Re-inventing the Wheel….Retailers do it all the time ……

An Original Wheel
An Original Retailer

I’ve got to say, whilst both concepts remain little changed in their function , the ancient retailer, in many ways, resembles the modern version much more than that of the original wheel.

Whilst aesthetics and the use of the wheel has undergone massive changes, basically the retailer does exactly the same as they would have 2000 years ago and more. They buy something and then sell it. Meanwhile, the wheel has undergone multiple transformations. It is no longer just about shifting stuff , it enhances power, tells the time (cogs), controls movements (steering wheels ,Ship’s wheel,) ,Chinese revolving wheel tables to name just a few. The Retailer still buys then sells.

But, of course , it is not quite that simple. Since the early 1900’s retail (especially within the U.K. & the USA ) began to change dramatically. In 1901 Michael Marks and Tom Spencer started to roll out their first joint venture under the Marks and Spencer banner and consequently the beginning of the ubiquitous British Chain store . Between 1931 and 1939 Jack Cohen expanded from 1 store to 100. In 1903 John Sainsbury opened his first grocery store (the very first general store was opened 1869) by 1928 there were 128.

In the 1950’s the concept of the Supermarket started to emerge, followed by Superstores, Discount operators , Convenience Stores , Mail order catalogues, even Boot Sales and eventually through to Online Retailers. All these were evolutions that would change retailing, and in the view of some eventually kill the High Street, independents and market traders. There is,of course, an element of truth in that view. But it is not the whole picture . By 2020 there were still over 300,000 retail outlets employing 2.9 million people.

So, What now ? Oh yes, we have Amazon Shops ! And what the f…!(…=acebook) we are now going to get Facebook shops.

Meta, the social media company formerly known as Facebook, has discussed opening retail stores that will eventually span the world, said people with knowledge of the project and company documents viewed by The New York Times. The stores would be used to introduce people to devices made by the company’s Reality Labs division, such as virtual reality headsets and, eventually, augmented reality glasses, they said.

The New York Times Nov 2021

But that is not about the changing wheel. What I have seen since the pandemic (and it is particularly during the pandemic I have seen this emerge) is a new type of independent Retailer that is dragging the High Street into the 21st Century .

During the late 1990’s, early 2000’s the major brewers started to dominate the Pub Scene. The inevitable consequence was a constant consolidation in the number of pubs and beers. So was that the end of the local hostelry ? Not so, there are now nearly 2000 Micro breweries in the UK ,many with their imbibing outlets.

The total number of (gin) distilleries registered in the UK in 2020 grew to over 560 (at least 563)*, up from over 440 (at least 441) in 2019.

WSTA

Street Food Stats: (Dunns Food & Drink Oct 2019

  • Over 6.6 MILLION posts on Instagram with the hashtag #STREETFOOD
  • Mexican is the 3rd most popular ethnic cuisine in the UK
  • Street Food is consumed by 2.5 BILLION worldwide each year
  • 71% of Generation Z like to try new dishes and flavours
  • The street food market is now worth an estimated £1.2 BILLION in the UK
  • 68% felt that street food introduced them to new flavours
  • £198 is spent on food and beverage by festival goers each year

Who would have believed this ten years ago……

There are now 14,727 physical shops in the UK which sell records, CDs, DVDs and Blu-ray, up almost 50% on last year, according to research by the Entertainment Retailers Association (ERA).8 Mar 2016

This is a six year old figure but there are no suggestions to show that this has changed much.

UK vinyl sales have continued to climb in the UK despite the dramatic impact of COVID-19 on the music industry. 

New figures from the Entertainment Retailers Association – who manage Record Store Day in the UK – reveal that last month’s RSD ‘drop’ on August 29 saw vinyl sales rise 3% year on year with 2.7 million units sold so far in 2020. 

Rob Copsey Official Charts

Since the easing of various lockdowns, I have been able to restart visiting towns throughout the UK. There is change (retail) afoot. There is evidence of more individualised independent retailers of all types offering different product in a much more professional manner . Perhaps it is the Hipsterisation of many town centres eg Brixton, & Hackney in London, Salford in Manchester, The Quays in Liverpool ,Glasgow’s East End, and areas such as Handsworth in Birmingham. There is a new vibrant feel. As such, it does create a dichotomy. That is to say these changes are coming at the behest of the middle classes. The poorer areas of towns and cities are not going to attract the entrepreneurial retailer. And that is very clear from seeing some of these areas where there are loads of boarded up shops. Yet, there is always hope, as landlords will start looking at their rentals and encourage these entrepreneurs with much more competitive and attractive rates. I digress.

Over to Ari…..

Aristotle November 2021

Our ancestors invented the wheel and it remain unchanged for a long time. The opportunists saw other possibilities so the wheel went from this …….

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To this….

Formula 1 Steering Wheel

Retailing has gone from this …..

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To this….

Less Change, more Innovation

Pricing ……Art or Science? Pricing Art is not a science…..

Julia paints. Yes, pictures. It is not quite that straight forward but it suffices for the sake of discussion on pricing theories , which is something we, often, toss backwards and forwards in our day to day chatter, especially prior to an exhibition where a piece of her has been selected .

When selling a piece of Art, there a number of considerations to consider that are not dissimilar to selling anything else .

