Wednesday, September 30, 2015

Category Management Series: Thoughts About Evaluating Promotions Efficiency

Promotions is a key topic in retailing. It cost money, requires time, not quite profitable, but you stop it and sales plummets and customers go away.
Therefore it is important to estimate properly what kind of performance you expect from your personal activities. 

One of the common way to estimate a sales performance is conversion rate : the ratio between the number of items you buy, and the numbers of items you sell, on a certain period of time. Indeed, one of the main problem of promotion, is you need to have products in bulk to sell it, but what do you do with the unsold items. 

The problem with conversion rate is that :
  • It does not take into account the actual sales (if you have a low conversion rate but on high sales, isn't it worth it?)
  • You need not to have too much stocks at the end of the promotion....
  • .... But you also need to have quantities available until the very last day of the promotion (in order not to miss sales.

This is the reason why I like also to identify the time of resale rate. The concept is simple: How long did it take you to sell your merchandize. If you have a great 90% of conversion rate, but a 30% of time of resale, that means you were out of stock for 70% of the time. Meaning you could have potentially triple your sales. 

The index of missed sales is linked to this item. Now obviously, it is difficult to have a clear formula depending on the promotional event, your business model. But all those analytics must be taken into consideration while discussing promotional efficiency.


Quelques réflexions sur le projet d'acquisition de Darty par la Fnac

La Fnac vient d'annoncer aujourd'hui un projet visant a acquérir 100% de l'enseigne Darty sous système d'échange de titres
C'est une nouvelle importante, au vue des positions fortes des 2 enseignes sur un marché commun, l'électronique grand public. D'un côté, une Fnac qui va mieux, qui a réussit à recentrer ses activités et à conforter ses places sur le Ecommerce. 
De l'autre, une enseigne Darty qui a plus de mal à faire face à la concurrence des pure players.
Tout cela dans un contexte de consommation atonne, avec un marché de l'électronique en difficulté depuis plusieurs années, manquant de réelles innovations de ruptures, et arrivé à maturité.


Quelques questions et réflexions sur cette éventualité:

Pas de réelles synergies
De ce qui est écrit dans la presse, l'idée serait de faire coexister les 2 enseignes. En effet, les 2 anciennes ont des positionnements différents, et très souvent, les 2 enseignes sont présents dans les même centres commerciaux, car ils vivent bien ensemble. Par ailleurs, est ce que cette alliance ne va pas poser des soucis de concurrence, qui pousserait à revendre des magasins?
Il est vrai que les 2 marques ont un réel capital, et en faire disparaître l'une ne semble pas vraiment intéressante. Mais dans ce cas, quelle type de synergie pouvons nous attendre?

Clairement, la synergie au niveau des achats, pour maxifier les volumes, que ce soit les produits vendus que sur les produits non marchants. Peut être que la logistique peut aussi être meilleure, et on sait que la logistique est un facteur très important, surtout face aux E-marchands en face d'eux.
Peut être également sur la stratégie d'expansion, quand bien même il n'y a que très peu d'ouvertures prévues.

Une opération risquée
En terme de chiffre d'affaires, Darty réalise plus ou moins le même CA que la Fnac. Néanmoins, l'action de la Fnac est mieux valorisée que Darty, ce qui rend la transaction possible. 

Mais il ne faut tout de même pas oublié la fragilité des 2 entreprises:
  • Depuis plusieurs années les 2 entreprises réalisent des pertes et ont connu des restructurations
  • Leur marché cible de l'électronique est ultra concurrencé, mature et atonne.
  • 2 entreprises exposées, car côtée en bourse, avec un capital flottant très fort.
D'ailleurs l'action Fnac a baissée significativement de 3% dans la journée suite à la communication de l'information, alors que Darty a fait un bond de 17%. Dans un système d'OPE, cela augmente le coût pour la Fnac d'achat, ce qui diminue également l'intérêt économique de la fusion.


