Thursday, 19 June 2008

retail bank, furniture store or traffic department?

there is a famous saying that goes something like…

“marketing is the most important function in any company, far too important to be left to the marketing department”

this broadened the scope of marketing as well as the responsibility for it. there is a similar move afoot in retail, and nothing demonstrates it better than the recent acquisition of ellerines by african bank. now the bank looks like a furniture store and is a pucker retail environment

contrast this with the major “retail” banking environments. there is little distinction between their branches and the licensing hall at your local traffic department, apart maybe from the quality of the finishes. they provide a good bank but a lousy shop. this may give us some insight into why we hate going to the bank but see shopping as relaxing or even entertainment.

so, as much as we want to improve the experience for our shopper, as retailers, we could show other organisations, like banks, a thing or two about people, product and space.

pick n pay made a customer promise a few years ago that the manager will always be available, and will spend most of his time on the sales floor. in the bank, the manager is furthest person from the customer. the only time you get to see her is when you are in trouble.

another promise, made by many grocery retailers, is that the moment there is more than one shopper at a till, another till will be opened until all are open. imagine a bank where all the tellers were open.

in a fashion retailer, the shopper can interact with the product. he can look at it, touch it, price it and try it on. think of all the information that he can gather from this process…colour, size, style, fashionability, fabric, quality, price, fit… to name a few. the challenge for the bank is to find a way for him to easily gather enough information to make a decision. if a bond or a savings account was a thing, what would it look like?

these are just a few of the thoughts i have had when pondering the question…

what would my bank look like if it was run by a retailer?

for those non-bankers amongst us, replace the words “my bank” with “my office”, “my reception”, “my department”, “my charity” or anything else for that matter.

would people want to come to it?
would they easily find what they needed?
would the offering make sense to them?
is the balance between self service and assistance correct?
would they be happy to give you what you want in return for what they got?
would they come back?
what would your returns percentage be?

…worth a thought

Sunday, 8 June 2008

if i wanted trailers, i'd have gone to the movies!

i have written previously about the story we tell our shoppers. i believe that this story has to be constant and consistent. that each retailer must be able to be relied upon to deliver something. a cold and pretty miserable weekend in cape town reminded me of the effect we have when we disregard this in favour of the corporate greed story.

i have two beautiful daughters and regard myself as a hands-on, enlightened, modern etc etc dad. i must admit, however, to having resorted to renting dvd's for the girls to watch, just to give my wife and i a break. we dont have a television, so these dvd's are played on a laptop in the lounge. i am constantly annoyed by how long it takes to actually begin watching the movie from the time i insert the disc. now, i am not sure if you can avoid the experience when watching on a conventional dvd player and tv combo, but on a laptop you may have to wade through between 4 and 10 trailers and adverts, before you can settle down to watch what you bought or rented. the adverts normally include a pretty scary and disturbing anti-piracy advert, and occasionally include an inappropriate trailer.

my friends know me as the guy who actually purchases all the music and movies in my possession. some regard me as antique or even quaint. i just failed to believe that, as napster and torrent so convincingly taught, from this point hence all music and movies are free.

now to the subject of my gripe. i pledge to purchase or legally rent all the movies we watch. in return i would like to be entertained.

i do not however want to be sold to!
i have already paid!

the amount of selling i am subjected to every time i put on a dvd for the girls, makes me wonder why i don't just copy the movies off the network. "coming fall 2005" doesn't quite have the same ring in the southern hemisphere winter of 2008! it just builds resentment.

how often do we just disregard our story to see if we can get a few extra rands out of a shopper? woolies do it consistently with their hell run of sweets. just thank the shopper and ask them to come back. they are worth much more, over their lifetime with you, than a hard sell impulse buy. remeber your story, tell it at the point of sale! besides, if you push shoppers too far they may just stay home and download a pirate copy!

what's a wienie?

as a rule i am trying to publish original and insighful content. i do however come across some great content and this one i felt was worth sharing. do you have a wienie?

what is a wienie anyway?

have a great week!