  • Cost of materials
  • time and labour (for artists this a little bit of a conundrum, as in many cases is this was done properly most art would not sell as the true labour cost even at minimum wage would extraordinarily high)
  • location -Central London Vs Middle of Nowhere, City centre gallery Vs local art exhibition
  • cost to sale(most galleries and exhibitions will charge over 40% commission)
  • Artist Rep-If Any ? Banksy Vs Jeremy Catchpole (of no fame whatsoever)
  • Media-eg Oils, Prints, Water Colour etc
  • Size- 20cmx20cm Vs 1,5m x 1.5m
  • Framed or unframed

Then comes the finger in the air bit , which is probably what most ‘reputable’ suppliers would say is Research or knowing your customers. Therefore after considering Milton Friedman’s theory of Pricing, the cost basis , potential demand at a certain price , we ignored the lot and made up a number .

Why is a Banksy worth several million? Whereas a very accomplished artist with appealing finished work will struggle to make a living unsupported by any other form of income . The answer because people will buy a Banksy because it has a value that at a point in time someone paid that sum . Not scientific, does not conform to any specific economic theory (especially not supply and demand ,which can really only relate to dead artists ) nor any real understanding of true value. So how does this fit in with every day product pricing , initially it would seem not a lot .

How for instance are the prices for the watches below calculated ?

The Times Luxx 16th October 2021

What for crying out load does POA mean ? Yes, of course I do. But why, keeping it from your competitor ? If you need to ask , you can’t afford . well the price does not seem to bother Bulgari, Chanel , or Audemars Piguet . Some sort of completely bonkers inverted vanity . If I saw someone wearing the Hermes watch I could just as easily think it was Fifty quid. Whereas I would know how the ‘Pillock ‘ paid for the Bulgari. Anyway, what sort of price is £90,500? What’s wrong with a traditional £89,999 or at very least £90,999 The watch makers may indeed write tomes about the craftsmanship involved , the precious metals, and the jewels but the latter two items are only highly valued because they have been deemed to be as opposed to having any real material value . Functionality, design, and performance can be created at a fraction of the price, so what is the balance ? It has to be primarily vanity . Only this morning I read a high end watch advert which emphasized how accurate it is and is not affected by a mobile phone. Well even if it was, you would only have to check your mobile phone for pin point accuracy.

How does this relate to products much further down the price chain ? Sometimes I think more than we are prepared to admit . At least with High End Cars , the bystander will have some idea what the marque is by the giant animal logo on the bonnet or at very least the name splashed across the back. You show off to your flash mates by giving them a ride. With a Watch you have to stick it under their nose before they have an inkling of the amount of money stuck on their wrist.

For many years retailers of real product have been transfixed by price points. Whilst I have for a long time firmly believed that selling an item for £2.25 as opposed to £1.99 will make a great difference to your revenue but it will to your profit margin. Yet I have had many a customer suggest to me that is not the case. The price point is a key focus in many product areas. Going back to cars. You will see many an ordinary car priced at something just below a particular thousand mark eg £14,900 against £15,100.

Today, and I mean now when retail has just started to get back on its feet but there is a shortage of stock, there are other influences coming into play , shortage of stock and potential inflation . Before exploring these influences let me go back to the end of 2019 .

Your prices might be going up 3% ? What planet are you living on ? My customers wont pay for that sort of increase

Various Customers

I will go back even further to the early 80s

What your prices are only going up 18% ? What good is that to me when inflation is 18%

Different Various Customers

Now, at very least within the party industry, there is a completely different consumer mindset. There have been a not inconsiderable number of price increases within our market during 2021 and the consumer does not seem to be at all bothered. Retailers have been saying over recent weeks that they are making price changes within their stores almost on a daily basis, and it makes not one jot of difference to consumer behaviour . Or rather it has, they are,currently, buying without pricing considerations. Of course this is , maybe temporary and we are talking, in the main about low cost items. Yet, to me it underlines the fact that within our market it is not all about price. Those that say they cant compete with supermarkets or discount stores on pure price . They can’t, but in most cases they are not competing with price even if the discounter is next door. Moreover, I know a number of retailers who are actually next door to a discounter and do very well .

Two good reasons:

a) They are next door and benefit from footfall

b) They are next door and the consumer sees the different between a range of max 50 items as against 5,000

Does this ramble actually take us anywhere ? We are in a very complex environment, but there are various principles that remain the same . All that changes is the value of each principal.

I feel very strongly that many often price according to threat or even lack of. Whereas, the focus should be on maximising the returns that are available within your sector of the market . On occasion that involves a little more art as opposed to science .

Back to Julia’s conundrum. We worked out all the costs , especially labour and time and came to the princely sum of £700 . So the piece was priced at £325. Told you it was not a science. Maybe it is Art ?

Keep on Truckin’…..

Note: Truck is left hand drive ….

Only last week, Julia and I spent one day flying up and down the M1, as we sometimes do , checking out services station stations to make sure they were all well and good . We, both, had to use the loos, which brought us to the momentous conclusion that Female Truck drivers were not required . In the Gents there were loads of posters offering vast sums of money to join various happy bands of truckers whilst the Women’s only offered solutions to incontinence . The immediate conclusion on that was that women would not want to become truck drivers as they would be constantly looking for a Loo.

Despite the fact that neither Julia nor I know anyone who has any issue with incontinence , of either sex or age, we bow to knowledge of the great marketing research that must have been carried out by Incontinence solution makers and providers. That said their solutions are that effective then the problem should not be a barrier to entry. So what is ? There are those(men) who say that women can’t navigate . Well GPS, Sat Navs, ensure that the modern day truck driver can find even the most unnavigable farm tracks on their way to some random small town centre. So that’s not a barrier.

