Tuesday, December 31, 2013

Happy New Year 2014

This post may not be the most innovative and creative of all, but I wanted to wish to all of you a happy new year 2014. 2013 has been a difficult year. Indeed, like other economic experts, I believed that 2013 would be the year that will mark the end of the crisis which started in 2008. Despite clear improvement, we can still say that the world is struggling. And I really hope that 2014 will be the year of sustainable change.

I have started couple of weeks ago a new job, and 2014 will also be for me a big change. I will discuss about that in my next blog notes.

I wish to all of you the best 2014 year possible.

Monday, December 30, 2013

Discovering the Homes-up.com Store Concept : When Showrooming Is Pushed To Its Extreme

French magazine LSA is publishing a series of articles about retailers all around the world that masters cross channel retailing (Internet – point of sales). One ofthe them got my attention: homes-up.com.

Homes-up.com is mostly an online retailer, but own a boutique in Shangai. The concept is that it is a 100% showroom store, where the different products the company sells are displayed. In order to get those products, the company have 2 computers in the middle of the store, for the shoppers to order the goods he wants. Then they will be delivered home.

LSA considers that it is a pity the store does not propose to purchase the products and hence to take them out with you. I actually don’t think so. We may have a consumption that showrooming is bad for business, and that it is important to find new ways to generate both squarefoot sales, and in store profitability.

But actually, homes-up.com is defining a totally new business model. A business model I envisioned years ago. This model has a lot of strength:
  • ·         You maximize the display room, as there are no stocks.
  • ·         You have very low wages costs, as you don’t cash in (either by mobile devices or the computers of the company). And same thing, you save space as there is no cashier desk.
  • ·         Your salesperson can focus on advising, and can be stress free concerning the fact that the customer is going to indeed purchase the goods online.

This is a new business model that I am sure will spring up in the next couple of years.

Friday, December 27, 2013

Apple Acquires PrimeSense: How It Will Impact Microsoft

Apple hasrecently acquired Israeli startup PrimeSense for $345 millions. The name of PrimeSense may not ring your bell, as I did not know either about the company, but it is the company that was behind Microsoft’s Xbox Kinnect system.

 As a user of the Kinnect, I must admit that the product is a hit. I have always been surprise to see how advance the technology was, especially because there has not really been any mid technology in between.

Apple has made a smart move. Obviously 3D sensing technology is the future media of interactions between electronic devices and humans.  And probably they are looming on using this technology for their TV devices they have been willing to launch for the longest time.
But Apple may also have some sneaky ideas behind this move: Indeed, the Xbox system is one of the major success of Microsoft those past few years. Microsoft is still struggling to find a new OS which would allow him to get some marketshares back, they are also experiencing problems with their Windows phone, but the Xbox is rocking.
 By acquiring the company that gave Microsoft an edge over the competition, they may master the cost of the technology, and hence have an impact on the Kinnect profitability. I can’t help thinking that Apple thought about it while discussing with PrimeSense.

Tim Cook hit the headlines with his wishes, writing about some highly innovative launch. I don’t think he was speaking about a larger Ipad, but probably that this innovation will include some of PrimeSense technology.

Friday, December 20, 2013

Playstation Strategy of Stockout During Christmas

Like every other year when a new video game hardware is released for christmas time, the stores run out of stock in no time, leaving customers in cries, wondering how they could get the precious new gear.

This year is exactly the same. Both Playstation 4 and Xbox one are impossible to be found 2 weeks before Christmas celebrations.

Some will say that this is a strategy, and that suppliers are actually planifying this stockout in order to raise the demand.

Obviously, one customer eager to purchase a Playstation 4 has no intention to by any other hardware, so there are little chances the customer will turn to a competitor.

But still, is it a good thing to leave customers unsatisfied like that? Also Sony is going through a retailer to sell those, and creating stockout is something retailers hate ( customer disatisfaction, loss of sales...).

Also Sony has hence never been able to experience 100% full potential of its launch sales, and therefore it is difficult for Sony to have clear data on the level of missed sales.
Probably Sony has hard time to produce that many hardware in such a period of time but they must anticipate.

This is the reason why I don't think Playstation is making the right call, and that this stockout strategy is actually bad for the company.

Friday, December 13, 2013

Thoughts On Ecommerce: How Big Will Ecommerce Become?

I would like to write an article about an interesting article I found online about Ecommerce sales figures. According to the article, Comscore estimates Ecommerce has generated $50 billions in the US for the second quarter of 2013. That counts for 5,5% of the whole commerce sales. Even if its share in the whole commerce pie remains pretty small:
  • It does not stop getting bigger.
  • It counts for most of the growth of commerce.
  • It still has the bigger growth potential.
Nevertheless, I still believe that Ecommerce as we know it will never be the biggest part of business. The human interface is too important to live without it 100%. 
Also, another important data of the article is the sales figures of mobile commerce: $4,7 billions. But the issue with that stats is that it probably counts the sales generated via tablets. And to me, there is a difference between buying with a mobile device outside home, and buying with a mobile device home. Hence, it is difficult to say that we see a real rise of mobile phones retailing. 

Monday, November 18, 2013

Walmart's Mobile Strategy

I wanted to discuss about an interesting post I found on Walmart's Mobile Strategy. Walmart is by far the largest retailer in the world, and obviously is a leader of opinion in terms of how to use new marketing techniques. It seems that Walmart's mobile strategy has been pretty successful.

Walmart has launched a mobile application, allowing the customer to have a shopping list, and to have information about the promotions and the products.

According to the article, the application generates sales incremental of 40%. The only thing is that we don't know if it is 40% more than prior to them using the application or 40% more than people who don't own the application. 

It changes a lot, because:
- If it is 40% more than before, that means the application really has an impact on customer behavior, proposing extra value to the shopping experience. I find that hardly possible to have such outstanding performances, especially because the application seems to be standard, with no extraordinary innovations. 
- If it is 40% more than customers without it, it maybe because people who own smartphones tend to have more money than people who don't. Also, probably people with the applications are people who are more loyal, and hence,  tend to spend more.

Nevertheless, Walmart made a right move in investing in mobile strategy, because it allows the retailer to improve its customer experience + its knowledge of customer's shopping habits.

