"Our circulation has gone from 250,000 and falling, to 600,000. The cost of getting each copy to a reader has gone from 30p to 4p. We used to pay newsagents for taking the paper, now they take it for free," Evgeny Lebedev, senior executive director of the Evening Standard, told the FT.
I nearly choked on my rice pops! He says he has cut his daily distribution costs from £75,000 to £24,000. Which if he publishes 250 times a year is a £12.8m saving. But whether the sums add up, we may never know.
Of more concern to a retailer planning to build a business on selling newspapers is Mr Lebedev's suggestion that this is the future for all newspapers. There may not be many of them if it is!
Suppliers should not over-estimate the attractiveness of footfall to local retailers. Footfall does not help the weekly payroll, one Yorkshire retailer told me at CTN World, the trade show last weekend. He was particularly critical of a well-know payment services company, who he said he had shown the door to! The only low margin footfall generator that comes in for any praise is Camelot and that is because, retailers tell me, that when they sell a lottery ticket they are selling dreams.
I am sure that Mr Lebedev is too far away from out mortal world of retailing to have been briefed on what to think about the Standard turning its back on millions of pounds of profit for local retailers by going free. However, local retailers gain from his remarks an insight into the thinking of remote decision makers, which rarely includes them.
Wednesday, 25 November 2009
Are loyal shoppers blind to your faults
It is a shock to read that Borders UK is on the brink of collapse. The book seller had seemed to revolutionise the UK book market and was widely praised by magazine publishers for the way it displayed their products. However impressive its 45 shops might look, they simply are not working at generating profits. On one side, lots of book sales have moved on line, on the other, the supermarkets have made inroads into the best sellers market.
My last visit, only two weeks ago, was a disappointing experience. The two books I went in to find were not available. The bookstore assistant expressed surpise I would be looking for one of the books - Ulysses and Us - in a branch of Borders. I guess that speaks volumes about how a retailer can lose its way.
The previous time I was there, with a senior news wholesale executive, he said to me that he did not know how Borders could compete with supermarkets. He said this looking while looking at a magazine category full of browsers. I was surprised because I had not noticed it was in trouble. I still viewed Borders as having the same brand values it had brought to the UK last century, when it was fresh and relevant. As an occasional Borders customer, I had not noticed it was deep in trouble.
There are lots of lessons for local retailers in this story but the last one is probably ov most value. Sometimes your most loyal shoppers will simply not notice that you have lost relevance. Their loyalty could trap you into staying the same when you need to change.
My last visit, only two weeks ago, was a disappointing experience. The two books I went in to find were not available. The bookstore assistant expressed surpise I would be looking for one of the books - Ulysses and Us - in a branch of Borders. I guess that speaks volumes about how a retailer can lose its way.
The previous time I was there, with a senior news wholesale executive, he said to me that he did not know how Borders could compete with supermarkets. He said this looking while looking at a magazine category full of browsers. I was surprised because I had not noticed it was in trouble. I still viewed Borders as having the same brand values it had brought to the UK last century, when it was fresh and relevant. As an occasional Borders customer, I had not noticed it was deep in trouble.
There are lots of lessons for local retailers in this story but the last one is probably ov most value. Sometimes your most loyal shoppers will simply not notice that you have lost relevance. Their loyalty could trap you into staying the same when you need to change.
Monday, 23 November 2009
Why did we visit Woolies?
The demise of Woolworths, almost a year ago, freed up some good retail real estate and left some shoppers with nowhere to go. Last week, property consultant CB Richard Ellis, released details of who had acquired the retail space. Discount stores took 39% of the space, supermarkets 26% and fashion operators 18%. On this basis, shoppers obviously went to Woolworths to buy cheap stuff, cheaply priced.
Shoppers in cars spend more!
In a weekend newspaper article, Peter Davies, the elected mayor of Doncaster is memorably quoted as saying: "People will not use the buses: they are poor and expensive. People in cars spend more than people on buses, why wouldn't we want them?"
At the same time, at the CTN World trade show in London, I was talking to a retailer who explained that her local council kept on making it harder and harder for people to park near her shop. They insisted on residents parking bays in roads that were empty during the day when the residents drove to work. They installed traffic lights which took more kerbside out of use for parking. The free parking that was available was not ample enough to support her high street.
Even worse, the council ran buses from the train station to the out of town shopping centre where national retailers predominated and where there was ample free parking.
Mr Davies puts his unexpected electoral success down to plain speaking on issues that matter. He wants to encourage cars back into the centre of Doncaster because he thinks it will be good for business. "We have arrayed against us the climate change alarmists and green fools, who want us all to eat lettuce and live in caves," he says.