Néanmoins il existe quand même pas mal d'opportunité pour le groupe, et il est vrai que vu le contexte concurrenciel, il fallait s'attendre à des modifications profondes sur le marché. 



Tuesday, September 29, 2015

Book Review: Maitriser l'art de la PNL de Catherine Cudicio

J'ai récemment lu le livre de Catherine Cudicio: Maitriser l'art de la PNL. En effet, le sujet m'intéresse, et je n'ai que très peu de connaissance du sujet, et je me suis dit qu'avec un tel nom, le livre devait m'enseigner l'art de la PNL, et donc m'être utile dans la vie de tout les jours.

La PNL est la programmation neuro linguistique: C'est l'étude de l'ensemble des techniques d'analyse du comportement et de la communication permettant soit de comprendre, soit d'influer un comportement.

La PNL est donc un sujet très technique, qui peut s'intéresser aux éléments de langage, aux gestes, etc...
Et pour être honnête, je me suis un peu perdu avec le livre. En effet, celui-ci est très complet, et je l'ai choisit par rapport à son nom. Mais en fait, l'autre, Catherine Cudicio, a publié d'autres livres, notamment un livre qui s'appelle "comprendre la PNL". Et pour être franc, démarrer avec ce livre risque d'être difficile.

Par ailleurs, le sujet étant vaste, et bien que les différents éléments sont très clairement expliqué, il est difficile après avoir lu ce livre de mettre en place quoi que ce soit. En effet, je pense que le sujet est assez technique pour pouvoir avoir plus d'informations sur le sujet.

Donc ma conclusion: si vous êtes comme moi intéressé par la PNL, il faut démarrer par un livre plus accessible et plus simple, et même, je pense qu'une formation ou bien un podcast vidéo ne serait pas de trop pour vraiment comprendre et surtout assimilier cet art très technique et complexe.

Monday, September 28, 2015

Jet.com : The Costco of Ecommerce

Ecommerce is mutating. It is adapting to its own maturation. You can see it with retail tycoons emerging like Amazon or Alibaba. But you can also see it with the different business modells adapted. You can see that some keys of Ecommerce in a very near future may be:
  • The marketplace to offer the wider product range possible.
  • The last mile solution, with the development of drive in pick up, and lockers in high traffic places
  • The usage of social media as a primar leverage of visits.
  • But I also believe that we will see more and more original business modells.
I recently read an article of French Newspaper Les Echos About a company named Jet.com. The article name it "the Costco of Ecommerce". Indeed, Jet.com is a club membership based retailer: You need to pay a $49,99 fee to access the different offers.

What is very innovative, is that the more you add goods in your cart, the cheaper the prices of items are. Also, what is interesting, and different from Costco, is that the saving is clearly marked out, and especially, the price is compared to other Emerchants. I believe actually it is comparing only to Amazon (see below), clearly the market leader.



The Founder Mark Lore was also the founder of diapers.com or soap.com, which were Emerchants specialized on specifi category of products (as the names explain).

The concept is great, and I believe in it. Indeed, Costco is fore sure one of the finest retailer in the world, with outstanding sales results:
  • The membership concept secures profit margins to the 
  • It also allows jet.com to lower its gross margins to be competitive.
  • It also secures a high end clientele, able to pay up front a 50 bucks fee to access the website.
  • Even though they have a relatively short product of range for a Emerchants, it owns way more merchandise than a standard club warehouse company.
  • Moreover, US customers are familiar with the concept, as Costco and Sam's Club among others use the same concept in brick mortar land.

Beyond Jet.com, I am sure that smart Emerchant business modell will soon pop out.