Thursday, November 14, 2013

Apple Struggling In China As Xiomi Is Overtaken The Iphone

Apple is facing a lot of competition both in the tablet and the smartphone markets. Indeed, even though Apple is the trailblazer of both devices, it is struggling to compete with its competitors especially in the emerging market. Apple has always had a luxury brand strategy, trying to set itself apart of the competition, and owning unique products. But the fact is that its competitors now manufacture devices as good as Apple's ones, at a lower price. 

Emerging market people still have lower salaries and purchasing powers than western countries, which fact does not benefit to companies with high pricing. And this is what Apple is experiencing right now. I recently learned that Apple is only ranking n°5 in the Chinese market, and has recently been overtaken by Chinese competitor Xiomi

Apple has reshaped its strategy lately, by launching an entry level phone, the Iphone 5c, especially in order to be competitive in terms of pricing in those countries (China, India and Brazil), how would that work? It would be interested to see how this model perform, because the world growth of the electronic devices is based in those emerging markets. Apple can not delay its efforts in these countries, because once the competition will be mature, it will be tough to gain marketshares.

Wednesday, November 13, 2013

Category Management Series: Supply Chain As A Key Component

It has been a while I have not fed the category management series, even though i know it has some success. Today I wanted to discuss about one of the key of category management, especially for fast moving goods categories: The supply chain.

The supply chain is a very important part of category management. Indeed, you may have set the best product range, the most attractive promotional offer, or have a massive number of customers, if your supply chain has not been integrated properly, it may lead to a disaster.

An efficient supply chain is the one which provides you with the appropriate number of products, at the appropriate time. Problems with supply chain lead to stockout, which is one of the main cause of unsatisfied customers. Customers expect you to own the products of your product range, and it is one of the basis of one retailer's trade.

The supply chain therefore should always been integrated to the category management process right from the beginning and followed through. Indeed, a problem with the supply chain management may explain under performance for example of a promotion, if the product has not been available right from the beginning of the communication.

A strong supply chain also implies good interractions between the retailer and the supplier in order to minimize the issues that may appear once a category management program has been set.

Friday, November 08, 2013

My Thoughts On Twitter's IPO

Twitter's IPO yesterday was a remarkable success. The stock has spiked by 73% for its first day of quotatation. There were a lot of questions about how Twitter would do for its first day at the stock exchange market, due to the fact that the company has not achieved yet any profitable years. I wanted to comment a little bit about that news.

I think Twitter's stock is overrated
Of course, we are far from the 2000s Internet buble, investors know how to forecast better the return on investment of such Internet companies. Nevertheless, I may be old fashion about it, but without a consistent business modell, it is difficult to evaluate the worth of a company. Having a company worth $21 billions which is about what a company like Carrefour is worth, which sales for over $130 billion and generates hundreds of millions in results, it is difficult to understand. Obviously Twitter has a large potential of growth, but still, they need to show evidences that they can achieve such a worth.

Twitter's stock spike is understandable
Investors understand that tech companies are in the future the most profitable companies, and the companies that will grow the most. Therefore, in this crisis, having such an opportunity to invest on one of the largest Internet company (in terms of users) is a great opportunity, which is worth to be over paying at the moment. This is the reason why I believe the company had experienced such a great success.

Twitter's stock price is a threat to Twitter
The higher the price, the higher the expectations. Twitter now must be able to deliver proper financial results in order to generate profits to distributes to its shareholder. Has Twitter's business modell evolved dramatically those past few months to achieve profitability? In my opinion the answer is no. Now Twitter has financial results to invest, but they need to accelerate their sales and revenues. 

Twitter will remain in the long term.
Despite the fact I am still questionning Twitter on its business model, and I don't see yet how the company would generate profits in the next 2-3 years, I believe Twitter will remain. The service has changed the life of millions of people, the idea is great, and the service work. I don't believe that people can now live without Twitter. I also believe that Twitter has achieved to get such a high number of users that no real competition would be able to do so. Now the question is how Twitter will evolve. It will be interesting to see, but now that Twitter is a public market company things will move fast.

Monday, November 04, 2013

8 Habits of Highly Effective People

A quick note about a great article I found thanks to @guikawasaki. I am always seeking for new ways to improve my professionnal efficiency, and I believe this article and these 8 tips are easy to set up, and work. I have just completed them with a little bit of my insights.

1- Stop multi tasking: 
One man brain works like a computer (actually, it is more computers that have been designed like a human brain, but for my example let's turn it around): the more you have software open at the same time, the slower your computer will be. Be like an Ipad: Apple decided right from the beginning to have only one application at a time, to secure fast running processes.

2 - Delegate:
You can't do it all by yourself, whatever your hierarchy postion may be. You need to trust people and find way to control what they are doing. If not, you are screwed. You don't need to have a team under you to delegate. Sometimes I even delegate to my boss some work that I consider he would do better than me, due to his skills and/or hierarchy position.

3 - Use appropriate communication
This one probably requires a lot of experience. It is through experience that you know how to communicate efficiently. It is important always to work on it.

4 - Apply structure to your schedule
It is important to have an organized schedule, but also a schedule where you plan ahead of time some open loops in order to gain flexibility. Because there are always unexpected things, you need to plan ways to deal with them.

5 - Give everything a proper place
This one I may disagree a little bit. Indeed, you save time when you know where things are. But by spending too much time to range everything, then you don't focus on the things that really creates value. 

6 - Time Activities
You need to know the approximate time of certain tasks in order to master your schedule. You need also to be able to seek for ways to cut the time you spend on certain activities. This is how you complete efficiency.

7 - Commit to Downtime
Need to work on that. I used to go swimming every day at my lunch break, but got hooked by my work. Need to get back on my routine. Nevertheless, I am able to see the time of the year where work gets crazy, in order to lower my work load during weaker times.

8 - Plan Projects
What really matter is to break down projects in easilly achievable goals, which lead to progress. Project planning needs to have a clear mind, in order to think through all the potential outcomes of one project.

Friday, October 25, 2013

The Important Skills For Analytics

A quick note that have been inspired by a tweet of @kelloggschool about the most important skill in data analytics

"What very few people understand is that the most important skills in analytics are not technical skills at all. They're actually thinking skills".

