Everything is negotiable, when the chips are down…

Keith Ewing, owner of Number Eight Clothing in Stirling, commented that Independent retailers need to "put their heads above the parapet", as his shop was nominated as one of the UK's "top 100 inspiring shops" for 2013 by Draper's magazine. He listed rent-reviews, online, buying and display as key needs in independent retailing.

NAMs could help by sharing their negotiating expertise with appropriate retailers, as follows:

In practice, independent retailers can help themselves to survive by adapting the supplier-approach to business development:

• Cutting-costs: rent and rates are currently too high in these unprecedented times. Landlords and local government know this and are vulnerable to the ‘walk-away’ threat by retailers. In other words, retailers should calculate the level of rent and rates (seek help from commercial architects that can provide a broader view) that make the business viable, and renegotiate on this basis, ideally via a combination of lower rent and a ‘per cent of sales’ model, to force landlords to share the business risk.
• Driving sales: develop a strong online strategy by mining your customer records and collecting email addresses going forward in order to extend your reach beyond a shop visit. Optimise supplier help by negotiating better prices, terms and supply arrangement and especially instore merchandising in exchange for customer stats and enthusiastic/ innovative collaboration. Suppliers want you to succeed as a counterbalance to major multiple retailers and are willing to negotiate flexible packages for the right customers.

Being a business consultant to the retailer can optimise the trade partnership and broaden the NAM’s expertise in managing other customers.

Sharing negotiating expertise can help....

HMV: the song-writing on the wall?

Given the probability of weak Christmas sales, leading to a breach of its banking covenants, a fall in market capitalisation from £1bn to £10m, and a net debt of £176m preventing it from investing in belated development of multi-channel access to the consumer, perhaps HMV is in need of a radically different business model?

This initiative could be driven by a supplier-base that cannot afford to allow a customer with 20% market share of UK music sales to fail.

Essentially, HMV has become a suppliers’ show-rooming retailer, establishing physical presence and price points for products that are subsequently purchased online, elsewhere.

Staffed by music and entertainment enthusiasts that could explain and demonstrate product, the outlets could perform an invaluable merchandising function, like other specialist retailers provide in the toys category, with the added benefit of some direct sales where possible.

At a total cost of HMV’s current market capitalisation of £10m and combined backing for the £175m debt, competition authorities permitting, a consortium of suppliers could buy the company and convert it into a joint-merchandising/show-rooming vehicle, funded in part from advertising and promotion budgets.

Alternatively, why not let HMV go down the tin-pan, and allow price to be the only driver of sales in entertainment…..?

(How it has come to this)

Keeping independent shops independent - a new business model for 2013?

More than 50 of Itteringham's 120 residents work in their local shop voluntarily, helping to sell locally grown produce first stacked on its shelves in 1637 (Full details and pics here).

This local community's efforts to keep a village shop open by agreeing to work free indicates the degree of help some traders need in order to survive the combined pressures of flatline demand, consumption cut-backs and price-cutting by the multiples.

Whilst these moves may help on the cost-control side of the equation and with suppliers unable to justify lower prices for independents, those whose brands' viability depends on 'full' distribution, need to find ways of helping a retailer to address the sales-driving side of the equation.

In other words, ways must be found of helping the independent retailer to develop the good shop-keeping skills already established by the multiples. Retailers need the help, but under the current business model, suppliers cannot justify the cost of the call, given the size of resulting order required to break even.

However, given that our advertising effectiveness requires adequate levels of distribution and our brand may benefit from in-store discussion and even demonstration, then surely it would be realistic to regard part of function of the brand's presence in independent outlets can be to augment the marketing message and its effectiveness. We should therefore consider writing a proportion of the cost of call off to the advertising budget.

In this case, covering 50% of the cost of a retail call would translate into a 50% reduction in the size of order required to break even.

I leave you to ponder on the potential for shopper marketing initiatives and new variants that could be explored and even refined in readiness for sophisticated application in selected mults....

Support independent retail, you know they could be worth it...!

...and in a year like 2013, anything is worth trying..

Meanwhile, have a great weekend, from the NamNews Team!

2013: A year for realistic optimism?

With five flatline years behind us, and a high street littered with casualties, realistic NAMs should be finding it easier to factor in a further five years of the same....

If we accept that whilst politicians operate to a different agenda (re-election) and vocabulary (triple dip = flatline...) those of us still in business are here because we know that in times of zero-growth, any market gains have to be made at the expense of the competition.

This means always seeing our offering through the eyes of an increasingly savvy consumer that is unwilling to settle for anything less than demonstrable value-for-money, a consumer determined never again to outsource their purchase decision-making to marketers or retailers.

In these circumstances, it is vital to strip our offering back to the bare essentials, leaving a needs-based package that represents real value, measured by what people are prepared to pay, over and over again.
Using consumer need as the only real benchmark, realistic NAMs will assess the offering vs. what is available from competition, and will continue to cut until what remains represents true value, and more, to a consumer and ultimately the savvy retailer.

Achieving this level of confidence in our value means realistically factoring in politics, economics and banking into our business thinking, as we constantly strive to achieve acceptable financial rewards for risk in a market environment where the numbers do not appear to add up...first time.

