Discounters Outspend Tesco On Christmas Ad: Some Thoughts About Lidl Strategy

Lidl is at a very interesting time of its history. Lidl is indeed one of the largest retailer in the world, and thrive on hard discount. It is one of the leading retailer in Germany and has two interesting challenges in Europe:

1 - Grow as the most important challenger of Tesco in the UK

2 - Keep on growing in France as hard discount is going in limbo.

To achieve these two goals, Lidl has one main strategy: Strengthen its concept, in order not to be a standard hard discounter, but a reference in term of price/quality ration. This is the reason why Lidl has worked to hard to get its stores more welcoming. 

I read an interesting fact on the Internet: Discounters outspend Tesco on Christmas Ads this year. Indeed, the hard discount concept does not comply with advertisement, as hard discounter cuts off all kinds of extra costs that are not directly linked to operational costs. Lidl has also advertized a lot in France lately. But is it so strange to see hard discounter making ads? It is not so surprising. Both in France and in the UK hard discounters are now in a mature markets, where they need to find grow beyond expansion. That also needs they need now to explain well their concept, and to attract new customers out of their core clientele.

Of course, now that Lidl is now advertizing and hence getting far from the original discount concept, we may in couple of years from now see the rise of a new discount concept that will emerge, as it happened with the department stores, supermarkets, hypermarkets, hard discount...

Best Applications For Holliday Shopping

A quick article to show you what Forbes consider as the best applications to use for the holliday shopping season. 

This is interesting because it gives good example of the key features an application should have to boost retailers performance:

- Managing coupons and loyalty cards, thanks to barcodes management. Also, soon, you will be able to use NFC technologies, or bluetooth one like Ebeacon to do so.

- Proposes to reward instore visit. The key is to estimate how much you may reward your customers in order to have a positive return on investment. Nevertheless, the opportunity to leverage mobile technology to generate foot visite is important.

- Helping the customer to make a decision and find the right answer, by proposing content, ideas based on the user's profile, but also advices of other application users.

Walmart Investing In Its Prices To Compete With Amazon

I really believe that 2015 will be the year of a major fight in the Ecommerce industry.

Georges Plassat recent speeches on Amazon's strategy are not only to chat. Brick&mortar leaders intend to get marketshares quickly on the Internet. 

This is the reason why Walmart has decided to invest in its online pricing in order to catch up with Amazon. The price difference is narrowing, and I believe that Walmart has big plans on the Internet.

The price competition will hence become tougher as Amazon won't have any choice but to cut down its own price to keep its competitive advantage. As a result, the article shows that Compared with last year, prices are 12% lower at Wal-Mart, 9.7% lower at Amazon, and 3.5% lower at Target.  

As Georges Plassat said, traditionnal retailers have a competitive advantage in the Ecommerce game: They own stores network they developped over the years that will be hard to developp for a pure player (if they intend to do so). Amazon on the other end has plans to enter new categories to get business from brick & mortar retailers.

It will be interesting to see how things will go.

Les 3 principaux profils de promovores

Merci à @Adhréna pour l'article trouvé sur leur flux Twitter. Alors que nous sommes en train de terminer la période des fêtes de fin d'année, il est temps de faire un bref rappel des différents profils de promovore. Quelques informations sont très intéressantes:

1 Les coupons utilisés par les clients?

Pour être dans le monde de la distribution, il me paraît difficile de croire que les coupons sont fréquemments utilisés par les consommateurs. Au contraire, pour moi leur efficacité reste marginale vs des opérations de promotion de mass, avec théâtralisation en point de vente.

2 Les sources d'informations promotionnelles: 

83% In Store: Cela montre bien l'efficacité du marketing du point de vente, où je reste convaincu qu'il reste énormément à faire.

70% les boîtes au lettre. On est encore loin de l'arrêt du prospectus, média le plus efficace et le moins cher pour faire du marketing push. A quand une réelle réponse digitale pour préparer cette transition du prospectus à l'Internet. On y est pas encore.

Some Thoughts About Facebook's Long Term Strategy

I wanted to share with you an article (In French) I found about Facebook's Strategy for the next 15 years.

Here are the bullet points:

- Mobile as the heart of the strategy: Social media users migrate more and more to a mobile usage. That means applications must be developped on this channel to keep on growing their data base. The goal of Facebook in 5 years from now is to convert its users to its other mobile applications, such as WhatsApp, Instagram, Messenger, and Search. And then only to monetize this audience. This is this point that annoys mean. I mean, Facebook has already reached a large number of users, billions are using the service, it is now a public company, and is actually experiencing difficulties to keep some of its audience that are not using Facebook anylonger. I don't know if it is still time to grow the audience first, and then seek for monetization systems. Facebook needs to be profitable ASAP, in order to leverage these profits in new projects.

Splitting Facebook's Activites in several applications. The goal is to provide a better user experience. Indeed, when you have such a big Facebook activity, it becomes sometime overwhelming. It will probably also allows to have more advertizing product to market in order to get revenues out of it. Mark Zuckerberg believes that the different usage of Facebook actually respond to different target, with different interests. This is also something that is scaring me. Indeed, the Internet has based its success on the accessibility, and the freedom it allowed. But if Facebook really starts to master all the component of people's relationship online, Facebook would become a sort of private web, which everybody used and hence would be forced to use. 

Allowing The Most To Access The Internet: Mark Zuckerberg has goals to provide Internet to poor countries in order to the most people to access its service, which is something cool. 

The good thing about this stratgegy:

It is long term, it has a real vision. And I believe it is based on a good strategy, on the right path.

The bad thing about this strategy:

This strategy still delays the time when Facebook would become really profitable. I believe that Facebook has already mastered its competition, and can now focus on its business modell. Its IPO was meant for that reason. But Mark Zuckerberg don't really expect any revenues before a dozen of years... It is very risky.