I am 100% agree with this statement. Indeed, I believe that what really matters once analyzing data is the ability to understand the origins of the data, and to translate it into simple and operational decisions.

I always take a lot of times to understand the history, the origins of the data: Why did the sale falls? Was the previous data too high, hyped du to extrordinary events? Or because something went wrong in store? A shut down of the web page? Data alone, even if pure, well brought, and the proper one, does not mean much. It is therefore always important to correlate it to actual concrete stuffs.

And then, what is interesting, it is always to make decisions on it. Being able from complex data to bring a clear view of what needs to be undertaken to maintain good figures or to turn around one situation.

I am currently reading the book of former TESCO's CEO Terry Leahy in his book "Management in 10 Words". One of them is "simplicity". During this chapter, he emphasizes on the difficulty of making simple decisions to solve complex problems. Nowadays, with the Big Data, the information overload, most of things seems to be complexed, and most of the time, we tend to look for complex solutions to these complex problems. One of the key factore of success of management is to simplify decisions, in order to have them well applied by the staff. 

Same things with analytics, it is not because you have complex analytics that you should have complex reports, and complex actions linked to them.

Tuesday, October 22, 2013

Articles About Customers' Behavior During Sales Periods

Sales season, or promotional campaigns are a very important part of your marketing strategy. In terms of customer relationship management, actually, we use a lot of techniques in order to have targeted ads with targeted discounts in order to optimize promotional budgets. But when it comes to sales, you are in a totally different area, as you have massive discounts for any people who gets in your store. Nevertheless, as most of retails own a substential part of its sales made during those kind of periods, these events should be taken into account in your customer relationship management strategy.

French Magazine Challenges has interviewed French expert in economical behaviors Mickaël Mangot about how customer's behavior may change during sales periods.

Customers behavior during these sales are based on two platforms:
  • Rarity: The stock avaible + the high level of discount + the short period of time, drive the urge to get the products. We desire things more when they are rare.
  • Social competition: During the sales period, brand products are affordable to most people which creates the will to go up the social scale. We want to get as much products to own more things than our peers.
There are two main tactics used by retailers to succeed during these sales.
  • Showing off the original labelled price: The customer tends to pay more attention to the discount level than the actual price after the discount. By maximizing and showing the discount, retailers raise its chances of selling.
  • Advertizing big discounts in order to attract customers into its stores, and then having lower discounts inside store. The big discounted products are available with low stocks. If the customer don't find what it needs, it will have a high probability to buy another product with a lower discount.
There are two important kinds of utility for a customer during sales hunt:
  • The utility of the experience: What utility you get from the things you buy.
  • The transaction: Most of the time, this experience is the one with the most emphasize during sales. 

Sales are a very important part of a relationship between a retailer and a customer, and you should pay attention to the experience you provide to your customers during this period.

Monday, October 14, 2013

Leshop: The Most Successful Grocery E-Retailer In The World

I wanted to writte an article about a company I already wrote about, which is a great success on line, Swiss company Le Shop.  In the booming e-commerce, most companies which experience great success sell either cultural goods that can be easilly dematerialize, or companies that sell hardware and electronics. 

But in the world, it is very rare to see food retailers being able to run a profitable business. A lot of companies are looming on the potential, such as Amazon, but even though the business is not that old, some companies have already filed for bankrupcy, like French e-retailer telemarket.fr. 

The calcul is simple: If on average e-commerce can counts in the end for about 30% of the overall commerce, the growth margin is very high, as I don't know any countries where grocery e-retailing has a market share higher than 10%.

Le Shop is one of them. Founded in 1997, the company struggled in its debut, but was able to go through the Internet bubble of the early 2000s. In 2003, the company set a strategic partnership with Swiss leading company Migros, which allowed them to get the buying terms and the private label catalog. 

In 2013 the company:
  • Generates 31% of its sales on smartphones and tablets
  • Sales for 122 M€
  • Counts for 0,8% of market shares.
  • Is profitable.
Of course, the Swiss market may not be the most aggressive in terms of pricing, but Le Shop, thanks to its trailblazer mindset, has been able to develop a good business. Also, Switzerland is probably a great country, as the equipment in smartphones and tablets is probably higher than the world average. There are though probably a lot to learn for competitors in order to launch their business online.

Wednesday, October 02, 2013

La dématérialisation des programmes de fidélité

Je souhaitais relayé un excellent article que j'ai lu sur le magasin professionnel LSA du 26 septembre au sujet des programmes de fidélité dématérialisés. En effet, les smartphones et les nouvelles technologies ont énormément fait bouger les programmes de fidélité, aussi bien d'un point de vue du support, mais aussi des mécaniques commerciales. Vertone IAE et Comscore font un état de la fidélisation en France en 2013:
  • 58% des français ont entre 3 et 10 cartes de fidélité.
  • 66% : taux de pénétration des programmes de fidélité en grande surface alimentaire.
  • 50% des acteurs de la distribution alimentaire et 30% des acteurs de la distribution non alimentaire ont dématérialisé leur carte de fidélité sur mobile. A savoir (pour être dans le milieu) que cette dématérialisation qui semble très simple pour le consommateur, est en fait très compliqué car souvent, les caisses de ces distributeurs ne sont pas faites technologiquement pour lire des codes barres sur des écrans de portable. Mais les nouvelles caisses maintenant les prennent en compte.
  • +100% de programmes fidélité téléchargés en 2013. 27% des possesseurs de smartphones, soit 15 % de la population totale ont leurs programmes de fidélité sur portable vs 7% en 2012.
Il existe 4 grands types d'applications portable relayant les programmes de fidélité:
  • Les portes cartes, permettant l'accès facile et rapide au 3 à 10 cartes que le clients possèdent, et donc d'augmenter les chances que le consommateur utilise celui-ci.
  • La ludification: Proposer des récompenses liées à l'utilisation de l'application. Cela peut être en scannant des produits sur le point de vente, en faisant des commentaires et donc en interagissant avec l'enseigne, ou encore en "likant" la marque.
  • Le service omnicanal: Il permet de pouvoir proposer du service et du conseil à valeur ajoutée au consommateur, ce qui est très bénéfique sur des produits à forte customization, tel que les produits cosmetiques ou techniques.
  • Les porte monnaies: Une utilisation simple, qui permet d'avoir accès à des réductions. 
Il est très souvent difficile d'avoir une seule application qui regroupent l'intégralité de ces services. D'ailleurs, je pense qu'il y a certainement pas mal de place pour des entreprises qui souhaiteraient regrouper pour plusieurs enseignes un même service, type commentaires consommateurs, ou bien un porte monnaie électronique multi enseignes et multi produits.

