Archive for October, 2011

Recession or evolution?

Wednesday, October 19th, 2011

Costa CoffeeIt’s an odd thing this downturn/recession/slowdown. There are plenty of retailers who are suffering but many who are thriving.

The experts predicted that the public would cut out the unnecessary expenditure from their budget such as the £2 Latte. Well, surprise surprise, Costa announced like for like sales up 6.7% this week (total sales up 23.3% and underlying profits a whopping 41.8%) and meanwhile a medium Latte is now £2.45.

Ah, say the experts, we’ve cut down on the expensive luxuries and kept the little treats. Perhaps it’s just that Costa (although it pains me to say it) have got it right. They provide a good cup of coffee in a pleasant environment, comfortable for meeting with friends, working on your laptop or just a guilty pleasure.

Meanwhile Argos, a supposed bellwether of the retail trade suffered a 9% drop in sales in the last quarter. Well, I have news for you Mr Home Retail Group, perhaps life has turned a circle and bit you back. 10 years ago they were the scourge of traditional retailers who resented customers looking at their products using the advice and knowledge of the salesmen and then going to Argos who could sell it cheaper as they had no qualified personnel or expensive retail space given over to displaying products. Just a large warehouse and a counter where the cashiers knowledge of the item was whether it was collection point A, B C or D. The internet, mate, has turned the tables.

Meanwhile the electronic and white goods retailers are having a torrid time. Dixons sales down 10%, Comet owners allegedly offering up to £200m to a white knight to take it off their hands and Best Buy looking to retreat back to the USA with it’s tail between it’s legs.

It is cited that there are few new, must-have products to make the consumer part with their cash. Well yes, maybe, but also every time I replace my laptop (usually after 3 years) the price has dropped another £200 or so (unless you’re an Apple lover). So they need to keep selling more laptops every year just to stand still. Also, reliability has increased, particularly on white goods. How often do you need to replace your washing machine or tumble drier and fridges only seem to get bought when you move house. I’m not sure these retailers would be faring any better even if the economy was in good shape.

It’s all doom and gloom in the High Street with the number of boarded up shops. But is that due to the economy or just the fact that councils have been increasing business rates, putting up the cost of street parking (233% in my area) and employing more vigilant parking wardens eager to write out tickets. It’s far more pleasant to drive to a shopping centre with easy (often free) parking, temperature controlled environment and a vast selection of shops and restaurants (and Costas!).

Perhaps it’s just the natural order of life and a Darwinian evolution is more responsible for the retail turmoil than the recession?

Tony Heywood – Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery

Location-based Mobile Coupons

Wednesday, October 19th, 2011

Location-based Mobile CouponsLocation-based mobile coupons are starting to make headway in the UK.

If you are not aware of the concept, your mobile phones GPS monitors your current location and will send you coupons for products/services nearby. For example, you could be walking passed Starbucks and ‘ping’, you receive a voucher on your phone for 20% off a cappuccino.  You’re in a store looking at the shirts and ‘ping’ – buy 2 get one free. The promoters claim that it’s a win-win situation. You get a discounted coffee and Starbucks make an extra sale (as you were walking passed anyway) or you got a discount on 3 shirts and the shop made extra sales.

But is it necessarily a win-win situation? Perhaps you were going to Starbucks anyway but just picking up a newspaper first or had planned to buy 2 shirts and now you had been gifted a 3rd.

There can be no doubt that smartphones are fairly ubiquitous and their users moving from the initial gimmick apps to using them intelligently to save time, effort and money.  This, as with many new developments, has taken off in the land of Marketeers, US and a recent survey showed:-

  • 76.4 percent browse or look for a product or service on their smartphone or tablet
  • 75.0 percent use their device to locate a store or store hours
  • 48.9 percent research specific products
  • 45.7 percent read customer reviews
  • 42.2 percent have used their smartphone or tablet as a coupon (scanning a bar code, showing a text to a cashier, etc.)
  • 39.7 percent have made a purchase directly on a mobile device
  • 36.2 percent have scanned a QR code

02 Media recently launched Priority Moments, a daily deal program offered exclusively through mobile differing from Groupon as they claim ‘ it’s based off an app that recognizes location, Priority Moments offers our customers unique experiences in their preferred location that can then be redeemed in-store with the mobile device’.

So, is it a win-win situation or is it just giving discounts (and bottom line profit) away unnecessarily?

Well, like all marketing it’s try it in a small way, analyse the  results, tweaking, try in a bigger way, analyse, tweak again and then roll it out.

One thing’s for sure, discounts, coupons, incentives are part of modern retailing and you have to find the route that works for you.

Tony Heywood – Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery