Virtual fitting rooms for dogs...

                                                                                                      pic: veinteractive
Virtual fitting room provider, Fits.me, is to expand into the booming pet accessories market with the world’s first virtual fitting room for dogs.  Initially available for dachshunds and greyhounds – two breeds that Fits.me has identified as being the hugely difficult to buy for – the virtual fitting room will help fashion-conscious pet owners buy better fitting clothes for their pooches online.

With demand for pet clothing having soared in recent years, British dog owners already spend over £30m a year to dress and accessorise their four-legged friends

A virtual fitting room for cats is currently in development and Fits.me expects this to be made available for the next April Fool's Day in 2014.

BUI-ing online?

                                                                                                pic: Broadbandchoices
New research reveals that 1 in 4 Britons admit to Buying Under the Influence (BUI) online…

Apparently, in a survey of 2,000 people, 28% of those questioned said they'd shopped on the internet while under the influence of alcohol. One in four confessed they had later regretted a drunken buy…. Results range from purchases of false teeth, a musical Chairman Mao cigarette lighter, a 1930s male bathing suit and Chilli-vodka....

Personal experience
Apart from a notable near-miss return flight booked from destination to home, in that order, from personal experience I would beg to challenge the inclusion of Chilli-vodka as an indicator of BUI-online purchasing…

A few years ago when running a very intensive 24/7 workshop in the Ukraine, the client recommended a local ‘reviver’ when one needs that vital extra 30 mins output at the end of a 15hr day. I have to say that a generous shot of Chilli-vodka (must-have ingredient is a whole chilli pepper in the sealed vodka bottle) is scarily effective, but strictly for 30 minutes extra output only.

After that, one is left temporarily brain-dead, but thankfully in no condition to communicate with Amazon, 1-click or otherwise….

Have a long, no-regrets weekend, from the NamNews Team!

Au shop charges $5 'just looking' fee

                                                                                               pic: Reddit Barrett Fox
In a bid to combat show-rooming, a speciality food shop in Brisbane allegedly charges shoppers* Au$5 per visit, deductable from a purchase, or non-refundable if 'just looking'...

Apart from being a real test of retailer pulling power, this move raises the issue of how retailers and their suppliers can satisfy an obvious consumer need to 'touch the product' before buying, without compromising retail pricing.

In categories such as toys, consumer electronics but also speciality food and drinks, it obviously benefits the brand if consumers are given the opportunity to visit a specialist shop to experience the product and seek advice before making a purchase. However, the resulting on-cost usually makes it impossible for the retailer to compete with online prices for the same brand.

More intensive branch calling and support can obviously increase the efficiency of a specialist retailer. However, given the relatively low turnover of typical specialist outlets, it is usually not possible for a supplier to break-even via orders taken at store level.

A possible solution for brand owners could be to treat the specialist shop experience as an extension of the marketing process, and fund it appropriately. 

In other words, given that any support at point-of-sale can make ATL advertising more productive, then why not write off say 50% of the cost of branch support to the advertising budget? This additional funding could be used to cover part of the cost of calling and also the provision of 'demonstration' allowances for the specialist retailer.

This would allow the supplier to influence the point-of-purchase message to ensure compatibility with overall brand positioning, enhance the consumer-service and allow the retailer to reduce the online price-gap....

When you think about it, a variant on shopper marketing, for the little specialist guys...

* More on the Au initiative

Hiving off capital intensity - How Coca Cola bottling works...

The Coca-Cola model splits ownership of the brand and concentrate from capital-intensive bottling and logistics, by far the bulk of which is handled by independent franchises, with the remainder owned by the company. The system works for Coca-Cola by providing it with the superior margins that come with an asset-lite model, while giving it control over the bottlers.

In general, Coca Cola appear to favour the franchise option and in fact operate Bottling Investments Group, dubbed “the hospital ward” by outsiders, who describe it as the place where ailing bottlers are spruced up before being sold on again. According to the FT, the company is in the process of building scale and closer links with its franchisees through greater co-ordination and consolidation of the sprawling bottling empire. Details of regional/local performance and analysts' estimates of financial impact in key regions are given in the FT article. 

Food for thought?
Whilst the option of splitting brand ownership from production & logistics may not be available to all other suppliers, the advantage in terms of ‘allowing’ the multiple franchisees to handle the commercial relationship (esp. margins, prices and terms) with the trade, and the consequent dilution of retailer power, has to make this alternative worthy of exploration…

By keeping commercial issues tied to ‘local’ production units, the supplier could then focus upon brand building, and more effective management/negotiation/compliance ref trade spend, without the distraction of having to deal with other parts of the commercial relationship…

Too radical? Welcome to these unprecedented times….

Key case Shatters Irish Upward-only-rent-reviews

Despite ‘incompatibility with constitution and expense of implementation…’, a landmark court case is potentially a major development in Irish case law which puts in doubt the ability of a commercial landlord to enforce so-called “Upward Only Rent Review” terms in pre-February 2010 leases.

Apart from refusing to allow the enforcement of the UORR clause, the Judge has apparently ordered the rent to fall to current market levels, which are more than 50% less than peak rents in 2006-8. This judgement could affect all other similar leases in Ireland, making retail rents more manageable for businesses throughout the country.

