Thursday, 6 September 2012

If Airlines Sold Paint…


Given Ryanair’s imminent bid for Aer Lingus, coupled with many homeowner’s desire to avoid some painting chores by flying away for the weekend, we felt it might be interesting to link airlines and paint with a lesson in pricing for those NAMs that never like to forget the ‘day-job’

Customer: Hi. How much is your paint?

Clerk: Well sir, that depends on a lot of things.

Customer: Can’t you give me an approximate price?

Clerk: Our lowest price is our introductory special at $12 a gallon. After that we have dozens of different prices up to $199.

Customer: What’s the difference in the quality of the paint?

Clerk: Oh, there’s no difference. It’s all exactly the same stuff.

Customer: Well, in that case I’ll take your $12 paint.

Clerk: Well actually the $12 variety is only available on our website. If you want to buy it here at the store you’ll be charged an additional $20 Customer Convenience Fee

Customer: So if I go home and get it off the website, its only $12?

Clerk: That’s correct sir – plus a Credit Card Usage Fee of $6 and then there’s standard Shipping and Handling of $15.

Customer: What? So in other words buying online would cost me almost exactly the same as what I’d have to pay here in the store?

Clerk: I suppose so, but if you buy it here you get to use it immediately. Online purchases take ten business days to get to you – unless you pay the optional $25 Express My Paint Fee.

Customer: You’ve got to be kidding me!

Clerk: Well no sir, but it’s academic anyway as right now the $12 paint is completely sold out in both places.

Customer: That’s BS. I’m looking at shelves full of the stuff!

Clerk: Ah, but that doesn’t mean it’s available for sale. We sell only a certain number of introductory priced cans on any given day. Oops, look at that! It just became available again – at $17.50.

Customer: C’mon! You mean to say it went up while I’m standing here?!

Clerk: ‘Fraid so. Inventory control changes our prices all the time.

I strongly recommend you purchase your paint as soon as possible as it could go up again. How many gallons do you want?

Customer: Well, maybe three gallons. No, make that four, I don’t want to run out. I assume I can return anything I don’t open?

Clerk: Certainly sir. The $12 paint is non-refundable, but if you return it within 48 hours you will be entitled to a $5 credit towards the future purchase of another gallon of the same color at the same or higher price.

Customer: That’s crazy. In that case I’ll just give any unopened cans to my brother as he’s planning to repaint his home soon.

Clerk: Sorry sir, no-can-do! Our terms and CANditions – that’s a little in-house joke – prohibit paint transfer. It is strictly for the use of the original purchaser.

Customer: But wait a minute, I hadn’t spotted those “Paint Sale – $9.99* a Can” signs over there? That sounds like a much better deal.

Clerk: Ah yes, that’s from our low cost paint division. The asterisk denotes that the cans are actually half-gallons and the price is based on a minimum purchase of two. There is also an additional Environmental Fee of $5 per can, a non-refundable Can Deposit of $3.50, a Paint Facility Charge of $5 and if you want more than one color, the second has a $25 surcharge and the third is $50 extra.

Customer: This is utterly ridiculous. To hell with this! I’ll buy what I need somewhere else!

Clerk: Well sir, you may be able to buy paint for some rooms from another store, but you won’t be able to find paint for your connecting hall and stairway anywhere but here. And I should also point out that if you want Uni-Directional paint it is priced at $249 a gallon.

Customer: I thought your most expensive paint was $199!

Clerk: That’s only if you paint non-stop all the way around the room and back to the point at which you started. Stairways and hallways are considered one-way exceptions to the rule.

Customer: So, if I buy the $199 paint and use it in my hallway what are you going to do about it – send some goons in to paint over it?

Clerk: Wow, I believe you’re getting it now sir. But no, please, that would be plain silly. We’ll simply charge you a Direction Adjustment Fee plus the difference to $249 on your next purchase.

Customer: Next purchase? No way! I’m out ‘a here

Clerk: At Skyhigh Paints we never forget you have a choice, so thanks for shopping with us. Have a nice day!

Have a price-sensitive weekend, from the NamNews Team!

Credits: latest version found here
Appears to have originated in Travel Weekly, October 1998, by Alan H. Hess

Supermarkets eroding their brand equity?

Almost three-quarters of consumers believe supermarkets are trying to mislead them with confusing pricing practices, Which? has found.

Their survey of 2,100 shoppers revealed that 74 per cent think supermarkets are trying to dupe them.
Current legislation requires retailers to provide both a selling price and a unit price for products, but a spot-check of branches of each of the 10 leading supermarkets found none met the watchdog's best practice criteria developed with Trading Standards and the Royal National Institute of Blind People for size and legibility of unit pricing.

