Underestimating a 26% CAGR customer in a flatline zero-sum world…

With a vision ‘to be the earth’s most customer-centric company; to build a place where people can come to find and discover anything they want to buy online’, the problem in many categories is that Amazon’s vision is becoming reality, fast.

Walmart-like origins

Essentially, having started trading in 1994, Amazon has grown fast, and in relatively low profile to its current global scale of US$48bn, growing over the four years of the global financial crisis at a CAGR of 26%, producing a net margin of 2.2% and an ROCE of 9.06% in fiscal 2011. In other words, serious customer-centric retailing, from a standing start, rather like Walmart - only faster - with an EDLP platform that seems to retain its excitement for consumers, everywhere.

Customer-level assortment
Amazon is raising not only the online commerce bar, with all of its potential efficiencies, but is also going to the heart of state-of-the-art retailing, providing much more than store level assortment. It is, in effect, tailoring the offering to individual consumer level, better than any other provider.

Convincing colleagues, fast
Our free analysis of Amazon’s business model aims at helping you build an in-house case to raise its profile within the business. We have also added a key-point treatment of the wealth of insight available within Amazon’s 2011 Annual report to help you explore the implications for your categories.

Finally, if still in any doubt about Amazon’s impact on your business, think 50% of most categories in the next 5 years, and see if that provides an appropriate wakeup call…

Exploring the downside: A positive benefit at the museum of failed products…

Spend time vividly imagining exactly how wrong things could go in reality, and you'll often turn bottomless, nebulous fears into finite and manageable ones.

Happiness reached via positive thinking is fleeting and brittle; negative visualisation generates a vastly more dependable calm.

A new book* by Oliver Burkeman supports the intuitive realisation of many NAMs and KAMs, that we learn more from failure than success. In other words, when a project is successful, all of our energy goes into bragging about it, whilst a failure keeps us awake nights, revisiting every step, missed signal and failed KPI…

Provided we have the courage and power to cut our losses, maximise the learnings and move on to try again, the overall result can be positive.

The book deals with examples of many failed FMCG brand variants available at the Museum of Failed Products, Michigan (part of GfK Custom Research, North America). More details of products here. Each failure must have made it through a series of meetings at which nobody realised that the product was doomed. Perhaps nobody wanted to contemplate the prospect of failure; perhaps someone did, but didn't want to bring it up for discussion. The examples are fascinating in themselves, but also reassuring for those marketers and KAMs that feel their little set-back is a one-off…

*The Antidote: Happiness For People Who Can't Stand Positive Thinking, by Oliver Burkeman, published next week by Canongate at £15 (guardianbookshop.co.uk )  

Making ideas work in the KAM role

In the same way that objections should be regarded as buying signals, so too should degree-of-resistance be seen as an indicator of ‘goodness’ in the spread of ideas. Fear of plagiarism can also be a constraint, however, as per Howard Aiken:  "Don’t worry about people stealing your ideas. If your ideas are any good, you’ll have to ram them down people’s throats"

Have a persistent weekend, from the Namnews Team!

Going into Administration, what then?

Given yesterday’s news of Peters Bakery collapse into administration, together with today’s report in DIY Week that Allders of Croydon are ‘facing administration’ it might be useful for NAMs & KAMs to explore the possible consequences and implications of such moves.

As a legal concept, administration is a procedure under UK insolvency laws. It functions as a rescue mechanism for insolvent entities and allows them to carry on running their business. The process – an alternative to liquidation – means a company in administration is operated by the administrator (as interim chief executive) on behalf of the creditors as a going concern while options are sought short of liquidation. These options include recapitalising the business, selling the business to new owners, or demerging it into elements that can be sold and closing the remainder.

Options for Peters Bakery
In the case of Peters Bakery, it might be assumed that the owners have already explored the options of recapitalising and/or selling off the business, leaving the option of demerging into elements that can be sold, i.e. the bakery and the shops (The mobile sales operation might remain with the bakery as the better option).

The bakery
The bakery with its relatively new plant and its supply arrangements with major retailers could be attractive as a buy-out by management or takeover by  another bakery where increased scale/synergies might add appeal, and some negotiation muscle ref the multiples.

The shops
Meanwhile, the 54 shops with their regional brand equity could also present viable options in terms of either management buyout or acquisition by another retailer. Given the parallels with Greggs shops in terms of positioning, possible acquisition might be worth adding as an agenda item  at the next meeting of the Greggs team…

Which options do you feel are best for Peters Bakery?