Insights on Amazon's Strategy To Enter the FMCG Market In France

This is one of the hypest topic in the professional retail newspapers in France: Amazon has launched last week a new platform to sell FMCG products. We all know that selling FMCG products is one of the key strategy of Amazon in the next few years. According to Amazon, it will enable the E merchant to grow its sales in term of frequency, providing a better customer experience. Moreover, the FMCG market is a large pie, where even a small share could represents soon billions in sales worldwide. Amazon has already launched services in several cities in the US with its Amazon Fresh service.

Now in France, it is not exactly the same concept, as Amazon is focusing on dry products, rather than fruits, veggies and dairy products. It is therefore easier in terms of logistics and supply chain to deal with.

This is also the reason why Amazon is using some of its partners in its marketplace to complete the offer. Here is a sum up of the different info you may find in the French news.

An Offer Coming Mostly From the Market Place
Obviously, the market place concept is one of the most efficient and will probably be the modell of the future. Especially when Amazon don't have much experience about a category. This is the reason why only 9% of the offer comes from its own website, about 10 000 SKUs. On average, a hypermart in France owns about 15 000 SKUs, so it is not that bad. But the issue is that major SKUs such as Nutella is not listed directly on Amazon. 

The issue is that by doing so, Amazon don't master neither the availability of the product nor the pricing of it.  

Problems with the pricing
Amazon is for sure not a FMCG retailer. Therefore, it sometimes have very bad pricing, as you can see above: a tuna can at 34 €, simply because the offer comes from a British market place. But for a French customer, the pricing of this item hurts very much the image of Amazon as a discounter.


The E Merchandizing
France is a great market for the Ebusiness of FMCG goods. Indeed, the concept of drive thru shopping is a tremendous success, counting for about 5% of the total sales. Therefore brick & mortar such as E. Leclerc or Auchan propose robust shopping experience online.

Amazon is using the Very same interface it uses for all its other categories. The problem is that you don't shop the same way for a TV or clothing than food. Your decision making process is faster, and the filter system part of Amazon's website is not accurate enough.

Same thing with navigation within a category. The category leaders are not present in the first page of the choice. But I am not so worried about this fact. Indeed, we all know Amazon is good at ranking its products. It may not have enough sales history to propose an accurate ranking so far. 



Conclusion
Now, you can clearly see that Amazon is not ready yet to enter the competition. Furthermore, the task is hard. As I have said, Amazon enter the Emerchant competition delivering FMCG goods home. This is a 500 millions € market, whereas the drive thru business counts for over 5 billions €... It will be tough then to have a concrete market share without developing a large drive through network.

Nevertheless, Amazon has a great reach, and probably we will soon see the power of Amazon:
Amazon is a yield management freak. Once they will have enough sales data, it will close in the issues noticed on pricing, and product ranking. The only question remaining is: Shouldn't Amazon develop a specific interface for FMCG products? I believe they should. And when you see all the hype around their dash buttons and other ways to have monthly subscriptions, you can clearly see they will soon improve fast.




Thursday, September 24, 2015

Here my answers to the Four Questions About Retailing Future?

Excellent article of Forbes about retailing, asking 4 very important questions about how retail is evolving.

Here are my answers to those questions, which are actually pretty close to the vision of Forbes.

Can virtual reality and augmented reality replace the brick and mortar experience?
It will depend of the category of products. Some senses will always feel better in real than in augmented reality. I don't believe fabric could be one day copied to have a clear benefit with augmented reality. Let's see how glasses vendors have failed to use top of the line augmented reality to boost their online sales. 
Furthermore, I believe people will always like to go shopping as I consider shopping as a social experience. This is the reason why brick & mortar remains the most dominant kind of commerce.


Will shopping become cashless?
Yes, of course. But as the article points out, security is a key issue when talking about cash free payments.

