Lidl's International Strategy

If you read this blog, you must know all the respect I have for Lidl as a retailer. Actually, I believe that Lidl is one of the FMCG retailer that have the strongest concept, based on a very efficient operation model.

As I have said in my previous post this week, I have spent several days in Malta. When I arrived at the airport, I found the sign above. This is the same kind of signs I have seen when I went some years ago in Greece. Lidl is advertizing and has chosen its medium. 

This is part of an overal international strategy. Indeed, since 3 to 4 years now, Lidl has started to be more and more marketed in order to recruit new customers that did not used to go to their stores originally. The copy and implement the same strategy worldwide.

Here are some of the components of what we have seen.

Communication

• They communicate in airports for international and visiting clientele.
• They communicate also by sponsoring some sport national teams: Handball in France, Soccer in Italy

Categories

They implement specific categories in order to improve their image. Mostly the fruit and vegetable section, but also the bread section, that is heat up in store. 

They still keep their European strategy by buying in bulk products, but more and more they have specific offers to fit with the local culture. 

Internet

They have several local initiatives, but Lidl tends more and more to propose click & collect service, sometimes on specific offers only available online. I am thinking for example to the wine promotions in France with Premium brands.

Lidl is for sure one of the largest competitors to Carrefour, Tesco and even Walmart worldwide, and they have a clear vision of their strategy.

Category Management Series: Travel Retail Case Study

As I explained in my yesterday post, I have visited Malta, a beautiful destination that I recommend to you if you live in Europe. While I was waiting for my plane, I had the opportunity to visit a pretty well executed retail store. And it made me thought a lot about in store category management execution.

The store's purpose

One of the first thing to think about is to understand your store purpose. And when it comes to travel retail, the purpose is clear:

1. To improve your flight experience
2. To get the products you will need when you will be at your place, that you might have forgotten
3. Getting souvenirs you did not have time to purchase.

Focusing on the store's organization

You need to have your largest categories in the back for customers to make sure they purchase things out. That's what this store made: the book category was at the end of the store. Most importantly, I liked the merchandizing and the way the different segments were played: business, historical, cooking, etc...

You also had all the categories represented. Interesting to visit, because once again the products' formats, the book selection, the way souvenirs were displaied, everything was well executed.

Retail In Malta

Not so long ago I spent some vacation on the Island of Malta. Even though it was for leisure purpose, and actually it remained mostly about that, as I have not spent much time visiting stores, I still was able to find out a bit more about the retail landscape.

About Malta
What is interesting about Malta is first its geography. It is at the south of Italy. Therefore, you will find a lot of Italian products and brands.
Moreover, it is an island. There is hence different factors that will shape the retail landscape.

1. First in terms of products: You will find a lot of fish products.
2. Secondly, the cost of retailing. Indeed, you need to import a lot of products. Two consequences. A fairly big part of the products are made in Malta, but some international products, especially cosmetics, were pretty expensive.
3. There is no potable water on the island. And it is very hot. Therefore, the water category is very large in the island, with large formats.

The retailers

A lot of small convenience stores can be find, or small hypermarkets. The roads are small, and the island is small. Therefore, no need to have a big hypermarket. I have found none there.

But another format of retail is thriving there: Lidl. Indeed, Lidl can have a very efficient supply chain, multiplying the stores in order to cover the whole Island. Good strategy.

Tower Supermarket

I haven't visited one (once again, not a long time, and really focusing on the tourism part of the vacations), but Tower Supermarket is really a great store. A big focus on fresh products, with specific concepts, well executed, a large health and beauty section.

A very modern store, that could work in most of European countries. It is always funny to see how local retailer can sometimes be so good.

Some Features Of The Whole Foods Market 365 Store Concept

Whole Foods Market is obviously one of the hypest grocery store concept in the world. What is also fascinating, is that it has been rarely copied by competition in other countries, even though its international expansion is very limited so far.

Whole Foods Market has recently hit the headlines with its new 365 store concept, dedicated to smaller formats, closer to downtowns. 

Here are some of the features of the concept exposed by Time.com

Cheaper, with lower operationnal costs: 365 aims to expand the clientale of Whole Foods Market by different means, but also by cutting of the prices. In order to keep its expenses under control, it will cut down the operational costs:

• Fewer product ranges
• Less employees
• Ready to sell products, cutting assisted sales

Will the formula works? It will be interesting to follow, because the competition will be rough on smaller FMCG stores.

Relation client: Excellente Campagne Allo Resto, le Goal Delivery

Un petit blog en cette période de coupe d'Europe sur une très bonne initiative d'Alloresto.fr. Bien évidemment, la période de la coupe du monde est souvent l'occasion de se faire livrer à domicile, notamment les fameuses pizzas. C'est donc une très bonne période pour Alloresto.fr de communiquer. Ils ont donc fait une publicité intéressante.

