Le Petit Dejeuner Reverse-Charge?

Joe, a recently retired Dublin grocer, decided to treat his wife Bridget to a long weekend in a Parisian hotel in Place Pigalle, in celebration of their ruby wedding anniversary.

The next morning, pausing only to indulge his lifelong habit of recording the serial numbers of each large denomination euro note in his wallet, they went to a nearby café where Joe ordered a couple of double expressos and some croissants for their sidewalk breakfast.

Asking for the bill, and fully prepared to offer a 10% tip, Joe was surprised at the waiter’s demand for €40, and requested an itemised bill. Pausing only to double-check the price-list on the wall, Joe followed the waiter into the café, in time to see him retrieving a crumpled bill for €15 from the waste bin, and asked him to explain the request for €40…

It was the ‘win some, loose some’ response that caused Joe to try to get even…

He handed over a €50 note, and the waiter offered change for €20… Joe held his ground, demanded the full €35 change and took the receipt, left the café and hailed a gendarme.

Inside the café Joe explained to the gendarme and waiter how he had been charged €40. The waiter insisted he had charged €15, and refunded €5 in exchange for a €20 note, so he could not have charged €40. He even opened his purse to reveal a mix of 50s, 20s and some small change…

Joe insisted he had handed over a €50 note and received €10 change, and even had a record of the serial number…

With a ‘win some, lose some’ shrug at the waiter, Joe pocketed the €50 and left to join Bridget on the corner…..

Moral: Running the numbers and keeping a record can pay off in mini-negotiations...and even the odds in day-job sessions…

Walmart to send automated shopping lists to its mobile app

By crunching data about a customer's buying habits, the store thinks it can pop up the things they'll need to buy. Using its ‘bigger than Pentagon’ database, it will automatically create shopping lists for customers on its mobile app

In so doing, Walmart is endorsing its belief that in-store buying influenced by mobile use is on track to be about twice as big as e-commerce sales by 2016.

The app already includes a shopping-list function, which can tell customers where to find their products in the store and give them relevant digital coupons they can redeem through the phone.

Potential revenue stream in offering manufacturers 'highlighting' of their brands already on list?

Next step automated deliveries unless countermanded?
Risky, but if they get it right….

When the Buyer says your supplier margin is too big....

With retailers struggling on 4% Net Margin, whilst many suppliers are in trouble on anything less than 9%, the buyer may claim that you are taking advantage.

S:   Glad to see you have looked up our latest published accounts. I obviously keep up to speed on your profitability, so now we can jointly explore ways of optimising your net margin, without driving me out of business

B:   Well, you are always banging on about lack of money, so I thought I’d call your bluff: Here you are making 9% and we only have 4%

S:   On the surface, it looks bad, and it had me worried first time around. However, deep down we are each trying to balance reward and risk, it’s just that we work in two  different business models..if you take more risk, you need more reward

B:   How come? …and I haven’t got time for a lecture on finance

S:   No way. For me to understand it, it has to be simple: As a manufacturer, we have to research and invest in product ideas up front, a big risk we are prepared to take, provided we can convince our shareholders that the rewards will be adequate. We also have lots of money tied up in state-of-art plant and equipment, whilst you can operate from leased premises, if necessary…

B:   We all take risks in business

S:   Agreed, but your risk is limited to taking in two weeks stock of our new product, and if our advertising and trade funding is not enough to move it, you can sell it at cost and de-list it. No harm done, except to our bottom line…

B:   Yes, but I could have given that space to something more successful

S:   ….and sacrificed an opportunity to experiment with a bit of innovation that might have given you a competitive edge. But let me explain more about why we need our margin to optimise your profitability…

B:   Ok, I buy the need for innovation, but I need to improve my bottom line

S    Fine, we need to manufacture big runs and hold at least 6 weeks buffer-stock of finished goods to cope with fluctuating demand. This allows you to operate on two weeks average stock. In fact, with our daily delivery of main SKUs, your average stock on our lines comes down to 2.5 days, reducing your risk even further.

B:   More like 3 days, but I take your point..

S:   Great, so when it comes to optimising your profit, the closer we work together, the more we can each make…you make more sales, we waste less money..

B:   How come?

S:   Think about it. Our biggest investment is in advertising (5%) and trade promotion (20%). See, you already get the lion’s share! So if we can coordinate our above-the-line campaigns with bespoke instore activity geared to your traffic flow, we get more for our buck, and the more you optimise shopper demand. Provided you manage potential wastage, the increments go straight to your bottom line.

Buyer:   So what do you need from me?

SuperNAM:   Now you are talking! If you give me guaranteed forecasts, we can optimise factory output. If you can pay a bit faster, we don’t have to fund so much free credit, but the real payoff can be via improved compliance instore…

Adventures of SuperNAM (19)

Differential Euros - how a French euro can be worth more than a Cypriot euro?

As we approach the final stages of EU governments’ efforts to agree to use bank deposits exceeding €100,000 as a means of ‘bailing in’ or rescuing ailing banks, clients have asked for an explanation of how this can result in differing values for a euro within the EU.

