The slowdown of consumer confidence
104 years ago last night, the mighty Titanic went down – the speed and ferocity of its demise must have been as breathtaking as the conditions of the night if we try to comprehend what happened on that fateful night. In the world of consumption, we call life, the speed of the sinking is slower, but the hull has been breached. Since the turn of the year we have seen considerable uncertainty across many markets and this is translating into a slow down in spending by the consumers. Having them part with their pounds and pennies is getting tougher by the day. There are confidence pressures on the pound until the Brexit referendum has it’s say, and then what?
Before you read on, look at this chart from an a retail economic forum group in the UK –this is before we have any level of certainty.
Brexit aside, it is interesting to watch the changes. Not being an economist, I cannot say with absolute confidence but we are in the midst of a macro economic cycle, the size of which we have not seen for some time. There are those who have read the signs and have decide who to get in the lifeboats with. Take Tesco, under severe pressure, unprofitable and under scrutiny, they are divesting alot of their portfolio and going back to their yellow pack days of what they do well.
Morrisons and Amazon partner: Why I love this idea, it is simplicity at its best
The more interesting move in my opinion so far has been Morrisons alignment with Amazon. Just read the headlines from any newspaper or online journal, within seconds you will see the biggest and best playing with the biggest and best – it’s a classic symbiotic relationship. Because we are not that big, does not mean we cannot behave the same.
Partnership as protection.
I guess what I am trying to say is start planning your future now and start looking at scale – not scaling, but consider scale. Build once, use over, make it sweat. Money is hard earned these days and we all want bang for our buck. Staying “on trend” is no longer a safe strategy, it’s impossible to not consider the power of increments. It is the law of diminishing marginal returns in reverse. We operate in a world of data structures and metrics now where literally every second counts – just ask Google and then test your site speed!
Everything is derivative. It’s OK to share data!
A predominantly Northern grocer who have been feeling the pinch, pin their collar to the behemoth of retail and all of a sudden a bleak future glimmers with hope. The benefits to Amazon are a full range for their “Pantry” and impending assault on the family shopping basket. Throw into the mix their ability to use their engine and all its bells and whistles to bring product to your doorstep with ease and confidence and this seems like a very smart move. Morrisons as such don’t need brand awareness, at the end of the day, it’s all about sales. Sainburys deal with Argos looks like it is about to be accepted and yet another unholy alliance gives us further signals that in classic distress times, the right partners are critical to survival.
In times of uncertainty the partner model works well – leverage competencies of others. In online retail it is no different. The notion you can be all things to all people is a fallacy. It’s time to sharpen your pencil and be better at your core skills than muddy the waters and try to recreate the wheel. And believe it or not, for the most part the hard yards are done. All the data is there. You have created it. Now it’s about connecting with the right partners.
The continued challenge of supply chain evolution
The second major shift right now is the battle for control in supply chain. We get it, brands get it, manufacturers get it, we all get it. We all want those extra few points of margin and we don’t want to race to the bottom. Why should you – it’s your supply chain. You know this better than anyone. Direct to consumer has to be a consideration for a multitude of reasons. Traditional supply chain is under pressure and doesn’t want to lose its foothold in what it does well not does it want to ignore this potential new, more lucrative revenue stream.
You should be in control or your product mix – Can you say that today?
How can you make your data work well for you. How do you extend your products time in the market, at maximised profit levels for the longest period you can. Oh that’s before Amazon get their hands on it. They already have in most cases or at some point will. You just need to understand how to control this and decide at what point will they be part of your sales mix. Simple logic suggests that you use your products and make it available to consumers wherever they want it, whenever they want it – not where you think it should be. By the way, they can be in any country in the world, on any time zone. Cross border trade means, you can reach these guys – but what about my supply chain? Nature always finds a way – are we not part of nature? The shifts in supply chain management will be significant in the next 2 years.
It is cheaper to retain and harvest clients rather than buy new ones
The internet of things or (IoT) - This can be very simple – those who will win at IoT or the connected home are those who partner with our ubiquitous friends. Look at Philips lighting and their impending friendship with Apple to become the defacto lighting app on your phone. He who sells the most light bulbs wins. We will witness the advent of the Samsung kitchen in the next ll year or two also – oh and that will most likely connect to your local Asda, Tesco or that little corner shop that opened up Amazon Pick up stores. We will see many products trying to get into this space and many will fail. The horse is bolting fast in this space already. Time to get your sugar cubes ready.
Some core concepts are relevant, now more than ever. Create your content – content was king remember – Connect to the right partners. Physically and systematically. Next up, take your direction and accelerate. Hesitation can be costly, lack of direction even more so – but consider now that the barriers to entry are as flat as they have ever been. Pick up the phone and ask...