How To Get The Stores Ready To The Showrooming Challenge

I want to thank my friend @ppc to have highlighted for me an interesting article that I actually read through, but with not much intention. As a lover of customer relationship management and retail, I have always believed that humans (the sales representative, or even the person in the call center) are the best medium for CRM, and that the point of sales is the best place to deliver great customer experience. 

Now that E commerce has sprung up and has took a significant part of the overal business, traditionnal stores are struggling. Indeed, a lot of businesses are seeing their operational results going in limbo, with higher costs and lower sales. 

But there are a lot of challenges in order to get back on track:

• Reset the wedges in order to get its human resources for customer service rather than operationnal tasks. This is the reason why you see more and more automatic cash register, RFID technologies to manage inventory, and so on... Also, a lot of company, like Carrefour, have decided to lower their headquarters number of employees in order to redeploy people in store. 
• Find new ways to advice customers, based on new technologies, like augmented reality, or the use of tablets, and have more product demonstrations.
• And also, to me the most important: Find a new way to evaluate store economical performance. Indeed, ubiquity and showrooming implies that customers may purchase at your company their products, but maybe not in your point of sales (they may finish up their order at home online). And by having the bad economical index, you are condamning your stores to fight against your Internet website, which is counterproductive. The Internet website of a banner is successful thanks to the job of the store network, and hence, it is important to see the big pictures, and to incentive the point of sales maybe not to the sales it does compared to N-1, but to the level of service it provided, the sales on the Internet website the region did, or something like that.

I think the last point is the most important. We are experiencing major changes in shopper behaviors, and the way retailers envision its index of performance will have an impact on the way the stores can contribute to the whole sales of the banner.

Anders Dahlvig's Vision Of Private Label And Its Example: Oxylane

Couple of months ago I finished the book of former CEO of Ikea Anders Dahlvig. My readings inspired couple of blog posts I wrote. But so far I don't think I have discussed about Anders vision about private label. Anders Dahlvig, and Ikea foremost, believe that private lable is vital for one retailer. It allows one retailer to set apart the competition. Indeed, if retailers of one sector have the very same products to distribute, then there are little room to differentiate, and hence to set apart from the competition. Then most of the time it leads to price competition,which has as the main outcome to shrink mergins.

Hence, Ikea has always worked on innovative private labeled products, that would be difficult to reproduce for the competition, and hence, can give them an edge.

I wanted to link this vision to one of the greatest success of French retailing: Decathlon. Decathlon is a sport goods retailer. The sport market is ruled by large brands, mostly Nike and Adidas, which have massive advertizing budgets of all kinds (sponsorhip, TV commercials, event organization...) to promote their brand. Therefore it is difficult in these conditions to see a private label grow. But Decathlon, which was already a large retailer in France, decided to focus on its private label, and to turn it into the core of the company. Now, Decathlon sells mostly private label goods, and has been able to innovate big time in the industry. Its tent which is set in 2 seconds is one of the best example.

Private Label is actually a very important marketing tool for one retailer, as it is the easiest way to be different from the competition.

Whereas its competitors are struggling, Decathlon is able to maintain its sells thanks to its private label, in a market known for the power of its brands. The best example I believe of all.

Leclerc: Est ce que l'objectif du 0 prospectus est il tenable?

Un petit post en français (une fois n’est pas coutume). Mais je voulais réagir à un article publié sur le blog d’Olivier Dauvers, que jesuis régulièrement. En effet, la problématique est plutôt française pour 2 raisons :

• .       La première est que Leclerc est un acteur principalement français.
• .       Le prospectus reste une typicité française (attention : tous les autres pays en ont, mais il reste pour moi tout de même une spécificité nationale.

Est-ce que Leclerc va réussir son pari ?

Personnellement je n’y crois pas.

• ·         La concurrence est exacerbée sur le marché français.
• ·         La consommation a été maintenue principalement via la promotion, et donc l’augmentation de l’agressivité des tracts.
• ·         Cela reste l’un des médias push les moins chers du marché.
• ·         Une grande partie des négociations avec les industriels restent basées sur le prospectus, et donc trouver d’autres contreparties qui permettraient de développer de la même manière l’activité semble difficile (sinon Leclerc aurait déjà significativement baissé ses investissements tracts).
• ·         Les autres médias disponibles en push (notamment l’emailing) n’arrivent pas à avoir le même impact.

Est-ce que le pari du 0 prospectus est possible ?

Non, pour 2020, néanmoins, je crois sincèrement qu’il serait possible dediviser par 2 le nombre de prospectus distribué.

• ·         Modifier la stratégie promo des distributeurs : Aux Etats-Unis, la promotion était principalement faite par des coupons papiers distribués en boîte au lettre. Depuis plusieurs années, il y a eu une très forte conversion de ces coupons vers des applications mobiles.
• ·         Travailler sur des prospectus avec moins de produits, et surtout plus regroupés, ce qui permettrait de faire baisser le nombre de pages par prospectus.
•         Une baisse du poids promo dans les enseignes, lié à la reprise de la croissance et d'une augmentation du pouvoir d'achat. Le budget prospectus reste conséquent, et si la bataille concurrentielle se réalise sur d'autres aspects, alors il sera plus facile de diminuer les envois de prospectus.

N.B. : Il faut savoir que l’édition des prospectus n’est pas forcément mauvais pour l’écologie, puisque la plupart des papiers imprimés aujourd’hui sont issus de papier recyclable, ou bien issu de forêt géré de manière durable où le papier consommé permet de financer la reforestation. 

What Strategy For Amazon With Its Small Suppliers?

Obviously, the interview of Jeff Bezos on CBS’s 60 minutes show has created a great hype. First of all, Jeff Bezos is a brilliant entrepreneur that makes very rare apparitions on TV. Secondly, its aim to use drones to deliver in an hour merchandises was obviously a great marketing coup. Indeed, I believe that legal restrictions makes the idea of seeing drones delivering packages at a large scale a real utopia.

But there was another part that was interesting: Amazon’s relationship with its small suppliers. Indeed, Amazon has become a real tycoon of cultural goods retailing. Its low cost strategy has narrowed the margins of a lot of small book editors, which are now struggling financially.

Here is apart of the discussion on this topic.

Charlie Rose: A lot of small book publishers and other smaller companies worry that the power of Amazon gives them no chance.

Jeff Bezos: You got to earn your keep in this world. When you invent something new, if customers come to the party, it’s disruptive to the old way.

Rose: Yeah, but I mean, there are areas where your power’s so great, and your margin — you’re prepared to make it so thin — that you can drive people out of business. And you have that kind of strength, and people worry: Is Amazon ruthless in their pursuit of market share?

Bezos: The Internet is disrupting every media industry, Charlie. You know, people can complain about that, but complaining is not a strategy. Amazon is not happening to book selling; the future is happening to book selling.

I believe that Amazon needs to have a different approach with its small suppliers. Indeed, Amazon has been able to build its success thanks to its ability to propose the widest product range possible. And small editors are there to make sure the choice remains high. Obviously, Amazon can not take the responsibility to save one supplier. But having a specific approach with its smaller editor can only be good in the long term. Indeed, I don’t believe it would be savvy for Amazon to see a massification of its suppliers, as it will imply tougher negotiations with larger corporations. The fact the book market is so open is a competitive advantage for Amazon that can benefit of its ecommerce structure to propose once again a wide range, with a lot of different actors in it. If the small firms quit, it would be easier for competitors to have a product range close to Amazon’s. And once again, the ability of Amazon to negotiate will be more difficult.