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. 

Should #Walmart Split His Activities?

Interesting article on Forbes about a potential strategic move Walmart may take: Should Walmart split in two or three its activites? Obviously, Walmart is by far the largest retailer in the world. So far ahead that no real competition could really threaten him on the global stage. Not even Amazon or Alibaba in my opinion. Here is the rank in sales of the most powerful retailers:

1. Walmart: $473 billions
2. Costco: $102 billions
3. Carrefour: 74,88 $90 billions
4. Amazon: 74,45 billions (even with a double digit growth each year it would take at least two decades to get back to Walmart)

But Walmart is struggling to reinvent itself. It still dominates the US market, have great international sales, but:

• The US market does not grow enough to keep a high growth pace.
• The Internet competition is a threat to instore sales
• Its facing high international competition in market such as China or Brazil.

This is the reason why the author of the article is thinking about splitting the company in different parts. Here how it could go:

Walmart U.S.                           $279.4 Billion

Walmart International            136.5 Billion

Sam’s Club                                  57.2 Billion

Total                                          $473.1 Billion

I believe the  split would make sense:

• Each company would be large enough to keep its strength in the market.
• All of them may have different strategic focus: In the US, to develop the Internet Activities, Walmart International, to focus on key markets. For Sam's Club, to find new locations and grow its real estate or develop new product ranges.
• It may allow to reevaluate the worth of shares, as it most of the time do for such spin offs.

By having such a move, Walmart may be better prepared to face its competition on the different markets.

Book Review: The One Minute Manager by Kenneth Blanchard

I recently finished the reading of "The One Minute Manager" By Kenneth Blanchard. The book discuss about a management technique, allowing the manager to adapt to all kind of situations and to all kind of people at different time.

The whole idea of the book is that you should not have a top to bottom approach while managing people, and also that the manager needs to adapt its management style depending on the person.

Indeed, one person may need different kind of managements depending on its level of expertise on a specific topic. I like this approach, as it tends to be more efficient and way smoother than a rigid and military approach.

I recommend the reading of the book to understand the whole concept of the book. Actually, it is very easy to read, with a lot of examples. 

#Walmart #Target Setting Aggressive Online #Pricing Strategy To Fight Amazon

The Internet is becoming more and more important in the growth strategy of brick & mortar companies like Walmart or Target. Indeed, as traditionnal retailing is slow to find a solution to stop the decrease of instore visits, The Ecommerce economy is still growing.

The Internet Retailer Website has noticed that both Walmart and Target have changed their pricing strategy in order to be more aggressive against Amazon. Amazon's size and strength can't be ignore by anyone, and Amazon has already become one of the biggest retailer in the world, which implies a high purchasing power, and the ability to have low operationnal costs.

But Walmart and Target have some arguments to compete online:

• A strong brand
• A size that allows them to have the same kind of purchasing terms than Amazon
• A network allowing multi channel strategies and delivery possibilities to customers.

Now, is it the right approach to fight Amazon on its prices? Of course! How could a discounter like Walmart not be able to have the same prices and even cheaper prices than Amazon's?

Now Amazon still own 2 assests which will be difficult for brick & mortar retailers to own:

• Its high efficiency delivery system
• Its large product range, providing the best choice for customers.

Nevertheless, I believe that Amazon should fear a shrinkage of its market share, as competition will boost their investment online.

Some Thoughts On How Best Buy Can Get Back On Track #Bestbuy

Best Buy has been struggling the past few years, as a lot of electronic goods retailers. Among the reasons of its issues are:

• Tougher competitions with online competitors like Amazon having aggressive pricing
• "Showrooming", which is linked to the online competition: people go in store to touch the products, get information, than buy it online to competitors
• Less disruptive innovation (tablets, Led TVs, blu ray, digital cameras...) than the last 2 decades. Also, and linked to it, we are not anylonguer in an equipment market, but in a renewing one, which implies less volumes.
• Digitalization of cultural contents, which are decreasing the sales of DVDs, CDs, and soon video games.

Best Buy is in the same situation than other retailers, like Fnac in France, which had to adapt to the competition, and a lower demand. Obviously, Best Buy still have strong arguments to face competition:

• A strong brand, which people knows and trust
• A large retail network, which allows Best Buy to have proximity with its customers.
• A know how in terms of logistics, and a size that allows it to master its operational costs.