Tuesday, 27 May 2008

a view on costs

in these times when shoppers are scarce we are often looking for ways to cut or fix costs. this allows companies to guarantee the percentage return for shareholders. i was recently reminded of two ways to do this.

a friend of mine works for a company that totally “zero-bases” their budgets every three to four years. this stops costs from growing just because they were there the year before. the slightly more controversial part of this process is that it is accompanied by a condition that the new budget includes a 10-15% decline in headcount.

the other way, which may sound simplistic, could also be used to motivate staff. the objective is to compress your costs and revenue into a work day. then calculate at what “time” you start to make a profit. a recent example showed profit generation starting at 4:55 pm…pretty scary

i find this method useful as it implicitly associates costs with time. the biggest costs stand out when put into something as finite as one work day. projects can then be initiated to address specific costs. for staff, targets can be set to move the “profit time” by for example 2 minutes, which in turn is linked to an increase in profitability…

Thursday, 15 May 2008

traders and whitecoats

just spent an amazing evening with two principal scientists from oracle retail's optimisation solutions group in cambridge massachusetts, usa. their names however, would not have been out of place in the line-up of the rajasthan royals, or any other of the ipl teams for that matter.

they both had phd's from ivy league schools and work in a team of 35 phd'!
their grasp of inventory theory and levers that affect retail sales was fantastic. their ability to systematically break down a complex problem into its component challenges and put these challenges into a logical order to solve, was simply brilliant. the intelectual intimidation factor was high.

we discussed size curve optimisation , markdown optimisation and replenishment optimisation, over some great food and red wine. for any person who enjoys intellectual jousting and floyd, it was heaven.

i am discouraged by the gap between these guys and the people who run retail. the retailer is notoriously "technology-phobic", and instead of recognising this, the technologist has filled the world with three and four letter acronyms, and gave the world the dot-com and bomb. as a result, technology is often seen as a neccesary evil.

the tragedy of this outcome was evident to me tonight. here were two guys who could save/make a retailer a large amount of money, without changing store, product or people. someone who trades just needs to guide them, listen to their logic and trust their solutions.

i challenge you to find the "propeller-head" in your i.t. department, or even an oracle scientist, call her in, and really try to understand what she would like to could mean a lot of money in these lean times.

the job of the techies amongst must however be to make themselves "understandable" to the person who sells the more tla's!!!

Friday, 9 May 2008

Chocolate chicken?

i saw this in the pick ‘n pay store in willowbridge a week or so ago. those chocolates are R60 a box and yes, those are fresh chickens and dustbins beside them.

a wise person once told me that you cannot complain about your shoppers’ perception of you…you gave it to them.

we give them these perceptions by consciously and unconsciously telling them stories (recent post). we tell them in adverts, windows, store fittings, staff greetings, product range, pricing, the events we sponsor, radio interviews…even product adjacencies. what perception does the scene above create?

i am a big fan of pick ‘n pay, and raymond ackerman in particular. mostly it is because of the consistency over years, of the story he has told. we now “inspire him”, but he has always been “on our side”. he has been relentless in telling this story. we believe him too, as is evidenced by the massive support pick ‘n pay received during the extortion incident.

this week he penned an article in the cape times. in it he outlines what has to be done by the suppliers, retailers and the government to help us deal with rising food prices.

my concerns about the new story and the attempt to chase the wealthier consumer are twofold.

firstly, is it possible change mrs jones’ view – she totally buys that pick ‘n pay is on her side and i am not sure she wants a new story.

secondly, it is going to require a huge effort to get the story consistent across all the communication channels.

i am rooting for you mr ackerman and so, i am sure, is mrs jones (we always support those on our side!).

for the foreseeable future though, i will be getting my luxury food items from woolies….