How will the Internet of Things (IoT) transform logistics?
To me, the answer given is not answering the question. Indeed, Internet of things may help customers in decision making. I especially think about Auchan's initiative with Hiku,  a connected object allowing the customer to edit its shopping list by scanning barcodes, or with voice recognition.
But about logistics, are they thinking about the drones? So far I believe a lot of work can be done to adapt logistics to the new omnichannel concept, to have a better look at inventory either at the supplier, in the warehouse or in store. Also, new ways to be more efficient in transportation can be found by big data, and could give an edge to the trailblazers. This is the reason why every body is investing in supply chain.
Will the “sharing economy” be the end of retail?
I don't think so, but initiative to implement some part of sharing economy in the retailing process will emerge for sure. Some categories such as video games or home improvement hardware could see a big lift to implement sharing economy. Also, the sharing economy could be used to improve product delivery, by ride sharing, or by having new ways to deliver goods for E merchants. But yet, people will still need retailers to get innovation and most of their commodity goods. 

Wednesday, September 23, 2015

Some Thoughts On Aldi's Strategy In The US

Aldi is one of the premium retailer in the world. Probably not the sexiest, as it is a hardcore hard discounter, not the hypest, as it barely use RP and do not advertize, but one of the best performing ones, with a unique concept.  Former CEO of Tesco Terry Leahy explained its fiercest competition came from the arrival in the UK market of Aldi. I have recently published a post about its international strategy.

Aldi has recently created a social media campaign with comedian Ben Bailey to promote its US store. The purpose, to show that Aldi has remarkable quality product, and have great prices.

Some thoughts come to my mind while watching those videos: 
  • Aldi's store have nothing in comon with what I know of Aldi in Europe: Larger stores, more choice, better presentation
  • Aldi is advertizing! This is for sure unique. But Aldi has been in the US (with the Aldi Label, not the Trader Joe's one) for a long time and struggling. This could be the reason why they are using advertizing.
  • They use social media, which is probably cheaper than national advertizing, and better accepted than standard media which Aldi don't use in the other countries.
Now if you look at the number of subscription and the number of views, for such a large market, you can clearly see that the success is non really relevant. But Aldi is planning to open 45 new stores, and I believe that the US will become one of the strategic country for the company.

Also, a very important news in the article: Lidl is opening in the US! The potential growth of hard discount retailer in the US will for sure be a great story to follow. Especially because the US market is really difficult, and a lot of foreign retailers such as Auchan or Casino failed to enter.

Tuesday, September 22, 2015

Débrief conférence Whole Food Market à la #Parisretailweek

LSA a été plus rapide que moi, mais je tenais à écrire une note sur la conférence auquelle j'ai assisté lors de la Paris Retail Week. En effet, il est rare d'avoir des intervenants de la chaine Whole Foods Market en France. En effet, l'entreprise n'est pas présente en France, et de ce qu'ils en disent, ils n'ont pas de plan de se développer pour le moment sur l'Europe Continentale. Néanmoins, avec la forte part de l'alimentation bio sur notre continent, et une part croissante, l'arrivée de ce géant américain aurait une réelle logique.

C'est donc Rob Twyman, directeur de la région de la Californie du Nord qui vient nous parler de son entreprise.

Première surprise: Il parle français! Et très bien. Même s'il lit un texte, on voit qu'il manque un peu d'entrainement mais est assez à l'aise dans la langue de Molière. Tout cela grâce à des cours à l'université de Strasbourg dans les années 80 (et non les années 40, petite faute, mais une nouvelle fois, très bel effort, apprecié et réussit).

Il est vrai que la présentation était très corporate, avec beaucoup de sujet sur les "core values", sur le positionnement aux USA, les étapes clés du développement de l'entreprise. La belle histoire (storytelling mais réel) où après une innondation conduisant à la faillite du premier magasin à Austin, les fournisseurs et les créanciers ont remis l'entreprise à flot...

Il manque néanmoins de photos des magasins, qui pourtant est très fort en théatralisation et conceptualisation. Dommage, car Costco lors de sa conférence à Dauphine avait donné de belles images pour bien montrer ce qui se passe là où tout se passe: le magasin.