I believe that Best Buy however need to move forward and make adjustment to its strategy in order to  find back growth:

• Find new product categories linked with its brand image: That is what the Fnac has done in France, selling kitchen applicances. It will allow them to master the decline in DVDs and CDs sales.
• Invest in instore experience: There are two ways they should do so: Educate its sales person. We are living in the information age, where most customers know more about products than most sales persons. Hence, in order to create value to the store visits sales person needs to provide great advice and information about products. Also, Best Buys stores should emphasize more on product demonstrations, to enhance shopper experience and trigger sales.
• Lowering instore stocks to get more cashflow. Internet retailers are thriving on cashflows as they have cheaper infrastructures. Hence, instore inventory should be lower in order to get back some cash and hence profitability.
• Embrace multi channel potential. And this by 2 ideas. First: get some lockers to develop click & collect activities. It will create some traffic from online shoppers, and hence potential instore sales. Secondly, master "showrooming". People want to buy it online after having visited the store? Fine, but on bestbuy.com. Marketing materials must hence be developped to make sure we track these customers.

OSICAM's New Website: One of the best CRM Approach I know

I have already discussed about the OSICAM strategy on this blog in the past. The OSICAM method has been developped by Christophe Bouguereau, one of the best customer relationship management expert I know. The concept of OSICAM is to base your CRM strategy on a 360 approach which allows your company to understand each of its components. This modell is adaptable either in a btoc or btob environment.

The osicam.com website has recently been updated. It now proposes to download a free white paper which unfold the whole concept behind it. I highly recommend its lecture, and you to get in contact with Christophe in case you are interested in it. 

Let's Put Some Focus On Sampling: A Great Marketing Techniques

I read an excellent articles about a very efficient marketing tool a lot of marketing professionals don't seem to master: sampling. 

Sampling is a great way to give the opportunity to potential buyers to try out your products, and to convince them to buy it. Indeed, one of the reason why people tend not to switch from one product to another, or avoid new products is because they fear to be decieved or that the product is not worth what they will pay. By sampling, you limit the potential deception, and you can boost your sales!

Now you must use wisely this tool:

• Sampling to anyone may not be that efficient: If you hand out free products to anyone, you will give probably 80% of your samples to people not in your target, which is not what you are planning.
• Sampling should not also be considered as giving out your products, especially if you do it quite often. It will lower the face value of your products.

But I like some of the ideas of the article:

• Get samples of different flavors in a tea box, to push customers to try out new flavors
• Allow to get samples regularly with other purchases of the customers, which will boost your cross category sales
• Get samples as the "exra value" of your products, which will increase customers' satisfaction.

Also, some good tips not to neglet:

• If you use this technique, you should for sure not be greedy with the sampling, which could actually be as deceiving as not giving samples.
• The medium (either a person, or a website) you use to access the samples should also be of quality. It should not be a bargain and to send 3 files to get a small sample of skin cream...
• You should also focus on the education you may give to the customers around your product. The person needs to get as much information as possible about the products to make sure it will adopt the product and consume it from now on.

Ikea Plans And Strategy In France

After Costco unveiling its strategy in China, a second global retailer has some quite innovative strategy in a foreign country. Ikea has announced three very important news about its expansion in France, and both of them focus on bringing Ikea downtown, in Paris. This is a very interesting strategy as Ikea so far has thriven in rural and urban places with its concept. But as competition is getting tough, Ikea needs to find new ways to get new customers.

Ikea testing some pick up lockers

Some companies have already had the ideas of locker to pick up goods bought online, such as Amazon, Walmart, or Dia for grocery shopping. Ikea will soon propose its own locker to pick up its furnitures. It will obviously implies large lockers, far larger than the ones operated by the other company I listed above.

The concept will be tested in France at the Lille's store. The lockers will also allow customers to use them for returns. So far this locker is only a prototype, but it could be launched at a large scales, in public transfert places such as train stations.

The invention of a "Shazaam for furnitures"

Second innovation, Ikea is working on an application that will allow the customers to take pictures of any furnitures. The application will be able to recognize the model, and for example if its an Ikea's model, to propose to buy it online.

These two ideas are very innovative, and I believe they will experience great success.

The opening of a store in downtown Paris

So far Ikea has not been looming on downtown store, but as more and more customers live in large cities, Ikea has decided to open a location in Paris. This store will be more a flagship than anything else, as the company is not forecasting any profitability of this store. Nevertheless, if Ikea is able to find the right chemistry to launch downtown locations, it may expect in a near future new business opportunities.

Costco's Strategy to Enter China

Costco is probably one of the most fascinating retailer in the world. Despite tough macro economic situation, Costco still performs better than most of its competitors. Also, Costco is one of the fewest US retailer that experiences real success abroad, with 30% of its warehouses located outside the US.

Costco has developped its international strategy the past few years, with especially big plans in Europe, with the launch this year of operations in Spain, and forecasted operations in France for 2015. 