The good news for local retailers is that if you can put your case across, there is hope that the electorate will listen.
At the same time, at the CTN World trade show in London, I was talking to a retailer who explained that her local council kept on making it harder and harder for people to park near her shop. They insisted on residents parking bays in roads that were empty during the day when the residents drove to work. They installed traffic lights which took more kerbside out of use for parking. The free parking that was available was not ample enough to support her high street.
Even worse, the council ran buses from the train station to the out of town shopping centre where national retailers predominated and where there was ample free parking.
Mr Davies puts his unexpected electoral success down to plain speaking on issues that matter. He wants to encourage cars back into the centre of Doncaster because he thinks it will be good for business. "We have arrayed against us the climate change alarmists and green fools, who want us all to eat lettuce and live in caves," he says.
The good news for local retailers is that if you can put your case across, there is hope that the electorate will listen.
Monday, 16 November 2009
Things to do about VAT
A local foodservice business has just issued its new price lists. Its solution to the tricky issue of the 1 January VAT price increase? Put up its prices today! Not necessarily a strategy suitable for all businesses but those who can will know that they can.
Optimism but clouds ahead
There was a clutch of stock market updates by major UK retailers last week, with Asda unveiling a £150m price war ahead of Christmas and Tesco following up by saying that it planned to save shoppers £250m. Some City analysts talked in terms of "cut throat" tactics; others suggested shoppers would be hard put to spot the difference.
Sainsbury declared excellent first half sales and profits. In the detail they said that one in three sales were of items on promotion, which was largely funded by suppliers. The owners of Waitrose talked optimistically about Christmas and thanked Marks & Spencer for mentioning its Essentials range in its advertising, which had helped sales.
Overall, the message was slightly upbeat. However, Asda warned of a "few frosty moments" ahead. So too, did Sainsbury. And the message from Wal-Mart in the US was that shoppers "continue to tell us they're concerned about their own finances and unemployment."
What are the analysts thinking? Big stores did well out of food price inflation but that has disappeared. Tax rises are on the way. Electrical prices are falling. Shoppers are nervous.
All of which means that you need to be cautious about 2010 as shoppers are most likely to be keeping a lid on spending. If you are benefiting from trends towards shopping local, buying small affordable treats and home entertaining then this is likely to continue.
Sainsbury declared excellent first half sales and profits. In the detail they said that one in three sales were of items on promotion, which was largely funded by suppliers. The owners of Waitrose talked optimistically about Christmas and thanked Marks & Spencer for mentioning its Essentials range in its advertising, which had helped sales.
Overall, the message was slightly upbeat. However, Asda warned of a "few frosty moments" ahead. So too, did Sainsbury. And the message from Wal-Mart in the US was that shoppers "continue to tell us they're concerned about their own finances and unemployment."
What are the analysts thinking? Big stores did well out of food price inflation but that has disappeared. Tax rises are on the way. Electrical prices are falling. Shoppers are nervous.
All of which means that you need to be cautious about 2010 as shoppers are most likely to be keeping a lid on spending. If you are benefiting from trends towards shopping local, buying small affordable treats and home entertaining then this is likely to continue.
Monday, 9 November 2009
More winners and losers
The Financial Times published a quick guide to US grocery sales last week, pinpointing the products that are in and those that are out.
The winners are: ice cream and cakes, performance drinks, glazed popcorn, frozen chickens and nut butter. The losers are: eyewear, cheese slices, cola, film and disposable cameras, and crisps in a tube.
The reasons are: more children's parties at home; these drinks are "costlier but healthier" than cola; evenings in watching movies; prepared boneless birds cost more; "healthier" breakfasts and packed lunches. And they are: sunglasses are a luxury, impulse buy; higher prices; fizzy drinks lose out to smoothies; camera phones; and fewer "impulse" buys of pricier potato snacks.
What can the local shop make of this? Healthier still seems to work and impulse seems to be under pressure. Even better, analyse your own top five growing categories and your top five fallers and see what it tells you about your shoppers.
The winners are: ice cream and cakes, performance drinks, glazed popcorn, frozen chickens and nut butter. The losers are: eyewear, cheese slices, cola, film and disposable cameras, and crisps in a tube.
The reasons are: more children's parties at home; these drinks are "costlier but healthier" than cola; evenings in watching movies; prepared boneless birds cost more; "healthier" breakfasts and packed lunches. And they are: sunglasses are a luxury, impulse buy; higher prices; fizzy drinks lose out to smoothies; camera phones; and fewer "impulse" buys of pricier potato snacks.
What can the local shop make of this? Healthier still seems to work and impulse seems to be under pressure. Even better, analyse your own top five growing categories and your top five fallers and see what it tells you about your shoppers.
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