Customer Decision Making Process: What information drives consumers' online buying decisions?

Interesting blogpost I found from Forrester's website. This Christmas season is obviously crucial for most retailers results. The shopping frenzy makes it one of the busiest time of the year for retailers. More and more, customers tend to shop online instead than in malls and stores. But what information drives customer to shop online. What are the key information that will trigger the sales for e-retailers. Here is an interesting chart: 

What is interesting, is how there key aspects of the decision making process need to be taken into consideration into the website's strategy. Hence, by advertizing clearly the information about the shipping costs, customer reviews, product information, and clear return policy, one e-retailer will limit the bargain of buying online, and hence maximize the chance the customer to buy online.

Especially, if these information are clear, it will limit the risk the shopper to go to different online stores to compare, which is a real risk in the e-commerce world.

Also, what is interesting, is to see that brick&mortar retailers, which are facing high competition of e-retailers, should actually leverage this information. Thanks to mobile technology, they are able now to provide a lot of information on product reviews, and product information on store. They also have most of the time clear return policy, which is easier as you may deposit it in the nearby store.

Very interesting stats.

How Properly Prepare Business Concept Experimentation, Especially in #Retail

New business concepts are a great way to dynamise sales and adapt to new customers trend. But most of the time, people don't really have a good process to implement these new businesses, which ultimately leads to failure.

Hence: "Think of it this way: A pharmaceutical company would never introduce a drug without first conducting a round of experiments based on established scientific protocols. (In fact, the U.S. Food and Drug Administration requires extensive clinical trials.) Yet that’s essentially what many companies do when they roll out new business models and other novel concepts. Had J.C. Penney done thorough experiments on its CEO’s proposed changes, the company might have discovered that customers would probably reject them."

Indeed, it is not that easy to perform a business experimentation. Because once you have the idea, which people believe is a good idea, the pressure is high to implement it as fast as possible to bypass the competition, and to earn the profits as fast as possible.

This article of the Harvard Business Review is very interesting, especially on a retail point of view as most of the examples brought are real case studies of US retailers.

Here is a Checklist of What You Should Do To Test A New Business Concept

1 - Does The Experiment Has A Clear Purpose?

In determining whether an experiment is needed, managers must first figure out exactly what they want to learn. Only then can they decide if testing is the best approach and, if it is, the scope of the experiment. 

When Kohl’s was considering adding a new product category, furniture, many executives were tremendously enthusiastic, anticipating significant additional revenue. A test at 70 stores over six months, however, showed a net decrease in revenue. Products that now had less floor space (to make room for the furniture) experienced a drop in sales, and Kohl’s was actually losing customers overall. Those negative results were a huge disappointment for those who had advocated for the initiative, but the program was nevertheless scrapped. The Kohl’s example highlights the fact that experiments are often needed to perform objective assessments of initiatives backed by people with organizational clout.

2 - Is The Experiment Doable?

Experiments must have testable predictions. But the “causal density” of the business environment—that is, the complexity of the variables and their interactions—can make it extremely difficult to determine cause-and-effect relationships. Learning from a business experiment is not necessarily as easy as isolating an independent variable, manipulating it, and observing changes in the dependent variable. Environments are constantly changing, the potential causes of business outcomes are often uncertain or unknown, and so linkages between them are frequently complex and poorly understood.

I believe that on this part it is very important to list all the variables that may impact the test, and right away from the beginning to understand how those variables have impacted the test results.

3- How Can We Ensure Reliable Results?

4- Have We Gotten The Most Value Out Of The Experiment?

What is fore sur is that experimentation is key before setting up new launches. The real effort is to master how much cost, and how much time you may spend on experimentation, as speed in execution also is a key factor of success in certain new business concept.

French #Retailer Picard Strategy: Japan & France

Interesting interview (in French) of Picard's CEO. Picard is to me one of the most exciting retail concept ever. As Ikea or Costco, it is based on hard discount operationnal approach, but by its store concept and category management, provide high service and optimized added value to customers.

Hence, Picard only sells frozen products, but as it focus on this technology, it is able to have large product range gowing to raw frozen veggies to concept desert or meals like sushi or burritos. Picard works on a 1 200 product range with 20% of the assortment changing every year.

Picard is aiming to launch a complete activity in Japan, and right now is testing a 50 products range in some corner stores.

Picard is planning on opening 250 to 300 new stores in France (it is counting so far 900 shops). It believe that stores are key in the customer relationship management of the company, compare to the Internet. Indeed, Internet website don't have any soul, don't create no feeling which could actually lead to brand loyalty. Instead, brick & mortar stores are the best way to create a real customer experience that ultimately lead to brand preference and loyalty.

Very interesting point of view. For those who don't know Picard, and if you come to France, I believe this is a must see concept.

The Bookbook of #Ikea

Not much to say, except it is a very clever way to advertize on a catalog, on an Internet medium.

Reuters decide to kill its comments Feature on its article

Reuter has recently decided to turn off its comments feature on its website. It explains the reason why on a long article. The whole concept is to say that in the age of social media, where conversation happens everywhere, and that it moved away for the comments on their website.

I totally disagree with this view. Of course, obviously, the conversation happens everywhere on social media, Facebook, Twitter, blogs, among other things. But social media is about multiplicity. And comments on an article are still one of the best way to discuss. When I read an interesting article on different news website, one of the first thing I do is to check out the comments. Indeed, where is the best place to see what people think about the article if it is not on this same page? 

I maybe old school on this one, but I still highly value comments on an article. Actually, I would really like to have more comments on my blog, which I always appreciate.

What do you think about it?