Si vous récupérez votre commande au moment où un but est marqué, vous êtes remboursé de votre pizza. Plusieurs choses sont intéressante:

• Le timing de communication parfait avec la coupe du monde.
• Le discours, qui est dans l'empathie, et qui permet de "lever" un vrai faux frein à la commande de produit à domicile alors que le match a déjà commencé.
• Pour se faire rembourser, il faut twitter un Hashtag spécifique, qui permet de faire du marketing viral sur Twitter.
• C'est très créatif, et donc cela démarque de la concurrence.

Bravo!

L'Ubérisation du commerce: Les places de marché

Les places de marché sont un sujet complexe, où j'ai souvent du mal à me placer. C'est en tout cas très clairement une des tendances de fond du commerce de demain. Elle offre bien des avantages:

• Pour le distributeur: une capacité à tester de nouveaux marché, à élargir de manière exponentielle ses gammes sans soucis techniques de place entrepôt, mais également de pouvoir avoir de nouvelles sources de revenus pour son traffic.
• Pour le locataire de l'espace, une manière d'avoir de la visibilité rapidement, de pouvoir bénéficier des outils du E commerçant sans investir dedans, et très souvent, de faciliter son approvisionnement et son offre commerciale, puisque celle-ci n'a pas forcément besoin de répondre aux mêmes impératifs qu'un distributeur classique.

Ces market places ont permis notamment de faire baisser les prix de vente consommateur, notamment en favorisant les importations de produit, et donc jouant des politiques commerciales des fournisseurs souvent bancales entre pays européens. 

Mais demain, la question est de se poser de la stratégie commerciale des enseignes. Comment se différencier si tous les produits sont présents partout, et qu'il n'y a plus de réflexion sur le merchandizing de l'offre commercial?

Comment faire pour sécuriser les rentabilités et la politique prix de son offre, puisque souvent une offre concurrente existe à quelques clicks sur le même site? 

Pareil pour les industriels, qui sont beaucoup plus à la merci de modification soudaine de stratégie qui peut les écarter à tout moment.

Je n'ai pas vraiment de réponse à ce sujet, plus des interrogations sur comment le phénomène va se développer. Néanmoins, j'ai 2 visions:

• La première sera l'émergence de spécialistes de la market places, des grossistes qui deviendront aussi gros que les clients E-commerçants, car ils auront la capacité à investir, et casser les prix des produits qu'ils pourront proposer sur plusieurs sites différents.
• Il va y avoir une concurrence généralisée, qui va faire baisser les prix des produits de grande consommation, car des écarts tarifaires entre pays ne pourront plus être accepté ni par les distributeurs, ni par les consommateurs.

Pour aller plus loin, l'édito de LSA sur le sujet.

Category Management Series: L'incrémental lié aux nouveaux formats de produits

Très bon article trouvé sur Nielsen. Et qui va certainement relancer le débat sur la taille des gammes.

Nielsen nous donne des informations sur l'incrémental générer par rajouter un format de plus grande taille à une gamme de produit. Dans 90% des cas, le nouveau produit génère un incrémental. 

Très souvent également, c'est en ayant un plus gros format que l'on génère le plus de chiffre d'affaires incrémental.

Néanmoins, je ne suis pas forcément très fan de ce genre de constat. Je suis d'accord sur l'impact d'augmentation du nombre de références sur le chiffre d'affaires, et notamment des formats plus stockant. Mais il ne faut pas oublier l'impact sur la chaine de valeur qu'il y a à multiplier les formats.

• On diminue le chiffre d'affaires au mètre linéaire
• Souvent en dévalorise, car le plus gros format est vendu moins cher au prix/kg
• On augmente de manière significative les coûts opérationnels, de mise en rayon, de coût de stockage, et de gestion administrative derrière.

Il est toujours important de prendre cela en compte, car l'efficience commerciale est souvent non présente sur ce genre de décision.

Retail Is A Media: How Carrefour Uses Its Store For Advertizing Purposes

Since the First Moment Of Truth concept, it has been a while that POS (Point of Sale) marketing has been developped in order to boost sales in store. Of course, a good advertizing during the shopping experience could be far more productive than advertizing on standard media while customers are not really into the mindset of editing their shopping list.

Carrefour has developped its POS tools in order to convince suppliers to use them. You will have below a very interesting video showing examples on how to use their services. 