Il y a encore pas mal de chemin à faire pour les applications mobiles dans le cadre de la fidélisation, car pour l'instant on reste sur une utilisation historique de programmes déjà établit, et très peu de nouveaux concepts de fidélisation ont émergé de ces nouvelles technologies. Je me souviens à un moment de Franprix qui avait fait des expérimentations d'un programme de fidélisation 100% mobile il y a déjà 4 ans, mais qui manifestement n'a pas vraiment marché.

Il y a un point dans la ludification qui pour mois a aussi un très grand avenir et un très grand intérêt pour les distributeurs, c'est pour les applications de géolocalisation, type foursquare. J'espère que Foursquare sera capable de passer un niveau, et de devenir un réel "annuaire mobile de géolocalisation", car cela sera un outil parfait pour les enseignes de générer du traffic en magasin.

Tuesday, October 01, 2013

Concours vidéo du Cercle du Marketing Direct

Une deuxième publicité au sujet de ma lecture récente du blog de mon ami Henri Kaufman. En effet, en plus d'avoir été directeur d'agence de communication, auteur du livre sur la Créativité, il est aussi actuellement le co-président du Cercle du Marketing Direct, l'une des instances les plus connues au sujet du marketing ciblé. 

Le Cercle du marketing direct vient de lancer un grand concours vidéo pour les jeunes professionnels de moins de 30 ans, afin qu'ils réalisent une vidéo de moins de 30 secondes avec pour objectif de nous montrer leurs vision du commerce dans 30 ans.

J'invite toute personne intéressée de s'inscrire, en vous souhaitant bonne chance.

La Créative Attitude par Henri Kaufman, éditions Kawa

Je souhaitais faire un peu de publicité (en français, une fois n'est pas coutume) pour la parution du nouveau livre d'Henri Kaufman sur "La Créative Attitude". 

Henri Kaufman est l'une des personnes les plus brillantes que je connaisse. Je l'ai rencontré lors de mes études à Paris Dauphine, il était alors mon professeur, et m'a éclairé à l'utilisation des réseaux sociaux, et notamment du blog. Je pense que sans lui, je n'aurai jamais réussi à développer autant ce blog, car il m'a permis de bien prendre conscience de tout le potentiel de l'outil (il y a près de 5 ans déjà). Henri fut directeur d'agence de communication, et est un spécialiste du marketing direct, et bien sûr du marketing digital. 

Extrèmement créatif, il a décidé de partager ses recettes miracles dans ce nouveau livre, afin d'aider ceux qui se considèrent non créatif, ou bien ceux qui ont du mal à trouver des idées, à développer les aptitudes et environnements qui vont favoriser l'émergence de ces idées. 

Je souhaite un grand succès à ce livre, en espérant qu'il vous aidera à trouver de nouvelles idées, mais surtout à les appliquer.

Thursday, September 12, 2013

Is There A Future For Electronic Goods Retailing? Some Of My Thoughts

I recently read an article about the good health of Best Buy's Stocks. Surprisingly, even though the competition with online retailer becomes tougher and tougher, Best Buy succeded in delivering promising results. The question that this article ask, and the same that I ask to @tbayart , was if brick and mortard electronic goods retailer still have a future. 

Indeed, in this specific field, the competition of the Internet is very important. Most of the traditional store chains are not able to compete with prices, and the showrooming hype makes it even worse. The margin rates are historically low, and the price competition with online retailers which don't have the real estate cost makes it even tougher!

Some people even believe that traditionnal retailers are condamned to shut down eventually. Actually, I do not really agree with this version.

I may look like a trailblazer, but I have envision what is going on right now almost ten years ago: the show rooming trend. But at this time, I did not picture it as a bad thing, but actually a great opportunity to improve customer relationship, and the added value of the retailer. Here is sort of what I saw:

  • Stores would have very low stocks as people would tend more to buy goods to be delivered home.
  • There would be no cash desks, people would buy with cards and have automatic cash desks, which would lower the cost of cashing in.
  • There would be fewer products, to simplify customers' choices, but they would be presented in a manner that customers would be able to test them.
Of course, my vision now would have changed a little bit. Because the world has evolved a lot (at this time I could not see how mobile devices would change the world, nor what the competition landscape would have been), and also because I gained experience and expertise about retailing and marketing.

But I still believe there is a lot of room for brick & mortar retailers. And the main reason is that those kind of products requires a long decision making process, a high implication due to the cost, and a great knowledge of the products due to their complexities.

So I still believe there is room to develop a profitable business modell, which would actually be based on the showrooming trend which most of experts blame.

  • Maybe there would be less stores, and further from downtown: Maybe like Ikea with a big surface, which would help to show out the products.
  • Maybe there would be no stocks, or actually like ikea, on the opposite, there would be no warehouses the stocks being in the store.
  • People would buy on their sell phone their products, which would lower the cash desk cost.
  • Maybe there would be lower inventory (I believe that the market becoming mature, the product ranges start to be cut, which is a good thing), which will lower the cost of inventory.
I may not have all the information needed to develop the whole concept, but trust me, there is room.

Wednesday, September 11, 2013

Apple's Low Cost Strategy To Enter Emerging Markets

Apple launched yesterday its new Iphone range, composed by 2 devices: One enhanced version, with a better processor, and new features, and one low cost, which is sort of the same than the previous version.

I believe there are two goals in the fact that Apple launch a low cost device:
  1. Being able to compete on the second hand market: Apple can propose an old version new at a good price. Now that the smartphone markets become mature, the second hand market starts to count in the overal smartphone market, therefore there is room for growth on it. This is what Renault made in the car market by launching the low cost brand Dacia, with a certain success.
  2. Being able to compete in the emerging markets, where smartphone prices tends to be lower. This is the reason why its competitors excell, and take some market shares to Apple.
This is the second point I would like to discuss. Indeed, emering markets are very important for global companies as it is where growth is. The goal in this market is to set a presence that will secure a big market share, if possible a leading position, in order to generate long term profitability once the market matures.

