4 cents Per Litre - A Declining Promotion?

Hidden in the Coles Group Ltd's third quarter sales announcement is a decline in the the number of supermarket dockets being redeemed by consumers. Coles Express reported a sales decline of 7% - also attributed to lower average petrol prices, competitor activity and their ongoing store upgrades.

Those of you that appreciate the workings of a Retailer P&L will agree that at the very low net profit margins that petrol generates (1-2%), this is likely to significantly impact the overall profitability of the operation.

I wouldn't mind finding out whether this has also impacted average basket size at Coles as consumers see less value in upping the transaction to hit the $30 threshold.

It will be interesting to see whether the decreased usage in the redemption is occuring at Woolworths.

Jason Wenn

Multichannelling : Forrester's Latest News

Great piece from Tamara Mendelsohn at Forrester Research. You can get the full article here. But the couple of key points I was interested in:

• This year, 16% of all sales will be influenced by the research people do on the web

• 43% of all purchases will be made at a retailer different to that retailer with whom they did their on line research.

Traditionally, on line research has been limited to big ticket or more technical purchases. For example, over at Bleeding Edge, Jeremy has a great post on how you can save up to 40% when IT shopping. But how far will people go? To what extent will we start to see this in the mass merchants and grocery channels?

Seems to me that consumers are more discerning about how they can use the Web. They still crave the need for instant gratification (i.e. they want the item in their hands now, rather than waiting for it to be shipped) but use comparisons off the web to get the best price. I wonder how the elements of customer service and location still influence the shopper decision?

If you're not going to be the cheapest - you need to be better at something. Better service, better location, better availability of stock - what else? Its a big ask for retailers, but how can suppliers and distributors add to this process?

• Retail sales training - help the retailer convert more shoppers


• Product training - the more information the consumer has usually means they'll ask much tricker questions when in store. In store staff need to be prepared.
  
• Stock availability - either on the shelf/floor, in the warehouse or available within 12-24 hours.

Any other ideas?

Jason Wenn

Will Coles be Too Much for KKR?

KKR have taken out a short term, AUD $16 billion dollar, loan to fund its takeover of Alliance Boots in the UK. Senior management at Alliance Boots stand to gain significant bonuses if the takeover proceeds – up to $15 million for the CEO Richard Baker. Apparently it is a short term finance deal at very high interest rates. It makes us ponder a couple of points:

1. Can KKR still proceed with a timely offer on Coles? Will the UK deal limit the capacity of KKR in the immediate short term?


2. What incentives will KKR offer Coles Management? How does this compare to the Wesfarmers’ offer?

I wonder if we will see the Coles Board attempt to delay proceedings to ensure KKR can make a decent offer?

Jason Wenn

If you're not up by 20% in Western Australia, you're not trying

Earlier we reported a great WA result for David Jones. Following their February announcement of a first half profit increase of nearly 40%, Harvey Norman sales have risen by more than 17% in the March quarter – on the back of strong results in WA and electronics (particularly Plasma and LCD TVs). Total sales for the quarter totaled $1.28 billion, with same store sales up 10.8%.

In spite of a tough market (except for WA!), Harvey Norman expect to maintain sales growth in excess of 10% for the second half of the financial year.

Gerry Harvey was reported in Inside Retailing as saying “If you're not up by 20% in Western Australia, you're not trying…”

So are you up 20% in Western Australia?

Sources: AAP & Inside Retailing

Jason Wenn

Out of Code Promotions

It’s always been tough to manage out of date products for some of our clients, but it might get harder if the ACCC chooses to get involved in out of date promotions. As reported in FOODweek, Cadbury Schweppes have been taken to task over a 250g display of Dairy Milk Triple Decker where a promotion had expired on 31^st December, 2006 and stock were still in a prime aisle gondola display on March 17, 2007. The ACCC aren’t involved in this case, but have in others previously. How can you avoid this scenario?

• Ensure your product has start and finish dates clearly marked on the packaging and associated POS


• Ensure the right level of sell in and manage store allocations carefully


• Brief your merchandising team on close to expiring promotions and optimise sell through tactics (points of display etc) earlier.