Deliberate or not?
The key issue is whether retailers are doing it deliberately, in which case nothing will change…
However, if retailers want true like-with-like comparison they need simplify the process for shoppers….

Making price comparison easier
Expressing the shelf-price per 100g/100ml along with the SKU price would surely add clarity to the (deliberate?) confusion caused by random use of Kg/g in shelf-label unit pricing, BOGOFs, extra-value packs, products sold in ‘standard packs & loose’ and especially the use of shrinking-packs to disguise price-rises….

Instead, stores routinely sell fresh fruit and vegetables in standard packs for a fixed price without providing a clear price comparison with the same items sold loose.

Call for legal enforcement
Consumer champions Which? are calling for a change in the law that would require retailers to provide clear unit prices, including shelf labels in large print against a clear background, showing a price based on a standard formula such as pence per item.

Morrisons Act first 
A week ago we advocated this approach in KamBlog
Now Morrisons have announced it will introduce standard large labels showing the unit price and price per kilo or per litre across all its products by the end of next year. A pity if other retailers wait that long to follow suit…

Evaluating the real brand of supplier or retailer
Shoppers use price as the final ‘decider’, but we should remember that this is on the assumption  that all other things are equal. In other words, by making it clear what the shopper is getting for the money, the ‘per 100’ comparison forces the brand to rely upon Performance, Presentation and Place in a like-with-like Price evaluation with the available competition, causing the shopper-consumer to fall back on the brand equity we have taken so much trouble to build and sustain over the years.

In the old days it used to be called trust…the most precious commodity in any business!

Wednesday, 5 September 2012

M&S Flag-ship floor plan - the real priorities?

Click image for larger copy

You have seen the pics, (if not, Google Images Chester Oaks M&S)
You may have even made a storecheck…
Either way a floor-plan of ground and firsl floors layout will help you appreciate the relative importance of Food vs. Non-food, departmental adjacencies and all the other little things that tell you where a retailer is going…

P.S. If you would like a 3MB pdf of the the above floorplan, please email me on bmoore@namnews.com

Tuesday, 4 September 2012

RUSSIA: X5 Retail Head of Hypermarket Division, Jan Fuchs off to opportunities elsewhere…

Russia’s largest retailer has confirmed that it has lost the services of a number of senior managers due to disappointing results. The departures add more pressure on the group, which has seen sales at its hypermarkets fall regularly in the past few quarters.

With sales declines like these is it any wonder that Jan Fuchs off to opportunities elsewhere…?
Apologies, I have waited 54 years to use that one, ever since the London Evening Standard carried the headline “Famous explorer Sir Vivian Fuchs off to the North Pole” back in 1958…

Eye-controlled Gaze TV unveiled in Berlin’s IFA Trade show

Viewers that resisted over-dosing on their Olympics viewing can now revert to potato-mode by avoiding unnecessary exercise caused by having to reach out and press the clicker…
Details + pic at BBC

How it works
Viewers control the set by staring at the top or bottom of the screen to activate a user-interface.
The user can then change the volume, switch channel or carry out other functions by looking at icons shown on the display.

Applications
Apart from TV, the eye-tracking technology originally aimed at helping disabled people control computers. Potential applications include gaze-controlled car information systems, surgery room image display screens, and video games.

New levels of viewer engagement?
Whilst still at prototype stage, Gaze TV’s elimination of the remote-control offers potential for whole new levels of family disagreement, apart from the hazard of high-speed random channel switching caused by a family member nodding off during the boring parts…
It is also a step up from attempts to involve family pets in the viewing process

However, the real issue for advertisers has to be the renewed pressure on maintaining viewer engagement, the need to refine the message to a precise and unique fit with consumer need, linked with a solution that delivers above expectation, better than alternatives available, or else…. 

Monday, 3 September 2012

Beat 'em or join 'em? Coca Cola co-branded Private label promo…


                                                                               pic: Brand Privat, Romania*
In their fourth co-branded promotion in Romania, Coca Cola have again linked with a private label.
For the next two weeks Coca Cola will team with Real Quality, the mainstream private brand from Real hypermarket (part of Metro Group) in a ‘buy a special Olympic pack (2 bottles 2l Coca Cola) and get a free 50g pack with Real Quality salted sticks.

