Wallet-in-watch, taking out the fumble factor…

New high-techwatch contains chip that allows you to settle payments by tapping it at the till, instead of having to rummage in a bag

The £99 gadget can be used at 70,000 shops in the UK, and currently have a payment limit of £15 per transaction

They contain a chip similar to a mobile phone’s SIM card that allows you to settle up by tapping the watch on a special terminal at the till.

The beginning of the end, or the end of the beginning in digital payment?

Supermarket thieves caught when getaway car runs out of fuel

A couple of ‘unsavvy’  shoppers stole £400 of alcohol from an Asda in Manchester, but then had to push their empty Citroen to the supermarket's petrol station, in full view of the CCTV.

Ignoring the logistics difficulties, this appears to be evidence of a significant raising of the shrinkage game, a reflection of the growing financial pressures on consumers..?

As always, Aldi have anticipated this market trend by their introduction of a £300 bottle of whisky, planned for early December, thereby helping thieves to meet their shrinkage targets, without a need to rely upon personal getaway facilities.

However, pricing the bottle at £49 may cause otherwise honest shoppers to regard it as a ‘steal’ anyway….

In which case, have a successful getaway weekend, from the Namnews Team!

Irish Cross-border shopping boost

According to the Belfast Telegraph, unlike the rest of Northern Ireland, the retail trade in Derry is being boosted by up to 35% by people from Donegal making possible savings of 20%, leading traders have claimed.

Numbers are expected to increase further when the Republic introduces a new VAT rate of 23% — an increase of 2% — in January.

An increase in VAT of any size has an effect, especially in these recessionary times when people are being extra careful.

Say a flat-screen TV retails at  €350 inc VAT @ 21%. A VAT increase to 23% will then raise the shelf price to €356

(i.e. €350/121  = €289  = price net of VAT.  €289x1.23 = €356)

Not a lot, except to a savvy and/or cash-strapped consumer…already sensitive to £/€ exchange rates, plus a day-out in the North… 

Debenhams early payment of suppliers’ invoices - how to calculate a fair share settlement discount?

According to the Financial Times, Debenhams has been allegedly offering suppliers earlier payment in exchange for a discount on their invoices, a process adopted by some other big retailers. It appears that its supplier terms can be up to 120 days, although people close to the company say it also has suppliers on 30-day payment terms.

Successful negotiation of a fair-share discount off invoice is possible using the following process:

Say, annual Invoiced sales to the Customer = £9.5m

Customer now pays in 90 days

We want him to pay in 42 days

i.e. a 48-day reduction in payment period

Customer now pays       4.06 times per year i.e. 365/90              

We want him to pay       8.7 times per year i.e. 365/42                           

Amount he owes us when paying in 90 days

                                                = £9.5m/4.06 = £2.34m

   

Amount he owes us when paying in 42 days

                                                = £9.5m/ 8.7  = £1.1m

                                                    

Therefore the cashflow saving = £2.34m - £1.1m

                                                = £1.24m

Say the cost of borrowing is 10% interest per year

Therefore the cost of borrowing £1.24m for a year

                                                         = £0.124m

Which is equivalent to 1.3% of sales

                                          i.e.  £0.124m/£9.5 x 100%

                                   

Therefore any extra discount above 1.3% is attractive to the customer (or should be….! )

This discount is the most you should offer for a 48-day reduction in payment period!

(To tailor the calculation to your company-customer relationship, simply substitute your figures for sales, current payment periods and desired payment periods)

Incidentally, why stop at 42 days credit, a credit period in which a lot could go wrong?

In fact given the current state of the Euro-manoeuvres, we could soon enter an environment where selling to customers for cash becomes the only safe option…..!

Suppliers in cash call from M&S

According to the Mail On Sunday, M&S have allegedly asked suppliers for cash to help pay for its store refurbishment programme

Calculate the incremental sales required as follows:

Assumption: a customer wants additional payment of 1.25% of a supplier’s annual sales to the customer.

A supplier with a net margin of 9.5% on sales of say £150,000 per annum to the customer, needs incremental sales of £19,736

i.e. 1.25% of £150k  = £1,875  = 9.5% of incremental sales      
Therefore incremental sales = £1,875/9.5 x 100 = £19,736

Simply substitute your figures to calculate the incremental sales for your company

Have a nice day….

eBay gets physical via first UK xmas store

A pure-play online retailer is opening a real-life shop on Dean Street in Soho, London that will sell toys, gifts and electronics at up to 70% discount.

eBay is launching its first UK store, albeit temporarily, this Christmas to allow shoppers to browse in the physical world before buying online.

The pop-up boutique opens for just five days from 1 December in what is expected to be the peak buying period for the year.
It will stock the website's 200 bestsellers, which range from House of Fraser party frocks to toys from The Entertainer, but purchases will be delivered to customers' homes

Shoppers will buy via scanning QR codes, and in a click, bypass crowds, queues, tills, bags, transport and other Christmas shopping irritants…

Traditional shops that see pureplay online retailing as a virtual threat obviously ‘ain’t seen nothin’ yet…’

Meanwhile, eKAMs and ‘normal’ KAMs need to keep in mind that a pop-up shop is simply a permanent shop on test…

Have a virtually realistic weekend, from the Namnews Team!

Unit pricing – the ultimate test of retail credibility?

Following the end of the Age of Credit, and the emergence of the savvy consumer demanding demonstrable value-for-money, it is surely time for retailers to find a way of making like-with-like price comparison easier for even non-savvy shoppers.

In fact there is a real opportunity for a fast-footed retailer to gain the innovator's advantage forever, by being first with effective unit pricing.

First, given current low levels of numeracy amongst the population, unit pricing has to be explained (continuously) both at point of sale and in mass media

Incidentally, if true like-with-like comparison reveals a shortfall in defensible value-for-money compared with available competition, so be it... Better to reduce the retail price than have shopper-demand do it for you...

Finally, the like-with-like comparison needs clear, unambiguous and legible signing on shelf.

An interesting article by Which is currently pushing for change, but the real issue at stake is brand credibility, meaning the name over the door…

Brand owners well know that brand viability pivots on the fact that the cost of persuading a consumer to try a brand is so high that profits depend on that consumer coming back to the brand over and over, without having to be re-persuaded…

Loosing that credibility by deliberate price-deception on-shelf means not only losing repeat purchase, but can result in the shopper telling 10 friends…

(There has to be an app somewhere in this, may even be tempted myself….)

Bus Q oR virtual shops?

HMV and Fox have introduced a campaign in the UK to buy DVDs at bus shelters, via QR code.

The campaign works by purchasing an ad space just like thousands of brands around the country. However, it’s no longer just an advert. The addition of a QR code makes it a real revenue-generator, through seamless integration of technology with a visual brand space.

Given the nation’s willingness to queue, the real opportunity for suppliers and retailers lies in posting QR-based adverts ANYWHERE a consumer waits…