Happy own-brand Xmas, how Ansoff can help?

Given Sainsbury’s predictions that this will be an own brand Christmas as hard-up Britons “splash out” to enjoy a family Christmas, making their money go farther via own-brands perhaps the Ansoff Matrix can spell out the moves and help suppliers to anticipate the impact…?

As you know, Ansoff identifies four ways of growing a business by selling:
- More current products to current customers
- New products to current customers
- Current products to new customers
- New products to new customers

How Sainsbury’s could increase own-brand sales

More current products to current customers:
Essentially, as most produce sales are own-brand, coupons and keen prices and store-level assortment could encourage purchase of larger portions of Christmas meats turkey, fruit & veg, with pricing delicately balanced to avoid over-purchase/waste….making current customers happier

New products to current customers:
Here the emphasis could be on encouraging purchase of complementary Christmas items both food and non-food, brands & own-brands, with in-store promotion/theatre and linked couponing to tease custom away from branded alternatives and other mults/channels via current JS customers in the aisle – making current customers even happier....

Current products to new customers:
By studying the profile of their current customer, JS could seek out new shoppers of similar profile, and try to attract them to the store via the own-brand products that appear to appeal to current JS customers, given that they probably have similar appetites. These new customers will need to be attracted and retained by a combination of virtually one-to-one communication and coupon-swaps to encourage a first-time switch from their traditional Christmas destination. To achieve an acceptable ROI, this has to result in an unprecedented and compelling experience, well suited to the JS approach.

This will probably be the most competitive segment as Tesco tries to recover lost share/customers and retain its current customers via its £1bn investment programme…

New products to new customers:
This high risk alternative means trying to attract new shoppers and sell them new products, targeting consumers that are unaccustomed to the JS experience, with products that are new to JS, a double-whammy that may attract the risk-seekers, but will probably play a small part in own-brand Christmas..

So, from a supplier’s point-of-view, this is all about own-brand, wrong!
This is about how a skilled and systematic retailer is going to make this an unforgettable own-brand Christmas, using differentiation to build and hold an enlarged customer-base, at the expense of brands…unless suppliers make Ansoff work even better for their brands…
PS  For insight on the subtle moves see our free paper : 4 generations of private label

Virtual shops vs. bricks – some spacial implications?

With a 2012 anticipated 13.2% share of all UK retail trade, and growing at 14%, in a flat-line market, online retail has to represent an unforeseen alternative to ‘real’ retail space. In other words, given the relatively slow reaction of retail space development to market demand, it could be said that UK retail space is already 13.2% over capacity, in that online is taking 13.2% of all retail sales. Moreover this situation will get worse as online grows, especially as online can react ‘instantly’ to market demand, scaling up at relatively little incremental cost…

The real space requirement:
In addition, as shops become more efficient, generating increased revenue per sq.ft., coupled with suppliers’ increased distribution efficiency (smaller quantities delivered more often = increased availability, 100%, zero-defect), adding store-level assortment, matched to local need, it can be seen that even less physical retail space will be required.

Buying time:
This means that major retailers will attempt to diversify even more to buy time, as they slowly readjust to market demand in terms of reducing their physical space i.e. sell off redundant shops, whilst taking some comfort in the growth of their online business, without fully appreciating the cannibalistic element…
Besides which, with Amazon at 50% of all online, no one can rest easy…

Supplier action:

• Suppliers need to reassess brands in terms of their bricks vs. online balance vs. real demand
• Where physical in-store presence is required, the brand will need focused support and performance-based-reward to justify its footprint
• Where shoppers need to handle the brand, suppliers will have to make case for purposeful ‘show-rooming’ and reward the retailer appropriately
• Suppliers need to drive store redundancy via 100% zero-defect supply, and optimise space productivity until a level of retail space is achieved that is more in line with market realities

All else is detail…

Unilever And GSK use of NFC: key potential pay-offs for enabled-stakeholders

Starting with 325 six-sheet digital poster sites in Reading, the key potential lies in the simplicity and scalability of NFC.

With over 130,000 poster sites in the UK, each offering an incremental route-to-consumer as each poster site becomes a new retail outlet, with advertisers gaining access to additional consumers data (name of NFC-enabled users, location, and shopping history) at ‘point-of-purchase’.
Advertising gains  

For advertisers, the combination of the low ‘chipping-cost’ of each poster with the ability to offer instant gratification gives a whole new meaning to impulse purchasing.

Moreover, the user-feedback data can be used to build ‘super-local’ highly accountable promotional campaigns using media-rich, high quality content that can only serve to drive store-level assortment for those retailers (and their suppliers) that want to stay in the game.

(For those unwilling to wait, yet needing some relative response details, some recent US data on the combined use of Bluetooth, WiFi, QR Codes and NFC to promote hotel room booking may help).

All told, it would appear that this new potential will only be limited by the availability of NFC-enabled phones and a possible privacy backlash if not handled carefully..
Raising the competition bar

For traditional retailers and brand owners providing only a token response to the savvy consumer’s need for individual attention via localised offerings, there is a real danger that their NFC early-adopter competitors may take NFC as the new ‘normal’, while traditional players insist on using up those bulk-buy mountains of  old posters and leaflets that seemed such a bargain only yesterday…

Tesco's City profile, an alternative view?

Weekend press reports would appear to indicate that some city analysts feel that Tesco is over-ranged, and over-focused on the bottom line, etc etc

We feel that this depends upon where you measure range.

Viewed at national level, Tesco's total repertoir would be vast. However, taking into account store-level assortment, at store level (where the consumer shops…) the assortment probably matches need. Where rate of sale indicates that this not the case, Tesco can re-arrange a store in a heartbeat.
Here Tesco have probably already reached a point on a journey upon which others are now being urged to travel (See Rule 4 'cluster your stores' in April edition Harvard Business Review, see also some good tips on focusing upon 'switchers')

Other mults could claim to do the same, but the difference is that Tesco can use Clubcard analysis to refine the selection better than most, and its internal efficiencies result in more margin dropping into the bottom line. They are not driven by margin, but because of their global rate of expansion, they need a good rate of ROCE (Margin x Capital rotation) to sustain the share price (i.e. reassure the City) , keep the cost of credit to a minimum, gain supplier support, maintain the respect of competitors, and build upon the loyalty of the consumer, at store level.

A great opportunity and a near-perfect match exists for those suppliers who realise that brand marketing is no longer about national coverage/saturation, but rather about being available in those parts of the country where the brand's consumer profile live and do their shopping, thus helping to get the brand closer to the newly savvy consumer, who is demanding personal attention, or else….(use our Buying Mix Analysis at consumer level to guage your pulling power vs.the competition)

We believe that Tesco can facilitate that process.