But Apple have a dilemma: Indeed, even though they are not a luxury brand, they have a luxury branding strategy. And by trying to have an accessible price, they may alter this strategy. I believe they must have struggled with this move. And probably this is the reason why they have picked a targeted price of 500$ which is actually very close to the standard price of 600$.

But Apple must be able to get competitive in terms of pricing in order to generate new customers. Because if they don't they may not be able to compete soon with the other manufacturers like Samsung.

What do you think about it?

Friday, August 16, 2013

Category Management Series: Considering Inventory As An Asset (Inspired by The Ikea Edge)

One new post in the category management series, linked to my reading of Anders Dahlvig book. Ikea has based its success on low pricing. But more than buying cheaper than the competition, one of the key component of this low price strategy is the mastery of supply chain and inventory. 

Most of retailers consider inventory as a liability. Indeed, a high inventory leads to decreasing the cash flow. Cash flow is important in the retail business. A positive cashflow, allowed by buying products with 30 to 60 days to a supplier and selling the merchandises in 5 to 10 days, allow the retailer to invest in opening new stores or new activities. Owning a high inventory is therefore considered as a bargain.

But rather than that, Ikea believes that Inventory is an asset. Having a high inventory allows your store to minimize the stock out situations, and then maximizes your sales. Low inventory leads to low stock in store, and hence you miss some sales. Ikea's main goal remain the sales.

Here is an example of how low inventory management has a bad impact on sales and the overal performance of one retailer: Most of retailers deliver its results at the end of the fiscal year, on december, 31st. Hence, most retailers tend to order as less as possible, to get as low stocks as possible. But the end of the year is a very important time of the year for a retailer, a period where retailers make most of their sales. By giving too much importance to low inventory, one retailer may miss some important sales.

Also, one more thing: Instead of trying to pay its supplier as far as possible, Ikea would rather pay their supplier on time. Indeed, paying suppliers far allows the retailer to play with its positive cashflow. But Ikea think differently: By paying its supplier on time, the supplier has less financing issues with its cashflow, which allows Ikea to gets better buying conditions, and then lower the cost of its inventory (because they get better conditions).

I believe it is a very unique way to consider inventory, but what I like about this philosophy is to always prefer stock availability than low stocks, because sales must always be the main and primarly goal of one retailer.

Wednesday, August 14, 2013

The Ikea Edge: The Best Gears Don't Make The Best Cars

I wanted to share with you in my series about Anders Dahlvig's book his thought about management and team work. It has been based on a quote of Russel Ackoff, a trailblazer in management sciences.

Let's imagine you gather all the best cars in the world in one single room. Then you pick the best gears of each modells: The best engine, the best wheel, the best breaks... In the end, you get all what you need in order to build a car, with all the pieces you need. The question is: If you put it all together, would you have the best car in the world? Would you at least have a car that would move forward? Maybe not. The fact that each part works well individually does not mean that it would work all together. Success comes from the ability to work together. That is what makes the best car.

I believe it is very important to understand this part. I am totally agree with this quote. How many times a pro sport team build up dream teams on the paper but those teams never work together.
One example that comes up in my mind is the Lakers team of the 2000s with O'Neal, Bryant, Payton, Malone. All of these guys were all of famers, and despite a really will to work together, that did not happen the way they wanted and they failed in the finals.

Human interactions are key in business, with partners (suppliers, clients, investors), but also with employees, wether they work directly together or not. Great lessons, and great story to tell.

Monday, August 12, 2013

Category Management Series: Managing The Product Range And Its Consequences Inspired By The Ikea Edge From Anders Dahlvig

The first blog post I wanted to share about my reading of Anders Dahlvig's book The Ikea edge is actually linked to category management. Indeed, as a category manager, we are responsible of the listing and unlisting of products, and therefore, we need to master the width of one product range.

Most of the time, category manager tends to look after the largest product range. Indeed, owning the largest listing allows your category to become a leader in its trade: The more you have products, the more customers will consider your category as performing. Also, the larger the product range, the larger the sales, as you cover the most customer needs.

But as a category manager, it is also important to always understand what impact having a large range also implies:
  • High inventory,
  • Larger stores to show out your range
  • High wadges due to the manutention cost to put products on shelves.
Ikea is for sure the definition of a hard discounter, or a low cost company as you like. Anders Dahlvig's philosophy is: while choosing between a large product range and supply chain/ operationnal efficiency, Ikea will always choose operationnal efficiency.

As Dahlvig says, Ikea has a target of 2 500 products in its listing. Ikea, thanks to its concept and the attraction of its store, could sell almost anything, and has a lot of great products that supplier show them all the time. But because of their eagerness to get high efficiency on the operationnal point of view, they always keep their 2 500 products threshold. Keeping a short product range allows Ikea to keep low prices because they master their retailing costs.

Should you apply this rule to any kind of retail? Of course not! Amazon's goal is to get as much products as they can, because their business modell is much different than a hard discounter. But when thinking about category management, it is important to always keep in mind the cost of one new product in the range is.

In the Category Management Series:

Sunday, August 11, 2013

Book Review: Anders Dahlvig The Ikea Edge

I have juste finished reading the excellent book of Anders Dahlvig about Ikea's success story. Anders Dahlvig has been the CEO of Ikea for 10 years, between 1999 and 2009, but more than that has spent about his whole career at Ikea, working in different business units of the group. Hence, rather than telling the story of how Ikea has grown, Anders Dahlvig analyzes what makes Ikea a remarkable success story.

This book has really inspired me as a retail professionnal. Indeed, Ikea has great ideas on how to run a retail business, and some of them are quite different from how retailers usually think. This book has so many great ideas, that I decided to make a series of posts instead of one, in order to analyze the favorite parts I have from the books.