Three years ago women accounted for less than 2% of the truck driving community and yet I suspect given an equal opportunity there could be a considerable uptake should pay and conditions( one of the factors that are deterring men plus poor dining facilities, rubbish, showers loos, dodgy lay up areas comparing U.K. conditions vis a vis Europe ). That figure is now 1%. The stats for female commercial pilots in the UK is nearly 5% . Hardly enormous in itself but nevertheless a significant difference. So one can assume Navigation is not the problem. Said skill being somewhat more important for pilots than for truck drivers, there being no road signs in the sky .

Good Truck Cab
Not So Good Cab
Great Truck Stop
Not So Great Truck Stop

Here’s another number I struggle with, 100,000 drivers short . That’s a huge number . It’s more than the entire U.K. British army, nearly twice as big as the Met police, more than BT or Sainsburys total work force . I know it does not mean 100,000 new trucks as it invokes multiple use, shifts etc but it must 15-20,000 or so . Where are they all going to go and on what road? I know The UK motorway system reasonably well , having travelled most if not all of it ( I can quite confidently say that there is not a single stretch of UK motorway I have not driven on)I can vouch that most of the time at 06:00 a.m there is little room for another 1,000 trucks, let alone 15,000. As to when they leave the motorway and head on to the A roads , and then the B’s , and those with dodgy sat navs the odd footpath, well that’s another story.

There is constant guff spoken about short term visas, couple of hundred squaddies, ninety year old retired truckers going back on the road, but I have heard absolutely nothing about encouraging more young females to qualify. Nor have I heard a single word about investing in the infrastructure within which the trucker works .

This is from a BBC news report in 2016

The haulage industry has a shortage of drivers, so the government is urging companies to encourage more women to get behind the wheel.

BBC News Oct 2016

Apart from ‘urge’ the UK Government has done diddly squat.

The UK needs far more haulage drivers on the road to keep the UK moving, with an estimated shortfall of over 50,000 drivers in 2017. Could more women lorry drivers be the answer?

HR GO Recruitment Feb 2019

What has the haulage industry done ? Not a lot. Or if they have , its not terribly successful as the stats don’t show it and nor do the ads in the Motorway services . What has the Government done ? Even less . Sorry not quite true they have offered visas for a few months , hijacked the squaddies (great message to the public don’t panic, there is no shortage, but we will be bringing in the Army) and allowed HGV drivers to drive for a couple of days non stop . Stupid boy there’s the solution… if women don’t start queuing at the cab door allow drivers to drive 24/7 and then you may triple the number of available truck driving hours . Simples !

Keep on truckin’

Eddie Kendricks 1973

Do you eat too much Data?

Err Yes ….bit of a no brainier really. Or at very least it is for me. Only have to meet three people (data) ,and I would have forgotten the name of two within ten minutes . We are awash with it, data that is .

In any business we are constantly being told that the more information (for information read data , its the same thing) you obtain, the better you can operate your business. There is no doubt that there is an element of truth here, but only an element.

Ever since mankind decided it was jolly useful to write stuff down, we have collected data. How we used it depends on who you were or are. Historically the collection of data was rarely used for the general benefit of society. It was more about who or what you owned and just as important how you can increase your ownership and power structure. Many would say that little has changed.

Whatever the motivation data has become increasingly important to the point that it could argued that power wealth and data are inextricably linked . That said it can be argued that society has benefited from its use within areas such as health, education, technology and well being.

We are awash with it and half the time we don’t know what to do with it and the other half we think we do but we don’t really. I am not referring to those of us sat the bottom of the data strata, I am talking about the data giants, the Googles, Facebooks, Amazon et al. Here’s one of my favourites , or rather personal pet hates ( not ‘pet’ hates , as I love pets but ‘hates’ that I love the most ). The super companies who probably accrue more data together than the rest of the world intelligence services. I search for a new telly . I buy one. Meanwhile the cogs at google have been whizzing away saying that I am wildly interested in TV sets. and send me ads for the next six weeks. But I have bough one and you know that as well so what is the point in sucking loads of dosh from companies who are advertising to sell me one when I have already bough the bloody thing. Amazon admit to some sellers they struggle with the counterfeits as there is so much that goes through their market place. If they struggle what does any mortal company do about it.

Covid seems to be the perfect example of incremental amounts of data with bucket loads of organisations interpreting it all in widely different ways , leading to utter confusion and in many cases poorer decision making.

The above image replicates one of the more everyday, and simpler data overloads that many of us face everyday . Every item of data is most probably valid and legitimate but the method of portrayal, imagery and context is likely to lead to misunderstanding, poor decision making and ultimately much worse .

Some Completely Bonkers Data statistics

Here’s a very simple example I made up myself, which will seem obvious (that I made it up).

Man walks into jewellery shop and buys a very expensive piece . He does not speak to anyone or ask any questions , just takes it to the counter, pays for it then walks out .

That transaction is now a piece of data for that retailer. But what use is it ? What was the purpose of the purchase ?what is the customer profile ?

1. He bought it for his Wife

2. He bought it for his Mistress

3. He bought it for his Daughter

4. He is a cross dresser

The list is endless and without further data is really of no help to the retailer as to why certain purchases are made. Its very simple but by being very simple illustrates how very complex data can easily be misread if read at all.

Data accrues data. It feeds on itself . The more there is the more processes that are needed to make use of it and even to determine if its of any use. Worse still is bad data. The data on its own will not have any indicator that it is bad . It is its effect that makes it bad. Viruses are made from using bits of data albeit in a rather nasty way. Combatting bad data is more ‘good’ data.

