Latest reports in The Guardian that over-complex supermarket pricing is being targeted by UK government to ease price comparison will probably end up in the usual letter-of-the-law observance, forgetting that consumer trust is based on the spirit-of-the-law.
Providing consumers with true bases for like-with-like comparison needs the combined efforts of suppliers and retailers with a common aim of rebuilding consumer trust, the essence of branding, both retailer and supplier.
Given its presence at the point-of-purchase, and at 29% market share with most to lose, I believe that Tesco - and its major suppliers are in a position to take the following steps:
Price clarity: A major opportunity lies in wait for those retailers that strip offerings back to the basics of letting consumers know what they get for their money. Apart from an obvious emphasis on unit pricing combined with a little education ref. prices per g/ml, it means eliminating all ‘letter & spirit’ legal issues regarding promotional offers, and replacing them with genuine, transparent and defensible offerings that can be compared accurately with competitors’ alternatives, like-for-like, but also meet and even exceed consumer expectation
Product delivery: When a consumer opens a tin, its contents should match or even exceed the expectation created by the lid…a fundamental of branding based in part on the fact that the cost of making the first sale to a consumer is so high that profit is only possible on return visits without having to be re-sold. Tesco is in a unique position to add like-with-like conditions to its purchasing criteria, and delist brands that are found to have used content reduction to disguise a price rise…
Demand forecasting: As ‘experts’ in consumption, suppliers can be in a position to help refine demand calculations and the combination of this insight with a retailer’s instore on-time fully-shared expertise has to be a way of ensuring 100% zero-defect shelf availability, at minimal cost for all parties
Trade credit: Credit was always meant to cover the gap between delivery of goods to a reseller and payment by shoppers, and was never intended as a means of generating interest on 40-day deposits. As such, given average retailer stockturns of 20 times per annum, this means paying supplier invoices within 2.5 weeks of delivery, with recent moves to 14 day payment for small suppliers a good start. There is even a case for paying faster for items delivered on a daily basis
Trade investment: Post-audit recovery came about because of a combination of inadequate ‘paper trails’ of promotional agreements by suppliers, and the ability of financial programmes to search and claim for unpaid funds for six years previously. Despite the strict letter of the law supporting this process, all retailers could show more goodwill and pragmatism by limiting such searches to a maximum of two years…
Trade Deductions: Should not be regarded and treated a source of income, but should reflect genuine failure to meet reasonable standards agreed in advance as a condition of purchase, with perhaps some element of reciprocation for failures of on-shelf compliance...
Organisational compliance: The above changes need to be understood and communicated at all levels within both supplier and retailer organisations, thereby reducing the possibility of 'rogue-employee' defences at higher levels of management…
Tesco, with 29% market share and a need to regain custom, is in a unique position to be in the vanguard of this change..
And if it results in a temporary loss of margin, so what…
In time, as shoppers - and suppliers - begin to relax into the feeling that in a Tesco store, ‘what you see is what you get’ and even more, then the result have to drop into the bottom line as repeat sales come in at less cost, like with all good brands…
HT to Wayne Robinson for Guardian link
Providing consumers with true bases for like-with-like comparison needs the combined efforts of suppliers and retailers with a common aim of rebuilding consumer trust, the essence of branding, both retailer and supplier.
Given its presence at the point-of-purchase, and at 29% market share with most to lose, I believe that Tesco - and its major suppliers are in a position to take the following steps:
Price clarity: A major opportunity lies in wait for those retailers that strip offerings back to the basics of letting consumers know what they get for their money. Apart from an obvious emphasis on unit pricing combined with a little education ref. prices per g/ml, it means eliminating all ‘letter & spirit’ legal issues regarding promotional offers, and replacing them with genuine, transparent and defensible offerings that can be compared accurately with competitors’ alternatives, like-for-like, but also meet and even exceed consumer expectation
Product delivery: When a consumer opens a tin, its contents should match or even exceed the expectation created by the lid…a fundamental of branding based in part on the fact that the cost of making the first sale to a consumer is so high that profit is only possible on return visits without having to be re-sold. Tesco is in a unique position to add like-with-like conditions to its purchasing criteria, and delist brands that are found to have used content reduction to disguise a price rise…
Demand forecasting: As ‘experts’ in consumption, suppliers can be in a position to help refine demand calculations and the combination of this insight with a retailer’s instore on-time fully-shared expertise has to be a way of ensuring 100% zero-defect shelf availability, at minimal cost for all parties
Trade credit: Credit was always meant to cover the gap between delivery of goods to a reseller and payment by shoppers, and was never intended as a means of generating interest on 40-day deposits. As such, given average retailer stockturns of 20 times per annum, this means paying supplier invoices within 2.5 weeks of delivery, with recent moves to 14 day payment for small suppliers a good start. There is even a case for paying faster for items delivered on a daily basis
Trade investment: Post-audit recovery came about because of a combination of inadequate ‘paper trails’ of promotional agreements by suppliers, and the ability of financial programmes to search and claim for unpaid funds for six years previously. Despite the strict letter of the law supporting this process, all retailers could show more goodwill and pragmatism by limiting such searches to a maximum of two years…
Trade Deductions: Should not be regarded and treated a source of income, but should reflect genuine failure to meet reasonable standards agreed in advance as a condition of purchase, with perhaps some element of reciprocation for failures of on-shelf compliance...
Organisational compliance: The above changes need to be understood and communicated at all levels within both supplier and retailer organisations, thereby reducing the possibility of 'rogue-employee' defences at higher levels of management…
Tesco, with 29% market share and a need to regain custom, is in a unique position to be in the vanguard of this change..
And if it results in a temporary loss of margin, so what…
In time, as shoppers - and suppliers - begin to relax into the feeling that in a Tesco store, ‘what you see is what you get’ and even more, then the result have to drop into the bottom line as repeat sales come in at less cost, like with all good brands…
HT to Wayne Robinson for Guardian link
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