Why you should read this book:
  • The Story of Ikea: Even though it is not the sole purpose of the book, you learn a lot of details on the key dates, but also how and why Ikea grew the way it did.
  • The retail strategy: there are great ideas that retail businessmen should read carefully, in order to understand very specific parts of Ikea's success. I will write couple of notes about them.
  • The management style: Beyond retail parts, Ikea has a management styles that have thrived throughout the years. It could be very inspiring.
  • Understanding how to settle in new markets: Dahlvig tells us about how happened the launch of new business units in new markets. It is important to know for companies that wants to go abroad.

Wednesday, August 07, 2013

The Recency Theory

I was going through my saved favorite tweets on my account @schriver and I found this article about the "recency theory".  

Maybe the term "theory" may be too much about this concept but I believe it is interesting: In order to be efficient in your advertizing, it is important to focus on the time when your customers may most likely be making their decision.

For example, it is no use to have a commercial about a pizza at 9 am, because people will tend to forget about the commercial once lunch times come. Instead, having the right mobile coupon ringing around 11:30 AM will have a high change to trigger the sale.

In nowadays society, we are all overwhelmed with advertizing overload. Basically everything and anything is an advertizing medium: TV, websites, radio, smartphones, billboards, newspaper you read... It implies people can't keep in mind for long a commercial, and therefore, they must be able to make a decision out of it quickly.

Thanks to new technologies, it is now easier to communicate with one customer when he is in his decision making process. It is very important to be efficient in this timing in order to get customers' responses rate high.

Monday, August 05, 2013

Some Thoughts About Facebook Graph Search

Earlier this summer Facebook launched on a larger scale its new search engine called Graph Search. Search Engine is a very strategic tool in the online advertizing business. Indeed, most of the advertizing revenues Google get is from its search engine activities. And as Facebook owns a large number of users, it is important they leverage this base in order to get revenues. This is the reason why they have launched their own branded search engine.

I believe it was very important for Facebook to own their search engine. After having seen the Bing experience with Yahoo, I am convinced it is better to own the search engine in order to maximize revenue. Now, you also need to have a powerful and efficient search engine, especially while comparing to Google excellent system. 

Facebook took an innovative approach, trying to focus on its main strength, the social links its users have with each others. That is the reason why Graph Search has been designed that way.

The problem is that a lot of people raised the confidentiality issues that Graph Search will bring on the table. I understand that issue, but once again, Facebook also need to leverage the data it has in order to improve its users experience. I believe that people using Facebook are now well aware of the confidentiality problems that may occur.

I have not really used Facebook Search yet, so it is difficult for me to talk a lot about it. But I really wonder if people will actually use Graph Search a lot. 

What do you think about it?


Wednesday, July 31, 2013

Category Management Series: The Pricing

One of the key elements of a category management strategy is the pricing aspect of it. The topic is very large, because there are almost as many price strategy that there are companies...

There are different key aspects though to take into consideration in order to set a pricing. These aspects are not ranked! Because once again, depending of the global strategy of a company you may use one component more than the other:
  • Companies costs and margins: Obviously, if you are running a business, it is not for free, and you need to earn money. Therefore it is important to understand how much money you will spend once selling one product, in order to have a price that will secure you some profits.
  • Competition: Of course, you will always been in a competitive environment. Maybe you are the "Apple" of your sector, or with very innovative products, you will always need to find products that have the same usage that may be an indirect competition.
  • The facial value of your product/service: Customers may have an idea of how much money they may put in your products. This facial value may come from the money you allow your customer to save, or the time you will save, or the comfort you will provide. It is important to see how much money your customer is eager to spend on your products.
For a retailer, and most companies with wide product ranges, there is also a very key component of the pricing strategy: The equalization. The equalization process comes directly from the important competition you have in the retail business. Therefore, your pricing strategy is one of the key reasons why your customer will choose your store rather than another. Your equalization process obviously needs to get customers perception that you are cheap, but also needs to take care of the three aspects of the pricing above. 

In the Category Management Series: 

Monday, July 29, 2013

Publicis & Ovicom Joins Forces To Create Advertizing Tycoon

I learned this morning that French advertizing company Publicis has decided to create a holding with American group Omnicom.  The group is going to be a holding with headquarters in Holland (??? Probably for taxes reasons) with operations main office in the US and France. The new holding will become the largest group of advertizing in the world.

The merger is supposed to allow both companies to save money on expenses, and also to create different synergies. Now is it a good thing?

This is a question I don't really know actually... Indeed, some clients may be reluctant to remain in an agency for example that deals with their competitor, so I believe that they may loose some clients due to that. I actually believe that maybe the new group will need to sell some of their agencies due to that reason.

Also, I believe that where the group may create the best added value is about its consulting activities, rather than their power of purchase. Media companies are struggling financially, and I don't think they are in the capacity of providing better pricing due to the fact those both companies will buy together.

Now I am very happy for Publicis. I believe that Publicis did a great job and had the good strategy for years now. They have been able to shift from traditional media to digital with success. It is always great to see a French company succeeding as much as Publicis does.

Friday, July 26, 2013

Tesco's Talking Shop Blog

I recently discovered the Tesco Talking Shop Blog thanks to an article of French magazine Linéaires. Tesco is one of the leading retailer in the world, thanks to its leadership in England and different other countries. Tesco has also been rewarded thanks to its customer centric approach, and the usage they make from their loyalty reward program data.

In this blog, top executives of the company discusses about their job, they're philosophy, and what the innovations are at Tesco. It is a great source of information in order to know what the company is at.

As a professional of retail, it is a great opportunity to understand better what makes Tesco so unique. I invite you to have a look if you have the change.

Thursday, July 25, 2013

Should Businesses Experiment? thanks to @ariegoldshlager

I wanted to share with you my thoughts about an article I read on the blog of @ariegoldshlager : Why Businesses Don't Experiment. Actually, I found this article very interesting, because it is true: From my personnal experience, I believe that companies tend not to test much. Most of the time, they would rather change their whole business at once than to conduct tests.

The thing is that testing is difficult, and requires you to have clear patterns and protocol to respect, in order to have usable data at the end of the test period. Testing is not only about launching a new product and letting a few sample of people try it, it is about targeting the right sample to use, and to define right from the beginning the data that will provide you a clear answer.