In 2018 alone, the development of macOS malware tripled. As much as 250,000 new malicious programs are registered every single day, and there are grounds to assume this number will keep growing. A thorough analysis of scans performed by our users revealed that as much as 62% of Macs are infected with viruses (with an average of five infected files per user)

mackeepr.com

The flow is relentless and will only increase at an exponential rate . Mankind has becoming data obese. Obesity has many side effects . Data obesity has its own hunger and that is energy . It consumes vast quantities of energy . And this is only the beginning.

Bitcoin consumes a similar amount of power to the Netherlands

This suggests that whilst we may all be trying to reducing our energy consumption , data will be out there having an orgy of eating more energy . I am sure that tech guys will find ways of reducing this hungry beast, but they will need to ‘crunch’ a load more data to find the answers.

Most large organisations have CIO’s -Chief Information Officers who report to the CEO. They know the importance of data but whether they are able to really understand it remains to be seen . There have been too many events within the last 10-5 years when events that have occurred because previous data has been ignored or misinterpreted . The financial crisis for 2008 and many would say our current pandemic, are just two.

The obesity crisis in much of the West has been looming for some time (the data has been there). It can be resolved with education, government policy, time, and of course the will. I am not sure data obesity would be as easily solvable.

Data is crucial to every organisation and increasingly to the individual. What is overwhelmingly important is to the evaluation, sourcing, examination and decision making process involved with that analysis. Even within our own market place I have a seem an increasing number of players starting to use data analysis. My concern it is limited to what is happening today or yesterday but it is not very effective in determining what is likely to happen tomorrow .

‘It ain’t easy ‘ ….Being an online retailer !

It is also the title of a David Bowie song from way back in the early 1970’s, way before the internet, but not door to door van deliveries. My ‘Old Mum’ used to give her greengrocer a written list and he delivered it to the front door a day later. And she was doing that in the sixties. No internet, no iffy broadband, no crashing web sites, no ‘out of battery‘ phones. Pen, paper, man in greengrocer and a green van ( colour that is, not in the slightest bit eco-friendly) . Simples as a wise Meerkat once said.

That Greengrocer eventually closed because of the rise of the supermarket. What do you make of that because my mother then had to drive to get her greengroceries. Now, it was not down to my mother that all independents closed, but there is some irony in that some consumers lost an element of convenience in the name of convenient shopping.

Race forward sixty years and we are back to delivering our purchases via a method somewhat more complex than pen and paper. Before the shout goes out about the Internet killing the retailer , unfair competition blah, blah, blah., lets just take a gander (Look for non native English speakers of whom I know there are a few , or at least one or two)over the last 18 months . With the various lockdowns throughout Covid, the retail environment would have been even more dire. Dare one say the emotional health of the nation would have been somewhat worse the wear, in that costumers were , when finances allowed, able to indulge in a huge variety of product, whether books ,puzzles, hobbies, household products, clothing , all product that was not essential but enabled a slightly better environment when you were confined to your own four walls.

So if we can make the case that all online operations are not all bad then I think it is only fair to look at the case as to why they should not get quite the bad press most of the media seems to give them .

Whilst these 2 Charts are from different sources and slightly different years , it helps to illustrate the way retail is moving

There are broadly 3 types of B2C operators

Those who sell on the market places eg Amazon, eBay & Etsy etc

Those that operate their own Web shops

The Third being those who operate on both

Let’s examine the the second ie those who trade via their own web shops.

Before doing that it is important to make thing clear about online operators , for the most part they do not operate on the High Street therefore their rent and rates will tend to be lower than a Bricks and mortar equivalent per square metre. There ends in my view their main economic cost benefit .

Basic Higher Costs for Web shop operators Vs Bricks and Mortar

1.Unit size tends to be much larger than equivalent bricks and mortar
2.Stock holding is likely to be much higher
3.Technology both hard and soft high cost of entry due to much greater demands on the systems
4.Greater number of SKUs-Independent brick and mortar (in Party) maybe 6000+ ,web shop more like 30,000+
5.Can take up to 30 minutes to load one new product onto a web shop (that is similar for the market places, if not more so)
6.Very high cost of marketing or web awareness. It would be no exaggeration to say this can be in 6 figures
7. High cost to maintain awareness
8. Cost to deliver (no cost to Bricks and mortar). Current major issue is a problem concerning shortages of drivers
9. High cost to maintaining customer loyalty (Since there is no face-to-face interaction like in a retail store, the development of trust and loyalty takes more time and effort in eCommerce)
10. Cost of returns (Over 60% of online shoppers look at a shop’s return policy before making a purchase.)
11. Cost to pick and pack
12. Increasing IT requirements such as data analysts

These are just some of the cost issues. Other barriers facing B2C e commerce platforms are (all involve cost at some point)

Online identity verification
Overall cyber security
Shopping Cart Abandonment (apparently this can amount to anything between 60-80% )

Many of these issues can be offset by using the market places such as Amazon & eBay. Yet these have their own pitfalls in terms of there is, of course a cost, pricing is very aggressive, you can be competing against a far bigger supply chain, and you are reliant upon the whims the platform you are using and subject to their rules.

Here’s a fascinating little fact

It takes about 50 milliseconds (that’s 0.05 seconds) for users to form an opinion about your website that determines whether they like your site or not, whether they’ll stay or leave.

sweor.com


and another …….

47% of Users expect a maximum of 2 seconds loading time for an average website

sweor.com

yet another ….

Users spend an average of 5.59 seconds looking at a website’s written content

sweor.com

Take the sum of these 3 stats and you are not looking 8 seconds in total. It takes that long to walk into a shop before you have begun to get an impression of what is on offer. That said there are some retailers where I have made a very precise decision not to enter in a fraction of that time , which will say loads about those particular shops.

