Customer in trouble - your call?

'The big ones hit the headlines, but when you see them all in a list....'

Given the cost of recovering lost profits when a customer goes bust, it is obviously vital that suppliers watch for the signs of trouble and act faster than the other guy. Obviously the finance department are equipped to pick up the signals in a customer’s annual report, but this merely gives a historical view.

Why the NAM view is crucial
However, when combined with a NAM’s daily experience of being in the market, continuously being exposed to a mix of weak and relatively healthy customers, understanding the effect of business pressures on interpersonal relationships, being subject to all the stress-symptoms of a customer drifting to the edge, and usually tasked with the job of filling the supplier’s profit-gap via incremental sales, it is more important that early warnings detection and signs of possible recovery be built into the NAM role.

This means NAM’s should familiarise themselves with the key financial indicators (see above) and couple this with any signs of a stress-driven deterioration in their dealings with the buyer and other functions within the business, and hot-line their findings to their finance colleagues…

It goes without saying that NAMs should then be part of any decision to modify (application of credit limit, withholding supplies etc) any aspect of the trading relationship, given that the NAM will have to communicate the decision to the customer, handle any flack arising and have to find the appropriate incremental sales elsewhere…

Anyone having issues ref pulling the plug should remind themselves that if their net profit is 5%, and a customer goes bust owing £150k, then the incremental sales required for recovery of profits are £3m….

More here & here

Casino enters Romania via Private label

                                                                                      Pic Brand Privat Romania
Using a method pioneered by Tesco, Casino, in partnership with Mega Image (part of the Belgian Delhaize) have launched a complete range of private lines, from entry level (Tous les jours) to bio products (Casino Bio). According to reports from Brand Privat, Romania, the other lines are Casino Family, Casino Delices and Casino, approximately 50 new articles at the same prices they have in France.

Longer term, the exit of Intermarche and the Auchan-Real deal, there are free spaces (8 former Intermarche supermarkets and 4 Real hypermarkets) and with Carrefour’s rumoured exit from Romania, who knows?

The fact remains that the use of private label to build brand franchise ahead of market entry, never did Tesco any harm…

Watch this space…

Beth Davis on courage in the NAM role?

KamBlog is meant to be a thought-provoker for National and Key Account Managers, treating them like CEOs, Managing Directors of business units, applying all the skills of a business leader, striving against the odds for growth in flat-line markets, with the added restraint of responsibility without authority...in practice, NAMs that make a difference know that real authority comes from a proven track-record in developing and implementing a profitable customer strategy, especially in crazy times…..

It could be said that profitability and ROCE are issues for others higher up the company hierarchy, that in unprecedented times, NAMs need to focus on keeping the fires down, and leave the bigger picture to the bigger artists...

We happen to believe that without a big-picture context, continuous fire-fighting limits, rather than stimulates, personal growth. Use of numbers shortens the odds, whilst taking a chance without running the numbers smacks of recklessness…

But the real issue is courage…with the bar raised higher with every high street casualty…

However, in the buyer-seller day-job, fighting for time and even risking humour in the face of ever shortening attention-spans, working from the bigger picture can be scary in that, by encouraging the use of numbers and their impact on the retailer’s P&L, our ideas and recommendations can be quantified.

This means that, in unprecedented times, where history is of little help, a buyer following the advice will sometimes hold the NAM accountable for good results, and always in the case of a bad outcome.

It takes courage to persist until signs of success begin to emerge, increasingly conscious of the fact that a better than average promotion becomes a higher hurdle for the next initiative, especially when we apply the numbers and risk an ROI analysis…

Eventually, however, this continuous drip-feed of quantified initiatives begins to make an impact on joint-profitability, while others focus on nasal cleanliness and await the emergence of new guidelines when markets eventually settle down..

Meanwhile, the proactive NAM has the courage to focus on output rather than input, in a continuous stream of creativity that over time, results in the growing satisfaction of perhaps a few good ideas in retrospect…

Beth Davis, was old actress who often quipped about the difficulties of growing older…

Had she lived a little longer, she might even have said:                                                                      ‘National Account Management ain’t for sissies…’

'Queen's corner shop' Fortnum & Mason celebrates best Christmas in its history

Amidst the ‘doom & gloom’, a glimmer of hope in Piccadilly retail, at least…

Those of you still working your way through your £5,000 Fortnum’s Imperial hamper (a sell-out selection of carefully packed Beluga caviar, foie gras truffles, cognac butter, a magnum of champagne 2002 and a bottle of 30-year-old whisky) will be pleased to know that your purchases helped grow sales by 17% in December, with online increases of 45%...

See, it can be done…!
Simply follow the rules of good shop-keeping:

• Location, location, location, (ideally with a 305 year tenure...)
• An appropriate offering (need we say more?)
• Focused on the right target consumer (‘know who we mean, nudge, nudge’? )
• Price leadership (meaning hi-hi, none of that EDLP nonsense)
• Space (utilisation & merchandising, the ultimate in morning-suited discretion)
• Supply Chain (rotation, accuracy, a £3m investment in new warehousing and delivery systems to avoid last year’s hamper issues…)
• Private label (differentiation & profit) Think Generation 6, or even 7, i.e. far in excess of ‘national brands’….

