Shop bans Google goggles: a first in UK retail?

                                                                               

Just days after they were delivered to the first early adopters who signed up last year to be the first to buy the ‘explorer edition’, a Brighton shop has banned access to shoppers wearing the new gadget.

Google Glass, worn like a pair of glasses, has the ability to record images and take photos, operating like a mobile phone or tablet. Arts and crafts souvenir shop Zoingimage, in Sydney Street, has posted signs on their windows banning the use of the device on their premises.

Google Glass’s ability to take photos secretly, unlike via a phone, are the real issue behind the bans. This ease with which privacy could be invaded makes it a challenge for schools, cinemas, museums,  art galleries and shops.

The key issue for NAMs is whether such bans mark a return to the ‘old’ no-photo rules on store-checks, or will shopper-pressure force retailers to allow the addition of Google Glass to the tool-kit of the super-savvy consumer, adding to pricing transparency in the aisle…

However, pro-active retailers, and their trading partners, are no doubt already seeking ways of communicating with such shoppers' eye-piece at point of purchase…

What if consumers demanded supplier trading-terms from retailers?

An article on retailers' treatment of suppliers in today's Independent* introduces an idea that may hold the key to achieving fair-share treatment in supplier-retailer relationships.

Suppose consumers began to modify their shopping behaviour as follows:

• Telling the shop staff they are happy with the price, but need a 5% settlement discount to pay at point-of-purchase...
• Demanding a retro-rebate on goods purchased from the store six months previously...
• Requesting an advertising allowance to carry the store's shopping bag home...
• Applying a deductions' allowance for unbudgeted delays at the checkout, low on-shelf availability, 'cold' bread at the bakery, unhelpful staff...
• Expecting a contract allowance for buying a jar of own-label coffee every week for a year...
• Offering to buy a product's all five variants in exchange for a full range bonus..
• Seeking a quarterly/yearly bonus for shopping regularly...
• Requesting a listing-allowance to add the store's own label product to their shopping list...
• Demanding a de-listing allowance to cover the inconvenience of removing same when tastes change...
• Making a promo-allowance a condition of 'telling-a-friend'....
• Requiring a 'customer representative allowance' to encourage family members to tell their friends..
• Demanding a merchandising allowance for displaying product on the rear window-ledge of the car...
• Offering to fill the car-boot and all available seats in exchange for a full-load bonus...
• Requesting a collection-allowance to cover the cost of selecting goods from shelves and transporting to the checkout...
• Demanding a compensation allowance because the new jumbo-pack does not fit home-storage shelving...

[NAMs are invited to add personal experiences to the above 'shopping list'.....]

Unlikely that consumers would take a pro-active stance against business practices they deem unfair?  So thought a well-known high street coffee chain when their customers discovered their off-shore arrangements to minimise UK corporation tax payments...

* The Independent 

The Savvy Approach to Late Payments, Invoice-Haircuts and other power abuse..

A cross party Parliamentary inquiry into late payment will take place next week. The meeting, which will be chaired by Labour MP Debbie Abrahams, will examine just how serious the problem has become for SMEs, but will also look at other issues around poor payment practices, including so called ‘invoice haircutting’.

Catch-up
By way of background, NAMs may not be aware that the legislation is slowly catching up with reality in these matters, in that last month government regulations were updated to define 'late payments' (60+ days)  and impose interest  (Base +8% i.e. 8.5%). However, as always, these developments miss the basic point that unless the Government adopts the get-tough approach taken in other jurisdictions such as France, the measures will fail.

(To really protect SMEs you need to create a non-negotiable time limit for the payment of commercial debts. This is what happens in France, where failure to comply with the Commercial Code can result in criminal prosecution and heavy fines. An excellent article by Ben Gardner, a commercial law expert at Pinsent Masons develops this point in some detail)

The Savvy Consumer Approach
Given the fact that the savvy consumer may be beginning to appreciate that late payments, invoice hair-cuts and other power abuse like off-shore tax avoidance may be part-hindrances in their search for demonstrable value for money, it can only be hoped that any 'naming and shaming' will help to focus consumer pressure on companies that use trading partners' funds to supplement their cashflow and bottom-line.

The Savvy Supplier Approach
Without evidence, the law cannot act. However, whilst we are all aware of the commercial risk in whistle-blowing on a customer, the savvy supplier has to find 'safe' ways of making power-abuse known, hopefully  adding to the anecdotal 'evidence' that may heighten sensitivity to the issue for all parties and stakeholders..
Furthermore, repeated generic references to the increasing cost -and risk- of financing free supply-chain credit and its impact on retail prices may help when suppliers are communicating via mainstream and informal media.

The Savvy Retailer Approach
However, the real opportunity lies available for those retailers that, having run the numbers on the value of 90 days free credit, appreciate the commercial advantage of voluntarily reducing their payment period to a more equitable level, first...

What is 'fair payment'?
The current legislation, here and in France, refers to 60 days as being an appropriate period of credit.
However, whilst 60 days may be appropriate in 'normal'  B2B relationships, we believe that the payment period should be related to the supply-usage cycle. In other words, as many fast-selling SKUs are delivered daily, and food-based retailers hold an overall average of just over two weeks stocks, we would submit that 15 days credit (net) in the case of such supplier-retailer commercial relationships would be more appropriate.

Incidentally, for those NAMs that have a gap in store-visits near the Houses of Parliament next week, the all party inquiry into late payment takes place next Tuesday, April 23, at the Houses of Parliament’s Grimmond Room, Portcullis House, between 2 and 5pm.....

