Where will the retail gorillas make profits tomorrow?

Where will the retail gorillas make profits tomorrow?

Apr 20, 2016 | Customers, Marketing, Operations, retail, Strategy

Coles and Woolies are locked in a battle for share of the customers wallets and throats that becomes more complicated every day.

The competitive landscape has changed. The old model of them against each other and independent wholesaler supplied groups, has been spiced up by Aldi, Cosco, and the tide of competitive business models evolving both in store formats such as the convenience small stores around commuter points, farmers markets, and digitally enabled sales.

Those sales I call ‘Beyond Checkout’ cover everything from online ordering with home delivery to the evolution of old fashioned drive thorough pickup.

In my view the battle is a losing one for the gorillas without significant change to their operational culture. Their current business models are based on mass merchandising, not easily made compatible with the personalised service delivery and the  lower volume specialised products now being sought. You need go no further than the disappearance of Thomas Dux for evidence.

Having said that, I see 5 general areas for operational innovation of both the gorillas that would deliver ongoing profits, and sensitise them to the changes happening beyond the walls of their stores.

  1. In store technology deployment.

Deploying some level of the data driven category management control to store level would greatly enhance assortment optimisation, out of stock reduction, and margin maximisation. The assumption of course is that there is staff in the stores with the nous to leverage the information  they are being given.

There is also the juicy thought that stores will be able to connect to consumers in close proximity to stores via their mobile devices geo location capability and make them offers based on their purchase patterns. Then there is the option of instore kiosks harnessing the value of instore video and personalised advertising and promotion, again catalysed by your mobile device.

  1. Leveraging existing asset

Reduction of maintenance and running costs with innovations like rooftop solar power, preventative maintenance programs, improved store security, and stores as the logistic base for home delivery. Home delivery will become more and more important to time constrained consumers, so developing a compelling offer should be high on their agendas. To date the penetration has been poor because the logistics, particularly for fresh and frozen product is really challenging.

  1. Employee productivity improvements.

With better staff training, particularly in produce, customer sensitive opening and closing times, cash register  speeds (the Aldi insistence on prominent bar codes by observation speeds up throughput significantly), much can be achieved. Self-serve checkouts currently rolling out with store renovation programs have clearly been a success with consumers, and offer significant productivity improvements.

  1. Value chain optimisation

The use of collaborative technology  that goes back into supplier production planning and collaborative volume management from the production line to the checkout has been around for years. However, there remains huge opportunities to extract benefits from inventory management for all in the value chain. The barrier is cultural, as the gorillas want all the benefit to come their way, removing the incentive for suppliers to take risks and innovate, except when under the whip.  Collaboration through the value chain can deliver great benefits when done well.

  1. The customer experience,

What is retail about, if not customer experience?

It is here that retailers can differentiate themselves in all sorts of ways.  What they cannot do is demand from head office that customers like them, and prefer their stores over the others. Store choice is a personal thing for consumers, made up of many elements, but creating a store environment where the employees are pleased and proud to be of service is a great start.

Long way to go there.

What the senior management can do is provide the infrastructure that enables that level of personalisation and service to be delivered in stores, and the leadership to create and encourage the customer centric culture that front line employees then deliver.

And a final thought: Is that the light at the end, or a headlight?

E-tailing is a huge threat to the gorillas, and while it involves capital to develop and deploy the technology, it is essentially an individual engagement and transaction. Online gets all the publicity, but still only accounts for around 6% (depending on whose numbers, and which categories you look at) of sales. The gorillas should see E-tailing as their next opportunity area, to be embraced rather than feared.

Remember what happened to the Blockbuster video business? They had the game by the throat, Netflix was just an irritation in the corner, so they ignored them.

Bamm! Blockbuster is gone.

While it is still pretty hard to stream a family roast dinner, the lesson of Blockbuster should not go unheeded by Coles and Woolies.

 

How to find your keywords, for Free!

How to find your keywords, for Free!

Apr 11, 2016 | Customers, Marketing, Strategy

Pretty much everyone engaged in the ‘content wars’ have some level of focus on keywords.

It makes logical sense to include them in your headlines, and body copy where appropriate, and while ‘keyword stuffing’ now brings the wrath of Google down on you, being sensible still carries weight.

There are a number of paid keyword tools that do a great job, but a pretty good job can be done for free just by applying some thought and a bit of common sense.