Sunday, 4 May 2008

who's that lady in the umpire's chair?

welcome back!

it'll be interesting to see what all those public holidays did for retail sales...i was in cavendish today and was completely underwhelmed by the amount people shopping. during my time off i spent some time building a website for
ker!ching. it's not going to win any awards but it is better than "the future home of..." that was there before. let me know what you think.
now for today's post...

i am a firm believer in concentrating on your offer and making it unique, rather than worrying about the competition. there is something i want to write about competition though. i have been into more and more stores recently where there is an elderly lady sitting on a tennis umpire's chair just inside the door.

these stores invariably have the word "china" in their name, and this old lady is their equivalent of the cctv camera. by way of example, i have been in two stores in particular, one in port alfred in the eastern cape and one in belville, between the middestad mall and the taxi rank. their assortments and pricing are very similar - and yet they appear to be family run businesses. mom is behind the till, the kids on the sales floor and of course, gran up on high in charge of shrinkage prevention. the question i have is "what is the relationship between these stores?"

bigger retailers know their competitors... their stores have similar signage, employees cv's come across their desks, their results are published in the press. people like raymond ackerman, whitey basson, doug murray, steve ross and many others have media profiles.

the problem with the "china shop" is not that we don't know anything about it, it is that we aren't trying to find out. who's doing the buying? who's doing the planning? where are the dc's? if they are family businesses, who is financing them? (i have even heard rumours of mafia involvement) what are their maintained margin targets? etc etc etc.. my point is simply that we study our traditional competitors very well, sometimes only because they are visible.

i hope to learn more about the "china shop" retail chain but encourage all retailers to look beyond their "old foes"...

Tuesday, 22 April 2008

49 cent grapefruit

in the early 1950's there was a humble grocery store on lenox venue in haarlem, new york. it was run by a jewish immgrant, leo. he had come to america at the age of 5, from budapest. his son, calvin, showed a keen interest in the store and used to work there. he once asked his dad why some of the grapefruit were 29 cents a pound and some were 49 cents a pound. his father answered "some people like to pay 29 cents and some like to pay 49 cents"

although flippant, this is very true. pep sell jeans at 80 rand and true religion sell jeans for about 4 500 rand. some people just want to pay that much for jeans. whether the reason people pay the higher price is real or perceived is immaterial. i hazard a guess that if "49 cent" people found out there was no difference between leo's grapefruit, they would go looking for some. they want grapefruit worth 49 cents and are prepared to pay for it.


a good retailer (or manufacturer) gives someone a story or a reason to believe that will justify their paying over, or even under, the odds for their product.

lindt tell a great story, and for those who don't hear it, they put 70% or 85% in huge bold letters on their packaging. this gives us reason to believe.

the stories we tell our customers have to be real, or as seth would say, authentic. we have to live them, breathe them and keep communicating them. woolworths are exceptional at telling their food story, their clothing story needs work. pick n pay have some way to go if their new story is to be believed in the lsm 8 -10 market - where they want to succeed. they are brilliant at their old story of being on the customer's side. how good is your story?

by the way, that little boy's surname was klein. boy did he ever tell a great story. he sold dresses, jackets, jeans and even fragrances for a lot more than their 29 cents equivalents.

Wednesday, 16 April 2008

who's your partner?

small and big business's alike ponder over whether to invite a partner into their business. that is only the first question, after that come who, what percentage ownership, exit strategy and many more...

there is one "partner" that is often overlooked.

...the shopper...

there are many businesses where customers or potential customers are included in the business. in some theatre productions the audience even scripts the plot as the actors act it out.

so what about retail...

there are two remarkably successful companies and one upstart that come to mind - ikea, zara and let's dish

firstly ikea - their mantra is to provide the the cheapest (well designed furniture) available. their method is to do 50% of the work, and outsource the rest to the shopper, therby ensuring the price is kept low. ikea's 50% is design and maunfacture. the shopper's job is shopping, delivery and assembly. they realise that the shopper doesn't have a truck and that is where flat-pack furniture comes in (part of the ikea 50%). this model is so entrenched that to buy online from ikea costs more than in stores - why? because they are doing the delivery which is the "shopper's job" and so the price has to go up.

next zara - they have built one of the fastest (if not the fastest) clothing supply chains in the world. it takes just over 21 days from concept to store. this allows them to interpret the latest fashion from catwalks and red carpets around the world, and put them in front of the shopper in-store very quickly. in the next stage, store staff feed shopper observations, opinions and insights back to the designers at head office, effectively including the shopper in the design team. the super fast supply chain is then used to fill the stores with up-to-date fashions that the shoppers actually want!

lastly let's dish - here the 29 store retailer provides a venue, ingredients and recipes for home cooked meals. the customer books a two hour session in store and prepares a month's worth of meals which can be frozen and re-heated when needed. they obviously play on health, fresh ingredients, no preservatives etc. but let's dish are effectively a ready meal manufacturer where the labour is provided by their customer.

who best to have a vested interest in your success than your shopper? this besides the fact that people love to belong and to contribute...

is your shopper part of your business model? if not, how would you include her? if yes, tell them, it's worked for these three...