New #Retail Concepts: #Foodtrucks Allows Retails To Go To Customers

Brick & Mortar retailers are not dead, but they do need to evolve in order to adapt to the changes in customer behaviors. Indeed, with the rise of Ecommerce and multichannel strategies, retailers must adapt to reach its customers.

In the US, the food truck hype is high, and it allows people to get the food the closest they are, depending on the time of the day.

French retail magazine LSA published on its website some examples of retailers using this food truck concept as a store concept.  

I invite you to go on the website to have a look at actually what the pictures look like. The only regret I have, is that most of the examples are from brands sampling their products. But I believe that there are maybe a retail concept more sophisticated that may come up from it:

• You order what you want online, than collect it in the truck
• You maybe have a store that would move depending on the season, for example at the beach during summertime, in the business districk for the back to school period.

I think that having moving retail concept that will reach out to its customers is a trend that will eventually come up. It may not get a significant share of the FMCG market, but could tactically get customers from your competition, or lead to turn on sales.

What do you think about it?

What Do You Think About #Lowe's #OSHbot ? Is This The Future Of Shopping Experienc?

Intriguing article I found on the Internet lately. Retail chain Lowe's has launched experimentation of OSHbot, a robot designed to provide customer service in store. The robot can identify products, talk, interract with shoppers, and can lead the customer to the product it needs. It can speak several language, contact another salesperson in another store to provide extra advices. 

When I read the article headlines on Twitter "The Future of Shopping has Arrived and its Name is OSHbot" I had high expectations.

But after having seen the video, I am really wondering if this is what to expect from the future. Indeed, I believe that these kinds of robots must cost a fortune to equipe a store with (at least several thousand dollars a piece). How many of them would you need in a busy store to actually be enough to advice all of your clientele?

Also, those robots have a unique goal: to advice client. That means they can't do the other taskes a human may do, meaning merchandizing tasks.

Also, is the experience with a robot better than with an actual human? As a customer relationship expert, I still believe people do and will always value human interractions the most?

Now the only advantage I may found, is that if you are facing a high turnover, educating a salesforce may be costly and take time. Nevertheless, I am also questionning if those robots will have a long lifetime.

I would like to have your insights: What do you think about it? Do you really believe we will soon see those robots.

Does #Tesco 's Struggles Question The Application Of big Data In The #Retail Business?

Interesting article of the Harvard Business Review, trying to explain the reasons of Tesco's recent struggle in its domestic market. Tesco has been for years considered as one of the best global retailer, and a trailblazer in customer relationship management. But Tesco has lost market shares the past few years, letting hard discounters Aldi and Lidl grow in the UK market, whereas Tesco has based its success on its ability to value its customer experience and the analytics of customer data. Once the modell of a lot of other retailers, Tesco now brings a lot of questionning and the ability of big data to leverage revenue growth. Indeed, Tesco owns both the data (they know pretty much all what could be known of their customers) and have the experience to use it, but it has little impact now. What is even more schocking is that as hard discounters are benefiting of the weakness of Tesco, is that UK customers seem now to prefer a lean shopping experience to the fancy loyalty program Tesco has build up. To me Tesco's issues are simply revealing that before mastering marketing tools, one company should focus on execution. Also, analyzing data to maximizing profit without understanding customer needs is useless. It will be interesting to see how Tesco manages to get back on track to see if they rather lower their investment on their loyalty card program, or if they actually find new innovative way to create extra customer value out of it.

Georges Plassat CEO of #Carrefour Talks About Entrepreneurship, #CRM and #Technology

French Interview during the France Digital Day 2014, not so long ago, of Georges Plassat, CEO of Carrefour. Even though it was an English speaking event, the interview is unfortunately in French. But it was very interesting though, especially:

- His vision of customer relationship management: Before customer relationship management, in order to have a strong shopper experience, you need to master your trade and the basics. 

- His vision of "reinventing brick&mortar", it is a great happening to talk about reinventing brick & mortar business, but without strong core execution, it can only be an happening, a great PR speech. It is not so easy to transform brick & mortar business.

- His vision of E commerce: Even though things go fast, it is important to take its time, and to reach profitability, which is not such an easy business.

Should #Retailers Accept #ApplePay?

Apple Pay is probably the most innovative feature the new Iphones has. It has been years that cell phones company are looming on the mobile payment business. Apple has probably at the moment the best technology, it is one of the leader handheld manufacturer, and has probably a shot at getting the pie.

This news came up as Credit Card hack scandalls spring up. 

But the issue is that retailers are not keen on letting Apple getting in the business. When you run a business like Walmart that counts for about $500 millions in sales wordlwide, a tiny fee per sales could represent a lot. Here is a very interesting article that asks the question if Retailers shall accept Apple Pay. And It Emphasize on the reason why retailers are not proactive.

MCX was launched in 2011, led by Wal-Mart Stores Inc.,​ expressly to develop a mobile payment product. That product is CurrentC, which will be available sometime next year. MCX is a coalition of more than 50 retailers, including (besides Wal-Mart), 7-Eleven, Inc. Best Buy, CVS, Rite Aid, Lowe’s, Michaels, Sears, Gap, and Target.

In September, Wal-Mart Stores and Best Buy announced they wouldn’t accept Apple Pay, and in October CVS and Rite Aid came along with a similar pronouncement. 

The article emphasizes on the fact that Walmart should accept Apple Pay as it could be a bargain for customers.

But I think that Walmart is right to negociate hard on that.

Indeed, so far no actors is currently on the market, and there is no way Apple Pay could get big without Walmart or 7/11. Now the main question is: Who will actually be able to developp the winning technology? I bet that mobile phone manufacturers are not the best placed one. I would bet more on Visa and/or mastercard that are currently sharing the credit card market.

What do you think about it?

What To Think About #Foursquare New Strategy?