The following diagram may also illustrate how being an online seller is not that straight forward. Show me a bricks and mortar retailer that is faced with any of these dilemmas.

Governments have talked much about taxing the ‘ so called‘ advantages of the online operators . There maybe an argument for the likes of Amazon, but for the rest it is taking a sledge hammer to crack a nut. There has never been an argument for additional taxation for the supermarkets .  Tesco & Sainsburys alone take over 42% of the market. Who had it before they existed (as supermarkets) ? The independent retailer . It is how retail evolves. The market place has to adapt as it always has. Nobody said it was going to be easy.

No Retailing is easy. It never has been, and it wont get any easier. It has to evolve to survive. There will always be the ‘naysayers’. Online is here to stay and so are good bricks and mortar retailers , we started with Bowie so I’ll finish with Ike & Tina Turner

Working together we can make a change

Working together we can help better things

Ike & Tina Turner 1970

Bit of a shame Ike didn’t think more about some of the words he sung , but that does not detract from the essence .

Has the Consumer gone Bonkers ?

Some may say most of their customers are bonkers and always have been . But the real question, but less attractive title is Has the consumer changed in the last eighteen months, (or since covid started in the West Feb 2020).

Again most would say Yes, but would have more difficulty quantifying those changes and whether they will last .

There has been a seismic change in what people are buying and how they are buying it. According to Selligent’s most recent consumer survey 60% consumers now focus on buying essential items and almost a third (29%) say their shopping behaviours have changed forever.

These changes have been largely driven by a change in employment, with 75% of global respondents reporting that they have less work. Despite the economy and jobs market recovering, conservative approaches to spending will have a lasting effect, making it more important for brands to cater to cost conscious customers in the long term.

MarketingTech Anne Jarry March 2021

Selligent is a Belgian company ,with offices throughout the world and is an intelligent omnichannel marketing cloud platform. So whilst having a Global perspective they specialize in something most have of us have never heard about (they have been going since 1990 for crying out loud). Therefore a Global perspective with very specific ideas, perhaps.

Consider some of the changes that have happened with consumer behaviour since March 2020.

  1. Dramatic increase in online shopping-Overall, online sales rose to a record high of 33.9% as a share of all retail spending-Office For National Statistics 2021

2. Increase in shopping local -People are shopping more with local brands, both for convenience and to support their community: 46% are shopping in closer neighbourhood stores and 80% feel more or as connected to their communities. Paypal US December 2020. However, I would suggest a similar pattern, certainly in the UK

3. Caution in spending – More of a do I really need that ….attitude. Will I be in a job tomorrow ?

4. Nearly 40% of consumers are likely to use touch-free payments via mobile devices or credit cards, avoiding cash and person-to-person exchanges and opting for more hygienic methods. Consumers across the globe also plan to continue using low-touch services like self-checkout. PayPal US

5. Delay in consideration of environmental issues- In 2020, Euromonitor found that 73% of professionals believe sustainability efforts are critical to success. Interestingly, environmental initiatives in particular were waylaid in 2020 as companies and consumers rapidly changed their behaviour in response to the unique circumstances created by COVID-19: 51% of professionals reported increased use of plastic packaging, and respondents also noted delays in recycling, waste reduction and green technology efforts. Feb 2021 Retail TouchPoints

6. Trying something new . Consumers are trying new brands and products for accessibility and curiosity. Almost 30% have reported picking up new hobbies during quarantine, prompting them to discover new brands they will continue to shop with in the future. In China, studies showed 28% of consumers switched to a new store for convenience and stock availability, and 47% of them do not intend to switch back after the pandemic. PayPal US. Not sure about the China example but there is plenty of subjective evidence to show many took up new hobbies. This has been illustrated within our own Party Market. A huge number of people (and in the US) in the UK took up Balloon decorating via watching YouTube videos (On Balloon decorating !).

7. Personal Care. Google searches for “No Poo” (meaning no shampoo) have more than doubled in the last six weeks, as consumers take this opportunity to stop washing their hair or use alternatives like apple cider vinegar. Inferring a decline in expenditure of personal care products.

8. Change in working practices . Less expenditure in city centre establishments as home working continues . More working from home also leads to increase spending locally.

I shall take each one of the changes individually.

  1. Well Holy Moley! Most shops were closed, you could only move one metre from your house, you had to go out blindfolded and gagged and online sales only went up 34%. Well what a surprise or rather its a surprise the number is not greater. That said the volume of food sales has dropped back (online) . That’s no surprise as we can go out now ! Of course it will have moved more to shopping online or rather hastened a changing pattern.
  2. Again , where else could we go ? I do, however, think good local independent local retailers will have benefitted from a shift here. As to how the working from home and the return from furlough will reduce this trend is anyone’s guess. But at least it has shown some that they do actually have some quite good shops under their noses.
  3. This is balanced against those who have done well out of lockdown ie those working from home , who have no commuting costs and not spent anything on holidays and going out.
  4. The increase touch free payment was already happening this however has accelerated it. The trend will continue .
  5. I don’t know .
  6. The consequence of this is yet to be defined as it to a degree it is on going and will continue for some tiome as shortages continue. If the consumer is happy with the ‘different brand’ then i suspect there will be some quite big changes or there will be a lot more competition amongst the big brands.
  7. Not convinced this will continue.
  8. A change has happened and it will be difficult ot reverse. That said I am not at all convinced it is going to quiet as seismic as some ‘experts predict’.