Jason Wenn

That Was Quick - Tesco Out of Coles Bid

As reported by Kamcity:

AUSTRALIA: Tesco Said To Be Backing Off From Coles War
Tesco has decided not to try and bid for the Coles Group, according to Reuters, citing a source familiar with the situation. Tesco’s withdrawal of interest will leave the battle for Australia’s second-largest retailer open to conglomerate Wesfarmers Ltd., and a consortium including private equity giant KKR. Tesco had reportedly appointed Merrill Lynch to look into a possible Coles offer, but has now decided it was not a sound move. The source said, “They viewed it as a massive turnaround being required and a huge resource commitment". It is worth noting that Tesco usually prefers to set up its own operations in a new market, and grow organically, rather than through acquisitions. The Australian Financial Review newspaper separately reported that negotiations between Wesfarmers and Coles were in the final stages for a start to due diligence. Other local newspaper reports said KKR was close to finalising a joint venture with Woolworths to bid for Coles.

With thanks to Brian Moore at

Kamcity.

ROI of Training

At JSA, we're often confronted with the comment - "What if I train them and they leave? I've wasted all that money".

True, but what if you don't train them and they stay?

See the post over at Manage Smarter where there's an excellent example of both things happening - the've axed their trained staff and haven't trained the rest. A loss of US$80-90 million in 3 months seems to be the number there.

Jason Wenn

Is Your Account Profile a Photo or a Video?

What's the difference between a photo and a video? A photo is a snapshot and, so they say, tells a thousand words. A video shows the same scene with the passing of time. How many words is that? Many more I hazard to guess.

In our work we get to see many Account Profiles. From large scale grocery Account Profiles to notes about customers on the back of a business card. Whatever the form, we all understand that information is power. There are many terms for it - wiring, intelligence, DNA etc.

The question I have is how well do we understand changes in our customers over a period of time? History has a way of helping us predict the future and if we track trends in how our customers operate and perform, we might start to preempt and influence much of their future activity.

There's a terrific post on this by Adrian Slywotzky at SalesMotivation.Net. Adrian discusses the importance of keeping up with your customers no matter how they change.

Its all very well to have a complete and up to date account plan and profile, but if you don't use that information to determine where your customer is going, you're destined to fall behind.

Areas where change has a big impact:

• Personnel. Buyer churn is a common and deliberate strategy of retailers to disrupt supplier relationships.


• Business process. How decisions get made and executed is a critical part of the knowledge map. Businesses constantly change their policies and practices as they chase efficiency and effectiveness.


• Strategy. In the pursuit for shareholder value, companies review their overall strategies and day-to-day tactics frequently.

A great KAM knows that and keeps pace with the changes. At JSA we call this your Customer Engagement strategy.

When the top 5-15 accounts for many FMCG/Consumer Goods suppliers produce 70-80% of the business, Customer Engagement is no longer a function, it's a mission.

Failure to establish relations other than with “go-to-market” functions, risks being out of the loop when significant changes emerge in customer organisations. The good news is that with fewer accounts, more in-depth relationships between retailer and supplier management teams can be established and maintained.

Remember retailers have a greater need for supplier funding than they care to admit. It must be tempting for them to revert to the behaviours that have always worked….arrogance, threats, abuse, bullying.

But, retailers do have good ideas and there are some highly capable retail decision makers. All retail decision makers are busy…if suppliers can’t be efficient or innovative, they will be abused - and they probably deserve it. We have to justify a different positioning – grab their attention because we can add value.

Carrefour, the French global retailer, estimates that it has more than 20,000 suppliers worldwide. Each one of those suppliers wants to have broad-based access and solid relationships with the top managers at Carrefour. Competition for access, like competition for shelf space, is intense. Only those organizations with a strong benefits story are likely to succeed. Luckily, because most suppliers so thoroughly mismanage customer engagement, those few that spend the time to plan and execute well will see positive results.

