Maths blunder wipes £170m off SuperGroup shares

A routine audit last week revealed a series of forecasting and accounting errors. The most basic error was the insertion of a 'plus' rather than a 'minus' into the fashion retailer’s company accounts, which contributed to its third profit warning since October.

The news wiped around £170m off the company's value as shares plummeted 38% to 351.8p in trading on 20 April.

Thinking positively, the person responsible should perhaps be thankful that the UK financial environment is relatively benign in that, apart from the impact on the share price, no personal retribution need be expected.….

Other geographies can be less tolerant...

For instance, in the early years following the fall of the Berlin Wall, a marketing director pal working in Moscow, issued a new trade discount structure at 0900, realised during coffee break he had inadvertently approved an arithmetical error that would cost some key distributors (with strong family ties in the ‘toe’ of Italy) significant sums before a correction would kick in…..

The company immediately despatched cars to his apartment and kindergarten to pick up his wife and child, and all three were on a flight out of Moscow by early afternoon….

KAM Moral: If you make a mistake in the numbers, be the first to discover, admit and have an appropriate correction plan ready.. You are already first at Square Two, take advantage of it…

In other words, get used to approximating ‘in your head’ and develop the ability to spot figures that do not add up (remember that manual skill that allowed you to graduate from kindergarten?), and always keep your car-keys in your pocket, just-in-case….  

Nestlé Wins Battle For Pfizer Unit With $11.9bn Deal

Pfizer has agreed to sell its baby food unit to Nestlé, in a deal worth $11.9bn, giving the Swiss food giant a major boost in emerging markets across the world.

With 85% of Pfizer’s sales in emerging markets – the deal will complement Nestle’s existing infant nutrition business perfectly. The sale marks Pfizer’s largest divestiture since it divested some consumer health brands to J&J in 2006 for $16.6bn. The unit owns infant formulas such as SMA and Promil, and also makes Enercal supplements for adults. It has a network in more than 60 countries, and was the world’s fifth-largest maker of infant formulas in 2010.

Implications:

• As the No.1 food company in many countries, Nestlé are accustomed to, and will have anticipated issues raised by anti-trust/monopoly legislation.
• This step to full global coverage will enable the company to develop and sustain a fully global strategy for the combined brands in baby food.
• However, given that the company will probably take its time integrating the two operations in order to secure a smooth transition for the companies and the trade (the 1988  Nestlé–Rowntree integration took several years), this may give competitor brands some time to adjust to the new category dynamics…although a couple of what-ifs this morning might be a wise precaution...

Kammed Laughter: Taking humour seriously in negotiation....

Given the current financial climate, gallows humour might best describe any attempt at levity as a relief from the doom and gloom…  Incidentally, looking over the precipice (doom) does not necessarily go hand-in-hand with ‘gloom’. In fact extreme, unprecedented change should be seen as a breakable window of opportunity (‘doom and boom’?) for positive KAMs, while competitors wait in vain for a return to ‘normal’…

Laughter defined

Given that laughter is a nervous reaction to tension (a comedian deliberately builds this up via the story, causing puzzlement, anxiety and even suppressed anger on the part of the recipient to a point where the tension is ideally released via explosive/convulsive relaxation of the jaw muscles, nasal passages (or worse), the only proviso being that the longer the build-up, the better had be the punch-line!

Factories have been closed down for less…..

Delicate use of humour in negotiation

In the KAM role, skilled use of laughter can be an aid in optimising a negotiated agreement.

For instance, in delivering serious news/data to a buyer, if humour is totally absent, the only way to indicate ‘more serious’ is to up the volume or emotion, even more intimidating, leaving no guns in reserve….

However, a KAM that is able to manage well-placed levity allows emphasis of serious interventions as required, thus adding to one’s control of the overall negotiation session.

Operating safely....

To operate safely at this level requires a high degree of focus on the buyer’s combination of Job or Functional needs, whilst also taking into account the complex set of unspoken emotional needs that are not supposed to, but in fact greatly influence the progress to negotiated settlement.