Now I’m not quite up to speed with Cloud nine, metaphysical data analysing and marketing platform capabilities but I think a lot of these had started well before Covid. What has happened is their development has been hastened during the pandemic.

Most consumers have always been a bit bonkers . The consumer is an ever changing beast and always has been . What any of us who have any involvement in the retail market have to do is ascertain how long the changes that have occurred will remain and how they may evolve into something else .

One of many confusing tables produced to show Consumer habits during Covid

Inflation Coming…but Stock isn’t !

The Bank of England recently highlighted the danger of inflation having dismissed it a few weeks before. However, nothing has been so blindingly obvious as the sight of inflation on the horizon. These are the bank of England’s words in April of this year

Inflation is below our 2% target, but we expect it to rise to around the target this year

Below is the US inflation in May

The annual inflation rate for the United States is 5.0% for the 12 months ended May 2021 after rising 4.2% previously, according to U.S. Labor Department data published June 10. The next inflation update is scheduled for release on July 13 at 8:30 a.m. ET. It will offer the rate of inflation over the 12 months ended June 2021.

Now we are , of course not the US, but to believe that inflation in the UK will be only 2% is , I believe, either very naïve or very stupid. I hope I am wrong.

Driven by rising prices for food and for second-hand cars, the headline annual CPI rate of inflation rose to 2.5 per cent in June. City economists had forecast a 2 per cent rise. Month-on-month inflation rose 0.5 per cent, down from 0.6 per cent in May but ahead of City forecasts for a 0.2 per cent rise.

Richard Fletcher – The Times July 14th
  • Huge rise in factory gate prices (Far East Especially)

China’s factory-gate prices rose at the fastest pace in more than three years in April, fuelled by rapidly climbing costs for metals, oil and other materials.

The producer price index rose 6.8% in April from a year earlier, accelerating from March’s 4.4% increase, the National Bureau of Statistics said Tuesday. The reading was the highest since October 2017, when the PPI climbed 6.9%, and beat the 6.5% increase expected by economists polled by The Wall Street Journal.

Prices in the production sector continue to march upward amid rising international commodity prices, the bureau said.

On a monthly basis, China’s PPI expanded 0.9% in April from March, while the price of the means of production increased 9.1%, according to the bureau. The monthly decline was mainly driven by falling prices in the oil and non-ferrous metals industries. -Marketwatch.com

  • Massive increase in shipping Costs
Source Freightos
  • Increasing demand

Nearly all commodity prices rose in 2021Q1,
continuing the marked rebound since mid-2020
(figure 1.A). Almost all commodity prices now
exceed their pre-pandemic levels, and those of
some commodities, notably metals, are well above
their previous levels—copper prices were nearly 50
percent higher in March 2021 relative to the end
of 2019. The recovery has been driven by the
improving global economic outlook, aided by
significant monetary and fiscal stimulus in
advanced economies, and steady, although
uneven, vaccination rates. –World Bank

  • Increasing Wage rates

Additionally, pay growth is being affected by the base effect where the latest month is now compared with April 2020 when earnings were first affected by the coronavirus pandemic; April 2021 saw a growth rate of 8.4% for total pay and 7.3% for regular pay which feeds into the strong 5.6% average growth rate for February to April 2021.

ONS June 2021
  • Shortage of labour

Sounding the alarm over the risks to economic recovery from acute labour shortages, the Recruitment and Employment Confederation (REC) and the accountancy firm KPMG said the number of available workers plunged in June at the fastest rate since 1997.

Recruitment firms are reporting hiring challenges across several sectors of the economy, led by shortfalls in areas such as transport and logistics, hospitality, manufacturing and construction. …….In a sign of the growing pressure on companies, surveys from the British Chambers of Commerce published on Thursday showed 70% that had tried to hire staff in the three months to June had struggled to do so.. The Guardian July 2021

Lest we not forget , vast quantities of Government ????????

Now this is not the first time but it is for very different reasons a rather strange paradox as we have rising prices but the stuff we want, there is nothing to buy. A bit of an exaggeration, perhaps, but there is a shortage of product both unfinished and finished . In the UK in the early seventies , when inflation was rampant there were shortages but they were due to industrial action, such as the Coal Miners strike and the Middle East Oil crisis. Today’s shortages are due to disrupted supply chains primarily due to Covid, turn around in demand and shipping .

From Micro Chipmakers, Car Manufacturers, Construction through Food and us humble party suppliers, there is not enough product within the supply chain. Many have temporarily reduced their ranges to concentrate on core product. So are prices going up on product that does not exist. Not quite. However, it provides a temporarily dilemma. Retailers with healthy cashflows don’t mind a bit of inflation. I can go back to inflation nearing 20%. Traders without borrowings loved it . It meant more cash and consequently the same margin on a bigger take. The same applies to 4/5% inflation but if you are losing turnover in not be able to get core product, you don’t benefit much from a price increase.

The Consumer looses out on all counts. In the short term they can’t get exactly what they want , and when they can they have to pay more for it. However, something else comes into play with Consumer Purchasing psychology . Whilst I do no think there have been any studies yet, but there is circumstantial evidence to show that when a consumer cant get the brand they want, they buy an alternative and maybe don’t switch back.

Many do not expect to see much improvement in the supply chain until well into 2022. The problem being exacerbated by the inability to build any stock as all product is going into supplying current orders. That said as covid continues its destructive path , it does all it can to maintaining disruption in manufacturing and supply.

So what to do ? If you are trading you need stock and if you put off buying because of price increases, you are

  1. Missing revenue because you don’t the product (or service) to sell.
  2. Waiting means the possibility of further price increasesand maybe even further delays , leading to your customers going elsewhere.

