Who owns the Consumer?

Building on Seth Godin’s idea about ownership of customers it can be useful to compare UK retailers’ shopper-insight with that of a brand owner…

Retailer’s knowledge of the consumer:
- Name, address, age, sex, family size
- Occupation, income
- Health, insurance cover
- Finances
- Shopping behaviour
- Pass-times/hobbies/travel-behaviour

Supplier’s knowledge of consumer:
- Little grey-haired old lady, living alone (with dog + 2 cats) on the outskirts of Oxford, 2 children having left home…

If knowledge defines ownership, who now owns the consumer..and sells everything a consumer needs…?

Moreover, are we as brand owners capable of managing a retailer’s degree of consumer-shopper insight?

M&S extension of credit period 'in line with industry standards'...

Britain's biggest clothing retailer has allegedly sent letters to its 500 general merchandise suppliers on September 5th outlining the new terms. About 50 are in Britain.

Freight-on-board suppliers' payment terms were lengthened to 75 days from 60 days and full-service vendors, which transport, store and deliver the goods, will have their payments times extended to seven weeks from five weeks.

Incidentally, some major retailers work with banks to negotiate preferential lending rates for their suppliers, where selected suppliers are able to borrow against their sales invoices to the customer to ease their cash flow. As you know, this 'factoring' process, whereby an invoice is 'sold' to a financier for a discount on the invoice value, represents an additional cost of doing business, and should be an essential part of your personal tool-kit in these unprecedented times...

In other words, depending upon your credit-worthiness, suppose a 50-day invoice is factored to pay in one day, and the discount is 2.5% off invoice, the cost can work out as follows:

Assumptions:
Supplier's 'normal' cost of credit from a bank is 8%, and the invoice is for £250k, payable in 50 days.
Therefore the supplier is paying 2.5% i.e. £6.25k for the use of £250k for 50 days, which is equivalent to £45.6k for 365 days i.e. 18% is the annual cost of the money

Suppose a retailer moves their credit period from 35 days ( i.e.10.4 times/annum)  to 49 days (i.e. 7.4 times/annum), then the additional cost of credit works out as follows:

Say cost of credit on £250k for 365 days @8% per annum is £20k i.e. £250k x 0.08
Then the cost of credit for 35 days is   £1.9k i.e. £20k/10.4
...and the cost of credit for 49 days is  £2.7k i.e. £20k/7.4
Therefore the additional cost of moving from 35 days to 49 days is £0.8k on a £250k invoice

So the real issue is whether you negotiate with the retailer, or the bank...

Your choice, but at least an understanding of how to run the numbers puts you in a better position to negotiate, unless of course you prefer to operate in the dark.....?

Think you are Bluffing the Buyer? - The Myth of the Poker Face....

For those of us that think the role of KAM has become a game, with many of the attributes of poker, then latest research on the value of a poker face may save some disappointment in your next negotiation session…

A maxim of poker is to play your opponent, not the cards you’re dealt. A good player scruitinises opponents for clues: A slight wince may reveal that an opponent did not get a hoped-for card. Sitting up straighter could hint that he or she intends to make a big move. At the same time, a good player wears a poker face that reveals no hint of his or her true emotions.

But is it a myth? Can a social animal like a human really perform the sophisticated double task of keeping their face a mask while reading their opponents?

Holding a poker face is possible, but attempts to control the internal experience of an emotion “either fail to decrease or paradoxically increase emotion experience.” So trying to restrain your own nervousness while bluffing can only increase it, making it even more difficult not to reveal.

The research concludes that when it comes to identifying slight signs of emotion - the hints revealed by a careful player - someone trying to hold a poker face is more likely to miss them.

In other words, when next sat in front of the buyer and you are attempting to make a ‘take it or leave it’ offer, forget about trying to read the buyer’s reaction.

Instead focus on maintaining a poker-face regardless, hopefully causing the buyer to miss the subtle signs of your inner turmoil and anxiety at this ‘factory closure’ moment… 

Tesco builds flats above their shops

Bustling about in hard hats and fluorescent jackets, builders employed by Tesco are putting the finishing touches to a 60,000 sq. ft. Tesco store and 250 apartments that sit above, behind and beside it.

Living above the shop is very much back in fashion as supermarkets lead the development of thousands of homes in their latest tactic to secure new sites. As a consequence, the race for market share among the UK's largest retailers is inadvertently helping London chip away at a housing shortfall that equates to at least 32,000 new homes per year.

Tesco’s huge projects in Woolwich, Highams Green and Streatham are merely paving the way for a wave of supermarket-led home building projects which will flood across the south-east. More than 4,500 homes are being planned by the big five grocers in London alone over the coming years, according to property advisor CBRE, while construction market analyst Glenigan estimates supermarkets will be laying the foundations for more than 2,100 homes in 2014. After completing the development, Tesco remain the main tenant and occupier for years, so they have an added incentive to make sure these are developments of the highest quality.