To achieve these levels it is obviously best to practice on those in your circle where abject failure does not result in loss of job or divorce…in other words, sharpen your skills on those you still regard as your friends…obviously avoiding those who are also your buyers…

Incidentally humour can and should be funny too...

Go on, have a ‘witty’ weekend by practicing on your friends, from the NamNews Team!

Gesture-based-marketing of Coca Cola?

Forget price sensitivity by replacing cash with hugs…

A Coke vending machine was installed overnight at the National University of Singapore. It looks like a fairly ordinary machine, in the brand’s iconic red and white. But instead of it’s logo, this machine says “Hug Me,” in the logo font

Positioning this stunt at a university is a smart move in Singapore, where public signs of affection have long been discouraged, but are on the rise among the young. Coke is positioning itself as a non-threatening ally to affection demonstrating youth.

Given the fact that appetite for carbonated beverages increases with ambient temperature (a few years ago, the company tested a vending machine in Germany that had a thermometer on top, triggering a rise in price with every degree increase in temperature…), it remains to be seen whether the company have built in a facility requiring increasingly intensive hugs as the temperature rises…

In effect, Coca Cola are ‘pressing all the buttons’, in a world where buttons have been replaced by touch….
However, the real issue for others in the vending channel is the extent to which the game has just been raised in Singapore…

Flash Mobs morphing into Cash Mobs, a new force in retailing?

Inspired by Flash Mobs, a cash mob is a group of people who assemble at a local business and all buy items from that business. These groups of online activists are harnessing social media like Twitter and Facebook to get consumers to spend at locally owned stores in cities around the world in so-called Cash Mobs.

At the first International Cash Mob day on Saturday 24^th March, wallet- toting activists gathered in as many as 200 mobs in the United States and Europe, with the aim of spending at least £12 each in locally owned businesses, according to the concept's founder, Cleveland lawyer Andrew Samtoy. 

Essentially, this is a break-through moment, an event where a virtual society enters the real world, prepared to put their real money where their virtual/real mouths are, and actively support local shops….as their contribution to the on-going health of the community.

The need for conversion

However, it is essential to bear in mind that such initiatives are one-off injections of support, the ‘first bite’ of a new product. As you know, the ‘repeat purchase’ depends upon how well the experience matches, or exceeds expectation. In other words, for local retailers this is a windfall, an opportunity to meet and influence a target audience that wants to support local business and the community, and is prepared to spend money in the process…and tell others about their experiences (Remember, that’s how they got to the shop in the first place)

Capitalising on the trial visit

To convert these ‘trialists’ into regular customers, retailers need to ensure that their 8P Marketing Mix (Products & Assortment, Pricing, Promotional activities, Place i.e. store location, Personnel, Physical distribution & handling, Presentation of stores & products, and Productivity) more closely matches shopper need than equivalent offerings available from local and out-of-town multiple retailers. What they lack in price advantage, needs to compensated for in terms of personal service and convenience, to an extent that shoppers willingly come back for more…

How suppliers can help

Suppliers can help by revising their independent retail business model, and find ways of helping survival-mode retailers to adapt the state-of-art retailing principles established by the major multiples, and build an alternative route to consumers, as a way of realistically diluting trade concentration.

Have a pro-active weekend, from the NamNews Team!.

Asda adding retailtainment to the shopping basket?

Asda plans to revamp in-store marketing to improve core customer shopping experience, following Asda 'Mumdex' research which looked at how it could support mums and their sometimes over-enthusiastic off-spring.... Momentum, an integrated marketing communications agency have been appointed to enhance Asda’s key commercial trading occasions by creating a programme of retail events to
- engage customers
- ensure the programme delivers a proven commercial return
- strategically align with objectives of Asda’s brand partners
- use their digital and social platforms to promote events to customers.

This raises the issue of the extent to which suppliers and retailers share and optimise consumer insight and shopper insight in programmes that are based upon suppliers' differentiating retailers by shopper-profile, and tailoring trade strategies appropriately.