Foursquare has been a company I have been following right from the beginning. I loved the concept, about geolocalization mixed with social media. The application was also working great. But Foursquare have been struggling for years now to actually concretly find a business modell.

They have not been able to get a large enough audience to really go on with the original idea of gaming, which could ultimately become a way to advertize geolocally. They have not so long ago relaunch their application, abandonning the initial concept to become a geolocalization application of businesses, much more like Yelp. 

But I believe that it was the issue: How can you be better than Yelp that has been there already for years? It seems that the relaunch has not yet experience much success. Once again it is not because the application is not good, it is just that Foursquare was not able to turn its application and audience into a real business modell.

I don't know if that was a great strategical move, as geolocalization is doing great, especially with the new ibeacon technology. Maybe Foursquare should have more focused on this technology, because they already had a pretty good know how in terms of geolocalization advertizing.

 It is hard now to find the next move Foursquare will make, but I believe that they are still a talented company, and wish them the best, hoping they could find a way to make things work.

La stratégie d'Amazon décrite en vidéo

Très belle vidéo sur la stratégie d'Amazon, très décriée, mais très bien illustrée. Il n'est reste pas moins quand même qu'Amazon reste une superbe entreprise, visionnaire, avec de super produits (j'adore vraiment mon Kindle).

#CEO of #Carrefour Discusses About His #Strategy and his dark vision of #Amazon 's one #Retail

La Cité de la réussite is an event inviting some of the most prestigious and influent persons in France: CEOs, politicians, journalists, University professors or experts.

This year, the event hosted CEO of Carrefour Georges Plassat. the event is pretty big, as Georges Plassat is pretty rare and don't give much interviews. You will find (in French obviously) the video of the interview below. But also for my fellow English speaking followers, I will give you some of the best insights of this interview. I believe that his vision is very interesting, and may be good food for thoughts for some blog posts coming up soon. 

About E-Commerce companies

Georges Plassat don't believe in E-commerce companies without a strong network of stores. They believe that there is a need to own stores in the future, and this is the reason why brick&mortar companies have more chances to gain marketshares on E-merchants than the others. Actually this statement is very interesting, because Walmart, Carrefour and even Costco with their Chinese initiatives are looming on the Internet, and are investing a lot in a near future to develop their activies online.

Geographical Proximity Leads To Relationnal Proximity

This is also linked to the previous insight. Carrefour owns a large network of stores, in different type of formats and concept (big hypermarkets, supermarkets, and urban concepts). As Carrefour is close to people's work & house, they develop a relationnal proximity which is key to the development of the company.

About The Relationship Between the Global Brand Suppliers and Retailers

Retailers' concentration have just followed the concentration of the large retailers like Unilever, Nestlé or Coca Cola. But when you look at the EBIT of global brand suppliers, it has grow 2.5 times faster than the ones of retailers. Hence Georges Plassat questions the faire sharing of the created value and profit between retailers and brand suppliers. 

It also emphasize on the fact that Carrefour gave the opportunity to a lot of French companies to become global as they brought them with Carrefour when the retailer went abroad. "Gratitude is a feeling that fade away fast" Plassat says.

About The Price Competition Between Retailers

Georges Plassat Emphasize on the paradoxal mentality of customers, that understand price devaluation will lead to issues with employment and companies profitability, but once it will decide what to buy as a shopper, will get the cheapest products.

Georges Plassat is lucid about the potential cost of the price competition, and that it may end up badly. But he also emphasizes that Carrefour don't have any choice but to be competitive, as if it doesn't, it may be costly for the company.

"The only thing company tries to do is to survice in the competition, as long as it can".

About Amazon & Its Strategy

Plassat don't have no confidence in Amazon. He considers that Amazon's $200 billion value of stocks is sordid as the company keep on earning no money at all. The future is owned by retailer which owns a brick&mortar store network.

"The business model that implies products to come to its customers instead of its customers to go for their products is not viable. Amazon don't pay its taxes, doesn't pay well its salaries, and allows customers not to pay the delivery. How long do you think it will last? These costs that are not paid by customers, you see them in their quaterly results."

"I wonder how Jeff Bezos sleep at night. He is in an endless race that he can't win nor finish". "I am better placed to say that as Amazon constantly says brick&mortar retailers are doomed".

"When we ask customers if they prefer to be delivered home or to pick up their products at their closest store, 45 to 50% of them prefer to collect it in store. Why? Because not all customers have a nanny that can wait for 2 hours for the drone of Amazon to come & deliver the package."

Carrefour is hence better placed than Amazon in the future. Plassat considers that it is important to have strong foundation, in terms of store network and operationnal excellence, mastering its trade, in order to win.

Carrefour is hence in a better position than category killers, specialized in specific niche categories. As a global operator, Carrefour can perform better as it master more the risks on a wide range of different categories.

A merger between Amazon & Carrefour

Plassat says it would be interesting, and that some mergers of this kind will eventually happen, and probably sooner than we may think.

About The Drive
"The Drive has been developped by some of our competitors to settle close to our stores to attack our sales and market shares. They have had a goal of a torpedo boat, but without a real flight tanker.

Our vision is to develop drive close to our stores, to propose a new service, that will enhance the customer experience. But by having a store close to the drive, it allow the customers to access other services in the concrete store (shop in the mall, take a coffee...). It is cheaper for the retailer, and it proposes more service. Also, the job in the drive is not a great job, closer to the middle age than an actual job.

Carrefour is the retailer that has the most potential in the drive business, thanks to its commercial real estate that it already owns.

Also, now that competitors have already launched so many drives, they don't have much room to grow anylonger.


The definition of boldness
Boldness is the fact to take risks, measured in order to succeed. If risks are not measured, it is not boldness, but simply crazyness. 