Some of the ideas I have used in preparation of this blog are:

Google auto complete. Start typing a query into Google and it gives auto options. These are nothing more than Google scanning the similar terms put into search and returning their most common responses. Ie, a keyword or phrase.

Wikipedia. Thousands of experts collect and curate information on many topics. Any page that deals  with your niche will have links and words that can be used as keywords, curated by experts.

Google related searches. Every first page of the search results give you a number of related searches at the bottom of the page. Often some good ideas are hidden in there.

Amazon. This may not be an obvious choice, but if you have a look inside a book in your niche, you will see the chapter headings. Somebody who presumably has a bit of knowledge in your niche has taken the trouble to write a book, and set out the important stuff in the chapter headings, might be an idea there?

Quora.com. Quora is a Q&A platform, for the uninitiated, so there are discussions on many topics, probably yours, so there are a range of words and phrases used that could give some ideas.

Forums. Type your topic + Forum into the search box and up will come the forums related to your search term. Again, these are discussions on the topic for which you are looking for keywords, so there are likely to be some good ideas floating around.

Google keyword planner. This is a great tool, suffering from success. It gives only specific variations on a word or phrase you type in, there are  no similes or suggestions in there, no variations beyond the specific word or phrase you typed, no imagination or inference is applied. The obvious advantage is that you also get some data which can be very useful. On the flip side, everyone uses it, so finding a word that is different, but still relevant will not happen in this tool.

The paid tools are very good, but for a medium or small business, an expense that they often choose to avoid, as they can be expensive. No amount of keyword magic however can replace a creative and relevant strategy and Value Proposition executed with precision.

8 reasons the opportunity for consumer goods SME’s has never been greater.

8 reasons the opportunity for consumer goods SME’s has never been greater.

Mar 14, 2016 | Change, Management, retail, Strategy

Think about it.

  • Many domestic competitors are gone, sent to the wall by combinations of the high $A, the power of the retail duopoly to call the tune with prices and terms, house brand expansion, and poor management.
  • Coles and Woolies have lost some of their grip as Aldi makes inroads, and some of the independents like Ritchies continue to compete effectively in local markets, and access to food service, ingredient and alternative retail becomes easier.
  • Consumer brand loyalty has been disrupted by the disappearance of some of the favoured brands, offering opportunities to forge new brand loyalties
  • Marketing expenditure can now be highly directed, and its effectiveness measured and continuous improvement be applied.
  • The costs of the tools like the analytics required to do effective category management, a data intensive exercise are  getting cheaper and cheaper, and the skills needed to make sense of the data more available.
  • SME’s are recognising that collaborative actions are not verboten, but are in fact very sensible and cost effective. Making it easier, digital technology has removed one of the greatest barriers to effective collaboration, the inability to communicate.
  • SME management has also recognised that collaboration is strategically and operationally sensible to build comeptitive scale to enable long term prosperity, so there are potential partners around.
  • Export is easier, as trade barriers are dropping, and product niches are often global

None of this of course is of any value unless you have the cash flow, determination, and management capability to make the changes necessary. However, those that have survived the last 10 years are a robust bunch, now the pressure is off a bit, don’t make the mistake of taking a breather, get in there!

 

Three by four marketing equation for success.

Three by four marketing equation for success.

Mar 2, 2016 | Communication, Customers, Marketing, Strategy

How do you win business in a competitive world?

I know for sure it is not  getting any easier, but the advice on how to do, and stories of how to be rich in 15 minutes a day seem to abound.

Perhaps I don’t take advice well?

It is pretty clear to me, after 40 years of working with this stuff that the more we complicate things, the more difficult seeing the wood for the trees becomes, so here is a really simple tool that you can use today.

To get business, any business, although the context and circumstances vary enormously, the potential customer needs to:

  • Know you
  • Like you
  • Trust that you can solve their problem/add value to their lives.

Pretty simple really.

The other side of the equation of course is the challenge of creating the circumstances where a potential customer has the opportunity to get to know, like and trust you.

Marketers can spend huge amounts of money, much of it wasted, on chasing this outcome, often failing simply because they complicate the hell out of it and confuse themselves.

I like to think of it in human terms. The building of a marketing relationship is no different to any other type of human relationship, it evolves in stages that are pretty simple:

  • You need to be where they are. This is so blindingly obvious it is often missed.
  • You need to get their attention.
  • You need to make a connection
  • You need them to take action.

marketing matrix for successBreak all the complicated cliché ridden & expensive recommendations  you get from those with a pig in the race into this simple matrix and reap the benefits.