But Costco made the news headlines this week by entering the Chinese market with a quite unusual approach. Indeed, Costco started its activities in China not by opening a warehouse, but by setting up an online partnership with E commerce leader Alibaba. What is even more surprising is that Costco has never really been a big fan of Internet sales, focusing on its core warehouse concept, which is thriving despite online competition like Amazon.

But in a country where Ecommerce rules, and where setting up a business means to have a partnership with a local company, this quite innovative approach is for sure a great idea:

• Ecommerce is a $175 billions business in China
• This partnership allows Costco to enter the business at a low cost

Now what will it mean for Costco in China. Will they open actual warehouses? Can we expect from them a 100% online strategy? I believe that once Costco will actually focus its strategy on China, there is a high leverage to be expected. What will be difficult for Costco is to set a strong brand in China online without the support of its warehouses.

For sure, Costco's journey in China will be one of the story to follow in the next few years.

#retail: Connected Apps to Help Online Grocery Business: Hiku by Auchan

Auchan, through its Chronodrive banner, has revolutionized to me the online grocery business by creating the drive thru supermarket. In France this new retail channel has sprung up, and will count for 6 billion euros at the end of 2014.

The main goal now of these companies is to grow the penetration rate (15% of the French population has used a drive thru at least once this year), but also to generate more uses. 

Auchan is hence testing a connected object, named Hiku, to generate more usage of its drives. It is tested on 100 of its top users, since the beginning of July. The object has been designed in order to manage the shopping list of the whole familly, either by scanning bar codes, or by voice orders. Hiku obviously creates a real added value to the users, and has a real marketing purpose: to ease the order process.

I believe that Hiku is going to become a real tool that will change the way we grocery shop.

What Is Wrong With #India for the #retailers? #Carrefour leaving the county

India represents one of the highest growth potential for retailers in the world, and so for the longest time. Its 1.2 billion people population and its rising economy represents for sure a high potential. Especially while Brazil and China has already been colonized for the longest times by global retailers such as Carrefour, Casino, or Walmart. 

But the expansion in China and Brazil has been achieved while ago, and both legislation and poor transportation infrastructure has made it nearly impossible for retailers to grow. After two tries, Group Carrefour, the largest retailer in the world outside its local market, has decided to abandon its activities. 

Here is why:

The Indian government opened up the country's $500 billion retail sector to foreign supermarket operators in 2012, but mandatory local sourcing requirements and a decision to let individual Indian states decide whether to allow global chains have deterred new entrants.

Only British supermarket operator Tesco Plc has so far announced plans to set up stores in India.

The new Indian government under Prime Minister Narendra Modi, elected in May, has also opposed foreign investment in the supermarket sector, fearing it will hurt small shopkeepers.

"The barriers were laid down by the previous government and the new government only made it worse by opposing the policy," said Devangshu Dutta, chief executive of retail consultancy Third Eyesight.

"So companies who do not want to lose money in the market have been left with very little choice but to either hold back or fold up," he said.

The world's largest retailer Wal-Mart Stores Inc last year called off its Indian partnership and shelved a plan to open retail stores. The company is now focusing on opening wholesale stores in the country and recently launched an e-commerce venture in India.

But I believe India really need retailer in order to boost its demand and its economy. Hence, retailers will allow the country to grow its purchasing power, and its ability to afford a better lifestyle, which could boost the sales of other international suppliers such as P&G, Nestlé, or Mondelez. 

Obviously, India wants to keep control over this important market in order to allow an Indian retailer to keep a competitive place prior to the arrival of retail tycoons. The only issue is that these delays really impact the economy of India, which growths is lowering faster than its Chinese and Brazilian competitors. I don't believe anyway that a local operator may be able to grow enough to assure a high retailing service in such a large country. The expertise of international leaders is required to do so.

The time to market has not arrived yet, and some companies are still looming on the market. But for how long?

When Will We Have Quality Smartphone With Keyboard back?

I have posted several posts about this topic, and my struggle to find a good smartphone now that my last Blackberry bold has fallen apart. 

I own now a Samsung Android Galaxy Ace Smartphone. I was actually quite happy at some point to leave Blackberry, because over the years, I must admit the lack of applications has been a real bargain. I now have access to a lot of cool applications which really help, no questions. I also like the size of the screen, which allows to consult the web and videos very easilly.

But as you may know, I consider a smartphone as a business tool, in order to get organized, but also to "create". By creating, I mean editing text, writting reports or blog posts on the go. Something that I find nearly impossible to make with a tactile screen, wether it is a Samsung's or an Apple's. 