About Technology
"You can not go abroad, become global, go online, without mastering the basics. The strength of Carrefour is to master the basics, the foundation. You can innovate, and create only if the stores are performing well."

BlackFriday en France: Comment développer un événement promotionnel en France quand il n'existe pas

Le Black Friday arrive en France! En effet, cette année, j'ai été surpris de la médiatisation que cet événement à pris. En effet, les radios, télévisions, ainsi que les enseignes françaises via des publicités radios et presse notamment, ont énormément relayé cet événement promotionnel, qui pour moi, tente de construire un événement nationale.

Et ceci est marqué par différents aspects:

- Un nombre très importants d'enseignes jouant le jeu, aussi bien sur Internet qu'en point de vente. Liste que j'ai en tête: Auchan, Conforama, Fnac, Amazon, etc...

- Une communication importante: Relation presse avec de nombreux sujets en radio, sur Internet et en presse, publicité radio, publicité en Adwords sur Internet.

Néanmoins, même si je ne peux que constater les moyens mis en place, j'ai tout de même un doute sur la pertinence de cette opération. En effet, bien évidemment, créer des fêtes dans le commerce pour doper le chiffre d'affaires et surtout créer du traffic et des achats d'impulsion, il y a toujours un intérêt.

Mais le problème, c'est que je trouve que ce "Black Friday" sonne comme une coquille vide. 

Pourquoi cela marche aux US?

• Parce que Thanksgiving est toujours un jeudi ferié, et donc énormément d'américain font le point
• Parce que la date est très proche de Noël, et donc intéressant pour commencer les courses de Noël,
• Parce que c'est effectivement proche de la date de l'atteinte du seuil de rentabilité pour les distributeurs.
• Parce qu'il y a une tradition qui existe depuis des années autour de cette date.

En France, point de Thanksgiving (événement aussi majeur que Pâques ou Noël aux US en terme de tradition), et point de jour férié. Donc pourquoi faire un "black friday"? Ou surtout pourquoi l'appeler de cette manière?

Pour créer un événement commercial, il faut:

• Une date spécifique
• Une raison, un événement qui fait du sens pour le consommateur (là ...)
• Des promotions importantes (je ne suis pas sûr que les rabais de notre Black Friday ne puissent être comparés à ce des enseignes US). J'ai vu beaucoup de bons d'achats à hauteur de -15% à valoir sur les prochains achats...

Je trouve que le Singles Day d'Alibaba est pour cela un superbe exemple. Sinon, j'ai bien peur que le Black Friday ne soit là que pour gonfler le CA sous promo des enseignes.

Qu'en pensez vous?

Happy #Thanksgiving

I wish to you and your folks a happy Thanksgiving. As a French person, Thanksgiving is not really a tradition to me. I started celebrating this event while I started dating my wife. I love this holliday because it allows you to bond with your familly. It is great, especially as it comes right before Christmas.

Also, the day past Thanksgiving is black friday, a very important day for retailers as it marks the day retailers break the even point, and it is one of the busiest day of the year. I wish to all of the US retailers also a great Black Friday Day.

Distribution: A quand la fin des prospectus?

Une réflexion qui est là depuis aussi longtemps que j'ai commencé à travailler dans la grande distribution. En effet, on prédit depuis l'avénement de l'Internet la fin du prospectus. Notamment, Michel Edouard Leclerc,dès 2010, avait annoncé un plan visant à supprimer totalement le prospectus papier à l'horizon 2020. 

En effet, les moyens de communiquer avec les consommateurs à l'ère du numérique ne manquent pas. Entre Internet, le mobile, ou encore les PLV dynamiques, il y a beaucoup d'opportunités.

Néanmoins, nous sommes à présent en 2014, et Leclerc n'a jamais autant publié de prospectus qu'aujourd'hui.

Une autre information intéressante, relayée cette semaine par le blog d'Olivier Dauvers, Amazon a publié pour la première fois un prospectus papier. Quand les rois du web s'intéresse au vieux prospectus... 

De plus, ce prospectus pose 2 questions:

1- Quand est-ce que nous allons pouvoir enfin trouver une alternative au prospectus en terme d’outil marketing push? Pour l’instant, je ne vois rien venir. Comment est ce que Leclerc va tenir ses engagements de 0 prospectus.

2-Quel est l’intérêt pour un e-commerçant de faire un prospectus de ce type sans avoir ni d’accroche prix, ni de promotion? Car si l’objectif est de démontrer la profondeur de gamme, avec des millions de références, je ne suis pas sûr qu’un prospectus papier soit opportun.

Pour ma part, je ne suis pas sûr de la fin du prospectus pour l'instant. Surtout que les développements autour des outils marketing du web sont surtout focalisés sur des solutions de pull marketing, avec des systèmes d'applications et de publicité personnalisées. 

Mais il n'en reste pas moins fondamental d'avoir des opportunités de pouvoir envoyer du contenu commercial en push, pour pouvoir générer du traffic en point de vente.

Will Mobile Payment Improve Customer & Shopper Experience? #CX

It has been several years now that a lot of companies are looming on the mobile payment business:

- Banks, seeing a new way to purchase

- Credit cards company like Visa or Mastercard, seeing a potential threat to lower the number of card transactions

- Mobile devices companies, who could benefit 

- All kinds of web companies, building apps, like Paypal, to grasp a part of it.

- Retailers, which are the final users, and who wants new way to decrease the cost of payment by making it more efficient (faster, and obviously cheaper).

But the market is yet to spike, as no one seem to agree on the terms. Also, I believe that it has not yet taken off as shoppers have not really seen the interest to switch to the new technology.

I read not so long ago a great article about this topic on the French website Les Echos. Its message is that mobile payment could improve customer relationship as it could provide a new shopper experience by using the data of the past transaction of one shopper. It could hence maybe provide better advices on what to buy, or discounts.