So what is a Customer Engagement strategy?

An engagement strategy is a re-thinking of how a company goes to market. The era when customers were thought of as purchase orders is over. Trade demands require ever-greater commitments to information, services and people. Yet, from assortment optimisation to vendor managed inventory, the overwhelming percentage of activity is directly or indirectly related to product sales – moving cases. In developing a strategy, here are some things we should acknowledge:

1. Acknowledge that customer engagement is everybody’s business: Leaving account management solely to account managers is a recipe for non-competitiveness


2. We engage to learn and profit…not to serve: broad-based engagement is not an exercise is customer service. If the organisational attitude is “We’re here to help…”, the point is being missed. The mission is learning and building – not serving


3. Broad based engagement is a pillar of success – As important as products, funding or logistics


4. There will be resistance: To engage means that both sides must actively participate. It is a fact of life that the customer is considerably less motivated to enter and maintain an engagement that the supplier


5. We, the supplier, will, therefore, drive the process
   

So, whatever knowledge you have about an account needs to be more than a mere snapshot. It must help you predict the your customers intentions and actions.

Jason Wenn

Someone's Doing It Right - Latest David Jones Sales Figures

In the lead up to and wake of the Myer sell off in Australia, it has been fascinating to watch the David Jones on the up and up.

DJ's have reported an 8.4% increase in March quarter sales. Interestingly, they've opened their first store in 6 years just this month (Burwood NSW), so their sales increase is not on the back of any expansion. There are three other stores opening this year, so I suspect we can see further sales growth.

What are they doing right? Well it seems a visit to the Mens and Womens Apparel, Accessories, Cosmetics, Footwear and Homewares sections might be necessary. They're the standout performers according to CEO Mark McInnes. I might just do that and give you our thoughts.

Predictably, while all states delivered strong sales growth, Western Australia was the stand out performer.

So what do you think they're doing right?

Drop us a note here if you've got some thoughts.

Jason Wenn

What Category Leaders Do

For some years now, one of our clients, Masterfoods Petcare (Uncle Bens), has taken a strategic approach to growing the petcare category. With market share in the high 70%s in some channels, it was apparent that growth would only be achieved through overall category growth. Think about the numbers. If I have 70% share and am chasing 10% sales growth (in a market growing by 3%) then I need will have to increase my market share from 70% to 75%. Not sure how my customers might react to that play.

Consequently, the approach by Masterfoods has been to grow the category by increasing the incidence of pet ownership in Australia and increasing the share of the premium segments in wet, kibble and snack. You see it everyday in their advertising - We're for Dogs.

So it is very interesting to see Nestle Purina starting a similar process in the US. I've just come actross this series of "tips". I wonder what else they're trying?

Jason Wenn

NEW: Assisted Self-Learning Modules for the Sales Force

At JSA we're about ideas. We're rapt to announce a new development in the way that you can embed our sales effectivenss strategies in your organisation.

What is it?

This is a program of around 50 (and growing), self-learning modules, based on topics from our most successful training workshops of the last decade. We’ve grouped them as programs for different job roles and experience levels. Each module takes 40 minutes to complete and has 12-20 minutes of audio content.

The modules are built in Macromedia Breeze with Flash animated visuals and voiceover. Many are supported with Toolkits – planning processes, checklists and case studies. All have guidelines for the Manager on how to coach the topic, or run team meeting sessions to reinforce learning.

Why are we doing this?
Our clients’ organisations are leaner than ever. They recognise that Learning is a source of Competitive Advantage, Staff Engagement and Retention.

The challenge is learning delivery. 6-8 workshop days per year doesn’t cut it when it takes 3 years to cover the curriculum and most won’t be in the job that long. They need a productivity accelerator.

The message for learners is, “don’t wait for the next training course; satisfy your personal needs now.” Then, cover the module with your manager, get their ideas on what works, and make it the theme for your next coaching day.

Line Managers have the primary responsibility for team development and, being busy, they need simple solutions to focus their on-the-job coaching and make their sales meetings more interesting.