In other words, a major innovative move, meeting a real shopper need…

The initiative has echoes of 7-11 practice in Tokyo of taking the ground floor area of high-rise apartment buildings, just to be close to convenience customers. In fact, there the idea has been so successful that 7-11 is referred to as ‘The Refrigerator’ by tenants living above the store in typically small Tokyo apartments where space is a premium. In other words, tenants can run stock levels of milk in their apartment to a minimum, knowing that top-up is merely a lift-run away…

On a personal note, having lived above my parents’ Mom ‘n Pop store for most of my childhood, nothing beats the convenience of nipping downstairs for an impulse refill when the need arises…

A no-brainer for the mults…

Fancy a historic store-check via Sainsbury's reopening of first supermarket site?

Sainsbury’s has gone back to its roots today with the opening of its new West Croydon Local store. The new convenience store, which is on London Road, is on the same site as one of Britain’s earliest ever self-service supermarkets. It was the first store to be converted to self-service in 1950. This innovation was the idea of Alan Sainsbury, grandson of founder John James Sainsbury, who decided to launch the format after visiting the United States to study retail. At that time most store were counters where customers gave staff their shopping lists and waited whilst their goods were packaged for them. This new format put the power in the hands of the shopper making it a much more enjoyable experience for customers.

The original self-service process (click for larger image)
   

Win a few, lose a few…?

The only drawback was the fact that some shoppers took self-service literally, and thus ushered in the era of shrinkage…

When less is not more: How small packs work out cheaper than bulk-buy deals

Product	Store	Big pack	Small pack
Cathedral City Cheddar	Asda	£6.98 (2x 350g)	£2.00 (350g)
PG Tips tea bags	Asda	£4.68 (160)	£2.00 (80)
Nescafe coffee	Asda	£11.50 (500g)	£5.00 (300g)
Clover spread	Asda	£3.70 (1kg)	£1.00 (500g)
Loyd Grossman Sauce	Tesco	£2.79 (660g)	£1.00 (350g)
Napolina Olive Oil	Tesco	£6.49 (1 ltr)	£3.00 (500ml)
Mild cheddar	Sainsbury’s	£3.10 (400g)	£2.05 (270g)
Filippo Berio Olive Oil	Waitrose	£7.59 (1 ltr)	£5.49 (750ml)
Absolut vodka	Waitrose	£19.60 (700ml)	£9.00 (350ml)
Scottish Still Water	Sainsbury's	79p (750ml)	45p (500ml)

                                                                                                         
Source: Daily Mail survey

The mismatch tends to happen when supermarkets cut the price of small packs for a temporary promotion – or to match reductions at a rival. Whilst the mix-ups are understandable, the real issues are the impact on the savvy consumer-shopper and probable distortion of demand.

However, apart from an inevitable spike in small-pack sales for the duration of the price-cut, retailers need to monitor the effect of the resulting suspicion and lack of trust in terms of impact on shopping behaviour for the remainder of the shopping trip.

For suppliers, the issue is more about the extent to which the shopper blames the brand, rather than the store...

…and since you are probably picking up the promotion-tab, perhaps it is time to add multi-size analysis of unit prices to your promotional checklist in assessing the ROI on the initiative…? 

Pop-up Britain - Piccadilly flagship for pop-up shops

Popup Britain, the retail arm of national enterprise campaign StartUp Britain, has opened a flagship store in Piccadilly to offer 30 retail start-ups a week-long opportunity to sell their products.

At No.231 Piccadilly, 20 paces from Piccadilly Circus, pop-up shops are given an opportunity to check out what difference a prime, albeit temporary location will make for their business idea...
Last week's pics express it well:

                                                                                                     pics: Brian Moore

A variety of retail ideas, but the prize for innovation has to go to the SWIG Hip-flask company, a space near the door, and a bespoke title to mark the occasion at Swigadilly Circus...

Worth a pop-in on your next West End store-check? 

OFT: Furniture stores used fake prices - the anti-marketing strategy?

As any supplier knows, the combination of efforts required to grab a consumers attention, in the most overloaded media environment ever, attempting to communicate with the most savvy consumer-shoppers on the planet, served by 24/7 access to price-comparison facilities, as short of time as they are of money, getting awareness of the fact that their needs for a solution - not a product - could be met by your offering, attracting them to the right store in terms of range and offering that is a better combination of Product, Price, Presentation, and Place than is available via comparable competition, persuading them that fulfilment will meet expectations, and getting the money represents a monumental achievement!

To then fritter away the achievement via a cheap intelligence-insulting price deception, is incomprehensible....

This has to mean that these retailers are bypassing the savvy consumer-shopper pool and are in fact aiming at the remainder, those folks that know no better, probably have less discretionary spending power, but do have the means and ability to complain to their friends, and even to the OFT...

At least it makes the rest of us look good.....!