Retail Score: Tesco (£1.2bn), Goldman $1.2bn

A Reuters review of six years of filings with the SEC shows the many ways Goldman Sachs managed to earn more than $1 billion from its dealings with Dollar General.

Here are the back-of-the-envelope calculations that show how Goldman did it. (April 10, 2013)

Who says all the potential has gone from retail...?

Tesco Ground Clearance - Non-partner suppliers?

With their latest results revealing the first profit fall in 20 years, it is obvious that Tesco have used the opportunity to announce the clear-out of non-performing assets such as US operation, UK property write-downs, and potential sale of 100 sites it no longer plans to develop.

Logically, this ‘clearance process’ could now extend to non- performing brands and products, resulting in a review of supplier-partner relationships with a P&L by supplier as the ultimate measure…

A way forward?
While others may be scratching their heads and wondering what went wrong, proactive NAMs could benefit from re-auditing their Tesco relationship, reassessing how they well they match the new Tesco austerity-profile, the extent to which they and Tesco are compatible and complementary, compared with other suppliers in the category, and explore potential synergies…

In other words, imagine you are pitching for the Tesco business for the first time, taking a totally fresh look at the company’s market potential and financials, comparing with competitive offerings currently available, all from Tesco’s perspective…then find a way of optimising the potential...

Creditors pay £1bn for retail failures, enough said?

Creditors, such as suppliers and landlords, are likely to have lost more than £1bn from the retail sector's 20 biggest insolvencies since the start of last year, according to the credit information specialist Company Watch, just published in The Independent.

This figure obviously represents just the tip of the iceberg, in that many smaller retail business, often below the radar of suppliers have also gone bust over the same period, with the evidence available in the level of  boarded-up high street outlets.

But are we using the correct KPI?

Incremental sales as a measure of Threat or Opportunity
As we all operate sales-based business-models, our only access to wealth generation is via the net profit on sales made to third parties. This means that when we count the cost to us and the value to our business  partners, it is best to calculate the incremental sales of the sum given or received.

Thus the above loss of £1bn would translate into incremental sales of £10bn, assuming all suppliers had a net profit margin of 10%...a mean achievement for many, in the current climate.

Application to the role of the NAM
Apart from being responsible for the early warning when a customer is in difficulties (demands for more credit, cash–based incentive, lack of compliance….) the NAM is also the one who has to generate the incremental sales via other customers when the liquidator intervenes. (Can you imagine anyone else generating extra sales?)

A reflex-calc for NAMs?
For this reason it is vital that NAMs calculate their company net profit margin and factor in the resulting incremental sales requirement when ANY money is invested in a customer, whether via free credit, settlement discount, trade funding or deductions.

In other words if your company makes a net margin of 5%, you need incremental sales of £20k for every £1,000 invested in a customer… (£1,000/5) x 100, which needs to be  a reflex-calculation for every pound spent…

Incidentally, on the Opportunity side, your retail customer with a net margin of 2.5% needs to appreciate that every £1,000 you invest in their business represents incremental sales of £40k…more valuable than they think, in these uncertain times?

(For this reason we have added an automatic incremental-sales-multiplier for supplier and retailer to many of NamCalc’s 32 tools) 

'Settlement fees' for early payment

Given that some retailers are offering suppliers earlier payment for a discount, it might be helpful to run the numbers and explore the financial impact on a supplier.
Assumptions
-  sales of £1.5m per annum to the retailer
-  current payment period                                 75 days, net
-  Discount for 21 days settlement                    5%

Customer now pays in 75 days
We want him to pay in 21 days
i.e. a  54-day reduction in payment period

Customer now pays 4.87 times per year i.e. 365/75          

We want him to pay 17.38 times per year i.e. 365/21              
Amount he owes us when paying in 75 days
= £1.5m/4.87 = £308,000
 
Amount he owes us when paying in 21 days
= £1.5m/17.38 = £86,306

 Cashflow saving = £308,000 -£86,306
    = £221,694
Settlement discount for 21 day payment
                                                                 = 5%   i.e.              (5% of £1.5m = £75k)
Cost of the 5% settlement            =  33.8%                (£75,000/221,694) x 100  
i.e. the supplier is paying 33.8% 'interest' on the cashflow saving

Supermarket copy-products: compounding the horse-meat aftertaste?

The latest Which? report on the supermarket practice of designing own label pack-graphics that keep them out of court, - just-, provides a good illustration of retailers' inability to appreciate that the 'letter' of the law has very little relevance in marketing and branding...

On the contrary, in preserving hard-won brand integrity, suppliers have learned that keeping within the 'spirit' of the law is a fundamental part of the unwritten 'contract' made with the consumer, and is in fact, the raison d'etre of branding. 

Sure, many suppliers can be easily intimidated into not litigating in cases of 'crossover' pack designs, and expensive legal help can optimise the hair-splitting in-court encounters with those that insist on making a stand, publicly..

However, the real issue is the damage caused to a retailer's integrity-image by being seen to be the party to a deception, a misleading impression affecting the consumer-shopper in the aisle, already busy second-guessing the content of their private label burgers...

The emergence of the super-savvy consumer-shopper, coupled with the aftermath of the horse-meat scandal, now makes it even more imperative that a retailer prevents what could be a tell-a-friend endorsement morphing into a 'tell 10 friends' criticism...
....thereby converting a raison d'etre into a raison d'eath...