Previous promotions included:  

1. Coca Cola with spaghetti Fine Food (mainstream Private label from Metro Cash&Carry). Buy one box with four bottle Coca Cola 2l get 2 packs spaghetti 200g for free. This one was followed by a huge door-to-door campaign. Over 400,000 free samples (one bottle 1l Coca Cola + one pack 200g spaghetti Fine Food).
2. Coca Cola with spaghetti Top Apetit (entry level Private label from Penny Market – part of Rewe Group). Buy two bottle Coca Cola 2,5l and get one pack spaghetti 300g for free.
3. Coca Cola with “pasca*” Cora (mainstream Private label from Cora – the hypermarket chain Louis Delhaize). Special promo price for the pack.                                                                                             *pasca is the Romanian name for a traditional cheese pie made only for Easter. Followed by a two weeks out-door campaign in all the cities with Cora hypermarkets.

The real issue here is a major brand’s willingness to seek synergies via collaboration with a private label when it represents a logical, linked offering to the consumer…
A lesson (and a test?) for other brands?


Source: Brand Privat, Romania

Friday, 31 August 2012

Google, Amazon, Apple and Facebook - the new big four in retail...

We shop on phones, compare on Google and ask our Twitter-mates what they think. Even more importantly, we also have the ability to complain to 100 friends when a supplier/retailer misses our expectation…
This revolution in shopping behaviour is causing traditional retailers and suppliers to play catchup with multichannel marketing, or else…

Whilst historical purchase data reveals what we bought, social media reveals why and indicates the future. Think about it, we have been waiting 30 years for this insight…now we have it, are we doing enough?

The real opportunity
In fact, do we accept that the real  breakthrough hinges on the willingness and ability of the retailer to respond accordingly. For suppliers, the key issue is whether it is easier for traditional retailers to remodel the business based upon shopper-need, or for the new big four to fulfil the shopping transaction, profitably.

When I break from writing this KamBlog post to accept delivery of the Amazon book I ordered yesterday, at a 15% discount, while hesitating to drive to the nearest Tesco for a bottle of breakfast milk, somehow the answer suggests itself…

Just the first layer?
The multichannel e-commerce combination is obviously making it easier to buy, but I believe that as suppliers we are simply skimming off the first layer…

The real pay-off will result from re-engineering the entire brand offering to better meet consumer-shopper need, arriving at a minimal compromise between what a consumer is trying to tell us they require and our ability to provide the solution, better than the available competition.. In other words, building trust by delivering more than it says on the tin…always.

What this means for NAMs
This process includes adjusting our channel strategies to optimise their strengths, via NAMs that have the imagination to see that the accounts with real career-potential are the new retailers in emerging e-channels.
Sure, making real change in uncertain times is an uphill struggle, especially having to negotiate more with your own colleagues than with the customer.

However, given that we learn more from risk, mistakes, uncertainty and overcoming resistance (a buying signal?), numbers-based NAMs that are prepared to swim against the tide somehow move faster...

Thursday, 30 August 2012

Discount stores boom as upmarket shoppers brag...

The economic quagmire has provided the perfect breeding ground for general merchandise discounters, who have expanded aggressively – more than filling the void created by the collapse of Woolworths in 2008. Analysts at the IGD predict the value retail sector will be worth £8bn by 2015.

Classless appeal
But the key to discounter success is their classless appeal. Mature NAMs will remember their first visits to Aldi Berlin in the early 1990s, and their bemusement at the shopper transport parked outside – ranging from students bikes to state-of-art Mercedes. As we all knew at the time, this could never happen in the UK….

City paying heed
The growing might of chains such as Poundland, Wilkinsons and Home Bargains means the City is starting to take notice. Stockbrokers Shore Capital believes discount retail is the fastest growing area of the whole market, with the strongest performers potential candidates for stock exchange listings or takeovers by quoted chains further down the line.

The forward working environment 
Given their arrival at critical mass in a flat-line economy, we reckon that discounters are merely at the start of a five year opportunity to gain share in the UK. NAMs need to second-guess the politicians: they have been telling us about imminent recovery for the past five years.
Having thus established politicians' credibility, with little change to EU/global economic conditions, is it likely that we can expect any real uplift in the next 5 years…?

Competition hots up...
The competitive landscape ranges from single-price chains such as Poundland and 99p Stores to general discounters such as Home Bargains and B&M Stores. But the rapid expansion of what were once regional, often family-run, companies means the retailers are now treading on each other's toes.

A zero-sum future?
This means that market will operate on a zero-sum basis with any share gains at the expense of not only other retailers but also of other discounters.
In other words suppliers have to prepare discounter strategies that are in harmony with  overall trade strategies, taking care to avoid inadvertent compromise or conflict.

This means that suppliers need to factor discounters more aggressively into their organisational structures and trade strategies, ‘permanently’…

Permanently? Bear in mind that the other characteristic is that discounters thrive in a downturn, but rarely surrender any gains in market share in a rebound…