Whole Foods Market et le E commerce
Par contre intéressant, comme Whole Foods Market utilise le E commerce. Peu de drive aux Etats Unis, même si Walmart se lance avec de nombreux tests. Whole Foods Market a des partenariats avec Instacart et Google pour les courses à correspondance. Ce sont des systèmes multi enseignes, où le client fait ses courses sur plusieurs sites marchands, et Instacart et Google se charge de la livraison.

Whole Foods Market et la concurrence
Whole Foods est clairement attaqué depuis plusieurs années par la concurrence, notamment les "gros" distributeurs américains, notamment Kroger et Costco, qui ont développé des gammes larges de produit bio, à pris resseré. Costco est d'ailleurs le plus gros vendeur de produits bio aux US (voire je crois du monde). Whole Foods a du s'adapter en baissant ses prix, et développer de nouveaux format de magasin.

Whole Foods Market et l'indépendance des magasins
Bien qu'entreprise succursaliste, Whole Foods laisse énormément de place à l'initiative locale. Cela se voit par les initiatives, notamment pour limité l'impact environemental de leurs magasins, ou bien leur assortiment. Très bonne initiative. On le voit bien en France, il existe un réel dynamisme des enseignes indépendantes, qui ont les mains libres pour se focaliser sur la satisfaction client.

Whole Foods Market et son concept
Whole Foods Market  va très loin dans son concept. Filière d'excellence spécifique, magasin à 0 empreinte carbonne, investissement auprès de la communauté, Core Values exacerbées Whole Foods va au delà de son offre commerciale pour assurer son leadership. Toujours peu évident pour des chaines alimentaires.





Monday, September 21, 2015

Débrief #ParisRetailWeek 2015

Je suis allé ce lundi à la Paris Retail Week. Le concept: faire fusionner les salons E commerce et digital in store, avec pour objectif de concrétiser le lien entre brick & mortar et Ecommerce qui est de plus en plus visible. Je trouve d'ailleurs cette initiative sur le papier très intéressante. Maintenant est ce que la promesse est maintenue?

L'événement a lieu à la Porte de Versaille, classiquement, qui reste pour moi une référence pour les salons professionnels. Accessible, grand ,bien organisé, rien à redire. Pour moi, un bon salon, c'est principalement 3 piliers:
  • Des exposants de qualité, variés et innovants
  • Des conférences et Workshops intéressantes, avec des intervenants rare, donnant des cas concrets.
  • Une logique très claire avec un thème très clairement traité.
Des exposants de qualité
Beaucoup de stands connus, peu de solutions réellement innovantes. A remarquer néanmoins la mise en avant de certaines Start Up en devenir, une très bonne initiative. Parmi elle, notamment, TokyWoky, dont j'ai déjà parlé dans mon débrief des SCOPS de Paris Dauphine 2015. Sinon, le Guide.com qui lance un système de veille du pricing pour E commerçant, assez intéressante et abordable. Sinon, il manque pour moi des entreprises de consulting, donnant de la vrai valeur ajoutée. 

Des conférences de qualité
Je n'ai assisté qu'à un seul événement, la conférence de Whole Foods Market, qui était intéressante bien que très "corporate", mais rare donc un événement. Je ferais un article à ce sujet plus tard. Sinon, des workshop très concret, avec des intervenants montrant des solutions pour mise en place rapide. C'est plutôt bien donc pour la partie opérationnelle. Pour la vision stratégique, je n'ai malheureusement pas vu de réelles conférences avec des keynotes allant changer la manière de voir le commerce.

Une logique et un thème clairement traité
L'idée du salon: le retail global. Et effectivement, j'ai vu des fournisseurs de solutions en magasin d'affichage. Les Ibeacons étaient là. Le pricing également (le guide.com) est aussi discuté. Donc l'ambition se sent. 
Mais par exemple, je ne comprends pas l'absence de certaines institutions, comme la FCD, LSA ou bien des grands groupes comme Amazon pour présenter leurs Market Place.

