Some Thoughts About Neuromarketing

I had the opportunity to read couple of weeks ago the excellent work Yasmina Chikh made to publish her thesis. She picked a very interesting and controversial topic: Neuromarketing.

Actually, the hype around neuromarketing seemed to have vanished. Indeed, a lot of work have been published about it, especially about how ethical this discipline may be, but also because of all the scientific work that has been undertaken in this field. I believe that now neuromarketing is operationnal, in terms of techniques. 

Nevertheless, and that is what Yasmina has underlined in her work, ethical issues remain. How far can we go to trigger a sale? Should we use these techniques, that are not based on arguments, but on irrational behaviors someone may get, because of how our brain functions?

In France, very few cases are available, as neuromarketing is forbidden. But I don't believe it will remain for long. European large companies have embraced the techniques, and soon, lobbies will force the European Union to validate its use in our country. 

Now will we see a lot of neuromarketing campaigns? It still needs to be seen, because these techniques are pretty pricy. You need a sophisticated equipment, most of the time you need to go through a university in order to use it. I believe the challenge of this kind of field is to be cost efficient, and to have clear results in the real life. So far, most of the findings have been made by scientific studies, and not yet in the real business field.

What I also really liked in Yasmina's report, is how extensive she has been in listing all the techniques you may use in neuromarketing.You should try to add her on LinkedIn, she may share with you that work (in French though).

Why You Should Not Spend Too Much Times In Concept Stores

As a retail and customer relationship management expert, I spend a lot of time in stores. As I have said most of the time, even though retailing online is growing fast, and customer experience in the E-commerce is constantly improving, the main customer relationship medium remains the retail. 

A lot of companies have understood it:

• Nespresso, who built its business model and customer service excellence on the Internet, has built a strong store network in order to be closer to its clientele.
• Apple doesn't stop opening stores, even though they are an hardware company, in order to master the way its products are distributed. 
• French E-commerce leader Cdiscount has strong ambitions in developping a store network.
• French Mayo and mustard producer Maille (Unilever group) owns two stores in France where they sell some premium products.

Most of the time, the idea of these companies are to use the point of sale as a showroom which emphasizes on the products, and on the greatness of their brands. Some may earn money (I believe it is the case of Apple's store), some are pure advertisement (like direct banking company ING Direct, or online Internet provider Free).

Not only "suppliers" or service companies are opening concept stores. Some retailers also have concept stores in order to prepare the future of their banners. One of the most well known concept store that has been launched those past few years was Carrefour Planet. Not only because it was the concept store of the largest retailer in the world beside Walmart, but also because it was innovative.

As a pro, I am seeking for those kind of initiatives to visits. Because they always have the most updated tools , but also because you can see in it what is the best service one company can provide to its customers.

But it is always interesting to put them into prospectives. Indeed, with concept stores, most of the time, you are in front of a non profitable store: a lot of tests are put in place in order to see what suits the most the customer, and what is the most efficient. It is always important to have that in mind. This is the reason why, it is always important to understand where profitability is, and where the cosmetic part is.

This is the reason why, you should not spend too much time in concept stores, because most of the time it can't be implemented at a large scale.

Why We Should Believe In Costco In France

I wanted to share with you some thoughts I had about the conference I attended about Costco at Paris Dauphine. As I have explained in a previous post, I really believe in the concept, and that it has some chances to grow in France. But during the Q&A session, I could feel how skeptical a large part of the audience was. Here are some of the issues they have pointed out, which I must admit will be some challenges to overcome for Costco in France:

• France is a very tough market. Carrefour, Casino and Auchan are among the largest grocery retailers in the world, and they excel in retailing. Furthermore, even though these 3 companies cruises in the international market, they have an even stronger local competitor, which gains marketshares month after Months: Leclerc. How can Costco find his place in between?
• France proposes very low margins: Due to the competition, prices are low, and therefore the French market tends to be less "profitable" in terms of %margins. 
• France has specific concepts, and don't know how a membership wholesale works. It will be difficult to explain the concept and to convince French people to pay 55€ to become members.

I know all of those problems: I experience them every day as a category manager at DIA. France is for sure a very difficult market. But what I notice, is that even though people who raise these issues are for sure retail experts, they are very pessimistic and negatives. We all know how negative French mindset can be. What these people calls obstacles I'd rather consider them as challenges. Here is how I see it:

• Sure the French market has a tough competition. But isn't Walmart a tough competitor in the US? Walmart succeeded in settling down in England, where there is Tesco, and where Carrefour failed couple of years ago. Also, they are in Japan, also a tough country where Carrefour failed.
• The French market proposes low margins? Costco knows how to work with low margins. And they know how to work with it everywhere. Yes it will be difficult, but Costco knows how to work with international suppliers, so they should be able to get strong partnership even in France.
• People don't know how a membership wholesaler works? Japanese got it, English got it. As long as you propose true advantages to a customer, he will get it. Costco has strong ambitions in France, so they should have the money to communicate on how it works.

Something that marked me, in the answers Costco's CEO gave, is that it seems they don't pay much attention to the competition's landscape. Indeed, they have their own concept, a unique concept, and therefore, they don't really have a true competitor, that proposes the same service. In the retail world, where pricing is one of the single factor of differenciation, I think it is a tremendous technique. They know that if they deliver what Costco's knows how to deliver, things would work. And I believe it is the right mindset. By focusing too much on competition and how a market is at a specific time, you don't focus on what is really important: satisfying customers.