There are times when stock is King. This is one of them.

Pig Shit, Bullshit ….It’s the way Forward .

Farmers are building Hydro electric plants to power cryptocurrency mines

My Wife

Were the words I woke up to recently . To which I responded ….

What bullshit have you been listening to ?

Me

Julia, if not sleeping well listens to various stuff through a mini radio during the night , therefore random and often somewhat bizarre facts are not unusual upon awakening . Yet in this case, it was neither random but it was slightly bizarre. It was a Farming Programme . Me thinks I need to investigate this further and ask our own little philosopher .

Ari, is Julia talking Bullshit or Pig Shit ?

Aristotle Speaks

So, Julia was correct.

Farmers with renewable energy sources like anaerobic digestion can earn 10 times more running crypto mining machines than selling energy to providers

By Rupert Steiner June 2021 http://www.marketwatch.com

U.K.-based Josh Riddett, who started Easy Crypto Hunter in 2017 in Manchester, has carved a niche selling farmers equipment powered by renewable energy such as anaerobic digestion, which turns animal dung into energy.

……Farmers with renewable energy sources like solar, hydro, wind or anaerobic digestion can sell their power back to energy companies for around 4-7 pence per kilowatt-hour — but they can earn up to 10 times that running a crypto mining machine instead.

As Above
Josh Riddett with Cow
A new biofuel installation designed to power cryptocurrency mining. (Credits: Easy Crypto Hunter / SWNS)

I, really, don’t know where to go with this . My image of a farmer, wearing brown trousers, piece of corn grass hanging out the side of their mouth, collarless shirt, red cheeks and hands the size of footballs, has been blown out the water . Has it been replaced by thick glasses, a pizza stained T shirt, pale complexion, blood shot eyes and cans of Dr Pepper(most tech nerds are based in North America- yes I know not all) on the table ? I think not. There will be many farmers out there who would rightly claim they make little enough out of farming fields. What’s there to loose ?

A lot. Life is not quite as simple as I don’t make much on that so I will do that instead. Farming for food production is an essential .Crypto currency is not. Moreover, Cryptocurrency is a huge gamble . It is a bet, sometimes a scam, no more (yet). I have no doubt Cryptocurrencies are here to stay in some form or other but it will not replace Farming. Besides, if farmers stopped rearing Pigs , where is all the shit going to come from to keep the Crypto Mines Working.

That said, it got Julia and I to thinking. We approached Aristotle with a view to using his poo for a something similar but maybe on a slightly smaller scale. He said Dont be bloody stupid, you are barking up the wrong tree. You have missed the boat. Dogecoin was developed in 2013……..Seriously Dogecoin is a trading platform for Cryptocurrency.

 Billy Markus and Jackson Palmer, Software engineers & the Developers of Dogecoin

Will Farmers continue to move from agriculture to mining cryptocurrencies ? Will Tech Nerds become Pig Farmers ?

No. But as the old cliched phrase ‘Where there is muck, there is brass’ resonates once again, there is no doubt that there will be rapid changes in farming practices as there will be in the way money is transacted . Farming essential, money essential , renewables now essential, it only needs a small leap in imagination….. Ask Aristotle.

Much Ado about a ‘elluva Bloody Lot…..

I am not . I , truly am not . I am not envious of wealth or rather enormous wealth. I would like a bit , it goes without saying, but I am intrigued by enormous wealth. The easiest way for me to indulge in that intrigue is by looking at The Times Newspaper Annual Rich List.

I can easily swat aside those who say ‘of course you would want to fabulously wealthy’. I really couldn’t handle all the crap that goes with it. When you reach a point that you don’t know how many properties you own, or how many cars sit in your underground garages and making sure that every second of your day is covered by sufficient security and whether your family is safe, what is the point ? Perhaps that is part of the problem . Money no longer has a value, it is purely all about numbers and they are driven by that thought of continually upping the numbers . I digress, but only a bit.

Within the Rich list there is a whole bunch of guys and gals ( mainly guys) with heaps of money . During the Pandemic (2020) their combined wealth grew by 22%. I suppose it is not entirely surprising as this bunch of happy bunnies will own and control a greater many resources and when things are tough and resources or access to them becomes tough so their value increases exponentially.

Whilst there are the obvious players such Abramovich, Blavatnik, Dyson , The Hinduja family, there is a group of players who I class as the much ado about nothing, or rather their fortune is built on nothing tangible. I will return to this after taking a pokey at the retailers that still remain in the list . There being a good number, both in terms of bricks and mortar and online.

Bricks & Mortar

Stephen Rubin- £6+billion . family owned Pentland Group amongst the Group are brands such as Kickers, Speedo, Berghaus and a big junk of JD Sports.

Weston Family -£11+billion ,Primark and Selfridges to name but two

Tom Morris £4+billion -Home & Bargain Discount Stores

Mike Ashley £1.9+ -billion Sports Direct

Bernard Lewis £1.9 Billion-River Island

Will Adderley £1.78 billion -Dunelm

Jonas & Mathias Kamprad £1.74 billion -Ikea- Admittedly inherited but they are London based

Chris Dawson -£2+billion -The Range

The Arora Bros £2.5 billion -B&M Stores

Internet (retailers)

Mahmud Kamani £1.4+ billion -Boohoo

Tim Steiner £625 million – Ocado

Alex Chesterman £750 million – Cazoo

I haven’t included those whose operations no longer exist such the worlds favourite retailer Mr Green and Arcadia. But it is surprising, in terms of retail , in the UK, the wealthiest are those with bricks and mortar…… for the moment.