Don't get me wrong, I believe the whole tactile screen idea is genious. Indeed, it allowed to a massive number of people to access the Internet and all its components in mobile activities. It has really and deeply change the world. 

But I still believe there must be a lot of people like I am that would like to have a great keyboard smartphone where they can access applications and all the necessary I was discussing (schedule and task organization software).

Now Blackberry is leaving the smartphone market to focus on network security for businesses. I believe that there must be a place for a premium market to deliver high quality smartphones for executives like I.

Does Anyone know one of those smartphones?

Demetir, une solution pour améliorer l'expérience client au téléphone

Je voulais faire un peu de publicité pour un service que je trouve très intéressant, qui m'a été présenté par Benoît Bouffard de la société Demetir.


Ils ont développé en effet un système très intéressant pour gérer la partie "qualification" d'un appel consommateur entrant. Ainsi, au lieu d'entrer dans une fastueuse étape où il faut renseigner tout un tas d'information avant d'avoir un opérateur, cette opération ce fait en amont de l'appel, ce qui permet d'améliorer sensiblement l'expérience consommateur, tout en gardant exactement le même type d'informations.

De même, le système permet de faire du feedback management, en mettant directement à la fin de l'appel un questionnaire en place pour voir la satisfaction de l'appel.

Je pense que le système est ingénieux, et permet de sensiblement améliorer la relation client.

Qu'en pensez-vous?

Should Marketers Trust Their Gut or Data?

I favorited not so long ago a  tweet of RetailWire with this headline. And indeed the question is really good. For the longest time, with the rise of the information technologies, marketers have considered customer data as the Saint Graal of marketing. CRM tools have also thrived on this idea. Information and the new technologies allowing to analyze them provided the certainty to propose the best proposal to customers, and then secure sales growth.

But then, Steve Jobs raised as the marketing guru of its generation. Steve Jobs considered that he should not listened to customers demand for two main reasons:

• Customers don't really know what they want
• How could you propose something that stands out of the competition if you base your products on the same info than the other companies own?

And hence, Steve Jobs proposed products that were not expected or asked by customers. And it blowed their mind.

Now, you don't create the Ipad or the Iphone every year. And probably there are those two approaches in marketing:

• One based on gut, on the ability to think out of the box
• One based on customer data, in order to respond to the everyday demand.

I believe that Gut and Data are as important. It just depends on the situation. 

Now new technologies, especially neuromarketing, which allows to better understand customers' behaviors, may give better insights and data to make decisions for marketers.

What do you think about it?

Etude sur les webconsommateurs en France et à l'International

Etude PwC web-acheteurs novembre 2013 from PwC France

Une étude trouvée via le site Frenchweb, et réalisée par PWC. L'idée est de faire une étude comparative sur l'achat en ligne en France et à l'étranger, ainsi que son évolution. Ce que l'on peut voir, c'est que l'Ecommerce dans les pays développés tel que la France ou le Royaume Unis devient mature, avec des croissances qui ralentissent très clairement. Aussi, il faut voir que la part du ecommerce dans l'intégralité du commerce est en train de se stabiliser. Aussi, il va falloir trouver de nouvelles manières de chercher de la croissance, notamment via le multi canal.

Une étude très intéressante, qui donnent des données intéressantes sur la physionomie du Ecommerce en France.

Will Ibeacon really revolutionize Retail?

Ibeacon is obvisouly one of the hottest hype in the retail world. Indeed, the technology represents a lot of advantages for brick&mortar retailers, which still suffers from the Ecommerce competition:

• Better shopping experience, by proposing updated and customized informations/promotions along the shopper's way
• Better understanding on how the shoppers go in store, in order to propose more efficient concepts and merchandizing techniques.

The retailers are hence very interested by this technology, even though this one is pretty new and not yet really exploitable. 

But I believe Ibeacon represents also a threat for customers, which may not be to keen on allowing retailers to follow them while shopping.

Indeed, how could a retailer guarantee that its Ibeacon will not be too intrusive? Do a customer really want to have commercial info all the time while shopping? 

Also another question I have: Can Ibeacon, based on customer's infos, could better serve someone instore, than actually a sales representative? 

What is interesting with I beacon, is that it is to me one of the first push mobile marketing tool, which most of mobile marketing tools so far have been "pull" (an application that the person download and active whenever he wants).

For sure, Ibeacon is going to become one of the main topic of this blog.

Convertion rates For French E-Commerce

Shared by @marcsimoncini, the conversion rates depending on the industries. You can clearly see that you have very different results depending on the activity. Probably some room for improvements? I believe so, especially for "ameublement" (meaning furnitures).