Sunday, 13 April 2008

a bowl of beans

the last time you get to interact, wow, market to, entertain, do something remarkable or just annoy your shopper is when they are giving you money... the till point

this is also a big moment for her as she is giving you something tangible at that point, in exchange for your goods.

this moment is given precious little focus by retailers in general, which brings me me to the bowl of beans. i get my very good morning caffeine from a coffee shop, starlings, down the road. here trish and her team do a number of remarkable things, one of which happens when you request the bill.
this burst of colour arrives in a small white bowl. they have taken a standard practice (mints with the bill) and made it special.
so retailers, what do you give your shopper as she leaves?even if it is just how you say goodbye, and does is set you apart from your competition

Wednesday, 9 April 2008

lords, sirs and bad times

i found myself wide-eyed at the monument to bad 70's architecture that is the london hilton metropole on edgeware road, still reeling from paying 16 rand for each of my few pounds. all around there were signs such as the image below.

i didn't need a second invitation to read this as another chance to bask in the glory of the springboks triumph in the other event that went by that acronym. sport though wasn't the purpose of my visit to the land where the retail industry sustains a weekly printed publication (retail week) which follows its trials and tribulations. i was there for the publication's annual gathering.

i will write more on the two days i spent listening to the british retailers discuss their game, and i will try to draw insights applicable to retail here.

for now though i would like to comment on a theme that emerged from many speeches, be they on private equity in retail, csr, the future of value retailing or any other of the many topics covered.

two words: bad times!

the retail game in the uk, apart from a few shining stars (john lewis partnership a case in point), is batoning down the hatches for a storm that most speakers estimated could last into 2010. this situation has taken the swagger often associated with the lords and sirs that litter british retail, and lead to honesty and frankness during the discussions. all in the audience wanted to know how long? how bad? and what to do?

there was a lot of talk of practical and operational to-do's, especially from charlie dunston of carphone warehouse. the famous buffetism of "only when the tide goes out can you see who's been swimming naked" was even rolled out. if i had to take a strategic theme from the speeches and panels however, it was the overwhelming urgency to differentiate.

differentiate in the eye of the shopper.

when money is tight they need a reason to come to you and you need to be famous for something. it can be location, quality, assortment, service or a multitude of others, but it must be something.

seth godin calls it the purple cow, something remarkable. tom peters calls it the rpov, remarkable point of view. jerry garcia says "you do not merely want to be the best of the best. You want to be considered the only ones who do what you do.”

so it is not a new idea, but it is an imperative in the bad times. shoppers don't buy average when money is tight. ask any fashion retailer and they will tell you that the good styles clear at the same rate as in the good times.

in this country truworths and mr price have carved out spaces that they can largely call their own. this, together with good, honest retail operations, brought them through the last quarter of last year better than most. i recently worked with the brave management of a retail chain who have heeded this advice and i am expecting big things from them.

so differentiate, differentiate, differentiate...the sirs said so!

ker!ching take one

well here we go!

i've been promising to do this for a while now. to write down/blog some of the thoughts and views i have on retail, especially here in south africa.

hugh (one of my favourite bloggers - ) expressed the inertia extremely well on one of his business card cartoons

the fonts, layout, template will change over time as this web 0.1 blogger learns about this media. i don't even know how frequently i will be blogging, but I do know for sure i don't want to be a herb!

i have a load of topics to start with including, and in no particular order:

  • what was said at last month's retail week conference in london?
  • new store ideas/formats
  • who is getting it right?
  • who is getting it wrong?
  • the pick n pay rebranding
  • a view on the sizing debate raging in the press
  • winners and losers in the hard times
  • the plus size market
  • etc.

on some of these i may only come up with a short paragraph and some i could write a short series. i would love you to add topics to this list if you want me to investigate something, or even just want a view - albeit with a large disclaimer.

so here we go!