In other words, folks, in this case, an integrated ‘digital and physical’ opportunity to optimise Asda potential for brands with profiles that are congruent with Asda’s shopper profile…
One to watch, but still a bit to go to match instore theatre in Brazil...

Tesco's strategic options, suppliers' strategic response

What is this about?

Tesco’s core issue is its profit warning in January, ultimately a driver of ROCE, in turn affecting the share price. With 2/3 of its business in UK, any setback causes the company to challenge one of the basic ‘rules’ in global retailing – ‘dominate the home market’. However, any company having more than 25% of a national retail market attracts negative attention from media, politicians and ultimately shopper-voters. Within the home market, supply chain efficiency made some large space redundant unless freed-space is filled via product diversification. Meanwhile, having grown share at the expense of less efficient competitors, Tesco is now being challenged by retailers that are as good as, or better, for a share of a zero-sum, flat-line market in terms of range, quality and service, as it strives to return to the Tesco 'rule of 25'.

Finally, the early retirement of a strong unchallenged leader left at least four people who felt they should fill his shoes…

Where is it headed?

Essentially, Tesco has four complementary options:

• Sell more of its current products to current users (increase basket size)
• Sell new products to existing users (Clubcard data, trade up via diversification)
• Sell current products to new users (use Clubcard data to profile ideal Tesco users and attract more of this profile with current products)
• Sell new products to new users (high risk, given two unknowns)

They need to re-apply this formula in the UK, delivering greater perceived value to shoppers, vs. competition, and then roll this strategy out globally.
They need to re-assess their competitive appeal in the eyes of shoppers, vs. the competition in terms of range, quality and service, vs. price. The leadership issue needs sorting in order that the entire company pulls in one direction, rather than each function attempting to ‘rescue’ Tesco. This was the challenge faced and successfully dealt with by McLaurin many years ago….

How does it affect you?

Essentially depends upon category, geographical spread and degree-of-partnership, but in the short term the above strategy will put pressure on all aspects of the supplier-retailer relationship, especially price and supply-chain efficiency, as Tesco re-appraises its supplier-base vs. alternatives available

What to do about it?

• Re-assess your competitive appeal to Tesco as a company, and brand within key categories, and re-engineer to optimise, where necessary
• Re-evaluate your match with trade partnership criteria (Potential, Partnership, Profit and Performance)
• Invest (time, money, people) in what can demonstrably help Tesco implement its strategies, and meets your ROCE objectives 

Above all, insist on fair-play in all aspects of your Tesco trade partnership, a once-only opportunity…

Unprecedented Treats for Unprecedented Times?

A $200,000 bottle of whisky made to mark the 60th year on the throne of Queen Elizabeth II is on sale in Singapore for a mere S$250,000 ($198,500) a bottle - and it may well find a buyer, (for a buyer?).

No doubt it's a premium sip. Only 60 bottles of Diamond Jubilee were made by the Johnnie Walker unit of Diageo PLC from a blend of whiskies distilled in 1952.

It's also a premium price for Asian aficionados at the month-long Master of Spirits II event featuring specialty wine and liquor put on by luxury travel retailer DFS Group, part of the LVMH empire of high-end goods and services.

Discerning palates, and expats' excessive longing for the old country apart, this differential vs. a spirits’ bogof at Tesco has to be a reflection of the gap  building up in societies everywhere… the issue is whether this gap will continue to increase to breaking point, or whether new governments will take steps to keep the lid on via attempts to return to normal supply and demand in markets everywhere… Either way, time for suppliers to reassess trade strategies and avail of opportunities, ahead of  competitors locked in old patterns…

Incidentally, should any potential expat buyers like to take a first class trip back to the UK and pick it up locally, the same package - the vintage whisky in a crystal decanter with silver trimmings, two crystal glasses and a leather-bound booklet - is priced at 100,000 pounds ($159,100) in Britain.