Visit Virtually Coles Supermarket In Australia

I wanted to share with you an information I found on the minute retail blog: Australian supermarket chain Coles propose to virtually visit online its new store concept. Actually, I don't think it is the first time that I have seen such an experience. I have already "virtually" visited the new Tesco concept. The interface used is Google maps. You may click here to visit.

First of all, I find the interface very well done. It is easy to hang around the store, and the pics are very neat. You may check out how they merchandise their goods, which is always interesting to do.

Now, I believe it is more a public relation move to publicize Coles, dedicated to retail businessmen, more than aiming a shopper population. Why? Because it doesn't really consist in something that improves the shopping experience. Still, I think this is a great thing to do. How many retailers have been hidden their concepts in order to avoid the competition to compete with them? 

I still remember when I used to be a salesperson at La Fnac, that people were not allowed to take any pics in stores. Same thing when I visited the first time Carrefour Planet, when people told me I should not take any pics as the security staff has been specifically briefed not to let anyone shoot photos.

But in nowadays world, where information is going so fast, it is actually better to let anyone knows what you do good.

Offre de stage en alternance #dauvers70

Olivier Dauvers est l'un des plus grands experts de la grande consommation en France. Je lis son blog très régulièrement, et je viens de voir qu'il propose une offre de stage en alternance. 

Je pense que le stage est très intéressant, et je vous recommande de se rapprocher de lui afin de pouvoir postuler.

How US Retailers Adapt Their Strategies To The Growth Of E-Commerce

It has been a while I have read this very good article on the Internetretailer.com website. As you know, I am a fervent supporter of the multichannel approach. This article is great because it shows how well US retailers have adapted their strategy to the growth of ecommerce. First and foremost, which may not be highlighted in the article, US retailers have embraced e-commerce. The largest ones, even though they remain average challenger on the Internet market, have been able to grow their sales and their share of sales on the web those past few years.

As they have kept their store counts steady for most of them, they have searched their growth online. Obviously, as brick and mortar markets are already saturated, the best and most efficient way to grow it to look for online growth.

This fact is clearer on the chart below.

Square feet are shrinking, to be more efficient. Does that mean there are no future for brick and mortar new retail real estate? I don't think so. Obviously, in mature retail business like grocery retailing for example, market saturation will be hard to fight against. But we have seen those past few years new retailer that are working on shopping experience and new ways to approach categories thriving.

What is for sure is that, in mature markets, the Internet is the new playland.

#Sixt Loyalty Card: Something Is Wrong With Customer Relationship

Couple of weeks ago I went to Sevilla and rented a car there, a small but good Ford Fiesta card. I booked everything on Expedia, which I believe is one of the best service, especially while you try to look to get a plane ticket, a hotel and a car rental at the same time. Then I picked a car rental at Sixt, as it must have been the best deal in terms of prices (I was there for a week end, by myself, did not really need to get a large car to drive couple of miles). Everything did fine, no complain to make, everything was smooth about the rental.

I have been very surprised to find a mail from Sixt couple of days afterward, offering me my loyalty card. 

This loyalty card (the same than the one you can see below) offered me different kind of discounts, which I did not really understand how they worked.

The loyalty card looks like a real loyalty card with a magnetic band, like a credit card, with my name on it. The thing that I am bothered about, is that:

• I have only done business with them once
• I barely rent cars (If I would be a hard user, maybe they could have given me one, but they would have to know perfectly my profile, which they did not).

I did not sign up for anything, and to give me this card is a little bit ackward. The loyalty card should be asked by the customer, and not forced in the pocket by one company.

I don't think this strategy is well adapted:

• Giving loyalty card to anybody is kind of embarassing
• Their loyalty programs, as far as I know, is plain, and I have no intention to use it.
• I believe that this technique must cost a fortune in mailing and card creations. If they intend to use their customer data base, it must be a complete mess, and not of real value.

I believe that Sixt approach is bad, and that should really not be followed by any kind of business.

What do you think about it?

Quelques réflexions sur le rachat de DIA par Carrefour

Cela fait un peu plus de 6 mois maintenant que j'ai quitté la société DIA . DIA n'a jamais fait autant la une des magazines que depuis quelques semaines depuis que la maison mère espagnole a décidé de vendre les activités en France. Ce vendredi, nous venons d'apprendre que Carrefour a déposé une offre de 600 millions d'euros pour acquérir l'intégralité de la société DIA France.

