Wednesday, September 02, 2015

CVS Category Management Plan To Adapt Important Market Changes

I have previously discussed about CVS, one of the leading pharmacy network in the US, as they have decided to shut down their tabacco activities due to uncompatibility between this category and their brand image. They hence turned down $2 billions in sales by this move. Recently the Times published an article on their new strategy and their CEO Larry Merlo. 

CVS, as a nationwide pharmacist takes a large responsability in its role for the society: "He thinks CVS can save lives - and hundreds of billions of dollars in unnecessary health care costs annualy - by efficiently treating Americans' routine sniffles and aches, nudging them to take better care of themselves and making sure they take their medications when they're supposed to.

Most of the time, Europeans are joking about US pharmacy as they can shop for beers, milk or chips, something unconceivable in Europe. But I highly like the way CVS is working on its stores in order to adapt to the changes in the way health care is dealt in the US, especially since the Obama Care is effective.

The developpement of Minute Clinic
Minute Clinic is an initiative to provide health care advices in store in order to ease the access to medicine. They use big data in order to access the information of patients in order to provide a clear diagnostic to the patient in order to heal him. 

Obviously, while discussing about category management, the health care business is far from being the same from fmcg. But what I like about CVS actions in term of category management, is that their choices are meant to fulfill a clear strategy. A strategy which is actually in harmony with what the stakeholders really need.

Tuesday, September 01, 2015

Aristide Boucicaut: The Trailblazer of Modern Commerce and Retailing

I am currently reading the amazing book of French Expert in retailing Olivier Dauvers on the "Saga du commerce français" (the history of French Commerce). The concept is simple: to detail the history of retailing in France. 

Indeed, we have a long history of entrepreneurship in the retail business in France. Some of them has actually inspired some of the world leader of retail at the moment. I have already discussed how Sam Walton had the idea of his supercenters while visiting some Carrefour stores in Brazil. But what surprised me is that I have never discussed about one of the trailblazer of modern commerce: Aristide Boucicaut.

And that is the first date of this book.Aristide Boucicaut is the founder of "Le Bon Marché", the first department store. What is great to see is how his creation has changed dramatically the world of commerce, and actually invented retailing as we now even today. Here are the main inventions linked to Aristide Boucicaut:

The Price Tag
The book highlight well how revolutionnary the idea was. Prior to the department store, merchant did not advertize their prices and were fixing it upon the look of the clientèle, trying to sell as expensive as they could, based on how looked the customers and what wealth he could potentially own.
Aristide Bouciaut at first began to set some clear price tags, avoiding the fear for customers to be ripped off, and securing them to pay the right price. That was a real revolution! and Nowadays, it is hard to believe it was not the case before.

The Invention of the Catalog
In order to promote its prices and its choice, Le Bon Marché decided to publish some catalogs. They were the first tools of home delivery system, which is now very popular with the Internet.

Before even price elasticity exist, Boucicaut decides to cut his margins from the standard 30 to 40% to 13,5%. He then was able to attract more customers, to have higher rotation rates, and therefore to save on the operationnal costs what he left in margins.

Aristide Boucicaut did not have any big data or computer able to have complex pricing strategies. Still, he understood that in order to preserve margins and to have a good discounter images, he needed to differenciate his margins upon the products. He could then dump some prices of popular items and get the money back on others. The idea was to have a good price image on popular items, and the rest even if they were at a standard price looked cheap.

Department store: Everything under the same roof
As Boucicaut experienced success, he then decided to move to a larger store and to open new category of products. The merchants of the time thought it was a mistake as it was impossible to have any expertise for a merchant in such a vast product range. He hence hired experts in each departments, giving them high incentives on the overall results, to secure to have the advice and the good merchandize. The more choice and products he had, the more customers went to his stores.

Special Event Sales
In the early days of 1873, Paris was hit be cold weather and snow, and the store was empty. Boucicaut decided to create a new operation "le blanc" (White). He decides to get all his white merchandizes (handkerchief, tissues, bed sheets...) and set them up for the store to be all whitened up. The crowd came to see the piece of art he did. Lz blanc still exists today and the event is played by most of retailers, as one of the best promotional events of the year. He understood he had to create events to trigger customers' visits.

