Oct 14, 2011 | Customers, Management, Personal Rant, Small business
It seems that new ACCC chief Rod Sims is getting serious about the reality of the power of the two major supermarket retailers.
At the same time, Andrew Reitzer MD of Metcash is giving the ACCC a headache over his presumptive execution of the purchase of Franklins from Pick n’ Pay before the Federal court had ruled, simply on the basis that the business was bleeding cash, and the transaction had to be done, even at the risk of the consequences of an adverse finding.
An interview by Alan Kohler of Reitzer and the accompanying commentary give a great insight into the thinking behind the only real alternative to the power of Coles and Woolworths.
The overwhelming power of Coles and Woolworths has nevertheless not stopped the evolution of niche retailers like Harris Farm, competitive regional supermarkets like Drakes and Ritchies, and market entry of Aldi and Costco. The downward pressure on purchase price has however wrecked havoc on the Australian food manufacturing sector, with very few left, and those that are in pretty shallow water, with the only really large domestically owned manufacturer left, Goodman Fielder performing poorly.
I can only hope that in the new environment of more aggressive review of the retailers, that the plight of the domestic manufacturing sector is adequately considered.
Oct 4, 2011 | Communication, Customers, Marketing, Sales
Dave Winer, one of the earliest bloggers, prolific web publisher, and a key developer of the RSS technology so many of us use daily, has made many pithy statements worth remembering, but I was reminded of one over the weekend as the silly GASP customer complaint “thingie” went viral.
Dave opined “if you don’t want me to slag off at your product, don’t have a shit product”. A retailer sells goods, but the service is a part of the offering to customers, so irrespective of weather or not a purchase is made, it is in the retailers interests to have them leave with a smile on their face.
The dresses at Gasp may be worn by so called stars, but the failure by the self proclaimed sales superstar to recognise that individuals can now extract a substantial revenge for poor service via social media should ensure his superstardom is exercised elsewhere, perhaps serving petrol at the local Woolies where he cannot do much damage to his employers brand.
Oct 2, 2011 | Customers, Marketing, Personal Rant
Earlier today, Sunday, about 4.45, just before the League grand final kicked off, I got a phone call on my mobile from Optus. Well, sort of phone call, it was an automated call, some recording telling me they had something important to talk to me about, and it would only take a few minutes. Once we got that far, the call was ended.
There are plenty of ways for Optus to connect with me, to market to me, after all, I have all my services with them, despite being “stiffed” recently by them, changing is all a bit hard, and the others are not any better anyway, so I just swallow hard. Like most of us.
These clowns spend millions on “marketing”, TV, radio, magazines, social media, spin doctors, franchising sales outlets, call centres, the whole 9 yards, but they clearly do not have any idea about marketing, they just know how to spend money on media.
Using an automated service to ring a customer and ask for his attention on a Sunday afternoon, any Sunday afternoon, but this one? to talk about “something important,” presumably to their revenue, beggars belief.
You could not make this stuff up!! How stupid can they be??
Sep 23, 2011 | Communication, Customers, Innovation, Small business, Social Media
Ask a SME manager in packaged goods, “would you like a phone call from Woolworths ordering stock of your new product for every store in the country?” and you will most likely get a tear with the nodded head.
Enter the “Orabrush” story, they got the call from Walmart without any of the usual begging.
There are many hurdles for SME’s in the packaged goods industry to jump before distribution in the major retailers can be obtained, and then the problems really start, because SME’s lack the resources to move the product off shelf before the trial period runs out.
Social media has helped over the past couple of years, you now have the opportunity to reach highly targeted groups of consumers, and deliver them a message, but generally it has not helped much to get the product on shelf in the first place.
Orabrush really broke the mass market model with a product I still find odd, but great creativity and lateral thinking combined with social media has turned the product into a hit, and can now be found in Walmart stores around the world
Have a look at the Youtube ads in the link, gems.
Sep 16, 2011 | Customers, Management, Sales, Small business
SME’s in the Australian food industry are up against it if they see their futures as suppliers to the major chains, who require a combination of utter commitment, globally competitive costs, and supply certainty requiring substantial scale and the attendant capital base.
Added to all that, small business has it all in front of them in any stoush with a large corporation. Metcash, the nations largest wholesaler, and effectively the third force in Australian FMCG via its supply arrangements with independent retailers seems to relish a fight.
They chose to fight Andrew Bunn, a small retailer in Canberra who went to the wall, and then accused Metcash of breaking their supply contract. The blue Metcash then picked with the ACCC over their proposed purchase of Franklins has been entertaining. Metcash informed the ACCC they would go ahead with their purchase of the Franklins chain from Pick n Pay before the ACCC delivered its decision, ballsy call, justified as the Federal Court gave them the go-ahead, but the ACCC is now appealing the decision. Who knows what will happen next, but the ACCC must assert its power in the marketplace or become irrelevant, but whilst the legal stuff drags on Franklins is bleeding cash, virtually removing them from the scene as an ongoing concern, whoever owns them.
I’m sure there is more to come, but none of it matters much to the SME manufacturer facing a small number of retail gorillas who exercise their power ruthlessly, and without any empathy with their suppliers. The ghost of Eric Bender who inhabits the memory of the few of us still around who dealt with him, would shake his head in dismay, and take another drag.
Sep 8, 2011 | Customers, Management, Marketing, Operations, Small business
The mulitnational Heinz has been in the news a bit recently.
First, they announce a restructure, which means closing plants, and consolidating production, in this case to NZ, and to a remaining Australian plant that will get a bit of a kick-along. Wonder how long that will last?
Then the worldwide CFO Art Winkleblack took aim at the retail duopoly in Australia, citing it as a reason for the difficulties Heinz has had, and as a basis of the restructuring decisions. I bet the local sales management loved him for it, the next time they had to front Coles and Woolies!
In a short period, the challenges of the industry are laid bare, the $A making imports cheaper, the power exercised by the retail duopoly, and the necessity of manufacturing and marketing scale to counter it.
If Heinz, a global business turning over close to a billion dollars in Australia, and many more globally has these problems, put yourself in the position of the SME, with little marketing leverage, a plant that needs capital, banks that are so risk averse, and so stripped of people who understand small business they simply choose not to engage, how can the little guy hope to sustain his business?. Pure bloody mindedness and determination is about the only answer you will come up with, mixed in with a spirit of being prepared to really have a go, and screw the buggars!.
We wonder why we have more imports of packaged food products into this country than we produce, the position Heinz finds itself in demonstrates why.