Pour ceux qui ne le savent peut être pas, Carrefour possédait la société DIA avant de la céder en 2011 via un Spin Off. Ce Spin Off avait été décidé par l'ancienne direction de Carrefour, Lars Olofsson, avec comme but de revaloriser l'action du groupe Carrefour, qui à l'époque n'allait pas au mieux. L'opération avait bien marché, puisqu'alors que l'action Carrefour continuait de baisser, l'action DIA n'a cessé de grimper, la société espagnole ayant d'excellents résultats en Espagne, ainsi qu'en Amérique Latine.

Aujourd'hui, que va donc faire Carrefour de ces points de ventes? Très clairement, le PDG actuel du groupe Georges Plassat souhaite consolider sa présence en France, en réinvestissant une partie du cash généré par la vente de certains pays (comme la Colombie) dans les activités nationales. Carrefour ainsi acquiert plus de 800 points de vente, ce qui augmente une fois de plus son maillage national.

Mais ce qui va vraiment être intéressant de suivre, c'est de voir ce que Carrefour va faire de ces points de ventes. Voici pour moi la meilleure manière d'intégrer ces points de ventes:

• Consolider la présence en centre ville: DIA compte plus de 150 points de ventes en centre villes, la plupart à Paris. Carrefour devra très certainement en vendre une partie importante, mais bien évidemment consolidera ses positions en région parisienne, et revendra les points de vente devant être céder à des concurrents n'ayant pas réellement de présence dans la concurrent mais avec des ambitions (Auchan, Intermarché notamment) 

•  Récupérer une partie des plus grands points de vente pour les transformer en supermarché. Le seul soucis est que les "grands" DIA font entre 800 et 1200 M2, ce qui en font de petits supermarchés, et souvent dans des zones de chalandises peu intéressantes (soit avec un hypermarché pas très loin, soit en bas d'une cité HLM). Il faudra voir comment Carrefour gère ces points de vente.
• Mais pour moi, l'idée de génie serait de récupérer ces points de vente pour en faire des Drive déporté. En effet, le maillage de DIA dans certaines régions est très bon, la taille des points de vente parfait pour en faire des entrepôts Drive, et en plus, comme je le disais, souvent ces points de vente sont sur des zones de chalandise concurrente de gros supermarché ou d'hypermarché.

Peut être même que Carrefour va développer de nouveaux concept commerciaux pour tirer un maximum de ces points de vente. En tout cas, tout cela va être passionnant à suivre.

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Why There Are Still Interests To Invest In Mature Market

I wanted to discuss this topic on this blog after I was chatting with one of my supplier about why they should invest in the French market.  Indeed, he was arguing that European markets, as they are mature, are not a priority for the investments of its company, as the growth is now in the emerging markets.

This is to me a cliché. Indeed, sales growth settles for sure in emerging markets, were a large number of people experience a high growth of salary and lifestyle. And hence, as you start from the bottom, there is a lot of room for growth. And a lot of big companies have invested a lot in those countries, with success.

I am not going to hide the fact that indeed a lot of US and European companies have been able to meet their growth target thanks to their investments in emerging countries. But as the time go buy, we have seen that investing in the emerging market, even though still a priority, is as important as investing in mature market.


A company needs to be able to compete in a mature market
Hence, how could a company not be able to compete in a mature market if it wants to stay in the long run? Earning fast marketshares surfing on the economical growth of India or China is an easy game, especially because this growth most of the time has been financed with the money from mature market. But once the market is mature, and growth harder to get, then you need to be able to make profit out of it.

And competing in a mature market requires for sure large investment.

Mature market is often where innovation comes from 
In mature market, you need to have concrete and real innovation. You can't fake it as your competition puts a lot of money down inR&D. It is once you are able to innovate in a mature market that you will be able to set presence abroad.
Most of the time, emerging markets are reached with low cost versions of the European products. It is what was made for instance by l'Oréal in India, where they sold to beging one portion shampoo bottles to allow people to buy from time to time shampoo.

Mature markets are reliable
Mature market don't experience much roller coaster, which can be the case in emerging markets. Companies' status (leaders, challengers, premium niche) are challenged on a daily basis as new competition can show up at any time.
Also as we have seen this year, a lot of large European and US companies have delivered delivered deceiving figures due to currency changes. Mature markets don't have floating currencies as emerging market does. It has been the case of most of European retailer such as Carrefour, DIA or Casino.

Emerging market will become less and less attractive
Emerging markets growth are slowing down, competition becomes tougher, wages are going up: Emerging markets are going soon to reach a plateau where they will need to change their modells to keep up with the pace. And as they are loosing competitivity, then old markets start to be attractive.

It all comes back to the first point, a company need to be able to compete in a mature market. Because I believe that at the end of the day, this is what really matter: having a reliable profitable business.


What do you think about it?

What If Electricity Was Becoming Free?