Now, what I believe is still lacking while discussing about the impact of point of sales marketing, is the real impact of it. Indeed, in order to really trigger the sales, it is important this point of sales marketing effort is linked with other triggers, especially promotions. We all know how much of an impact it could be to have both leveraged at the same time.

What do you think about it?

The Future Of Private Label

Private Label is a very interesting topic nowadays. For years private label has been considered as gold by retailers as it was achieving several goals at the same time:

• ·         Differentiation with competition by having non comparable products
• ·         Improving price image, by lowering the prices per unit of standard products
• ·         Generating higher margins for most of them.

But the conjuncture has changed. Today, retailers in France are fighting in a mature market that is struggling to find growth. There has been two consequences:

• ·         Cutting prices to keep a competitive advantage.
• ·         Raising the number of promotions to generate more traffic in stores and get market shares.

Both of them have hurt private labels:

• ·         The investment in lowering price has been taken on the development of private labels for different reasons including more negotiation leverage with international suppliers but also to compensate some of the lost margins.
• ·         Prices of international brands are for a longer and longer period of the year at the same price of private label…

But what is the future of private label? I stille believe private label is a great strategic tools. And you can actually see that some of the best performing brands in retailing are still betting on private labels. As said Anders Dahlvig in its book, Ikea has thriven on developing their own products, which allowed them to work on added value better than competition. Anders Dahlvig exposes the fact: when every retailers distribute the same products, there are no other choices but to compete on prices by lowering them to leverage sales.

Now private label must be taken as a strategic tool to achieve its goal, not to be a cheaper me-too. 

The Future Of Pop Up Stores

Pop Up store is for sure a very important trend going on right now in retailing. The Ecommerce boom has created new needs in terms of commercial real estate, and therefore the pop up store concept allows malls to have a flexible solution to fight against store vacancy. 

I read this very interesting article about Pop Up Store. Indeed, the article questions the future of pop up store. I agree with the article, pop up store has blossomed in a market in crisis, benefeting from low renting prices. And it seems landlords are eager now to raise rents.

But I believe actually pop up stores will be fore sure THE trend of commercial real estate:

• First, pop up store will become a real business. It will structure itself, better master the concept, in order to lower the cost of implementation, which will ultimately raise profitability. I believe that the savings that could be leveraged from mastering the concept are far more important than a raise of rents.
• Secondly, I believe that the real estate landscape will never get back to what it used to be. Digitalization will hit new businesses, Ecommerce will still grow, and will lead to more store shutting down (in a small proportion but still). Therefore, pop up store business will be a key to keep profitability and malls attractive.
• Thirdly, I believe we will see retailers I believe that will have a 100% pop up store business. This will be a big thing, you shall watch.

Big Data and Category Management

I believe category management is on the hedge of a new revolution. A revolution that will be based on big data.

Let's not forget that most of category management steps of innovations have been made available thanks to technology:

• Walmart has been able to master its supply chain by launching satellites to control data over it.
• As say Terry Leah, former CEO of Costco, he has been able to launch its loyalty reward program only when computing power was strong enough to deal with the large amount of data.

And today, technology has never been so big. Big data is for sure something that could impact big time retail, because retail owns massive amount of data about shopping behavior, sales, and supply chain.

We all know that there are many factors that could impact sales in store:

• Product location within a store
• Product availability : minimizing out of stock
• The store's traffic: more traffic = more probability one shopper would go by a product, improving the probability to sell it.
• Stores location: how many stores distribute the product.
• Other media advertizing: Radio, social media, TV, etc...
• POS marketing: Animations. 
• Weather: sun lotion, soft drinks, ice cream when it is hot.
• Shopping experience

All of these components may impact on one product. And at the moment, it is difficult to analyze those data:

• You need to register all the components to be taken into account
• You need high computing powers to process them.
• Lastly, you need software that will help you get the right information.

So far, I believe not much of those big data have been developped, and I am eager to see how big data is actually leverage in retail to boost sales.

Category Management Series: Good Example Of How To Promote A Category

Promotion is one of the most powerful tools to grow a category. But promotion may have different prospectives:

• For retailers the main priority at the time is to grow markeshare, for the shopper to get the products at their place instead of the competition.
• For suppliers, mostly, it is to grow their volumes at specific occasions.
• It could also be to promote innovation, by cutting down the threshold of price for example.
• It could be to reward loyal customers.

But in a category management prospective, I believe that there is most of the time very few initiative on the retailer side.

I found this promotion in a Carrefour flyer. I find it very interesting. Indeed:

• You have tips and advices on how to use the products.
• You have the right promotions that fit the cocktail proposal.
• The products are owned by different suppliers. And that is what I like: The retailer take the initiative to grow the category by being the leader of the initiative.

Some good food for thoughts.