Contact us for more information: www.jsasolutions.com or email me.

Jason Wenn

Retail Sales Up for March

The latest ABS figures show that Australian retail sales increased in March by 1.1% The seasonally adjusted figure is A$19.03billlion. This represents the biggest gain in 11 months, largely on the back of department stores which increased by 3.6%. Recreational goods were up 2.3% and hospitality sales rose by 1%.

Coles and Tesco?

UK media reports suggest Tesco may be on the move to buy the Coles Group There have been several reports that Merrill Lynch have been engaged to provide advice on a possible bid.

With Tesco are under pressure with its huge US launch and some regulator interest in the UK it seems an unlikely scenario. It makes for interesting speculation though.

What might we expect if Tesco bought Coles? Some insight can be gained from Tesco's head, Sir Terry Leahy. Sir Terry recently commented on seven trends that will have a "swift and dramatic" impact on retailing:

1. The consumers' desire for simplicity - its a fast paced life and we have too many choices.


2. The consumers's desire to save time - its a fast paced life and who wants to spend it in the supermarket?


3. The growth in categories that contribute to their health and looks - the baby boomer phenomena rolls on


4. Globalisation as it impacts the economies of scale in the supply chain, but also in the optimisation of business processes - i.e. nearly all Tesco's IT is sourced out of India


5. The availability of information makes the consumer choice process faster and easier, but has also introduced other decision criteria - i.e the ethical/environmental footprint of the retailer/manufacturer, the healthy heart tick, nutritional information


6. Trust. In the age of the War on Terror, consumers are looking to for organisations and retailers they can trust.


7. Environmental - we are indeed moving back to the greengrocer. With climate change, emissions and carbon footprint hot topics, consumers are looking for ways they can reduce their environmental impact. Consequently they seek retailers and products who support that.

"Just as the opportunities for businesses, which get it right, are greater than ever before, so the penalties for those who get it wrong are equally dramatic. There is no gentle decline, no hiding place for retailers or suppliers who fail to spot consumer trends or adapt to changing markets" - Sir Terry Leahy

So if Tesco did make a successful play for Coles what might we see change?

Who knows, but something needs to happen quickly.

For some, Coles have been fighting a rearguard action, mostly focussed on defensive activities to guard share, but more recently focussed on activities to optimise earnings and cash. With takeover offers from KKR, Wesfarmers already in the news, rumours fly of excessive internal pressure on buyers and store managers to keep inventories down and extract maximum terms from new lines and major promotions. With this sort of focus on maximising cash flow and short term profit, Coles needs to be sold soon. There is nothing sustainable about OOS and five types of canned asparagus. If the "For Sale" sign is in the yard for too long, Coles will see any P/E multiplier diminish as potential purchasers lift the bonnet and witness the ever growing strategic black hole.

What does these mean for KAM's?

• Stay in touch with the financial imperitives of your category and buyer. These are changing weekly if not daily.


• Failing that, propose promotional activities that meet the need for cash flow and short term earnings.


• Keep on top of execution. Store management morale is reportedly low. We've had one report of a supplier paying for $1million for an end display and getting less than 70% of stores complying.
  
• Expand your network. As things evolve, we're likely to see high level of churn. Staff at Coles are under excessive pressure and some will choose "to seek excellence elsewhere". Others will jump. Whatever happens there will be corporate memory loss. You need multiple contacts for continuity.

Remember a great KAM not only knows the people, plans, processes and measures, but also knows how they're changing. And aren't they changing!

Jason Wenn

Humour: Maths Gone Wrong

As you know, JSA offer extensive materials in Retail Maths and Financial Acumen. We have modules covering:

• Introduction to Business Finance
• How Customers Make Money
• How Manufacturers/Distributors Make Money
• Presenting Financial Argument

Anyway, I doubt that the particpants in these recent tests had the pleasure of attending our workshops! I myself have had some cracker responses during the workshops - but none as funny as these.

If you're concerned with the level of Financial Acumen in your sales team, contact us directly for a free Financial Acumen Healthcheck. A 20 minute survey (ok - test!) to assess the capability of your sales team.