Obviously the title of this post has probably triggered your imagination, or at least your attention. It seems to be an impossible thought nowadays, while we still have not find a solution to stop using fossil energy, meanwhile gas and oil gas are still growing at a steady pace. 

As the Ukranian crisis is still unfolding we can see how it is vital for countries to get energy. Jeremy Rifkin, an expert forecaster has envisioned a new industrial revolution where fossil energy would have disappeared, and where we would have found renewable sources to replace it. This revolution would make electricity almost free as the cost will dive dramatically.

Seems unrealistic? Actually, this very interesting article of Le Nouvel Economiste explains why and how it could be possible. 

First of all, every industrial revolution have been possible thanks to a new energy source. The first one was possible thanks to the steam machine. The second one has been based on fossil sources.

Secondly, the rise of countries like India, China and Brasil, and their growing need of energy sources to produce more will very soon create high tensions on the energy market, which will speed up the need for new sources in mass. 

Also, what make new industrial revolutions is not only the arrival of a new source of energy, but its convergence with new communication media. Nowadays, we already have the new media, but we are still craving for a new energy source that will allow this economic boom.

What the author envision is a new way to consider renewable energy. What is great with renewable energy (wind, solar...) is that on the opposite of fossil energy is accessible anywhere at a low cost, whereas you need to dig deep to get gas for example. That means that instead of having huge plants regrouped in one place, you may have renewable source close to the place where it will be used, which will lower the cost of both exploiting and transporting. 

Of course, a lot of new technologies need to be found to store and produce this renewable source. Also, we need to invest in those new technologies once it will appear. But it will dramatically lower the price of energy, the same way the Internet lowered the price of access to information. It will obviously also have a great positive impact on the environment, and solve a lot of the problems of pollution we have nowadays.

As a result, whereas energy accessibility remains nowadays one of the biggest conflict issue, the access to information and network will soon become even more problematic as a result. 

I believe that his idea is genius, and it seems pretty possible this will happen. Now that you have read this article I am sure you will follow with another look what renewable energy will become, and how it may change the world.

#scops2014 : Compte rendu de la soirée

Malheureusement je n'ai pas pu cette année me rendre à la soirée des SCOPS 2014, organisée par le master distribution et relation client de l'université Paris Dauphine. Néanmoins, j'ai eu plusieurs échos de personnes qui étaient présentes pour cette événement, et il semblerait qu'une nouvelle fois, ce fut un très grand succès. 

La cérémonie est tenue depuis 3 ans au siège du MEDEF, dans une très belle salle, mais qui comporte selon mois 2 grands inconvénients:

1. Il n'y a pas d'endroits assez grand pour faire dans des conditions convenables un cocktail à la fin de de l'événement
2. Parce qu'il n'y a pas de réseau dans la salle où se passe l'événement! Cela fait 2 ans de suite que j'essaie de faire du live tweet, sans possibilité. Ce aui est dommage, surtout que le master est clairement moderne dans son approche.

En tout cas, la salle est bien plus grande que la salle historique de Dauphine Raymond Aaron, ce qui permet de pouvoir réunir un grand nombre de professionnels des métiers de la distribution, du marketing, de la communication et de la relation client.

Je vous laisse la présentation de la cérémonie, afin que vous puissiez apprécier l'excellent travail des étudiants du master.

En tout cas, je peux vous assurer que je serai là l'année prochaine!

Cérémonie des trophées SCOPS 2014 - Organisée par le Master 206 (Dauphine) from Mélodie Josset

Nutelladay.com Case Study: When Customers really take the power

Nutella is one of the most powerfull brand I know. It is quite often taken as an example on how strong branding can leverage high revenues. Despite some contreversy, especially linked to the use of palm oil in its recipe, people still love Nutella. Actually, Nutella is known for its vast group of fans, making it a great topic for tribe and social marketing guru.

Nevertheless, an article caught my attention about a recent story. Nutelladay.com is a website created by fans of the product in 2007, which were working on creating a Nutella Day to celebrate the product. In 2014, Ferrero, the producer of Nutella, decided to shut down the website, for no official reasons. My guess is that Ferrero wanted to take over the control of this popular website which became with the time a reference about their product. 

But social media and the Internet in overall has changed the game. When you have such a popular brand, it is nearly impossible to control how people use your brand for either positive messages (which was the case for Nutelladay.com) or negative (which is the case for activists against palm oil).

What is funny is that Nutella has such a high asset with its group of fans hooked to its product, but because of old corporate reflex they tried what they could to stop it to gain control.

What do you think about it?