Social Benefits
At the end of his era Aristide Boucicaut decided to give extra benefits to his employees, in order to decrease the gap between the salesperson and their premium clientele. Hence he set up a free library, and the premise of a health care system.

When you look at all those innovations, you can clearly see that all of them shaped the way commerce is handle nowadays. This is the reason of this homage to Aristide Boucicaut

Wednesday, August 26, 2015

How Small Businees Could Benefit From Instacart

Instacart is a US start up which is proposing same day grocery delivering.

Today, Instacart is fighting up against Amazon, which has set its strategy of online grocery shopping thanks to its same day delivery service.

What is innovative, is that Instacart is hiring "shoppers" in order to deal with the grocery picking and deliveries. Moreover, what is great is that it could be used in different stores, as the service is not linked to any retailers.

This is the reason why I would like to go beyond their actual service, and I believe it could give a lift to the small downtown retailers. I believe that in our nowadays competition local retailers have great opportunities if they can work together in order to create a comprehensive offer. And Instacart, by allowing one person to shop for another person, could be a great way to ease shopping in different small retails. It could for those retails:

  • Provide online and mobile exposition
  • Provide a better customer service
  • Recruit some customers that don't usually go to their shop.
What do you think about it?

Tuesday, August 25, 2015

Concentration des centrales d'achat en grande distribution: Vers plus de marketing?

Excellente tribune écrite par Frank Rosenthal pour le monde. L'année 2014 a profondément modifié le monde de la grande distribution en France. Le rapprochement des principaux acteurs en 4 super centrales d'achat, via souvent des alliances indépendants-intégrés a modifié la manière de négocié.

Elle a aussi certainement pérennisé la guerre des prix, octroyant à chacun des acteurs des conditions commerciales proches. Maintenant, il est temps de voir ce qui va se passer après.

Première question: est ce que ces alliances sont pérennes? Comment vont elles évoluées? les différentes allicances de différentes natures montrent bien que les évolutions risquent d'être importantes prochainement.

Deuxième question: comment créer de la valeur ajoutée au dejà du prix? Les rentabilités des distributeurs sont mises à mal, aussi il faut trouver de nouvelles manières de créer de la valeur. 2 axes:
  • Le coût outil: en améliorant les structures de coûts, logistiques (transport, entrepôt), magasin (frais de personnels, frais généraux, électricité...), coût centraux (marketing, communication, études, services au point de vente), commerciaux (tailles de l'assortiment, réduction de la promotion, réduction des surfaces, suppressions  de magasins.
  • La "value for money": développement de services (garanties, choix, accueil en magasin, qualité des produits frais, etc...)

Aujourd'hui, Frank Rosenthal penche plutôt pour la deuxième option, en pariant sur une augmentation de l'importance des stratégies marketing des enseignes. Je suis d'accord avec lui. Néanmoins le réel challenge pour les enseignes restera leur capacité à avoir les moyens de leurs ambitions. En effet, il va falloir faire "plus" avec "moins" de moyen, car je vois mal un distributeur sortir de la guerre des prix pour financer une politique marketing visant à améliorer la value for money et l'expérience client.

Et vous, qu'en pensez vous?

Wednesday, August 19, 2015

Retail Strategy: Whole Food Market Launches New Store Concept To Counter Attack Competition In The Organic Food Market

Whole Food market is in a very interesting position. It is considered as one of the fastest growing retailer in the US, thanks to its unique concept of organic, healthy and sustainable growth strategy. But lately, US competition has awaken with appetite for market share. This is the reason why Costco has recently published organic sales turning the company into the market leaderKroger’s natural and organic Simple Truth line has become a $1 billion-a-year brand.  And Whole Food Market growth is slower than the market's growth.

What is true though is that more and more competition is entering the segment, making the products more available, cheaper, and therefore reinforcing the penetration rate and the sales (which could be on the long run a good thing for Whole Food Market to get a new clientèle).

Therefore Whole Food Market needed to set a new strategy to fight against the new competition. That's the reason why Whole Food Market is launching a new store concept called 365. Smaller stores, in downtowns, to attract new customers and develop its store network. 

Now will it be enough? I believe it is interesting to see Whole Food Market focusing on downtown smaller units. In France, this is where the organic retailers are thriving. Also, I believe there is a lot to be done on the Internet, in order to adress to a clientèle that is accustomed to the E commerce. But maybe (and probably) Amazon is around the corner...