When a government raids depositors savings accounts, those who can do so try to move their money overseas. The government is obliged to ban currency transfers to prevent such ‘exporting’ of savings and avoid a run on the banks….

Example
Suppose a Frenchman, Pierre, wants to sell his holiday home in Cyprus for €200k.
He has two bank accounts, one in Paris and one in Cyprus.
Nikos, a Cypriot citizen living in Cyprus, wants to buy Pierre’s holiday home.
He also has two bank accounts, one in Cyprus and one in Paris, but wants to pay via his Cyprus account i.e. in Cypriot euros.
Pierre wants to be paid via the French bank i.e. in French euros, to avoid having the money locked in Cyprus, because of the currency controls.
If Nikos insists on paying in Cypriot euros, then Pierre wants an additional €50k for the flat, as compensation for the risk of tying up his money in Cyprus. 

Therefore Cy€250k is worth Fr€200k …. 

Thinking ahead...
In other words, if it looks like a major bank in the EU needs re-capitalising, and a government bans currency exports, then local euro devaluation follows by default, as the government helps itself to depositors’ savings, like in Cyprus…

Watch this space… 

BOPUT deals - at a checkout near you!

Contactless cards can hit shoppers with an inadvertent Buy-Once-Pay-UP-Twice deal as an extra payment can be triggered without their permission while paying with a standard bank card or cash.

The system, which can be used for goods worth up to £20, is supposed to work only when the cards are placed within two inches of special terminals at the checkout. But customers who got in touch with the Money Box show on BBC Radio 4 allegedly said they were charged when the plastic was in their purse and well away from the readers – meaning they unwittingly paid twice.

An article in the Daily Mail details shopper experiences in discovering the errors and obtaining refunds, and quotes the UK Cards Association’s suggestions that cardholders should not to put their wallet down in this quite narrow field when they pay.

Reality check!
Given that many shoppers may choose to hold their purse in one hand while multi-tasking                                (packing/coupons/babies/cash-back/loyalty points…) at the checkout, and even use their purse-hand to shield PIN input, it seems unreasonable to expect them to also remember to hold the purse at arm’s length, 'out-of-sight', away from the terminal…?

Action
Taking into account the fragile level of acceptance and relative novelty of contactless payment, retailers need to find ways of identifying the scale of the problem –‘naïve’ shoppers will expect that computer screens will simply reveal duplicate payments at a checkout terminal and in retailer records – and make immediate refunds, rather than await the inevitable build-up of creeping suspicion, and suffer the loss of business to ‘old fashioned’ competitors that still rely on personal contact…. 

Porsche gatecrashes Aldi – the ultimate in hard discounter pulling power?

                                                                                        Picture: Twitter / SarahGPuetz
Speaking to the Carmarthen Journal newspaper, store manager Tom Jones (!) said: "The chap who had the crash had just bought the car, and thought it was in reverse…..”

Reminds me of a pal in the City who picked up the keys of his first Porsche and couldn’t resist leaving work early. He went to the underground garage, switched on, touched the accelerator, shot up the ramp, took the gate off its hinges and ended up on the other side of a fortunately quiet, mid-afternoon street….

All goes to show, like in negotiation, power is often better implied than applied…

But now and again, giving it full throttle can be fun….

Have a powerful weekend, from the NamNews Team!

Trade Issues and the NAM – How Much Should You Know, or Care?

Given the unmapped rate of change in these unprecedented times, keeping up with the issues has become virtually impossible.

As the resident company expert on the retail scene, you are meant to have factored key issues into your trading strategies, with the lack of such foresight becoming obvious only in retrospect.

This means developing the ability to quickly evaluate individual issues, using the following approach:
- What is this about?
- Where is it headed?
- How does it affect me?
- What to do about it?
- How to do it?

In other words, be able to see what's coming and see what matters

For more on application, see this month’s NamNews editorial May 2013

Forgotten Underground Edwardian shopping arcade in West Yorkshire as traffic builder?

                                                                         pic:  Nick Catford, Subterranea Britannica
During renovation of the Royal Arcade in Keighley in 2003, a lower level of Edwardian shops was found underground during the clearance of the basement area.

The original Royal Arcade was built in 1901, the year Queen Victoria died and Edward VII came to the throne. Gott and Butterfield ironmongers moved in, and it was popularly known as Butterfield's arcade
The shop, once described as an Aladdin's cave selling household goods, bicycles and camping equipment, closed in 1983

Now Nick Holroyd, manager of the Royal Arcade, which is situated above the discovery, is investigating whether the street - once at ground level - can be restored. He has enlisted an architect and structural engineer - and plans are being made to develop the street, which has space for up to eight units.

Given that many high streets have long histories, perhaps there is scope for incorporating a high street’s origins into plans to revitalise town centre shopping areas, and possibly capitalise on the consumer’s current retro-appetite?

A pointer for major multiples seeking 'non-commercial' projects?

For full details including 27 pics and two 1890 site-plans, here 

Incidentally, if going underground seems like a perfect antidote to these unprecedented times, visit the home page of Subterranea  Britannica here