But I believe that actually what will be difficult to achieve:

- First of all, France has clear legislation limiting the use of financial information by financial institutions. Banks have already all the information they need, have the tools to analyse it but can't really do so, as it would cause privacy problem.

- Secondly, I think that entering shopper privacy by pushed marketing messages will be against mobile payment adoption. It is the reason why mobile marketing has not experienced such a high success. Text messages campaigns are intrusive, and difficult to be interesting.

- In terms of security, having no contact may seem not as secure as the credit card. Also, the mobile phone, if stolen, could be devastating: No tool to phone to cancel the card, unlimited access by the stealer of the information...

In order to actually force the market to benefit from mobile payment we need:

- A real captain to take over the investments, the campaign, and a clear approach (far to be won this one...). Too many people trying to win over the market.

- A secured technology (some improvements need to be done)

Category Management & Direct Profit by Products: When product complexity hurts true profitability

I wanted to share with you an interesting document I found wrote by Accenture. It is directly linked to my previous post about the Direct Profit by Product Analysis. This document is Named "When Product Complexity Hurts True Profitability". 

This concept is very true especially in category management in the FMCG world. As the article points out, the number of Skus in product range is constantly growing. It is actually growing faster than the sales do, which means the sales/product figures are declining fast. That means categories are losing efficiency.

Moreover, the more product you retail the more costs will be implied in your activities. That means more room in your warehouse, more data to analyze and to deal with for accountability and management, more time spent to set up products on shelves. More products mean more sales, but don't mean more profits in the end for sure.

The article emphasizes that there is a need to understand hence this complexity and its impact on the cost of goods sold, and therefore the profitability. Hence you need to track all the costs linked to one product. As the article says:
 These include direct labor and materials costs, administrative and sales expenses, rebates, discounts,
supplier overpayments, an allocated portion of the company’s cost of capital, and whatever other charges and expenditures the company makes related to the product.

Accenture analysis reveals that most blue-chip companies have about 65 percent of their revenues tied up in their cost of goods sold (COGS). Of that, more than 80 percent is for direct material costs. Clearly, if firms hope to improve a product’s profitability, COGS is where to start.

Winners and losers
In the example below, Product A is a typical underperforming product, with high direct costs. Even though the indirect costs are fairly low, Product A would typically be eliminated as both the true margin contribution and the sales volume are low. However, if the product is strategically
important—such as a legacy product—or has development potential, that has to be
taken into consideration.
Product B is a typical high performer. Direct costs are low, and even though indirect
costs are fairly high, the true profit margin is still high. The product’s sales volume
is above average but not as high as you would want with a high true profit product.
This means that Product B is a good candidate for a more focused sales effort.
Product N is a typical representative for true profitability improvement potential;
generally this type of product accounts for a large portion of a company’s product
portfolio. The true profit margin is rather low, but sales volume is high. The product
could benefit from product reengineering and design-for-assembly to minimize
the direct materials and labor costs.

These kind of analysis are I believe very interesting in terms of category management. What is also very interesting with this analysis is that it may evolves not only depending on the negociation of the gross sales price, but could evolve depending on the work ones may do on some part of the costs of good sold.

I believe that these approach will tend to become the norm, sooner or later.

Thoughts On Christmas Season Sales? When Early Is To Early

This article is directly linked to the one I wrote about Alibaba's single day records. Indeed, in the US, Christmas season has started a while ago. 

One of the best techniques to beat your competitors during the season sales is to sell your goods before them. This is the reason why big retailers tend to start the season earlier, with large discounts in order to stock customers which will then avoid to buy other goods at the competition. But as sales are getting tough in this economy, the race to be the first one to open the season has brought them to be out of reason: People are questionning why they should buy Christmas decorations while they have not even finished celebrating halloween and that Thanksgiving is a month after... 

Indeed, even though being the first is great, the time to market is also key to maximize sales. And by being too much in advance, you may not trigger the sales you expect. I believe that the approach of Alibaba to create a new event of singles day could actually be a better technique to generate sales and traffic.

What do you think about it?

The 7 trends of Modern Retail

Interesting slideshare presentation I wanted to share with you. It is French, but I thought it would be interesting to post it for all kind of audiences. Indeed, in the presentation, they give a lot of concrete examples on great initiatives of both France and the US. Mostly in France actually. But I believe that shows that France is for sure greatly innovative, and that the retail world is changing fast.

Here are the 7 trends:

- New Imaginaries of commerce: The importance of the local production, ethic and organic.

- Collaborative consumption: Through rental, second hand product or by borrowing and trading items.

- New digital lives: Click & Collect is a big trend

- Sharp retailing: proposing different concepts to different targets. Retail needs to segment.

- Back to the Salesperson: how to emphasize on this human interraction instore.

- Social and sustainable development

- New business models.

Les 7 mutations de la grande distribution en France et dans le monde from Sauveur Fernandez

Category Management and #Retail: Working on the Direct Product Profitability #DPP

I have already discussed not so long a go about a great technique to leverage a category profitability by analyzing the Cost of Goods Sold, I wanted to discuss another key concept on how you should analyse profitability in retail nowadays. Indeed, gross margin is probably the most common KPI of profitability used in retailing, but it does not give you the whole picture. 

Here is a great chart that will show you why:

In the chart you will find 5 different products, with different features. Depending on the KPIs you will look at, you will have a different prospective of what the performance of the products are.

If you look at Item A, it is the Item with the higher % of gross margin, which you may think is cool. But when you take into account all the direct product costs (DPC), which includes supply chain, wages, among others, you find out that you are loosing money on it.

Same thing about with Item E: You sell it the most, and despite a low % of mergin, it is the product that provides you the most gross margin at the end of the week (isn't it the concept of FMCG?). But at the end of the day, the resources required to retail the products are so big that the direct profit is negative.