The two wealthiest in the world are both retailers- One primarily stores(but not exclusively) – the other needs no explanation.

No 1 The Walton Family (yes the family that were constantly on our TV’s several years ago -err no actually the owners of Walmart ) £166 Billion.

No 2 Jeff Bezos, soon to be Rocket man, the founder of Amazon £128 billion.

Here’s an illustration of how not bad 2020 was for some…..

The last column on the right illustrates how they ‘suffered’ (Times Rich List- My words ‘suffered’ – not theirs).

But all that, is not what irks me . I have no issue with wealth creation, I have a problem with The Much Ado’s

There are, of course the Peskie Ruskies or more accurately , as they are not all Russian, former Soviets. The Abramoviches, Usmanov, German Khan(actually Ukrainian), Michael Fridman and a whole bunch more whose original assets were obtained by dubious means . It is the wealth that is created by legal but by not creating anything but confidence or analysed and calculated hope . By that I mean people believing that an idea is going to work even though the idea is not even an actuality . For example Denis Sverdlov whose British Manufacturing company of electric vehicles is worth £8.1 billion and not a vehicle has yet been made. This, in itself, is no bad thing if indeed the vehicle is made and successful . But Elon Musk who has been making vehicles for some time, has become one of the worlds richest men without yet making a profit ( I know he made a load of dosh via PayPal, but not through Tesla apart from its share price). Alex Chesterman, Cazoo fame (online car selling platform) , a loss making operation to date was valued at £5 billion on the New York Stock Exchange. It has yet to sell 20,000 cars.

Then there is the readily available lines of credit . Readily ,often for those who don’t need it, but sparse for those that do. There are the Issa brothers, for example, who raised £6.8 Billion , and contributed £780 million to buy Asda. I don’t want to start on cryptocurrency. A concept understood by few, creates nothing tangible, yet (in the case of Bitcoin) has increased in value by over 400% even with having fallen back from its peak. The latest wealth creator being digital art . where has that come from or rather where has the value come from?

it all leads to whole bunch of guys that actually don’t contribute a lot in terms of products, services, or indeed anything useful yet in doing their Much about doing nothing, are worth a ‘elluva lot. At very least Charles Ponzi and Bernard Madoff grafted at being thieving bastards.

The Good, The Bad and The Ugly….

Bad – I don’t do . Well at least I try not to , that said I do like Breaking bad (probably one of the best TV progs). I do Bad Hair days. I do like some sweets . Bad is the German and Dutch for Bath, and I do like a bath.

Ugly– I don’t do. Or rather I do, when I shave or brush my teeth, but the mirror tells me that’s enough Ugly for anyone. And I do like Potato Chips and Fries.

Good – Now I am not sure I do much good, and I don’t much like Brown Rice and Dark Rye but Good is not about me. It is about Retail, and in particular ‘Party Retailers’.

I, we (depending on who is reading this and in which country) are very fortunate to have some very good retailers. There are , of course, there are those that fall into the ‘Bad’ category but they will not be around for much longer. Certainly among my customer base they are ‘Good’. It is not that they are just Good Retailers, they are Good people. This, to some, may seem like gushing, corny drivel. But I feel that you have to be a Good person because without that you can’t be a Good Party Retailer.

If you are Butcher, serving an excellent range of tasty meat you can be a miserable git and still survive. There is one local to us , always busy.

If you are a clothes shop and you have a terrific range of on trend product great prices, your business will tolerate ‘They are really snooty in that shop, but they have some great stuff ‘ remarks and still make money. Been in quite a few.

If you are a Bookshop, as long as you have a great range and you are very knowledgeable, you can sit in a corner and hide (our experience of a lot of book shops).

A Party Shop is different. You have to engage , inform and in many cases empathize. I believe it is very difficult to truly emphasize, without being a ‘Good’ Person. Let me be quite clear , before you walk into your local Party Retailer and expect to find A Relationship Counsellor, you might, but don’t expect it. What I think you will find or rather if you have a Good Party Retailer is someone who will understand your needs, ask the right questions, and how to fulfill them. Now, hold back, I can hear the odd brain going into overdrive lead by one of two thoughts

For crissake, this is a bloody party retailer you’re talking about !

or

For crissake, I have been paying a fortune trying to find out about my needs and and all I had to do was go to my local party shop. There isn’t one, where do I find one ?

What the Good Party Retailer does is listen to what you want, ask you the right questions and then shows you how that can be achieved . They, also understand the emotion that can go with special events , be it weddings, first birthdays, 90th Birthdays, Anniversaries, Graduations , Welcome Home, or any of the myriad of reasons you are having a party. In most case it will involve having fun , but that fun must reflect the occasion. When they get it right that experience heightens and intensifies the emotional sentiments attached to the event.

I believe that emotion remains in the subconscious of the consumer. Before I hear the shout of Cobblers (English colloquial for Rubbish), the emotional impact of these special events, because of the rational for their being associated with close family or close friends , is very powerful. There is a very strong likelihood that they will return and they will recommend. You don’t and never will get this service from online operators (AI or no AI) nor multiple retailers.

Where did I get this blinding flash of enlightenment ? As lockdown eased , and I was able to go (albeit masked up ) and start visiting retail clients, I kept thinking what a Good (without being over the top I ,probably thought Nice but hate using that word as it doesn’t do the job properly ) person(s) that was . Then, I thought and they are bloody good party retailers.

Perhaps I should have another go at Brown Rice and Rye Bread…..but life is so very short .