Archive for the ‘retail’ Category

A salesperson’s lesson on growth

Friday, November 16th, 2007

A number of years ago, I was in an internal training class with some of my colleagues. One guy in particular was a salesperson I had always thought of as being a bit shallow. Anyway, during a break in the class, I got into a discussion with him about the effect of Home Depot and moving commercial development out of city centers, putting Mom and Pop hardware stores out of business. And in the discussion he was, to my surprise, against a lot of that development. I was saying, you know, wasn’t it a good thing that due to these superstores things could be cheaper and that people could buy more things? And I remember him saying in response: why do things need to be cheap, why do we need more things?

It really shocked me, because my assessment of him was way wrong. I had definitely not pegged him to be such a thoughtful person. I’ve remembered those words for more than 10 years and as I reflect on it now, his response and his thinking had a lot of the Buddhist in them.

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Posted in growth, pricing, retail, spoken post | Comments

Super-grocers are punishing convenience stores

Monday, July 16th, 2007

Here in the northeast US, super-grocers like Wegmans are providing stiff competition to Wal-Mart in the grocery business, with more abundant produce, more ready-to-eat options and more attractive stores. But they are inflicting pain on convenience stores as well.

Consider my dad’s recent visit from Connecticut. He reads the New York Post every day. You won’t find the Post everyplace around Harrisburg, but you will find it in several local convenience stores. And at the enormous Giant grocery in Camp Hill.

I took him Friday morning to get the paper. I considered the Sunoco mini-mart, but decided on the Giant. My dad picked up the Post and a couple of scratch tickets. I got milk, orange juice and bread—-all things I could have gotten at the Sunoco. All told, the Giant siphoned $15 from the mini-mart. Not a big ticket for the Giant, but it is for the mini-mart. It made me think about the strategy that Giant is using. Why else would they stock the New York Post and offer easy lottery options if not to draw business away from the convenience stores? And, for me, at least, it’s working.

Oh, yeah, our Giant is opening a gas station across the street from its main store. And when you spend $100 at the grocery, you get 10 cents a gallon off gas. Pretty soon the Sunoco will lose my gas business as well.

(Photo: “gas 5″ by tome213 via stock.xchng)

Posted in competition, marketing, retail, strategy | Comments

Tesco CEO on moving into a new territory–the USA

Thursday, June 28th, 2007

I’ve had the opportunity to help several companies set up shop in the USA. It’s a very challenging process, even for companies that have had success in other foreign markets.

European companies can leverage the EC, the euro and geographical proximity when expanding to other countries in Europe. The USA is a different matter. It’s massive in size, covers four timezones, has laws and tax rules that differ state to state, and its customers are used to getting their own way with products. Succeeding, however, can bring the company its largest market. Ask Toyota.

In Thursday’s Wall Street Journal, the “Boss Talk” column featured an interview with Terry Leahy, CEO of Tesco, the largest grocer in the UK.

Highly innovative in its home market, Tesco has set its sights on the US–but not with its superstore concept. Instead, Tesco is building smaller, 10,000 square foot neighborhood stores. Leahy describes planning the US launch, doing market research, and competing with Walmart. A sample:


We didn’t want to buy an existing business because what’s the point of going to America and just doing the same as everybody else? There is already so much retail there. So what we tried to do is turn a weakness we had — that we had no presence in America — into an advantage: We can research and design the perfect store for the American consumer in the 21st century.


This interview should be required reading of any CEO who has dreams of conquering America.

(Photo: “Go and Buy” by lusi via stock.xchng)

Posted in Wall Street Journal, business development, retail, strategy | Comments

Does the record industry fix prices? The Economist thinks not

Friday, April 20th, 2007

Let’s talk about price-fixing, shall we? The Economist reported in a recent issue that the European Commission was re-opening its investigation into the merger that created recorded-music titan SonyBMG.

Says the Economist, “At issue is whether the four majors together might now reach an unspoken understanding about prices.”