Et les réseaux sociaux?
Peu de live tweets, peu de rencontres, pas de # officiel, une application avec que peu d'intérêt... On peut certainement mieux faire... Par contre, on m'a dit qu'il y avait un Periscope du salon! Ca c'est une bonne idée. Mais je n'ai pas vu son utilisation, qui serait pourtant intéressante, notamment pour les conférences.

Conclusion
Du bien, du moins bien. De belles rencontres, notamment la rédactrice de Global Retail News, mais j'en parlerai également certainement prochainement. Pareil pour Igor Schlumberger, serial entrepreneur de Videomark. Toujours intéressant de venir, mais je pense que la marge de progression est encore très forte. En espérant voir mieux pour la prochaine édition!


Wednesday, September 16, 2015

Marketing to the Bottom of the Pyramid

 I am trying to write a blog post at least 5 times a week (which seems obviously a minimum, but trust me, a lot of work involved), even though I have a heavy schedule. Which explains the reason why sometimes I am discussing about topics that hit the headlines a long time ago, some times several years. But actually it does not really matter to me. My purpose is not to feed you with the most updated stories (even though I try), as other professional bloggers and newspapers can do so way better than me. 

Nevertheless I discuss about topics and share with you my opinion in ideas, in order to provide you with food for thoughts.

That is the reason why, sometimes, I write about old stories. Today, I wanted to discuss with you about an old story I found on Seth Godin's blog. It is about marketing to the bottom of the pyramid.

Most of mature companies in mature markets are aiming to premium their offer, in order to increase prices. But sometimes it is not possible, especially in fast growing markets, where you have massive markets of households with very few incomes.

there is a 1/3 of the global population 2.5$ a day, which represents 2.5 billion people. That's a $2 280 billion market!

But what really matter in the article, is the gap between the culture of those people and of western people. You can't market your product the same way you would with an American or a European. Package matter less. Point of sales advertizing is not really an alternative. "Impulsive purchase" is not possible.

Moreover, as the video points out, it is not easy to make understand to those people the product they need. They don't have the same access and decision making process when it comes to an innovative product. And having a viral marketing campaign would be of very little help.

So you need to focus on those people, their needs, and determine the best way to explain the product, and find the early adopters that will help in the process of mass adoption.

Very interesting article, a lot of food for thoughts, but necessary in order to feed those very important customers.


The Double Bottom Line from Alex Godin on Vimeo.

Tuesday, September 15, 2015

Some Thoughts On Why Groceries Is The 2nd Most Transacted Segment In ECommerce In India



India is a fascinating country, thanks to its large population, its english speaking people and its formidable room for growth. It is a fast growing country, speeding up the pace, and sometimes jumping some technologies gap.

I remember I attended a conference where they said India was going to jump from no Internet to mobile Internet, skipping home Internet equipment. Because of it, it could be a chance to innovate for the country. I read this interesting article about India's grocery Ecommerce market.

"We are seeing many companies aggressively investing in online grocery shopping. Web portals like Big Basket, Grofers, Grocermax have cumulatively raised over USD 65 million to expand their business. We expect this segment to witness 5 lakh transaction a day in 12 months from 30,000 at present," PayU India CEO and Founder Nitin Gupta told PTI.
"About 5 per cent of the total transactions made in e-commerce in India on our platform are from the grocery segment. We see it rising to 35 per cent in a year," Gupta said.

If you read this article, you may think that India could be the promise land for groceries Ecommerce. But I would like to make it clear this is not my case.

