Argos squares up for Amazon battle

With like-for-like sales rising by 5.2% - its best performance since 2006 - in the final quarter of its financial year, coupled with a better than expected profit forecast (results due Wednesday 1st May) of £90m, Argos may be on the way back...

However, Argos-watching NAMs may feel that this recovery may be more a reflection of the demise of Jessops and Comet, than improvements in state-of-art retailing expertise...

According to a report in The Telegraph, Argos are planning  to spend £100m in each of the next three years to put the retailer in shape to battle with Amazon by converting its 700 stores into 100 “showrooms” and 600 click & collect sites, and providing advice from customers assistants.  .

The real issue has to be Argos ability to compete on an equal footing with Amazon and increasingly Tesco, a daunting prospect given their head-start in offering a combination of speed, (1-click) service, multi-channel access, pricing, and increasingly click & collect.

Whilst Argos' commitment to the new show-rooming initiative, combined hopefully with high grade store advisors and efficient click & collect, could offer an initial advantage, anything less than state-of-art performance will result in Argos having to fall back on price and range in attempting to grow sales at the expense of two of the leading players in the market.

However, the fundamental issue for Argos and its suppliers has to be its emphasis upon private label, planning to double its current 15% of sales to a third by 2018, in categories where retailer brands are not an obvious choice.

Given that much of Argos success will depend upon brands' collaboration, they may find that supplier NAMs may prefer to work in the heat of the kitchen with Tesco and Amazon, a place where consumers actually come to buy brands...  

How Cinema should be,,,?

Customer engagement at the Komedia Cinema, Brighton
A pointer for cinemas everywhere?

Converting showrooming into buying instore - a proactive role for brands and retailers?

Among those who showroom, two thirds use their phone whilst doing so, providing a major opportunity for brands to interact with consumers via mobile and turn browsers into buyers, at point-of-sale…

TNS’s latest annual Mobile Life study, based on responses from 38,000 people in 43 countries, shows that whilst showrooming is a very real threat, mobile can offer a solution to brands in minimising this risk. 

The study also shows that people are open to engaging with brands whilst in-store, with more than one fifth of smartphone owners keen to receive mobile coupons whilst shopping and a similar proportion interested in apps that help them navigate the store they are in, as they respond to the biggest drivers for showrooming:  reassurance on price and reassurance on suitability....

However, the key for suppliers and retailers is to resist the temptation to alienate via instore information-saturation, whether physical or online... Converting such potential ‘interruption-marketing’ into ‘permission-marketing’ can be achieved by clear announcements – physical signs, audio and online- that free wifi is available to facilitate online comparison, along with e-advice from both the stores site and brand-owners, all accessible from easy-links at point-of-sale, for those that choose to use the facilities….

In other words, retailers need to be encouraged to optimise this physical encounter with a showrooming shopper by getting their consumer-engagement right, making it easier, more convenient and worth a small premium for the potential purchaser to complete the process at that point, rather than giving the almost-completed sale to an online competitor, for a few pennies less…

Meanwhile, brand owners can help by attempting to measure the maximum price-difference that will just about prevent the showrooming shopper from going elsewhere to complete the purchase

Getting it right will benefit all parties…
 

Why the world loves Clarks and its shoes as it nears its 200th anniversary

                                                                                                        pic: Brian Moore
Obviously they make a good shoe, but I have always attributed Clarks’ success to their unique approach to two key factors – their design philosophy and trade management model.

How they design shoes
Essentially, Clarks design shoes from the inside out in terms of starting with a good fit, with appearance coming later. This is in contrast with more stylish continental shoes that start with appearance and work from the outside in, sometimes with unfortunate results in terms of comfort.

As their children - and their shoe requirements - transition to early teens, anyone with teenage daughters- or even grand-daughters - will appreciate the difficulty in persuading them to accept anything even remotely connected with ‘Clarks sandals’

Thus Clarks ‘loses’ the satisfied user for the vital middle years..

However, with age, the increasing need for comfort means that they pick up that same child in her mid-forties, thus realising the remaining life-time value of their users…

Filling the gap between childhood and middle-age has always represented a marketing challenge for Clarks (more on this ‘gap-filling’ and how this family firm has beaten the ‘3-generation’ rule, here)

How they manage the trade
From a retailing point of view, Clarks again have a unique approach. When the new season’s shoe-models have been approved, sufficient quantities are made to facilitate a series of viewings at selected hotels around the country. Shoe retailers are then invited to their nearest venue, are shown the range and are invited to commit on their requirements before leaving the premises… From experience the retailers know there are limited opportunities to go backwards or forwards on order quantities as the season develops.

When all the orders have been received, Clarks buy the leather and manufacture the shoes…

Meanwhile, where have the rest of us all missed a trade-trick, I ask myself….?

Amazon finally flexes its third party advertising muscles

Google knows what people are searching for. Facebook knows what people like and who their friends are. Amazon knows you searched last week for running shoes, but also that you bought a pair a year ago. That kind of information makes a difference, especially for third party advertisers....

How it works
After running ads on its own website for years, the company has taken the first steps toward becoming a true Internet advertising network, using the knowledge garnered from its data to place targeted ads for some of the world's biggest advertisers across thousands of other websites. It buys ad inventory - or online ad space - from content publishers or through exchanges, which are online markets for buying and selling inventory.

Amazon quietly started serving ads on other websites in the fourth quarter of 2010. This part of its business remained un-named until about the middle of last year, when the company formally christened it the Amazon Advertising Platform.

Another $1bn revenue stream for Amazon?
Numberswise, online advertising has 20 to 30 percent profit margins versus less than 5 percent for Amazon's retail business, according to Ben Schachter, an analyst at Macquarie. Moreover, with predictions that Amazon's ad business will hit $1 billion in sales this year, the attractions are obvious. "Amazon is not a retailer anymore, it is the largest behavioural marketing company in the world," said Yaakov Kimelfeld, chief research officer at Kantar Media Compete. "Amazon will be the best positioned to predict whether to buy inventory or not and be the most efficient in this market."

A step closer to 'permission marketing'?
The real potential for advertisers lies in the fact that regular users do not regard 'Amazon' advertising as an intrusion, given the precision of its targeting... It therefore fits well with Godin's philosophy that marketers should obtain permission before advancing to the next step in the purchasing process, in contrast with the 'interruption-marketing' of traditional media. Amazon's approach can be a step forward for advertisers wishing to open a willing dialogue with consumers that want to buy..

The 'superfluous 50%' of advertising....
The Amazon move does not bode well for traditional media. If we take the old advertising maxim: '50% of my advertising is wasted, trouble is, I don't know which half...' literally, it means that advertising impact can be achieved with 50% of the spend, if the waste can be avoided. As a result, the precise targeting based on the Amazon model will mean a significant reduction in advertising expenditure, even if the reduced budgets go to traditional media. However, if speed and flexibility becomes a requirement in optimising real-time purchasing data, then traditional media may again be found wanting... With the reduction in its advertising 'lifeblood', traditional media may have to resort to the 'cover-price' to restore viability, or make a fundamental 'e-assessment' of their ability to meet real consumer need......

The amazonian-advantages for advertisers should go without saying.....

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.....