsibility, and we learned how to deal with it all…….. !

So, the continuing unprecedented times are simply challenges and opportunities for many of us…

Boarding Pass checkout - the ultimate fall-out?

Think about it:

• Retailer brand equity haemorrhaging...
• Higher than High Street running costs
• Turnover-based rental
• High Street prices subsidised by non-refund VAT
• 'Free' insight re shopper-behaviour cut-off
• Boarding Pass refusal-issues at checkout
• HMRC queries...and attendant re-funds
• Political platform emerging...
• Shopper alienation...

In other words, what was meant to be a shop-window is morphing into an outlet for pent-up frustration by vocal savvy passengers that fall out with the staff and vote with their feet...

Grocers as Media Outlets for CPGs Suppliers?

In culling times when retailers don’t need more categories, retailers are in danger of missing a unique opportunity to add media-access to their instore range.

Simply by putting their existing customer analytics and communications assets to work more effectively – and then marketing these assets to their suppliers – grocers have the ability to generate significant revenue for their business, while also helping to support their customers through each stage of their purchasing journey. See more at The Progressive Grocer.

Given their extensive range of communications channels, combined with physical access to the consumer in the shopper-marketing aisle, grocers are in a unique position to hand-hold the shopper throughout the entire purchasing process, and beyond...

However, David Buckingham in the Progressive Grocer makes the point that the opportunity will remain dormant unless retailers optimise their unique advantages over other media by tying suppliers’ marketing initiatives back to each stage of the shopper’s purchasing decision via the retailer’s customer analytics tools.

This will provide a means of directly measuring return on marketing investment, hopefully over-riding the distractions of back-to-front margin moves… 

By treating this ‘access and fulfilment bundle’ as an individual category and offering it as such to suppliers, the retailer can stimulate the collaboration necessary to raise its potential profile in both organisations.

It then simply takes communications-imagination on the part of supplier to add this new ‘category’ – a retailer’s unique channel, role and revenue stream - to their brand portfolio, and think accordingly…   

Boarding Pass checkouts - the unintended consequences?

Reports in The Independent indicate that Airport retailers demand boarding cards from travel-shoppers to avoid paying 20 per cent VAT on everything they sell to passengers travelling outside the EU, as there is no purchase tax due on such goods.

Research by The Independent also suggests most of these stores don’t pass the savings on to customers.

Apart from the inevitable damage caused to retailer brand equity, and possible questions from the authorities re inappropriate VAT collection, the real issue has to be the knock-on effect of most airline passengers refusing to submit what is a valuable source of shopper insight at checkout...

In other words, think about the value of knowing name, destination, flight class and frequent-flyer details of every travel-shopper making a purchase...especially if linked with loyalty-data to optimise shopper marketing strategies in some of the world's most expensive retail real-estate...especially if it can be shared with the airline...

Think also about the fragility of shopper-retailer relationships, in a world where passengers held overlong in the security security-process, already suspicious that the indirect route to the plane is deliberately designed to encourage shopping, are known to 'punish' the airport by refusing to enter, let alone buy from airport shops...

Time for a grand gesture - and some overdue damage limitation - via VAT discounts at the checkout?

The Savvy NAMs guide to Best-by dates and food safety

A new article by Business Insider makes a point that the "sell by" dates indicate not whether foods are safe to eat - they simply tell you when food will reach its limits for "optimal quality".

They link to a fully searchable site that gives guidance re. the safe-life of most foods, along with advice on prolonging life-time by category

Well worth a check over the weekend…

Meanwhile, it might be worth contemplating on the implications of savvy consumers adopting ways of reducing waste - $165bn/annum - thus effectively reducing consumer demand by even half of that amount, in a flat-line environment…

The way forward for food suppliers?
Why not embrace the inevitable and promote ways of prolonging the life of your brand, and grow credibility and market share at the expense of more defensive competitors, even in flat-line…?

TGIF !

..........or a fat-cat worried sick?

Amazon not clicking with Click & Collect?

Some recent research conducted by Instantly, a provider of audiences and insights tools, came out with an unexpected conclusion that Tesco is leading the way in click & collect at 60%. However, a surprise was that Amazon scored so badly at 16%....

Given that their home delivery is well-nigh perfect, it seem unusual that they are missing such an obvious trick on the more economic alternative from an online supplier’s point of view.

Unless Amazon are cooking up a radical alternative to collection-boxes in stores? 

Aldi-man new fashion range launch

Having landed a few heavy punches on the grocery mults, Aldi is now squaring up to the High Street clothing giants M&S and Next, with its first fashion range for men.

The new summer clothing range includes linen trousers (£9.99), smart chino shorts (£7.99) and Oxford shirts (£6.99), and for those NAMs wanting to avoid being recognised by other Aldi-NAMs, marl zipped hoodies are a must-buy @ £8.99….