In this example, it is the product C that is the most efficient and profitable. It doesn't have the best sales, it doesn't have the best % of gross margin, neither is it the most expensive, but the way its cost of goods sold is designed and how it performs makes it by such an analyzis the perfect deal.

The Direct Product Profitability modell allows you to make such an analysis. Its uses is common in companies like Walmart.

I believe that Direct Product Profitability is obviously by far the best way to analyze one product performance. Obviously, there may be other variables that are not taken into account, as the modell is more used for a purchasing strategy than an actual category management strategy. I believe that you should take into account the penetration rate of the product, or its loyalty rate, in order to understand how strategical the product maybe in your product range.

Here are The Seven Step DPP process

The DPP model is capable of calculating net profitability of individual items of fast moving consumer goods. Working with the DPP model is a seven-step process:

1. DPP model fine tuning: the classical DPP model is adapted to specific product characteristics of your industry
2. Input of process characteristics: process characteristics of the logistics chain are entered as activity drivers in the DPP model (examples: delivery frequency, productivity ratios)
3. Input of general ledger resource costs: resource costs of the central depot, transportation and the store (examples: transportation cost per km, costs per working hour)
4. Calculation of activity costs: activity costs are calculated in the DPP model
5. Input of product characteristics: all characteristics of individual products are entered as cost drivers
6. Calculation of direct product costs: activity costs are allocated to products
7. Calculation and presentation of direct product profitability ratios

How Did Alibaba Created The Most Successful Shopping Day Ever?

Chinese e-commerce company Alibaba has been the past few days the most discussed issue in the retail business world. Whereas Amazon's quaterly results raises doubts, the Chinese company experienced a tremendous success with its IPO, and has also breaken a sales record:

On November 11th, on a single day, it generated $5,75 billions in sales.

What is very impressive to me, is not that Alibaba is able to beat Amazon or Walmart for a promotion day, but more about its ability to have created this new promotion day.

Indeed, nowadays, it is very rare to see a retailer creating some really new sales event that can skyrocket sales. Most of retailers are actually fighting on the same days: Christmas, Easter, Black Friday, Halloween... And one of the only technique used to beat the competition is to start the season sooner than its competitors, which leads to weird things, like Christmas sales way before Thanksgiving day...

The ability of Alibaba to have created by its own this new day is to me something very relevant, that shows how strong the e-merchant is, how a serious competitor it will be once entering the European and US markets.

The concept of November the 11th, on 11/11, because of all the 1 in the dates, Alibaba celebrates single people , with sales designed for them. The goal is to be an anti St Valentine's day. I don't know if the success is based on the multiplication of single person household, but the sales really works, and I believe, as no other competitors is yet big on it, allowed Alibaba to have a strong communication plan of its own to generate so huge sales.

As the event also is pretty new, what is remarkable is how they are excellent in execution, because trust me, not to be out of stock when you see this success, that means you need to have forecasted well your quantities purchased, the supply chain and warehouse management, and also your online traffic.

Well done, Alibaba.

Category Management : Working On The #COGS Cost of Goods Sold

As a retailer, you are mostly working on thin margins. In the world of fast moving customer goods, you mostly work between 2 and 5 % of EBIT, with gross margin of 25 to 30%. 

While working on a category, and especially working on its profitability, we mostly use the gross margin approach, either in % or in value, to know what is profitable or not. But I believe that it is very short in terms of approach.

Indeed, a lot of aspects may impact your gross margin in several ways, which may change deeply the final profitability of one of your products. For instance, you may have a high margin on a product (let's say 40%), but if it moves slow, it will have a costly impact on your inventory or your cashflow, whereas a fast mover may have a 20% margin but will be far more profitable. Other items have an impact on the margin, for example, the transportation of it.

It is what we call the cost of goods sold. This approach allow you to have a kind of "EBIT" per product, and hence to see the real cost of some products that hide their performance by a high % of margin.

Here are some items that may have a deep impact on your costs:

• How fast the sales go (for inventory for example)
• The breaking/ stealing (for high cost goods, or fresh food)
• When you pay the merchandising (the later the better to have a positive cash flow, depending on how fast you sell the product)
• The supply chain

The Cost of goods sold approach is very important and should be developped at all time to better understand the impact of your category choices.

Some Thoughts About #Amazon 's Strategy

First of all, let's remind ourselves that Amazon is one of the highest success in business the past two decades. But Lately, Amazon's results have not been as promising as it could have been expected to be.

Indeed, Amazon has never really gave dividends to its shareholders as it was focusing on investing its profits in growing faster. A bold move that allowed the company, who by the way is not 20 years old yet (started in 1995) to become one of the top 10 largest retailers, and soon to settle in the top 5.

But E commerce, even though the largest contributor of retail growth, the increase is slowing down. And competition become tougher and tougher, especially by brick & mortar companies like Walmart or Target that are investing strongly in it.

Shareholders hence are getting annoyed by the current strategy, and is eager to find operating income. Obviously, after 20 years of investment, they are expecting a different kind of balance sheet, especially as the investments of Amazon in new businesses are yet to perform.

How long this situtation will last? if Amazon can't convince shareholders to keep on investing, it will be tough for Amazon to go on with its strategy to invest in new business to dominate the E commerce. 

Maybe the time is now to show how the Amazon's business modell can be more oriented on profitability, which is what ultimately will allow Amazon to have a long term investment strategy.

Some Thoughts On The Movie Be Kind Rewind

I have recently watched for the second time the movie "Be Kind Rewind". The movie tells the story of two young men who needs to film new VHS movies at a rental store, after the tapes have been demagnetized. 

