May 6, 2014 | Change, Management, Marketing, retail, Small business
Courtesy High McLeod @ Gaping Void
Retail has changed, very quickly and in a fundamental way, but not for everyone.
Retailers, the blokes with the bricks and mortar still hold sway in most markets, but to varying degrees, and can continue to do so if they are as smart as they have been in the past.
Consumers no longer have to go down to the store to buy much of their stuff, their store increasingly is in the palm of their hand. That is fine for cameras, refrigerators, and perhaps baked beans in a can, but not so good for fresh produce, meat, fruit & veg, and dairy, categories that are driving the profitability of supermarket retailers.
If we know anything, we know new models will come to light.
In the past, producers needed retailers to break down their bulk product, whether it be jeans, baked beans or refrigerators, and sell to consumers, but now consumers can go direct. So, it is not just the retailers who face change, it is the producers.
Held to ransom for years by retail that in effect sold them retail real estate while selling to the consumers, suppliers have some leverage back, and a few of them are game enough to love it.
The question both needs to answer is how they can best meet the needs of the newly empowered by information, consumer, who does not really care who supplies them the product, it is just about the convenience, choice, delivery and price of a transaction.
Looked at from this perspective, the retailer has a role to play in the relationships consumers have with brands, and suppliers, but they must make their money from a different model, one that relies on the manner in which they “touch” the sales process, rather than being the one solely in charge.
Sales leads that come from social media and the web are still just as likely to generate a sale in a physical retailer as they are on the web, and given that web sales are still a small proportion of total sales, using the web should be a seen as an opportunity, a bonus, not a threat, as Tesco in Korea has demonstrated.
It is perhaps telling of the times that the ACCC is mounting a case against Coles for beating up on its suppliers to improve its earnings. Nothing new there, but Coles management has an obligation to maximise earnings for shareholders.
The horse has bolted.
SME’s in the Australian food supply chain are now a rare breed, killed off my the high $A, retailer housebrand strategies, the scale of multinational competition, and poor management. The two retailers seem to have realised that without local supply, their long term options are limited, and so seem to be softening their short term demands in recognition that the sustainability of the food production value chain is in their interests.
PS Earlier today, after the initial publication of this post, I became aware that Big Sister Foods had been put in the hands of the administrators. While Big Sister is an Aussie company, part of that small club of natives, it spent 20 years as a part of Reckitt & Coleman in the 70’s and 80’s. Sadly I am not surprised, as their current website is about the worst I have ever seen, perhaps indicative of the declining state of the business.
May 5, 2014 | Change, Communication, Social Media
The Atlantic has made the call, at least asked the question.
Is Twitter dying?
I have no idea, as I am not a real twitter fan, never have been, simply because I do not see the sustainable business model yet, although there is no doubt of the disruptive impact of twitter on traditional media.
The thought of spending more of my most valuable and finite resource, time, on a platform that can deliver numbers, and can deliver with work some semblance of a community has never grabbed me, as the opportunity cost just seemed too high.
Surviving on advertising in a world where advertising space is now close to infinite, and thus almost worthless unless you can employ a degree of targeting that requires a degree of engagement that usually only comes from an existing relationships seems fraught with the sorts of hooks snake-oil salesmen use to catch the unwary.
Perhaps I am just getting old.
What twitter has done, which has benefited all of us is to highlight the value of condensing a message into its core, distilling out all the verbal trappings we often add in that really add no value. In addition, there is no doubt that the immediacy of twitter has played a vital role in getting information out about nasty, momentous, and often funny things that happen. The first time this was evident to me was the London bombings, when news came out via twitter way before any formal network could work out what had happened, and since then, Twitter has been the newsbreaker on almost every occasion.
So, I do not think twitter is dying, just trying to grow up.
May 1, 2014 | Change, Innovation, Strategy
There is plenty in the press about the role agriculture will play in the post mining boom era. “Asia’s foodbowl” and other such optimistic clichés get front page coverage.
I have been sitting in Armidale (NSW) for a few days, I have a bit of long term business up here, and I like the people, so come up fairly regularly, but the sense of optimism I normally find despite the difficulties is being squeezed by the realities:
- Communication. Armidale benefited from the presence of independent member Tony Windsor holding the balance of power in the last Parliament, it became one of the poster children of the NBN. It will eventually be a huge boon, but the implementation has a “pink batts” aura about it. A client lives 13 kilometres out of town, running a small property as an adjunct to other activities. She is unable to download a video from youtube, the NBN does not come out to her, she is on the end of the copper “pipe” and this will not change for many years. 13k, this is not the middle of the Simpson desert, it is almost an urban outskirt of a major regional centre. By contrast, a building in the CBD with a number of SME tenants of various types has been wired for the NBN, and the copper is about to he turned off. Problem is there is something wrong in the wiring, and the new stuff does not work for parts of the building, and fixing it seems to be a bit hard. Somebody wake me!