As Arie points out, companies would rather have consultant letting them know what to do with their core business and take their advises for granted than taking couple of months to figure out what the decision will imply.

Now I believe that once you want to make a decision either to experiment something or to set it on a larger scale, you should think about those two things:
  • Experimentation is a great way to apprehend the impact one decision will have on the different component of one business, and then you would be able to correct it, in order to provide the best service to your customers once you make it on a larger scale.
  • Experimentation takes time, and in nowadays society, in tough economy and tough competition, being fast is one of the key element of success.
I may not give a clear answer to this situation, but I believe that before skipping an experimentation process, you should deeply look after it, in order to know what would imply a testing period, how to do it, and then make a decision either to experiment or not.

Wednesday, July 24, 2013

Walmart To Set Lockers In Store For Online Deliveries

In Store delivery is probably the biggest challenge for online business. Indeed, E-commerce is still growing, but its growth pace has slowed down a lot lately. The share of retailing made on the Internet is becoming steady, which is a good and a bad sign:
  • A good sign because it shows that online business is durable and counts for an important share of the overall retailing
  • A bad sign for retailing because most of the growth of retail was based on online activities.

I believe that there is a great opportunity for growth for online retailer thanks to this system:
  • They benefit from new delivery places. In the case of Walmart, in a highly visited place.
  • They can optimize their supply chain by delivering large quantities of goods in one single place, cutting the cost of the last mile (which is very expensive).
  • The system is quite cheap (even though I don't know the fees Walmart may apply to the online retailer, in the caze of Amazon's locker for instance).
  • They can skip the problem of deliveries that unsatisfy a lot of online customers. Who has never had a problem of a product that never came, or late, or had to call the post office to know where the mail has been shipped... This system I believe is more secure.
Thanks to this system, I believe that Walmart.com will get more exposure, and a competitive advantage. It is a very easy way to leverage the store network available in order to get market share online.

Tuesday, July 23, 2013

Amazon's Strategic Plan By Entering The Online Grocery Business

I read several articles on the web lately about Amazon's strategy to enter the Grocery Retail Market. I actually already wrote a blog post not so long ago about Amazon expanding their Amazon Fresh concept to new cities. Forbes.com has an interesting theory about these investment: Amazon is aiming to propose same-day delivery thanks to its ability to sell fast moving goods. Indeed, selling groceries, especially fresh products, imply Amazon to set up a supply chain allowing fresh products like fruits or meat to stay for the shortest period of time in warehouses, but also to deliver them with short notice.

Amazon is not looking for high margin rates, especially because grocery already works with razor thin ones:
“No one has cracked the nut of grocery home delivery in the U.S.,” wrotePaula Rosenblum, managing partner, RSR Research in a recent RetailWire online discussion. “The low margin nature of the business, coupled with the need for fuel-guzzling refrigerated vans and trucks, make it very hard to do — and that’s in ‘easy’ cities, which means relatively new homes, no five floor walk-ups or winding stairways.”

Mr. Heckman added, “It could also mean that delivery fees are lower, order size minimums are waived, and it certainly could mean that home delivery and in-store pick up will never pay out using traditional metrics and full allocated costs.”

Amazon has already started in France to sell fast moving goods, but mostly the pricy ones, with slow frequency of purchases: baby food and diapers for example.

What is interesting with this strategy, is that it somehow looks like a revert strategy of what hypermarkets have thrived on for years. Hypermarkets proposed non grocery products at discounted prices in order to attract foot visits for customers eager to find great deals, and then to sell food, which is where their core business were.

But now, Amazon wants to do the opposite: Attract people with grocery food, thanks to the home delivery service they can set up, in order to sell more of their core business item.

Friday, July 19, 2013

Sales representative/Store Staff are the best people for your customer relationship management effort

A very quick note to share with you this story: http://www.loyalty-ip.com/article-123-exceptional-cx-creates-brand-engagement?utm_content=buffer299e4&utm_source=buffer&utm_medium=twitter&utm_campaign=Buffer

I believe you should pay attention to it. So many times I have emphasized in this blog that the best medium of your CRM strategy is the people directly in contact with your client. This story is just a great example. Beyond the big data, beyond the technology, human contact remains special, when it is carefully handled.

Thursday, July 18, 2013

Why Mobile Commerce Should Not Be Taken Individually

Very interesting article of chainstoreage.com about mobile commerce ROI. Actually, the comment sounds familliar as mobile commerce is in the very same situation than traditionnal retail once e-commerce appeared.

When E-commerce started to spring up, a lot of people thought that traditionnal retailer would have a great competitive advantage as they owned store with high traffic to propose delivery and added value to online shopping. But one of the reason why it did not work that well at first was the way retailer was seeing the online store of the company: It was stealing some business from them, and on top of that they had to deal with the dirty work: after sales service, returns of non working products, the cost of stocks when people did not come to pick up their goods.

For mobile commerce it is even more true. Mobile commerce is 100% part of a ubiquitous shopper. One shopper may use its mobile added to different kind of channels, such as traditionnal stores, a computer, or maybe even a call center. That way, to link a sale to an activity on a mobile phone is difficult. And the perception of the return on investment of mobile commerce is difficult to get. 

Mobile commerce is growing fast though represent a limited share of the overal commerce, in most industries where it exists yet. But it is important to have in mind that the mobile phone will be the ultimate tool to link all the other communication and sale channels.

Tuesday, July 16, 2013

Category Management Series: Category Management And CRM

Here is a new article about category management. As you all know, I am category management at DIA but also a customer relationship management expert. And a lot of times, people wonder what is the link between those two activities.

A category manager, as I say most of the time, is in charge of the 4 marketing Ps of a category (a group of product).
  • Products: The category management is head of the offer of a retailer. It defines the listing of products, optimizing both customers' needs and expectations and the retailers' sales and profits.
  • Price: A category manager works on the price of the products in order to have a great price perception for customers, being competitive, but also have a good mix allowing the category to contribute in terms of margins.
  • Place: The category manager sets the merchandizing plan trying to influence shoppers decision.
  • Promotion: The category manager tries to define the best promotion plan throughout the year, with different goals, such as marketshare gains, speeding up sales of specific products, highlighting innovations to help them to have a good start...
A category manager has always in mind what are the priority of its company, in terms of sales and profitability. But it is also linked to customers' choices and needs. A category manager needs to analyze sales, new customer trends, market data... It needs to know what the customers need.