Worth at least a store visit, but if you cannot afford to be seen in Aldi, some good in-use pics are available here.

Where is this headed?
Sharp-eyed followers of mens’ fashion will remember that Lidl beat Aldi to it via their launch of a men's fashion range in November 2014.

However, apart from resulting in a little headline-grabbing skirmishing, taking both initiatives together gives another indication of the extent of the discounters’ ambitions in the UK.

In other words, someone at Aldi/Lidl has to be assessing potential opportunities category by category, seeking the right blend of complacent-pricing and tunnel-vision that might respond to a Lidl proper discounting...

It costs little to try, and one discounter’s success automatically provides a pointer for the other…

Meanwhile, one can only imagine the additional disruption in the men’s fashion world should Poundland find a way to follow suit…?

Webification - how The Entertainer is taking the shop floor to new heights in Toy Retailing

If your kids have not already pointed it out, a visit to a branch of Gary Grant’s The Entertainer Toy store will convince you of the merits of experimenting with alternative tech-driven experiences, increasingly integrating e-commerce functionality with in-store environments – a ‘webification’ pointer for other retailers?.

With sales of £107m, ROCE 22.7%. and Net Margins BT of 5.7%, and growing at 13% in the current climate, they are one of the most innovative toy retailers we analyse.

The Entertainer is significantly improving both customer enquiry resolution and conversion, and Click & Collect performance by deploying shop floor tablet devices.  The independent toy retailer is now able to offer a 30 minute Click & Collect service, a development that saw sales via this channel grow by more than 80 per cent over Christmas 2014, accounting  for 35 per cent of the company’s online sales.

The shop floor tablets used by The Entertainer are a great starting point (more at ItProPortal). For example, they can be used to enable easy review of a store’s entire inventory, the traditional in-store equivalent of which would be incredibly laborious, even with the help of a shop assistant.

By arming assistants with a tablet, retailers can provide the shopper with an ‘endless aisle’ experience similar to that of e-commerce. 

Moreover, the devices can also allow assistants to process payments anywhere in-store, and even provide personalised recommendations.

Obviously, exposing your kids to a retailer’s entire inventory carries its own risks, so perhaps a solo store-check might be wiser this time…?

Getting mad, even for seagulls?

                                                                                                                                Pics: Brighton Argus

More about the dog-killers here

"Unexpected Item in the Bagging-Area"

Dear Retailer

Why not keep our little mistakes secret by eliminating 'shout-over' and confining our dialogue to the check-out screen?


Have a User-friendly weekend from the NamNews Team!

A step beyond GSCOP?

Whilst the issue of supplier-retailer trading relationships has become ‘Agenda: Upper Quartile’, and the Code of Practice, in practice, is now being seriously considered by key stakeholders, it could be that suppliers are not raising their sights and expectations to a place that was always the aim of GSCOP, in spirit rather than by the letter of the Code.

Whilst it is obviously important for all parties to understand the detail and practical application of GSCOP, it is important to keep in mind that focusing on the ‘letter’ of the code in legal terms will at best slow down the evolution of what could, and should, be a basis for improved day-to-day dealings between suppliers and retailers.

Meanwhile, there is little point in criticising retailers’ legal departments for helping buyers to avoid falling foul of the letter of the ‘legislation’, that is what corporate lawyers do….  And besides, retailers need, and can afford to employ the best talent available in finding a way forward, especially in unprecedented times…

In fact, should the GCA team ever find themselves in a position to levy a fine of 1% of a retailer’s turnover, they will find themselves opposite a/the best-in-class legal team, entirely focused on provable ‘letter-of-law’ breaches, with the spirit-of-law aspects playing little, if any, part in the process.

The answer for suppliers has to be a company-wide emphasis on evolving a sustainable offer that represents a demonstrable edge over available alternatives, an advantage that is not easily replicated by the competition. In practice, this could mean a supplier has to construct their own portfolio re-set, stripping out any brand/SKU that fails to reach this standard, and live with the consequences.., before Tesco does it on their behalf.

This should be followed by re-negotiation of your existing supplier-retailer relationship to a point beyond GSCOP, a fair-play arrangement where each party’s reward is proportional to relative risk, and the partners collaborate because they want to be in business together, in the full spirit of a mutually productive working relationship…

Over-idealistic, naïve even? 
Would you prefer having to refer to a lawyer’s ‘letter’ for every stroke, and a life where you best energies are wasted on second-guessing your ‘opponents’ on the other side of the buyer’s desk?
There is a better way...