In practice, this means realistically measuring all of our costs and being able to translate them into value that we represent to our customers, and being able to demonstrate our impact on their Balance Sheets and P&Ls...

In such unprecedented times, real opportunities exist in 2013 for those determined to be realistically optimistic, and are prepared to act decisively, while the competition await a return to the 'good old days'...

Meanwhile, a Happy and Positive New Year, from the NamNews Team! 

How do they sell Xmas champagne for £9.99?

The question is, how on earth can supermarkets afford to sell their champagne at such rock-bottom prices? In all its essential elements, the Aldi champagne @ £9.99 follows the time-honoured rules of the drink. It’s made from traditional champagne grapes - a third chardonnay, a third pinot noir, a third pinot meunier - using the double fermentation method that produces the famous bubbles. Its alcohol level is 12% - a classic figure for champagne. And it doesn’t taste too bad, either.

According to The Daily Mail, you need 2.2lb of grapes for a single bottle of champagne. At current market rates, that will cost you £4.38. Excise duty on top of that is £2.43, and VAT, at 20%, must be paid on the total - another £1.36.

Already we’re up to £8.17, and we still haven’t paid for bottling, warehousing, shipping and distribution. Those overheads vary but, altogether, the total cost price is almost certain to match or exceed the selling price of £9.99. So, a tight fit until they revert to the normal price of £12.99 until the new year.

If Aldi seems a step too far this Christmas, try Asda @ £10, or Waitrose/Tesco @ £14.99

However, if you feel this removes some of the romance from the Christmas festivities, why not pick up a couple of the traditional brands, the only issue being whether you serve these up before or after the Aldi version…

Tesco and Asda poles apart in Cyber Monday web performance speeds

If speed is key, then Tesco will increase their online lead over Asda at Christmas.

A study by Aberdeen Group published by Internet Retailing into ecommerce site performance found that a one-second performance delay reduces sales conversions by seven per cent, a figure which can represent £2.55 million a year lost for a £100,000 per day site.

The results showed that Tesco came out on top with 100% availability on the day and an average response time of just 1.403 seconds, a far cry from Asda, which had an average response time of 13.634 seconds and an availability rate of only 86.44%. The sluggish Asda rate was more than double the average UK-retail benchmark of 6.369 seconds and far behind the average availability of 98.48%, making Asda the worst performer of all the retailers that were tested.

However, the big issue for me was the fact that with a worse than UK average response time of 6.378 secs, Amazon have most to gain by bringing their response times up to match the simplicity of 1-Click purchasing…

Average response times and availability for the Top Ten UK online sites can be seen here. 

Pound shop backstory - 'Commodity City' - home of pound shop supply

Ever wonder where pound shops obtain those supplies not sourced via your surplus goods department?
Quick answer: China. However, nowhere reflects China's contribution to the pound shop phenomenon better than the town of Yiwu, about two hours by fast train from Shanghai. Four decades ago it was a small town - now it is a "commodity city" with a population of over a million.

Yiwu City has the largest small commodity market in the world.
It seems dedicated entirely to the production, exhibition and sale of the thousands of small products that cram the shelves of pound shops. Any shop owner can visit the city, order a dozen different kinds of vases, teddy bears or fishing nets, anything they want and which can be made for under a pound, fill a container and have it shipped back to the UK.

Vital statistics
And massive it is. 4.3 million square metres of floor space containing 62,000 booths representing factories and suppliers producing everything from 2011 Rugby World Cup balls to Hello Kitty socks.

Yiwu’s 3,000 jewellery booths make it the largest supplier in China and the jewellery accessories sector is even bigger. 70% of pens in China come from there, 60% of the gloves, and for those inclined, there are 3,000 booths peddling underwear. Yiwu is often called Sock City – if you’re wearing socks anywhere in the world, there’s a 50% chance they came from Yiwu.

Can’t wait to pay a visit? 
In which case, a  few helpful Chinese terms for visiting Yiwu
Yī wàn ge duō shao qián? … How much for 10,000?
Tài guì le! … That’s expensive!
Wà zi nǎ lǐ? … Where are the socks?
Wǒ néng bu néng mǎi yī ge? … Am I able to buy one of them?

Ten of Britain's most unusual shops?

Bored with store visits? Next time you need a break in the market-checking routine why not include an unusual shop in your schedule?

The Observer have identified what could be the 10 most unusual shops in Britain
1. Unicorn Antiques on Dundas Street in Edinburgh
2. Mr B's Emporium of Reading Delights, Bath
3. Fragile Design, Birmingham
4. Laste, Brighton
5. Nook & Cranny, Liverpool
6. Labour and Wait, London
7. Junk, Manchester
8. Junior Toys, Wells
9. Blaze, Bristol
10. Lupe Pintos, Glasgow
(pics and details in The Observer )

Given the conditions in the high street and the increasing emphasis on productivity, you can be sure that any ‘quirky’ shop still standing must have a unique and profitable appeal. This means that it stands out because of its high degree of match with shopper need, a real standard-setter in terms of assessing how well major mults branches are aligned to your target consumer….

These unusual shops can look messy, disorganised and unprofitable…but in practice they are re-writing the shop-shopper rulebook, in unprecedented times, when everyone is searching for new solutions…

Perhaps these shops have the courage to be different, and have simply found an unusual way forward…..?