Walmart, P&G QR-Code Initiative, the back-story...

Yesterday’s NamNews’ most downloaded news-item raises some interesting implications:

• This month-long initiative features virtual "pop-up" QR stores at Chicago bus stops and a "food truck"-style mobile hub in Manhattan, featuring P&G products was led by P&G, but in reality attempts to drive sales to Walmart’s online facility
• This innovative combination of mobile, social and real-time commerce appears to be an attempt by Walmart to neutralise Amazon’s increasing dominance in urban areas, a place where quick delivery is more convenient than access to big-box retailers
• (Amazon: think €36bn sales, growing at 46% p.a., 1-click purchase and ‘instant’ delivery…compulsive!)
• For P&G, a way of getting large packs into the hands of consumers, ultra-conveniently…
• ….apart from the peripheral impact of some extra on-street advertising in high-traffic urban areas..

Do you think the WM/P&G initiative is the shape of things to come?
In fact, which supplier-retailer combination will be first in the UK?  

Auchan opens first bio-supermarket Coeur de nature

Auchan has opened its first organic supermarket in Bretigny-sur-Orge. The supermarket has a sales area of ​​1,000 square meters. "We offer everyday products that consumers need to eat organic," says Guy Verdier, CEO of Coeur de Nature. There are in addition to the obvious products, natural products, cosmetics, and baby products. A total of 13,000 products in store, including 2,000 of the house brand.

We have deliberately chosen to sell mostly products of specialized brands in the store. The family business wants to make organic goods more widely available to everyone, although the price remains the biggest obstacle. That is apparent from an examination of l'Agence Bio. For 77 percent of consumers who do not buy organic products, the price appears to be the main obstacle.

Source: Le Figaro

Morrisons feeds Big Brother, really!

In a UK supermarket first, the new deal allows budget-conscious housemates on the show to buy groceries from Morrisons in their weekly shop, delivered on screen in the supermarket’s trademarked bags…

This link with the UK’s most down-to-earth grocer should help keep some of the most extreme housemates grounded, thus minimising the possible emergence of the “Truman Show” Delusion now becoming more common in the US…

“Truman Show” delusion?
In fact, psychiatrists are seeing an increase in the number of patients who think they are the unwilling star of a secret reality show. This “Truman Show” delusion may be the first mental illness to come out of the 21st century's obsession with quick and easy fame.

The First Lawsuit
Nicholas Marzano believes he is the subject of a secret reality show, and everyone in his town of Hillside, Illinois is in on it. He's suing TV company HBO in federal court for, in his words, "filming and broadcasting a hidden camera reality show depicting the day-to-day activities of plaintiff" without his consent. His suit, filed in April, alleges that HBO has hidden cameras throughout his home, installed controlling devices in his car, enlisted the help of local police, and recruited actors to portray "attorneys, government and law enforcement officials, physicians, employers, prospective employers, family, friends, neighbours, and co-workers," all so that their show about his life can continue. Marzano also says HBO is keeping him from getting a job or paying his bills, so that he will be forced to remain on the show…..
(See a further 5 case studies here.)

For NAMs and KAMs with a compulsion to read all of the source material, the real article is available for sale by the journal Cognitive Neuropsychiatry

A reality wake-up call?
The real issue is the extent to which we are all in the process of emerging from a 30-year ‘unreality’ show, with growth built on credit, a world where forecasting meant adding 10% to last year’s figures, and a combination of inflation and devaluation, all ably managed by trusted politicians and bankers, helping to sustain unreal levels of ‘feel-good’ consumerism…

This unprecedented wake-up call means we are all now playing for real at having to think for ourselves, unwilling to outsource our decision-making to retailers and marketers, determined to settle for nothing less than demonstrable value-for-money, ever again….

Have a really nice weekend, from the NamNews Team!

If the Numbers Don't Add Up, They Probably Don't

Following a global financial crisis that has left governments floundering, business managers have lost confidence in both bankers’ and politicians’ ability to reverse downward spirals in economic performance at country level.

This in turn is causing middle management to have to choose between denial and confusion as they attempt to move the business forward, where many of the numbers no longer appear to count.

Given that denial is obviously no longer a viable option, it remains for NAMs and KAMs to attempt to make workable sense of the unprecedented chaos in the market, as a basis for building customer strategies that have some chance of delivering acceptable returns on investment, while others naively await some guidance from the system…

Our latest guidance available free