Some Great Insights About The Drive Business In France

For those of you who are not French, and that don't really follow the French retail business, there is a massive trend that showed up about 5 years ago which is shaking the world of grocery retailing: Drive through grocery shopping.

People shop online, selecting their products and pay, then they collect their food right in their truck at the drive warehouse nearby. Most of the past 5 years market growth have been otbained thanks to this new retail channel.

Olivier Dauvers is a French Expert in retailing, and has been investigating these new operations for the longest time. He recently published a blog post (in French) about what are the questions people ask him the most about the drives. He is actually right now in the US to see how American retailers are adapting the concept there. 

Here are some of the great insights he provides:

• He forecasts that drive retail may count for about 10 to 20% marketshare once it will be mature
• There are two different business modell: one based on in store picking (an employee go into a brick&mortar store to pick up the delivery right on the shelves) or a real drive (a warehouse only selling online, where everything is conditionned to save space and time).
• The real business modell in the long term remain real drives, as it is the most cost efficient concept. Hence, once in a store pick up scheme an employee treat at best 85 products per hour, in a real drive, it will get 200 products... Of course, the real drive has thought everything through to save time in where the products are located to minimize the walking and roaming of the personnel.

Here is how the operating account of a drive works:

Gross margin: 25%

Wages: 9 to 11%

Investment: 3 to 4 %

Electricity and others: 1,5 to 2,5%

Advertising: 1%

Taxes: 1%

Banking fees: 0.5%

EBIT: 3 to 7%

You need to compare this data to the standard EBIT of a grocery retailer: 2 to 3% on average. Hence a well operated drive could be very profitable.

A third business model may soon be launched: A wharehouse which would prepare the deliveries, then send it to the point of sales. It would lower the cost of preparation and benefit from the point of sales to generate traffic and accessibility 

Some Thoughts On My New Approach With LinkedIn

For those of you who know me well, I have always been a high user of LinkedIn, and a fervent fan. I have found a lot of my previous jobs thanks to it, and as the service evolved (in a great way by the way), I have been able to keep in touch with a lot of my professionnal contacts, I have been able to look for job positions, to create the group of my master degree at Paris Dauphine, etc...

The service have been great, and at some point, once I started to have over 100 connections, I started to slow down with accepting people as most of the people wanting to get in contact with I did not know. I started to think: How can you keep in touch with over 100 people? Or if you keep in touch, how can you have possibly a strong relationship with that many people?

As the time went by, I started to get in contact with more and more people, and in fact, without even noticing it, I have over 400 people in my network... 

This is in fact a real blessing. That means that I have the opportunity to know and contact quickly a vast number of people that I would have never been able to keep up with, from different activities: finance, marketing, sales, international business, entrepreneurs...

Hence, I go more and more often on LinkedIn, especially to get information in the news feed they have. I am really amazed by the quality LinkedIn has been able to develop over the time. 

I really believe that they have changed the way people are approaching their career, and foremost, the way they are connecting with people.

You are doing a great job guys.

Where Does Ecommerce Stand In The Global Commerce World?

E-commerce is at a very interesting stage of its life. It has been about 20 years that Amazon has been founded by Jeff Bezos, and no one should question how big it became.

Depending on the activity related (music, electronic devices, groceries, traveling...), the E-commerce had sometimes a huge impact on the brick&mortar business. Let's take the most obvious example: Cultural goods such as music/video retailing business

• Some activities have been discontinued, like the DVD rental business, with the end of Blockbuster.
• Some activites are going in limbo like Barnes & Nobles
• Some activites have lower to their minimum levels, such as what Walmart or Carrefour in France does, proposing the minimum of range.

But now that E-commerce is entering into a phase of maturation, with lower growth rate, and actually basing its growth with multi channel strategies (opening drive through and in store pick ups for example), will the Internet business replace brick & mortar business? Will it become the leading retail channel? Will it remain the main source of sales growth?

I read an interesting article about this issue that I wanted to share with you. It shows the marketshare E-commerce owns of the whole Retail business in the US in 2013.

The chart shows clearly how important the E-commerce is growing, at a steady pace, but it also shows that traditionnal retailing remains the main show.

I also participated in a conference last year at Paris Dauphine that was leading to the very same remark. What is important, is to understand what will be in the next 10 years the share of e-commerce. I believe it will still grow at a steady pace, but it won't exceed maybe 10% (which remains a lot, as it may double in ten years). What will be interesting to see, is that obviously this growth will impact the way brick&mortar companies operate, and to see what kind of adjustment they will make.

I am jumping to the conclusion: There is room for growth in the brick&mortar world. What needs to be found is how you can create added value thanks to the contact and relationship you may create once in a point of sales.