Ikea has created the kitchen of 2025 — and there's no stove or refrigerator

Those of you putting the finishing touches to your 2025 trade strategies might benefit from a skim-through a recent Business Insider article that describes and illustrates Ikea's ideas on how the savvy consumer will manage food preparation in 10 years.

The article gives an overview and pics here, but if you really want to dig into the detail and methodology, best check the Concept Kitchen site.

This give details of
- Smart shelves with induction cooling replacing refrigerators
- Smart table with hidden induction coils to heat pots & pans, replacing the cooker
- Smart waste disposal to aid recycling

Over the top?
Perhaps, but what it could mean is more savvy buying and significantly less waste...
Add to this the increasing tendency for major grocery retailers to expand vertically into food processing to restore profitability, effectively withdrawing demand from the market.

In other words, branded food suppliers have ten years to anticipate and adapt to supply chain dreams that are fast becoming reality...

Why not try a what-if to explore how your encounters with the buyer will reflect the above developments in the coming years?  

Indy Convenience upping the ante?

                                                                                                                    pic: Brian Moore, Edinburgh

Amazon's Profit - a rounding error for Apple but proof of potential for the Stock Market

Amazon’s surprise second quarter profit of $92m, on revenue of $23.19Bn, a net margin of only 0.39% clearly leads the stock market to believe that the company is beginning to flex its latent profit muscles, adding $40bn to their market capitalisation, making them bigger than Walmart…

Reports in the New York Times confirm Amazon’s unchanging formula: 
It is the leading e-commerce company, and e-commerce is going to be really big. Its dominant position will allow it to undercut competition and bring home large profits. In the most extreme case, it will control the delivery pipeline of goods into homes, kind of the way cable companies once controlled the flow of entertainment... 

The stock market have obviously bought into the Amazon profit story, allowing the company to provide steady but minimal profits, re-investing surplus in innovations and experiments that normal companies can only dream about…

…Allowing Starship Amazon to continue on its mission of selling anything to anyone, anywhere, anytime, in whatever way they want to buy, forever?

BTW, in case you ever need reminding of their scale, Amazon have just opened a new multi-million pound fashion photography studio in London's Shoreditch as its fashion business continues to grow, and will produce half a million fashion images a year.

At 46,000 square feet (Asda-size), it houses 22 individual photography bays, a large state of the art editorial suite, video editing facilities, a creative fashion library, and office space for Amazon’s growing team of fashion creatives.

Please continue to watch this space...

NASA-funded study envisages a permanent Moon base within 20 years

According to Science Alert, a new economic assessment into the feasibilities of an ‘Evolvable Lunar Architecture’ base suggests that humans would be able to return to the Moon for approximately 90 percent less cost than previous estimates, which ran up to US$100 billion.

The new low-cost strategy would be possible due to leveraging partnerships with the private sector, and predicts that the US could lead an ‘International Lunar Authority’ comprising both public and corporate interests.

Time to begin to factor a re-born Tesco into your trade strategies, while others await a possible turnaround?

'Moe Greene' February 29, 1936 - July 18, 2015 R.I.P.

Supermarket price wars fall-out: Food companies across the UK 'on brink'

A report by Begbies Traynor in NamNews says the number of food and drink manufacturers in ‘significant’ financial distress has risen by 54% in the past 12 months to 1,622, 89% of which are small or medium-sized suppliers and farmers dealing with the major supermarkets.

Given that branded goods suppliers need Net Margins of 5-10% to fund brand equity building, and - depending on category - stock rotation of 5-20 times per annum to meet availability KPIs, ROCE performances of 15 -25% to ensure an adequate reward for risk - and thus some local autonomy - it is fairly easy to assess the scale of the fall-out in your categories...  

The key issue for suppliers is their own performance vs other companies in their categories.

In other words, check your company's UK figures at Companies House, for 2007 and the latest available - usually 2014 for most companies - allowing for issues re Corporation Tax (i.e. your company tax domicile arrangements can colour the reported performance at local level) but in general the figures will be usable for most companies in your category, especially in food.

Action: 

• Check your own figures, 2007 & 2014
• Check three competitors on the same basis
• Assess relative strengths and weaknesses i.e. the relative damage done to date, the ability to continue funding price-cuts and especially the competitors' ability to compete in your category
• ...keeping in mind that the buyer is equally capable of investing a £1 per set of results, from the same source...

This category-focus will provide a reality-check reflecting latest available data, a basis for optimising consumer strategies and especially a means of identifying and quantifying your walk-away points with the trade.

Unless of course you prefer to believe the politicians and fly blind?

Co-op convenience cashback for the weekend?

                                                                                                                             pic: Marisa Cashill
Midlands Co-operative Food shop, Duckmanton, this morning 0400hrs,
Police checking if they went north or south!