It’s clear that CD suggested retail prices–it’s clearly illegal for manufacturers to coerce an actual retail price from a retailer–are highly standardized. The actual retail prices, however, differ substantially based on the outlet (the latest Rascal Flatts CD at Wal-Mart costs far less than it does at Joe Nardone’s Gallery of Sound).

The Commission is not concerned about retail prices; instead they are looking at whether wholesale prices–the prices that retailers pay to the record companies for their stock–are coordinated.

Here’s why such coordination is virtually impossible. The power in retailing has shifted dramatically from manufacturer to retailer in the last twenty years (the recent book “Private Label Strategy” does a good job of explaining this shift). No record company dictates to Wal-Mart how much they must pay for CDs. Ditto Amazon and Target. So such collusion, difficult as it is to coordinate between the four companies, would fall apart anyway once they tried to enforce it with their retail customers.

So we can all breathe a sigh of relief about that and go back to illegally downloading our music over peer-to-peer networks. (Just kidding!)

(Pictured: the new album from Son Volt, distributed by SonyBMG)

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Posted in Economist, marketing, music, pricing, retail | Comments

Everything you ever wanted to know about private labels: What I’m reading now #3

Monday, March 5th, 2007

Unless you’re a consumer-packaged-goods marketer or retailer, you probably have no idea how pervasive private labels have become in the stores you frequent. But the next time you go to the drugstore, see if you pick up a bottle of Aleve or the CVS naproxen sodium placed right next to it.

Professors Nirmalya Kumar of London Business School and Jan-Benedict Steenkamp of Duke University have satisfied the curiosity of everyone who ever wanted to know about private-label goods by writing Private Label Strategy: How to Meet the Store Brand Challenge.

According to the authors, the opportunities for private labels are vast, and the challenges to branded goods are daunting. Private label goods provide a point of differentiation for the retailer (such as Target or Tesco), and they create powerful leverage when negotiating terms with brand manufacturers.

Leading packaged-goods companies, like Procter and Gamble, Unilever and Nestle, are responding to the challenge. How? Four main ways:

  1. partnering with retailers to produce exclusive specialty offerings
  2. innovating like crazy to stay ahead of copycat private-label offerings
  3. divesting laggard brands
  4. increasing investment in advertising and marketing for the brands they retain

To point (4), the authors point out a most interesting development: as a result of the increasing size and scale of retailers, brand manufacturers’ marketing dollars have been drawn away from advertising and other brand-building activities toward point-of-purchase and promotion investments. The latter help the retailer and sales (in the short term), but at the cost of the long-term value of the product–and as a side effect improving the prospects for private-label copycats.

The book is essential reading for any consumer-packaged goods companies or retailers, and for anyone else who wants to study up on a dimly-lit corner of the marketing world.

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Posted in branding, innovation, marketing, private label, reading list, retail | Comments

US MVNOs – what viable concepts remain?

Wednesday, February 28th, 2007

The US MVNO market has passed through infancy. Some MVNOs are entering adolescence (Virgin, Boost) while others are just starting to walk on their own (Helio, Amp’d, Disney). Discount prepaid operators are beginning to see a shakeout (see this news item). Which all begs the question: are there any new MVNO types that still have life? I think there are two:

  1. The “store-brand” MVNO – if you are a large enough retailer, with a devoted clientele, and don’t already stock other cellphones, a prepaid offering can be profitable. The prototype operator is Tesco Mobile in the UK.

  2. The cult MVNO – how do you lure customers away from the large mobile operators? One way is to have a powerful, long-lasting bond with a segment of customers. And tell them: “Buy cellphone service from us. It may cost a little more, you may have to give up a little service, but it’s worth it to support the community.” One very recent example is the launch of the Planned Parenthood MVNO.

Store-brand MVNOs will be larger, but fewer in number, since a limited number of retail channels will fulfill the criteria to host a successful MVNO. Cult MVNOs, by contrast, will serve smaller subscriber bases, but could be much more numerous.

And, of course, one significant question remains: will the operators want to enable them?

(Photo: the LG225 phone offered by Planned Parenthood Wireless)

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Posted in marketing, mobile, mvno, private label, retail, wireless | Comments