The movie tells us about this video rental business which is going in limbo, near to foreclosure, while the DVD rental business is booming. The store still uses VHS tapes while everyone is switching to DVD, and this business move led to the issues the store experiences.

I have watched the movie the first time while I was in the US back in 2008, and rented it at my local Blockbuster. Blockbuster was at the time a very strong institution, and indeed may have shut down many VHS business not ready to the DVD boom. As I am now 30, I have seen the arrival of VHS rental stores, then the boom of the DVD equipment (I was a salesman at La Fnac selling those DVD players in 2003), and the market of DVD rental plummetting.

And as VHS stores did not see the DVD business coming, Blockbuster has gone.

What I am trying to say is that:
- it is always difficult to see the obvious coming while you are good at a businness
- Even though you see it coming, moving 360 degrees your business modell while you have strong revenues is not as easy as it seems (change the revenue stream, the technology, the brand positionning, the distribution channel...)
- Changes come fast: The Blu Ray does not have ten years it is almost obsolete.

This is the reason why it is important to have a strong business model with core value, but also to embrace new technologies, new ideas, and move forward.

Crise de l'occupation des centres commerciaux en France

Un petit article en français au sujet d'une information parue il y a peu dans LSA: Le taux d'occupation des centres commerciaux en France ne cesse de baisser. Cette baisse est bien sûr liée à l'avènement du commerce Internet mais pas que. En effet, la multiplication des projets de centres commerciaux a mené à la diminution des performances en termes de chiffre d'affaires/m2. 

Ici un petit résumé:

Une augmentation très forte depuis 2 ans: C'est cette information qui est particulièrement intéressante. Cela prouve que cette hausse n'est pas corrélé à l'e-commerce. En effet, la croissance de l'ecommerce en France a ralentit ces 2 dernières années, alors que la vacance a explosé.

Mais le coeur de l'article:

"Mais Procos a tôt fait de rejoindre et… dénoncer le présent ! «Plus récemment, la vacance commerciale semble davantage résulter d’une crise de surproduction des surfaces de vente. Depuis une vingtaine d’années en France, le parc de surfaces commerciales croît en effet à un rythme plus rapide que celui de la consommation. Sur la période 1992 – 2009, ce parc a progressé de + 3,5 % par

an, passant de 48 millions à 77 millions de m² alors que dans le même temps, la consommation n’a progressé que de + 2,1 % par an. Dans le même temps, les rendements des magasins [exprimés en € de chiffre d’affaires par m² de vente] diminuent de 1 % par an, alors que leurs coûts d’occupation progressent de + 3 % par an par le jeu de l’indexation des loyers. Voire davantage, en intégrant les renouvellements. Mécaniquement, les enseignes sont conduites à redéfinir leur stratégie de maillage. Non plus à partir des performances consolidées de leur réseau de point de vente, mais à partir de la performance de chacun de leur point de vente, considéré comme un centre de profit indépendant ». On s’arrêtera un instant sur cette phrase et ce qu’elle sous-entend d’arbitrages à venir dans les parcs d’enseignes ! Finalement «la vacance témoigne ainsi des difficultés du commerce à se maintenir dans un parc toujours plus étendu, toujours plus concurrentiel, toujours plus cher et, en définitive, de moins en moins profitable » souligne la fédération du commerce spécialisé."

Je pense qu'il y a de fortes chance que la vacance progresse ces prochaines années. et qu'il y aura, comme aux Etats-Unis, des centres commerciaux "fantômes" qui apparaîtront, faute d'intérêt commercial.

Some Thoughts About The #Chef Movie

#Chef is a movie realeased couple of weeks about about a chef who lost his restaurant, and decides to start a food truck company to reclaim his status.

I have not watched the movie, but could not escape the commercials and interview of its actors. What I wanted to focus on is the high success truck food have had lately. Indeed, you see both in the US and in france more and more of these trucks. Actually the food they propose has also evolved big time. It is not simple fast food burgers or hot dog, but now you may have high quality cuisine, with hyped trucks.

A lot of the journalists hence talk about the "Food Truck phenomenom". But they actually are right. People are now looking for more and more proximity and adaptation to access products. 

Food trucks therefore have the flexibility to move where the customers are, adapting their menu to the day of the time. Isn't it what you expect of a retailer?

Could it be the next move in multi channel marketing? Could brick&mortar businesses adapt thanks to those rolling structures?

I believe you may link this social phenomenom to click & collect approaches for example, and also a project of Carrefour I will talk to you about soon.

Obviously, a lot of food for thought. I believe that if you are a retail or a customer relationship management consultant, you should have a close look at it. There is a lot of food for thought.

Would India Be The First Country For #Amazon To Launch Its Drone Delivery System?

Amazon's project to deliver its products by drones has made a lot of buzz. Of course, the idea is revolutionary, and the potential is great. But of course, so far, drone delivery remains a thoughtful dream, as there are little changes that it would be allowed in most of countries. Indeed, especially in nowadays angst about terrorists attack of all kind, governments have other issues to deal with than letting Amazon's project become a reality.

Nevertheless, in other less regulated countries it could have an opportunity to be launched first. And that could be India, according to French retailer magazine LSA. I remember that we had the same thought some years ago about the mobile phone market. Indeed, As India did not have a mature telecommunication network allowing the country to access High speed Internet with DSL or cable connections, India was supposed to be a laboratory of mobile devices Internet usage. I don't think it quite happened.

Hence I don't really think that launching such deliveries would be a good idea in India:

• E commerce is not that much of a success in India so far. First things first: let's grow Ecommerce first, then find new innovative delivery systems. Especially as I don't think drones could actually accelerate the Ecommerce growth by itself.
• A success story in India would be difficult to adapt to countries like the US, Europe, or even China.
• The cost to launch the project will be gigantic, to have enough drones to have a comprehensive service, especially for a low usage.