Hence, the category manager relies a lot on customer data, in order to make decisions. I believe that category managers may not leverage a 100% the full potential of CRM, in terms of knowing customers, being more efficient in its promotions and so on. But thanks to new technologies, especially mobile ones, it will become easier and easier to do so. New tools exist in order to interract more with them, to help them in their every day life, and these are the next challenges of the trade.

This is what I am trying to do as a category manager: 
  • Always try to know more about customers decision making process
  • Analyzing new trends, new usage of the products
This article is part of the category management series. Here are the other articles:

Monday, July 15, 2013

Category Management Series: The Client Is Not The Customer

It is something important in terms of category management because it is one of the main difficulty of category management. In the retail business, suppliers provide products for customers, but need to go through a client, the retailer, in order to do so.

Hence, the supplier needs to take care of two peoples' expectation:
  1. The customer: They need to define a product that will match their needs, will be better than the competition, and will have an affordable price.
  2. The retailer: They need to propose high level of sales, good profit, low inventory, among other issues.
Of course, the goal of category management , both for the category management staff of the supplier and retailer, is to respond to both people. The difficulty is when there is one of both that is not fullfilled. Seth Godin recently wrote a blog post about the difference between the client and the customer. I believe he explains well the difference.

It is always better when the client is the end user (the customer) of one product, because it ease the customer relationship management process. Hence, one supplier (or provider as Seth is writting) needs to have two specific approach for the same purpose: selling a product to an end customer.

Let's not forget also that the supplier (or provider) do not always define products matching customers' needs. Sometimes (quite often actually) they launch new products to increase the profitability of a production unit: I acquired a new plant that do plastic tubes, I am going to put my best products in plastic tubes. I bought a brand recently, I am going to get my flagship product with the flavor of this new brand...

I believe that category management is efficient when it starts from customer needs. Of course, both the supplier and retailer may have industrial or economic interests, but in order to make long term decision, and analyzing all the different economical aspects of the decision, they should focus on how the category development may benefit the end consumer.

This article is part of the category management series. Here are the two previous articles:

Monday, July 08, 2013

How Walmart Became The N°1 Retailer On Facebook

Walmart is of course the world laster retailer, especially due to its dominant position in its domestic market. Over the time, Walmart has been able to grow a base of 30 million fans on Facebook. French professional magazine LSA recently posted an article on the reasons why Walmart succeeded in its digital strategy.

Using Images and Video Media: 85 % of the content generated by Walmart's page is either videos or images. 

What kind of content?

  • 45% of posts are about products, depending on the seasons.
  • 17% is buzz contents, viral videos, that have nothing in common with the company's retail activities.
  • 15% are tips on how to use products, or to better consume.
  • 13% are interractions with fans, mostly through polls.
  • 10% are about ethical causes, such as recycling, donations.
Here is a sum up of Walmart's strategy

Wednesday, July 03, 2013

Amazon's Strategic Move Into Grocery Business

Amazon  has been mastering E-commerce since it started its business. Amazon has set its reputation on cultural products, books, CDs and video games among others. As the time went by, Amazon expanded to new fields, and now is able to sell clothing, and even groceries.

For five years, Amazon has been testing Amazon fresh in Seattle, and now plans for 2014 to open its concept in 20 new urban zones. Among one of the main reasons Amazon is betting on Amazon fresh, is to be able to offer to its customers delivery the same day of the order. 

Grocery E-commerce has raised a lot of questions. Indeed, there are very few companies in the world that have been able to develop a profitable business modell out of it. The most efficient and profitable way is for sure what exists now in france, drive through supermarkets.

But Amazon has for sure a lot of strength to succeed:
  • A great knowledge of E-commerce website, with the ability to upsell for example.
  • The excellence of their supply chain, which will help them to lower the cost of the last mile delivery
  • A great data base of customers to leverage, and to convert to Amazon Fresh.
  • Amazon already own top of the line warehouses, which means they don't need to invest much more to store the groceries.

Tuesday, July 02, 2013

What Is Going On In India?

India has been for the past decade one of the most promising country in the world. It is considered part of the BRIC (Brazil, Russia, India and China), a group of country which share common assets that set them among the potential leaders of the future.

I have always considered India as one of the most promising of these countries for several reasons:
  • They have a large population
  • They have the chance to have access to the sea, which helps both importation and exportation
  • They speak English, the language of world business
  • They have high skills in computing, which is an opportunity.
But laetely, India has struggled to grow as much as expected.

A recent AT Kearney's report show that India fell to 14th on the most attractive destination for global retailers list. Those past years, a lot of retailers expressed a lot of interest in India, such as Carrefour which launched a cash & carry store couple of years ago, Walmart also, or Auchan that set a strong partnership with a big Indian company.

But things are moving slowly. The infrastructure remain low, and the average income too. What is the main issue remains political uncertainty and corruption. 

How long will retailers need to wait before leveraging the full potential of this continent-country?

Friday, June 28, 2013

Category Management Series: The First Moment Of Truth

During these category management series, I am not really going to follow a specific order, nor establish a concrete way to manage categories. The goal is more to share some interesting thoughts and ways to have performning categories.

The first post of these series, I wanted to dedicate it to a concept I love, and that I have already discussed in this blog: The First Moment of Truth. Like a lot of other category management concept, the First Moment of Truth idea popped out of Procter & Gamble's people. Procter & Gamble was one of the first supplier to work together with Walmart to establish category management plan. 

The First Moment of Truth describes the fact that for fast moving consumer goods (FMCG) shoppers make their decision within the 7 seconds prior to pick their products on shelves. As a result, Procter & Gamble decided to shift its marketing expenses from mass media to point of sales advertizing.

At this time, First moment of truth was composed by paper-based brochures, signs etc... But nowadays, while social media and new mobile technologies are springing up and their cost is lowering, you may see more and more mobile apps, TV screens, and so on. 

The main idea to get is that the art of mastering one shopper decision making process in store is one of the key component of category management efficiency. New tools are available to marketers to help this decision making process in store.