As additional details of the judgement of 25th March become available, it appears likely that the judgement will be appealed. Hopefully, common sense will prevail in abolishing UORRs, effectively removing what is a partial cause of the current high shop vacancy rate in Ireland...

Those with interests in the Irish market can access full details including the final judgement here 

What if: Pepsi and Kraft merge?

The recent stake-building in Pepsi and Mondelez – formerly known as Kraft Foods - by Nelson Peltz, one of America's best-known corporate raiders, presents several possible outcomes… These range from passive strategic shareholding, to forcing Pepsi to split its business along the lines of the Mondelez split into global snacks and Kraft grocery, to a full-blown merger of the two companies.

Given that Peltz, in the current climate, is well-known in the shareholder community as a fearless activist investor willing to agitate for strategic change and take on company boards, we can rule out passivity, whilst the Pepsi demerge option would seem like an intermediate step….

From a category impact point of view, it is probably best to explore the implications of a possible £112bn merger…

Key will be the usual pricing and terms disparity issues, causing post-merger delays as the new company works through the detail of the resulting implications at the supplier-retailer interface.  Any differences will require the negotiation of a rationalised set of trading terms and conditions, dealing with a trade that wants to go for the lowest common denominator ( and appropriate compensation for ‘immovable’ terms) within an over-riding desire to simplify their overall trading relationship with the company.

At global level, this may extend to global retailers wanting to deal with ‘one face’, a challenge to the differing account management structures in each company, apart from the additional complication of the involvement of bottlers in the Pepsi trade-mix, at global, regional and country level….

A key concern for some retailers may be resulting size of its new supplier… This means that some of the major multiples may attempt to reduce their level of dependence by creating new/increased alliances with other suppliers in the categories, with obvious impacts on different brands.

Obviously, category members will drill down to explore specifics in terms of changes in relative competitive appeal, government-forced disposals of over-lapping brands and the resulting changes in category dynamics, seeking opportunities at each stage in the merger process…

On balance, given the above ‘distractions’, quite apart from the potential issues with governments at global, regional and local level, a possible merger would appear to represent more opportunities for the competition than gains for Pepsi-Kraft, at this stage…

Hopefully, Mr Peltz can be persuaded that the potential negative impacts will outweigh possible gains in shareholder value from a forced merger, in these already over-complicated times…… 

A lesson in how to steal?

                                                                                                          video: AP on Youtube
This polite but firm hold-up of a convenience store illustrates a return to the values of yesteryear, when good manners really made a difference.

The gunman starts with developing a business relationship with the owner of the money, gets to know how much is available via a visual check of the till-drawer, explains his predicament and his need for the money. He then makes a direct request for the cash with barely a reference to the power he wields in his right hand, and invites the owner to hand over the contents of the till.

Finally, he expresses his appreciation, bids farewell and leaves the store on a promise to repay the money should his circumstances improve….

Unlike this week’s events in Cyprus…..

Reduced value packs - how it sounds to the buyer….

Given the latest Which? report showing that household brands are disguising price increases by reducing pack sizes by up to 25%, and sometimes adding a price increase, NAMs may prefer to raise the issue with buyers upfront, rather than be forced to go on the defensive when the customer makes it an agenda item…

S:     Just to let you know, we have managed to minimise the shelf price increase. We are recommending an increase of 6%
B:    …and keeping the pack contents the same?
S:     Well, not exactly… We are actually reducing the pack size by 15%.  Our research shows that the consumer won’t even notice…
B:    Hang on a second. There are a lot of savvy consumers out there, and they are even more value- conscious in the aisle…given all the price comparison tools available… and we even encourage the process instore. Are you guys doing the right research?
S:     As champions of the consumer, we are very sensitive to their needs…
B:     In reality we like to think that the consumer-shopper regards us as their champion, and given the latest Which research, they seem to need our help..
S:     Well, as joint-champions of the consumer–shopper, we feel that  the new pack represents good value for money..
B:     So, let’s take your 750g pack, currently retailing at £3-25, giving us a margin of 18% i.e. cash of £0.585 . This gives the shopper a cost per 100g of £0.43.
Reducing the contents by 15% increases the cost per 100g to £0.51, an increase of 18.6%!  Suppose we add your proposed 6% price increase, this makes the new retail price £3.45.
On a price per 100g of £0.54, that makes it a total price increase of 25.6%.  And you think they won’t notice?
S:     But the consumer doesn’t think like that..
B:    We believe it gives us a competitive advantage to help them think like that, which is why we are putting the price per 100g under every shelf price…
S:     Well, other members of the category are experiencing the same ingredient cost-pressures so they will have to follow our lead…
B:    As you may have noticed, our private label has a 20% share of category, and we have not seen ingredient cost increases of anything like 15%.. and besides, your competitors have not moved yet…
S:    But if you raise your shelf prices on our brand by our recommended 6%, you will generate additional margin of ...
B:   You don’t get it. The sales of your brand are going to fall, making even less money for both of us, thereby diluting our category margin…
S:    Perhaps you could lower your shelf-prices to maintain rate-of-sale….?
B:    Presumably you will compensate me via increased margin?
SuperNAM:    I hadn’t  actually factored that in…
Buyer:               Byeeeee…..

Adventures of SuperNAM (18)