Indeed, for the longest times, leading retailers such as Carrefour, Walmart & Auchan, have been looming on the potential of the Indian market. But they so far have failed where they have thriven in Brazil or China.
For 2 main reasons:
  • The market is over regulated, and the government has no intention to let foreign retailers to settle down in the country. 
  • India is poorly equipped in cars, and transportation systems, especially roads, to allow hypermarts to settle down. Major investments are needed to really allow retailers work on an efficient supply chain and to have enough people coming to their stores.
Actually, I checked online two of the grocery Emerchants they are talking about in the article, Grofers, & GrocerMax. Both have based their modells on home delivery, which requires a lot of operational costs, even though obviously manpower is pretty cheap in India. Nevertheless, once discounters like the one named above would come around, they will have hard pricing which will open the market, and will lower the importance of those actors.

Now don't get me wrong, you should pay close attention to this article. Still, to be the 2nd most transacted segment is still a good performance. And when I check those websites they are of a pretty good quality. Also, let's remember India could be the first country to adopt for real the Amazon's drone delivery system. 

 But still, I really wonder what it would be like when the Indian retail market will really open up.

Monday, September 14, 2015

Which Is The Most Efficient Social Media At Driving Ecommerce Business?

I am sure this question interests you. Social media advertizing budgets have skyrocketed and know what is the most efficient usage of social media remains key to manage your campaigns properly.

Here is an interesting tweet, giving some Shopify data on where the crowd comes from.

— Paul Bachelier (@Bach_Paul) August 2, 2015


I have several comments to make about this chart.

First of all, don't get fool about the Facebook stats. Indeed, below you wil see a chart with the active monthly users with dates close to the chart of Shopify. Facebook counts about 194 times bigger than Facebook or LinkedIn. The only one where can clearly see that is not performing well is Youtube, where the gap with Facebook is huge compared to the number of users.


Secondly, What is very interesting about the chart is to have a category management analysis: some categories tend to be more efficient on Facebook than others. But there is a clear bias. I don't believe Facebook fits well those categories, but I believe social media may fit better those categories. And it is hard to tell if you may have better results with other social media.


Friday, September 11, 2015

Best Buy Testing Shops In Shops At Macy's


Best Buy announces it will open corners in 10 Macy's location starting this holliday season for a testing period ending at the end of 2016.
The goal is supposed for Macy's to boost its electronics category which has been going in limbo, and for Best Buy, to benefit from the large foot visit of Macy's in order to find new real estate space with added value.

The move seems obvious, and the benefits for both companies evident. Nevertheless, I am not really convinced about how well the test will go. Especially as Carrefour has already made some tests of a partnership with Virgin to manage its cultural goods category, with very few success. Obviously, the cultural good category was undergoing major changes with the digitalization which has already started, and Virgin was about to shut down in France in the new few years.

But the interesting question is: Can a retailer have a corner? Does Best Buy's brand and added value could be strong enough to be successful at Macy's? Does Best Buy's category management expertise is strong enough to create more value than Macy's skills?

Thursday, September 10, 2015

Category Management: Why I love working in the Health & Beauty Market

It has been now two years that I am working in the health and beauty market. As a retail professional, I don't really have a preference in terms of categories nor kind of retail format (I have worked for hard discounters, supermarkets, hypermarkets...). What really drives me is the interest of the challenge and the mission to fulfill. But I must admit I love to work in the cosmetic market.
Why? Because more than any other categories, you face a multiple competition:

  • Other FMCG retailers
  • Pharmacies & Parapharmacies
  • Specialized cosmetic retail chains like Sephora
  • The Internet
  • Clothing chains
  • Among others...
I recently edited the presentation you'll find below. It gives you a clear view of the competition. The point is not to say that the market is very competitive. All markets are. But because of this multiplicity of concepts, it brings a large place to creativity, and the urge to find the new trends to understand in order to perform. 




