M&S Deal Could Cost Ocado A Large Chunk Of Customers

A survey of 250 Ocado customers carried out by analysts at HSBC found that 22% would no longer shop with Ocado if it did not sell Waitrose products, while 17% stated they would not use it if the Waitrose products were replaced by M&S lines.

David McCarthy, head of consumer retail research at HSBC, described the findings as “worrying” for the new Ocado and M&S joint venture. “A meaningful proportion of customers said that their loyalty is to Waitrose and that M&S is not an adequate replacement,” he wrote in a research note. [more for NamNews readers]

• Its called brand loyalty, folks…
• …whether it be supplier or retailer.
• Hopefully Ocado will have factored this into the equation in advance…
• …and can live profitably with the difference.
• Watch this space…

Short-sellers target Sainsbury's on Tesco fears

News in The Telegraph that short-sellers in the stock-market are betting that Sainsbury's share-price will fall as a result of Dave Lewis sacrificing Tesco margins to regain market share, offers a valuable insight-tool for NAMs wishing to anticipate additional pressures on the retail-buyer in the supplier-retailer relationship i.e. buyers are increasingly remunerated by share-options in their own company.

In short-selling Sainsbury's shares, the market believes that Tesco has more scope for cutting prices than Sainsbury's bottom line would allow.

As you know, short-selling is a process whereby stock-market traders bet that the share-price will fall by borrowing shares of a company, then selling  them 'short' at the current price. They then hope to buy them in the market at a lower price when it is time to fulfill the contract, thus making a profit on the deal...

The percentage of a company's shares 'on loan' in this way can be tracked (see Short Tracker) and the greater the percentage, the more shorting of the stock is going on, meaning that the market believes that the share-price will fall.

For instance, Short Tracker's details this morning on the top most-shorted retailers are as follows: (the % is the amount of a company's shares currently 'borrowed')
-  WH Smith        11.4%
-  HMV                 8.1%
-  Sainsbury's         8.0%
-  Ocado               5.6%
-  Morrisons          4.72%
-  Debenhams        3.13%

Another NAM tool to add to your repertoire!

Thanks to Richard for his persistence re this short-sell pointer.

NB. Should you be tempted to try some short-selling, it must be emphasised that the bet is on the price going down. If, for whatever reason (i.e. a sudden takeover bid) the share price rises, and the rise can be infinite, the short-seller is still legally liable for fulfillment of the contract, thereby losing the difference between the latest purchase price and the selling-price on the sell-contract.....!

NB. We wish to stress that we are in no way recommending dealing in shares, we are simply making observations re market activity in retail and other stocks in which our readers may be interested as part of the supplier-customer trading relationship.

Amazon should buy Ocado, says Cantor Fitzergerald analyst

One of America's top technology analysts has said that Amazon should buy Ocado, describing the online retailer as having one of the “most advanced technology platforms” for grocery delivery in the world.

In fact, KamBlog readers will have come to this conclusion on 14th August 2012  when we wrote that Ocado’s banking issues represented ‘an Amazonian window’, and again on 26th November 2012 ‘Amazon-the-grocer moves from 22,000 to 150,000 products since July 2010’, making the M25 ‘market’ a natural test-bed…

Why now?
According to The Daily Telegraph, the Morrisons’ deal has put companies that have eyed Ocado for much of the past three years back on “red alert”, including Boots, Amazon and Carrefour, who are considering a licencing deal (a networking tip for your continental colleagues?).

Cantor Fitzergerald analyst Youssef Squali said: “We believe an Ocado deal would bring much more automation to grocery delivery within Amazon and accelerate AmazonFresh’s roll-out across the US.”

Amazon has been testing Amazon Fresh in Seattle for six years and recently expanded it to LA. It is thought to be considering entering 20 US cities.

Why it matters?
The real issue is not the fact that Amazon may be contemplating the inevitable, but that given some pointers, a NAM can be trained to recognise early signals in the market. In fact, by joining up the dots (or having them joined for her),  a NAM can sometimes have at least six months ‘warning’ of a customer move.

This time-advantage has to provide an opportunity to anticipate or even implement a strategic response while competing NAMs are surprised on the day, and have to resort to a reflex re-action…

...and the facts, figures and opportunities are all around us (especially in retailer's latest Annual Reports), all for the want of knowing what to look for, coupled with a creative ‘what if’, or two, combined with the potential synergies arising from a NAM's day-to-day relationship with the customer… 

In fact, ignoring what a retailer says about its finances has to represent one of the biggest and most dangerous tricks a NAM can miss…

Amazon-the-grocer moves from 22,000 to 150,000 products since July 2010

With a sevenfold increase in the groceries it offers online in barely two years, ‘having completely met expectations and growing great’, in a flatline market, Amazon has to be growing at the expense of traditional grocers. Whilst some big-lunged suppliers and retailers may decide to await the outcome of possible government moves ref alleged tax issues, proactive suppliers will take a positive approach and follow the market…..

Managing Amazon-the-grocer
This means accepting the fact that Amazon are going to go all the way with food, offering the simplicity of 1-click ordering, pick-up/drop-off convenience on the back of a food range that knows no limits, and no-quibble returns, all tailored in terms of consumer tell-your-friend delight.

It also means staffing Amazon with NAMpower matched to potential, rather than history, of a quality that can scope out and deliver an omni-channel strategy that integrates with all other ways of buying your products, seamlessly…using the Amazon strategy as a template for all other retail.

How to recognise this Amazing NAM?
Big-thinking question:  ask candidates how Amazon might finesse its home delivery within the M25…
Disqualifying hint: In terms of ways and means, given Amazon’s growth record and prospects, how long do you think it would take them to raise the £386m it would take to buy Ocado at today’s share price?