Beware though, as Steve Jobs said, “Simplicity is the ultimate sophistication” so this stuff is deceptively hard, but now you have a tool to make it easier.

What fly fishing can teach us about lead generation

What fly fishing can teach us about lead generation

Feb 22, 2016 | Marketing, Small business, Strategy

 

When I can, I fish for trout with a dry fly in mountain streams. It can be cold, obviously very wet, frustrating, but oh the joy of the feel of a fighting trout on the end of a 2kg breaking stain line, and a light rod.

Often you sneak up a stream all day and see nothing, but sometimes, occasionally in unexpected places, you get  a rise, with luck and skill hook them, and with more luck and a lot of skill and experience, can bring some of them into the net.

So what has this got to do with lead generation?

Well, a lot actually.

Fish where the fish are.

There are places in a river where the trout are more likely to be, at the tail of runs, behind an exposed rock, under the banks, protected by overhanging trees. You can spend a lot of time fishing every inch of a stream, but if you need a feed for lunch, best spend your time going to where the best odds lie.

Patience

You rarely get lucky quickly, it takes time, perseverance and patience, as well as skill, and better yet, local knowledge.

Use the right bait

Trout are fussy feeders. In the really clear streams, you will sometimes see a trout come up ‘for a look’ and pass on the fly. When that happens, it sometimes pays to give a it a few minutes, and change the fly to an alternative. You know there is a fish there, you know it can be tempted, so trying an alternative fly sometimes pays dividends.

Blend into the ecosystem.

Being obvious ensures failure. Colorful shirts, noise, creating any disturbance in the surroundings puts trout off. They are timid, easily scared, and have very good senses that pick up anomalies. Alarm them even slightly, and you have no hope of tempting them to a fly.

Learn to stalk

When you find an ideal spot, and you know there is a trout there somewhere, spend some time watching, noting the nuances of the stream, observing the sort of food that is around, and how it behaves in the water , and particularly if and when your target comes up for a look or rises to take something. Then you have the knowledge to tempt them onto your fly.

The conditions have to be right

Trout are very sensitive to conditions. They will not rise if there is a storm coming, they feel the pressure differences, so they hunker down. Similarly, they rarely rise in the rain. Surprising really, a bit of extra water should not make a difference, but it does. Best times are early morning, when the sun has been up for an hour or so, and still evenings around dusk.

Luck plays a role.

J.P. Getty was once asked how he became so successful. His response  was ‘rise early, work hard, strike oil’.

Sometimes you just get lucky but if you are not in the river at the right time, with the right fly, and doing all the right things, by definition you cannot be lucky. Luck comes with hard work, engagement and commitment.

None of this is any different with Lead generation, it is remarkably like fly fishing. Every lesson I learnt a my old dads knees, hiking through the bush to find the right spots, wading up steams, learning the knots and skills of the sport is applicable to  commercial ‘sport’, where lead generation is an absolutely essential skill for most businesses, certainly all B2B businesses.

As we fly fishers say ‘tight lines’ .

Australia day report card 2016

Australia day report card 2016

Jan 26, 2016 | Strategy

Today is January 26, 2016, Australia Day.

As in past years , I have reflected in a post on this day what it means to be an Aussie.

The post on January 26 2012, called for a mature debate on the challenges we face as a nation, the real, long term issues, rather than the diet of puffery and bullshit we normally are asked to digest. Quaint idea that, asking for a national debate on real issues.

In 2013, I asked what it was we wanted the place to look like in another generation, and I guess some degree of pessimism came through the words.

In 2014, I focussed on what I thought would be the defining trend that would drive our decision making, individually and for the nation: Data, and the essential truths that data can convey. The observations of what might be coming turned out to be absolutely wrong, about as wrong as anyone can be, and is again a salient lesson to those with a crystal ball hidden somewhere. Last year I think I just had my head in my hands in despair at  the nonsense passing as responsible government, and whilst I am again tempted to head for the bar to sink a few Coopers (the only significant Australian beer left after the foreign invasion) I am going to try and be a bit more responsible and make some serious comment on the state of the nation.

It has to be noted also that as I am now of an age at which those icons of my youth, the Beatles wrote songs, (‘When I’m 64’)it is fair to suspect that my view of the country, and the various carryings on that are happening is tempered by all those years.