Wednesday, September 09, 2015

Pricing Strategy: Don't Change it too often

There is a lot of hype around pricing. You only have to see the large number of pricer positions springing up everywhere. It is easy to understand: by managing properly your pricing strategy you may:
  • grow your profits by having a direct impact on net profit
  • Developping customer preferences by altering the price image of one brand/retailer.
And as a matter of fact, the new big data technology allowed to implement new pricing strategy fast:
  • By allowing to have large data base to evaluate the impact of different prices alternative
  • By enabling deep analysis of those alternatives
  • By changing price tags fast, especially thanks to E comemrce and electronic price tags in store.
But the Harvard Business Review is actually alterting that too many pricing strategy changes may hurt deeply your business:
  1. It creates confusion for customers, that would rather postpone their purchasing decisions
  2. It will trigger your competition into a pricing war that will in the end be destructive and result in a loss of control of your own pricing strategy
  3. By changing too much prices, you will get the attention of customers on pricers rather than on product features, and it could actually change its decision making patterns, and you could lose some of your brand attributes, and lower your brand loyalty.

This is the reason why, despite the importance of the new pricing strategy definition, you must

Sunday, September 06, 2015

Some Thoughts About Multiple Inventory Tools In Terms of Omnichannel Retailing

Inventory is a key element of category management in retail. Actually, it was the first step of the category management process: the ECR, effective customer response, is based on sharing information about sales, inventory, and production by both retailers & manufacturers. 

Even though most of retailers consider inventory as a liability, something that cost money, Ikea believes it is more an asset: the more inventory you have, the less chance of being out of stock, which means you minimize your missed sales, increasing turnover. 

But there is a big challenge that appeared with omni channel retailing : how do you manage the different concepts, especially brick & mortar & E commerce inventory? There are in my opinion two main issues:
  • In 90% of the cases, information system dealing with inventory are different between brick & mortar & E commerce business units. Why? Because they have not been created at the same time. Especially, in brick & mortar, they are hardcore huge data base, with a lot of risk to transfer to a new system. But that causes a big issue, as it means it is difficult to have a single inventory system that may ease the inventory management for both BU
  • In nowadays E commerce, market places take a larger space in the game. And in market places, the merchant don't manage inventory. Therefore, if you sell some goods by a third party, it is difficult to forecast which share will go to the third party and to you.
But by having a global inventory, taking into accounts online & brick & mortar sales will be a key factor of success for retailers in a near future. 

Friday, September 04, 2015

Some Thoughts On Grocery Trucks

Our world is evolving fast, toward a more complex world, but where proximity will be key, and timing crucial. This is the reason why I love the pop up stores concept, and food trucks. I discuss a lot about those in this blog.

I read a great article about grocery truck not so long ago, assessing that we will see more and more grocery trucks in our streets. There have been some good examples of truck or pop up grocery concepts lately: 

What I like about this article, is that it points out that we are living some sociological changes that retailers must take into consideration:
"Traditional retail was born with modern suburbia. At the time, consumers could come and park easily with their brand new car. Not anymore. Dense urban traffic, environmental concerns, gas price, multiple taxes are now deterring consumers from taking their car to go shopping. 1.3 million people move into cities every week. More than half of the world’s population currently lives in cities; by 2030, two-thirds of the population will be urban dwellers
This trend matters because urban areas are the drivers of economic growth: industrial and commercial activities in urban centers account for 50%-80% of GDP in most countries.  According to the United Nations, the world’s top 25 cities are home to over half of the world’s wealth. Even old cities continue to grow, as shown below."


Now do I believe that grocery trucks will take a concrete market share of FMCG markets? Not so sure:
  • If it is to deliver groceries that have been prepared before, you still need a place large enough to accomodate a large number of customers.
  • Operational costs, even though optimized, will still be pricy
But I am sure there are some food for thoughts to develop a concrete business model, especially in certain categories of products with high added value, to thrive with this new model.


Wednesday, September 02, 2015

CVS Category Management Plan To Adapt Important Market Changes

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

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

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

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

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


Tuesday, September 01, 2015

Aristide Boucicaut: The Trailblazer of Modern Commerce and Retailing

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

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

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

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

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

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

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


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

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

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

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