…and then the ROCE takes care of itself, and need not be mentioned…

More here

The Prompt Payment Joke....

Given the problem of companies’ increasing use of extended free credit as a source of free finance in these credit-starved times, the government is attempting to tackle the wrong problem, all in the name of protecting the little guy…Ha!, Ha!, Ha!

Even a cursory glance at the Prompt Payment Code will reveal that it focuses on paying within an agreed time. In other words, depending upon the credit period agreement into which a trading partner has been forced, be it on delivery, or within 5, 30, 60, 90, or even 180 days, a company can comply with the Code by paying by the specified date…

The humour starts with the consumer’s cash payment to a retailer. Then, despite zero-defect daily delivery of some SKUs, the retailer feels compelled to demand up to 90 days to bridge the cashflow gap between delivery of goods and payment by the shopper… (Ha? Ha?) 

When challenged to explain the joke, the retailer refers to market ‘norms’, without pointing out that these ‘norms’ have been creeping out from 30 days to the current 45 days in recent years, in readiness for a move to 90, as soon as sufficient retailers have helped to establish this new ‘norm’…

Suppliers who complain are told that there is 'obviously no compulsion' to agree the terms, they are free to sell their goods elsewhere at whatever terms they can agree, ignoring the fact that a customer taking 15 -30% of one’s output does not allow for alternative access to the consumer…  (Ha? Ha?).

But the really ‘funny’ bit is the process whereby larger members of the supply chain simply pass the credit burden back along that chain, “reflecting market norms”, until the point of least resistance is reached, the little guy who re-mortgages to the hilt, or cracks under the strain… (Ha! bloody Ha!)

However, and the biggest laugh of all, in spite of this upfront cash advantage, even the big retailers are suffering sales and margin-wise with some retailers having come to depend on the free-credit norm to such an extent that unplanned falls in consumer demand have caused these cash businesses to succumb to the inevitable….
Their carcases litter the high street…  (your turn!)

Time for everyone to quit the joking, and sort out the real problem?
(For starters, how about passing on the joke, this one needs to go viral…?)

HMV - cause of demise not just online, but good online?

With the inevitability of a slow train crash, HMV’s stakeholders have finally decided to bring down the curtain by refusing to add £300m to the pre-Christmas facility…

We have all had our personal relationships with HMV and each of us picked up different clues, but the clincher for me was going to the Harrods Christmas sale and finding that my favourite department, the HMV franchise, had been replaced by extended consumer electronics, and sadly, Elvis had finally left the building……

However, despite 75% of CD and DVD sales in the UK going online, it needs to be kept in mind that online was not the threat, otherwise even HMV could have cranked up their online offering and made the transition…

The real threat was good quality online…

For instance, many companies have developed a ‘clunky’ online presence that alienates, rather than encourages repeat purchase..

In the same way that corporate web-sites were developed with great initial enthusiasm, but soon become ‘elderly’ through lack of regular upkeep and innovation, so too an online presence needs to be refined to a point that matches Amazon 1-click in all respects, in order to stay in the game…

In practice, peoples’ mediocre online experiences make the following joke funny, but would be meaningless if all online matched Amazon…

The Knock-on effect: Kettle sales lose steam as coffee machines grow ever more popular

With kettle sales dropping by over 7% in five years, it might appear that kettle decline was due to a combination of the global financial crisis, people 'making do' with what they have, and a direct result of cutting back, when in fact our loss in sales may be caused by demand switching to another delivery mechanism, a new consumer-taste via a different appliance (22% of households in Britain now make their own espressos, lattes and cappuccinos). In other words, we are the knock-on effect of other peoples actions.

In practice, management-ego can cause us to assume that the knock-on effect is a result of our actions, rather than caused by others....

This means that direct attempts to stimulate demand can be a waste of promotional funds, when in practice we need to reassess fundamental demand for our product, re-examine its competitive appeal and then invest appropriately in maintaining the share-of-pocket our brand deserves...

And, just-in-case, perhaps diversify into coffee-making machines...?

More on home-coffee developments here

Amazon moves your old CDs into their cloud with AutoRip

Amazon’s new service  means that any AutoRip eligible CD purchased from Amazon since 1998 should automatically land in the user’s Cloud Player, free-of-charge. Starting with 50,000 of the more popular titles, the company anticipates building a library of millions of titles as they work back through customer records…

Added value, at zero-cost
Apart from being able to listen to an album before the physical CD arrives from Amazon, the service allows you to re-access albums purchased in the past 15 years… OK, so some of your old stuff you might never want to play again, even if you still have the original…..but now you have the choice..

Also, for those that like the look ‘n feel of ‘real CDs, it would not be beyond the capabilities of Amazon to build in a sleeve-note library for even more added value.

Speaking of which, just suppose Amazon decide to add books to the initiative…..

To really get a grip on how fundamental a step Amazon have taken, and the impact on traditional retailers, why not pop into your local branch of HMV (still open?) and ask for a spare copy of a CD you bought back in 1998, free-of-charge….?

Alternatively, why not have a Cloud-nine weekend, from the NamNews Team!

(more AutoRip here)