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.

why?

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...


...at 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 -http://www.gapingvoid.com ) 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!