Jason Wenn

Looking for Some Good Industy News?

At JSA it's vitally important for us to stay in tune with some of the latest trends and research in retail, key account management and sales management.

A couple of great sites that you might like to check out:

• Retail Wire: a great site with some of the latest US news in retail.




• Kamcity: A UK site that has some excellent resources for Key Account Managers. Their newswire service and Something for the Weekend is always interesting.




• Trendwatching: Remember Yuppies, Dinks, Nimby's etc? Well these are the guys who think of those names. Every month they have a new one, some stick some don't. Visit them for the very latest in consumer behaviour




• Sales Machine: A great, often entertaining look at the world of sales and sales management. See their latest article on the Worst Sales Manager's Ever




• Zen Habits: I love this low impact blog on time and self management. Some excellent ideas. Well worth subscribing to. The best one I've seen.




• Presentation Zen: What is it with Zen? Well this is a great source on the latest presentation techniques and innovative ways to avoid Death by Powerpoint. Essential cruising for anyone who is presenting more than once per week.

We'll let you know as interesting pieces come up. But in the meantime add them to your favourites in Internet Explorer or subscribe to the RSS feed. We'd also love to hear of any your suggestions for our other readers.

Just post a comment below.



Jason Wenn

A New Client - Village Roadshow

At JSA, we've commenced our latest project with Village Roadshow. It is an exciting project with extensive work with their Key Accounts, Sales Management and Field Sales operations.

Roadshow are the number one player in DVD business. With recent blockbusters - Happy Feet, Lord of the Rings and the Matrix.

A few facts for you:

• The DVD business is still a stong growth category for retailers - inspite of piracy (valued at $250 million this year) and Internet downloads.


• Many of the Mass Merchants treat DVDs as a loss leader category


• It costs a lot more than the $2-3 people think it costs to produce a DVD. Aside from the physical costs there is the costs associated with royalties. But more than anything its the risk they take with new films that needs to be factored into the cost of successful ones.

Brandon Hill is the Sales Director at Roadshow. Some of you might remember his last stint as NSM with Bonds - so it's good to see clients coming back for more.

Brandon has already achieved some great things at Roadshow and we look forward to helping them maintain and extend their Number One position.

We'll have some more news as the project progresses.

Jason Wenn

We're Moving!

Progress is progress. The building at St Kilda Road is being demolished to make way for a new apartment complex and JSA are relocating.

We've found some great offices in Richmond, just off Church Street. With more space, meeting rooms and facilities it's a great opportunity for JSA.

As always, all our clients are welcome to take advantage of our facilities whenever they need an off site meeting or a base during interstate trips. With a wireless network, printers and meeting rooms we trust our hot desks can give you an office away from the office.


The new address is:
13/150 Chestnut Street
Richmond VIC 3121

Our new numbers are:
03 9421 2442
03 9421 2443

Our existing numbers will divert for a period of two months.

We're on Level Three with a neat Balcony view over the city.

We take up residence on the 7th of May and look forward to welcoming you there in the near future.

Jason Wenn

Welcome to the JSA Blog

Things are afoot at JSA!

This is the opening salvo in our new blog. We hope it will be a useful source of news for all our clients and colleagues:

• the latest news at JSA - projects, research, tools


• industry and channel news


• links to useful websites and articles of interest

Feel free to post comments or ask questions. Indeed share this link with friends and colleagues.

The Relentless Advance of Private Label

Boston Consulting Group have published a useful and concise article on the strategies of those manufacturers who are competing successfully with private label.

Some of the key poings strategies of those manufacturers are:

• They adopt a total category approach. More importantly their definition of the category tends to be broader than most - encompassing usage, demographics and occasion


• They have higher levels of investment in product quality and innovation


• They leverage their economies of scale in manufacturing and supply chain management to provide more SKU varieties at lower costs

BCG have produced a series of questions manufacturer's should be answering to help them understand how well they are and can compete with private label.

See the full article here.

Jason Wenn