Retail is Art: Gregoire Kaufman's Book "Retailart"

Grégoire Kaufman is working as a top manager of Group Carrefour. As an exeperienced manager, he has sailed the seven seas to look for new store concepts, and to study how different countries distributes fast moving consumer goods. 

Grégoire believes retail is somehow an art. It also pictures well the social and cultural landscape of one region or country. It is always interesting to visit stores in foreign countries, because you will always encounter new ideas, products you don't know, and different ways to promote products.

He has already published a bunch of his thoughts and pictures in his blog, couple of years ago. Unfortunately, he does not publish anymore (even though I understand: he is very busy as a professionnal). Nevertheless, he went a step further, as he published an online book, you will find on Blurb's website.

If you are a retailing professional, or simply curious about Gregoire's work, I highly recommend you to have a look at his work. 

What is very funny with retailing, is that the rules of the industry are very simple, and basically to keep it simple. Most of retailers have been inspired by Bernardo Trujillio, who held seminars for most of nowadays retail tycoons' founders (Carrefour, Auchan, Darty for French people)... But when you see how those rules are applied in different countries, you can clearly see the cultural aspect of retailing). If nothing looks like more a starbucks than an other starbucks, you should check out how in a global company like Walmart or Carrefour adapts to its clientele.

Here's a picture I liked of Gregoire's blog, about how an Argentinian Carrefour took advantage of the Soccer World Cup to animate its store.

Costco France's Conference at Paris Dauphine

Yesterday I attended a conference organized by my former business school, Paris Dauphine, Master "Distribution et relation client". This master often organizes conferences around the topic of retail and customer relationship management, and we had the opportunity to meet with CEO of Costco France, Gary Swindells.

The topic is very interesting to me, as I have always been a fan of this commercial concept:

•  I used to be a card member while I lived in the US.
• When I came back to France I had the opportunity to prepare a presentation for Auchan's marketing department, as I was eager to convince people in France of how good the concept was.
• I asked Lars Oloffson while he was CEO of Carrefour what he thought about the concept, if he was eager to try it in Europe, especially as he owns Promo cash, a btob card member wholesale chain. He responded to me that it was interesting, that they owned in Brazil Atacadao which is a concept close to Costco, and that they were on their way to launch a test, in the northern part of France. I don't think the project ever happened though.

It was also a good opportunity to see how Dauphine changes, as the main hall and the conference room has been fully renovated. It has been also my pleasure to have the opportunity to meet with Yves Soulabail, one of the main expert of Carrefour's history in France, but also an expert in Bernardo Trujillo's history, the person who invented the "modern retail". He owns a blog I visit almost daily, Carrefour un combat pour la liberté.

What is Costco

Costco is a warehouse, where both professionals and individuals may found products in large formats, at a great price/kg. In order to access their stores, you need to own a membership car you need to pay. Here is a great presentation.

Key figures and quotes of the conference:

• Costco works with a sales margin of 14%, which is actually very low compared to what other retailers have usually. But actually, I don't think that in this margin they count the money they get from the membership fee people needs to pay to get in ($55, $2 billion in membership yearly). What is interesting with the concept is that the membership fees is somehow the profitability they reach with each customers up front, even before they have bought any products... Which allows them to propose better pricing.
• $92 billion expected in 2012, which is I believe the 5th retailer worldwide.
• $148 millions in sales per stores, 13 205 m2 per stores. They even own a store in Korea that makes $478 M a year!
• 4 000 listed products: 3 500 listed permanently  500 which are in & out promotions, that goes from lobsters to cars, to pants...
• Customers visit stores on avarage every 10 days, which is actually high... I did not use to go that often...
• Costco don't communicate, meaning they don't do any flyers, any TV or radio promotions. They just have sometimes local campaigns for store openings. 
• Sometimes, they lend parts of their stores for "road shows", people that comes with a specific offer, and that shows products. 
• They believe they would be profitable once they would reach 3 or 4 stores! Which is not a lot actually.
• They forecast to own 10 to 12 stores in 10 years, and 20 in 15 years. You can clearly see they have a map and are eager to invest large amounts of money to settle in France.
• The average basket is 130$

Best Wishes for 2013

It has been a while I haven't posted something on my blog. As some of you may know, 2012 has been a very busy year on a personnal basis. I have moved to another appartment, became a landlord of my former appartment, and couple of days ago, I embraced parenthood. All these changes have kept me away from this blog. Also, as a category manager of DIA France, I extended my perimeter with new categories to deal with, which also took a lot of my available time.

2012 has in a certain sense allow me to grow my level of responsabilities, and I am quite happy about it, as I have always been eager to take some, both in my professionnal and personnal life.

As I have said, couple of years ago, while the beginning of the subprime crisis started, I expected as certain expert thought that the end of the crisis would approach in 2012. I believe my forecast was not that bad. But I don't believed that actually, 2013 would also be a tough year.

I have never been pessimistic, and I believe that 2013 will be a difficult year. But also, it will be great. Great because we will be forced to look after new opportunites, new way to create values. It is when times are difficult that you are actually forced to do more, and better.

I wish to all of you a happy 2013 year. I don't want in this post to make any forecasts, because 2013 will obviously be full of surprise. But what I wish you, is that 2013 will propose you the challenges and the opportunity that you need.