  • The cost of housing in Sydney and Melbourne, is it a bubble or not, can I get in for my capital gain before the bust? It is a very common Australian dinner topic. What concerns me is what appears to be a process of parking money in housing, an essentially unproductive asset, and in Australia a moderately tax effective strategy. Those with the money, and it is not just Australians, it seems to be a global phenomenon, protect their money by property investment, to the point where there are more empty residences being built every day that those who need housing cannot afford. Youngsters are either moving to the fringes of cities, or resigning themselves to long term rental. Logic would suggest there should be a move to the country centres with the facilities, but is seems not to be the case. Recently I was in Armidale, a town with many huge  advantages, schools, a university, long term agricultural production and research, proximity to stunning wild Australia, but seemingly devoid of much of the energy that builds long term communities by successful commercial activity.  By contrast, Uralla, 20k’s down the road and only 1/10th the size is buzzing.  Go figure.
  • The internet has changed everything, and there is a generation that was born after the net become widely available  that do not understand what it is  not to have it.  I can remember the first Fax I saw, and recognising that it would change the world, but have not used a fax in 20 years. While the net has completely altered the way we work and live, it has removed the face to face communication human beings have relied on through our evolution, replacing it with digital ‘connectivity’ which is just code for substituting depth of a few relationships for the siren promise of breadth of relationship with many. I am no anthropologist, so cannot speculate on the longer term impacts of this substitution, but the speed with which it has happened, way faster than our evolutionary cycle time, cannot be good for our collective mental health.
  • There is no longer longevity in art. The world of art, in all its forms, is the way we express ourselves and how we relate to our communities. The loss of longevity might be just the next iteration, but I suspect it is more than that, it is a profound change taking us into new territory. Not necessarily a bad thing, change is what art is about, but nevertheless, a source of uncertainty and ambiguity. If Leonardo da Vinci was around today would he spend  4 years painting the roof of the Sistine chapel? No, it would be done with a paint gun in a day and a half, and then we would be wondering why it took so long.     Control of your art is essential, even more than before. In the old days  the record companies got wealthy on the back of bands they promoted managed and screwed, now talent has the opportunity to come through without the friction, but     how do you retain control in a world of streaming and sharing? The exception to this longevity and lack of control seems to be the fixation with tattoos. Showing my age perhaps, but I dislike them and their defacing of young Australians intensely. What will they look like when their carriers are my age? Tattoo removal is about to become a huge boom industry when a viable method is found
  • Our society has a new rat in the foundations, drugs. Not the tobacco of my day, with perhaps a bit of weed and booze added in, but all sorts of stuff that is as available as alcohol, but uncontrolled, very dangerous, and ubiquitous. Even smart kids are killing themselves with shit at concerts, and we have no idea why, or how to change it. They are smart and educated, why would they do it to themselves?.
  • Demographically we are a country in change, rapid and substantial change, but we seem to be able to absorb the change better than elsewhere in the world, but perhaps we are a the limit of absorption, at least in some locations. A long term fiend moved from the home he and his wife built after they were married, as they were now aliens in the suburb they had made home and brought up their kids. Is this a bad thing? I do not know, but it is certainly something that is driving change. It is perhaps ironic that John Howard lost the Liberal party leadership in 1989 largely for comments made about the rate of Asian immigration being too high, thus offending the then widely held view that the more the better, then 12 years later successfully used the Tampa affair to shore up his government. The change in the community over those 12 years represents a complete turnaround in our view of ourselves.  I am unsure of what the next iteration of those changes will be, but perhaps the focus has moved on from Asian migrants to those from the Middle East.
  • We have becomes cynical and disconnected from  the processes that govern us. Membership and activism in political life seems to me to be at an all time low, and the net result is it is being left to those who see it as a road to their own success rather than a service to the rest of the place. Obviously there are exceptions, but there seems little doubt that the politics of the last 10 years have been nothing short of toxic and do our country no good at all. I am just glad that we do not have the full blown circus determining who will be the head clown as they have in the US, ours is just a suburban circus by comparison, so far.
  • On a lighter note, I not only love the Operation Boomerang lamb ads, I also love the fact that the complaints from the usual suspects,  vegans, animal rights, anti-violence advocates (don’t they know it is an ad, a bit of entertainment with a message?) and assorted other anti-funsters got thrown out of court on its tush.

That is enough, for now. The place is changing, quickly, too quickly for many, but along with death and taxes, change is the only constant in life, so we better get used to it.

Happy Australia day.