- Transport. We have vast distances in this country. To compete internationally and service those hungry mouths in Asia, we need to be able to cover the distances efficiently, and get our stuff onto boats and planes reliably, quickly and cost effectively. Road transport is dying, literally. The average age of truckies increasing, as young blokes find more financially rewarding and less physically challenging ways of earning a living. Those retiring are not being replaced even as the demand for freight providers increases. Rail is a joke. What is left of the regional rail network is unreliable, and deteriorating.
- Climate change. Nobody in Canberra, or any other cosy clime can do anything about the weather, but for heavens sake why can’t we recognise that there is change happening that will impact on our lifestyles and livelihoods over the next 200 years and recognise that politics and ideology have nothing to do with dealing with the problems in a logical and economically sustainable manner. The people in rural communities like Armidale are like the canaries in the mine, they see and feel the subtle changes as they occur way before the boffins in laboratories and caucus rooms are even aware of them. Listen.
- Immigration and human capital. This is a university town, as well as a centre of rural innovation. The diversity emerging is evident as you walk around the town, and particularly around the university. However, lets be fair dunkum about the capabilities we need for the long term and be sensible about scoring these items as components of the immigration intake. This bit is personal. My brother in law lives in Armidale, obviously with my sister. He is a globally experienced IT guru, and Pommie. His skills are in great demand, but we do not let him work, while we go through an extensive, detailed bureaucratic process projected to take another 6 months on top of the year to date, assuming all the crap necessitated by the form fillers turns up without delay from all the places in the world he has worked at advanced, leading edge IT applications. He is sitting on his hands as my sister tries to make ends meet, because they decided to settle here after 25 years of globetrotting. How many degree qualified hairdressers and chefs do we need on 457 visas? Armidale is a town that desperately needs his skills if the NBN (assuming it is rolled out successfully) is to deliver he economic benefits projected.
If we are to have the post mining agricultural boom, we need to work for it, not just hope if arrives by some osmotic process.
Apr 29, 2014 | Communication, Customers, Sales, Small business
Successful selling
Regularly I find myself on the receiving end of a pitch of some sort, as do all in business. We all buy and sell on a daily basis, and whilst there are easily recognisable and specialised functions that buy and sell on behalf of our organisations, we nevertheless are “pitchers”, and “pitchees” every day.
It seems that one of the impacts of digital communication has been to help us forget, or perhaps brush over some of the foundation sales skills honed over the millennia of human activity, so here they are again:
- Listen rather than speak. Asking questions, listening to the responses, and then asking the follow up questions has always been, and will always be the best sales strategy.
- Benefits not features. When you are speaking, talk about the benefits of your offering to the “pitchee” rather than reciting the features. Customers are really only interested in what value a product is to them, not what the range of features may be, so focus on value to them by demonstrating how your product makes their life easier, more efficient, and more productive.
- Deliver useful insights, knowledge, and intelligence. Being of value to a customer is more than just flogging product, it is also about articulating the context in which the product will be used to add value. Clearly however, there is a line here with confidentiality, any potential customer who hears what their competitors may be doing from you will never trust you again to keep their confidence, but the best sales people are always able to deliver solutions to problems they have collaborated to articulate.
Easy to say, often hard to do.
Apr 28, 2014 | Change, Innovation, Social Media
A/B testing
As a marketer, I am fairly left brain oriented, some may say flakey and opinionated, and I have done well with that for many years.
Here is the paradox.
You can now test just about everything if you try hard enough. All sorts of ads, headlines, copy size, placement, colour, the best mix of paid and organic media, channel A Vs channel B, and so on. There is no longer any excuse not to test, to quantitatively know what works best, to be able to calculate with a pretty good level of confidence the outcomes of some marketing activity.
There are also some great resources to help think about the topic, Avinash Kaushiks blog being gold, as well as books like “A/B testing: The most powerful way to turn clicks into customers”.
There is a trap here however.
Reliance on data to inform decision making can become a crutch that stifles the left brain driven capacity to connect logically unconnected dots in some new way.
Years ago I was faced with a dilemma.
I just “knew” that rectangular 1kg yoghurt tubs would be better than the existing round ones, better for the retailers, better for consumers, just lousy for us as the producer, as margins were at risk from the higher costs, or volumes at risk from higher prices had we chosen to recover all the incremental costs.
Problem was that the round ones were industry standard, and were so for a reason, they were substantially cheaper, easier to print, and all the filling and collation equipment was designed for round tubs. I had to wait 6 years to do an A/B test by subverting a capex process of an equipment upgrade in a factory by substituting rectangular tubs for round. Not a simple proposition when you consider all the supply and distribution angles that had to be covered.
Outcome: rectangular was vastly preferred by consumers (I somehow “knew” that) and retailers as they achieved better shelf utilisation, which we were able to calculate and demonstrate to them. It turned out the cost premium was easily recovered in the incremental sales, and the dynamics of the market were changed in a fundamental way.
I could have, probably should have, lost my job for that piece of subversion, and had it tanked, I am sure I would have, but it would not have gone ahead with full disclosure in the capex process.
Some things are still really hard to digitally A/B test, you still need the market instinct and market risk taking mentality to have a go, but the personal cost has the potential to blow out in the wrong environment, but without the risk, there is no progress
