by Editor | Jan 12, 2012 | analysis, consumer markets, retail
A&P in purgatory, Fresh & Easy struggling. And now for the news: Bloom is closing …
Last time I tried to take a couple of weeks off, India agreed to retail FDI. Luckily, by the time I was back at work the government had performed a swift U-turn, so I’m glad I didn’t bother panic-writing something about it. This time, a few major US retail stories slipped out of the net while I was still mainly eating brandy butter. And I don’t see them becoming non-stories by tomorrow so here goes. (more…)
by Editor | Dec 12, 2011 | analysis, consumer markets, economy, finance
Clock is ticking as first divestment barely diminishes Premier’s debt …
Beleaguered UK food manufacturer Premier foods has managed to sell its lossmaking chilled foods business Brookes Avana to 2 Sisters Food Group (owned by Boparan), for GBP 30 million. The maker of Hovis Bread and Mr Kipling cakes said the divestment was an important first step towards streamlining its portfolio. Brooks Avana posted a loss of GBP 13.3 million.
Comment: (more…)
by Editor | Nov 7, 2011 | analysis, consumer markets, marketing, retail
If marketing is about selling a dream, have consumers finally woken up? …
A majority of consumers would be perfectly happy if 70% of brands disappeared, according to new research from Havas, a media buying group. The survey, which polled 50,000 consumers in 14 markets, aimed to chart the extent to which consumers felt brands had a “meaningful impact” on their lives. Factors such as health, happiness, values, financial security, society and the environment were considered. In developed markets, the perceived impact was minimal: consumers in the US said only 5% of brands positively expanded their quality of life. In Europe that figure was 8%. In developing markets, brands had a higher resonance, with 30% of brands in Latin America deemed meaningful to consumers. The report said that “positioning brands as socially responsible” had a “moderate impact” on consumer sentiment towards the brand.
Comment: Havas comes to the conclusion that the marketing isn’t working and better investment is needed. That’s to be expected, since Havas sells media. I think there are conclusions to be reached in addition to this. If traditional marketing is based on selling a dream, it looks to me as though consumers have woken up. Either: the reality fell short of the myth, or: there’s a dwindling appetite for myth at a time when hard realities are coming knocking for an increasing number of consumers. Either way, the revelation that consumers have no time for 70% of brands will be welcome news to retailers and their private label partners.
by Editor | Oct 28, 2011 | analysis, consumer markets, strategy
Can you divest non-core assets if you don’t really have a core? …
US food and beverage group Sara Lee has sold its North American coffee business to JM Smucker for USD 350 million. The business, which generated USD 285 million in sales this year, was part of the international beverage business the company spun off in January. In a statement, Sara Lee executive chairman Jan Bennink said the sale to the maker of Folgers coffee was part of the Sara Lee’s “mandate to create the strongest possible pure-play company.”
Comment: Although the split earlier this year was clearly a precursor to a divestment, I was mildly surprised to learn there was anything left of Sara Lee to sell. It got out of apparel back in 2006. In 2009 it sold its personal care business to Unilever. Last year it sold first its North American dough business to Ralcorp, then its fresh bakery operation to Bimbo. It also sold off its Spanish bakery and French dough businesses. The story raises a couple of questions. The first is: is it wise to divest non-core assets if you don’t really have a core? Does Sara Lee have meat at the centre of its brand equity in the same way that Tyson does? I’m not convinced it does, although meat is more or less all it has left to “pure-play” with. The second is: what are discarded Sara Lee assets ultimately worth to their buyers? Grupo Bimbo — which paid close to USD 1 billion for the bakery operation — admitted Monday that it saw “low growth” ahead in the Sara Lee units it acquired. Either: Sara Lee is a company whose assets aren’t up to much; or it’s a company that doesn’t really know what it’s in the game for; or it’s getting stripped piecemeal by shareholders upset at net profits of only USD 642 million on sales of USD 10.8 billion. Could all three be true?
Photo credit: Takeflight Design
by Editor | Sep 22, 2011 | analysis, consumer markets, marketing, retail, strategy
Private label news: The FT had a rather interesting take on the SKU-editing trend. Responding to the revelation that Unilever is to cut 40% of its range, the article maintains that the manufacturers’ “trend towards less complexity is helped by the support of retailers, which are eager to clear more shelf space for their own-label products”. Meanwhile, Kraft and P&G say they have no intention of scaling back ranges.
Comment: “Helped by the support of retailers” is an interesting way of putting it. In truth, retailers’ SKU-delisting exercises and the rise of private label are forcing manufacturers to reconsider their ranges. But smart companies are turning the situation into something positive. Unilever is using the exercise to cut costs across its supply chain and leverage scale: the leanness will serve the company well. It’s a sensible and businesslike response to increased private label activity, as is increased collaboration with retailers over NPD. There is consensus that consumers will not abandon their “hero brands” for private label, but the endless flankers are helping no one, least of all the consumer. The cult of “new” is so ingrained in brand marketing strategy, however, that I doubt many manufacturers are ready to abandon it. Wall Street’s demand for growth is so insistent that it must seem so much easier just to add variants than work out how to get genuine organic growth from existing products. Such innovation is all very well, but if you can’t sell it in …
by Editor | Sep 19, 2011 | analysis, consumer markets, retail
Good lord — for once I don’t fully agree with Seth Godin. Godin posted a piece yesterday about new media and how it’s hard to succeed these days unless you can provoke a “wow”. That may be true, but Godin used the example of supermarkets to contrast the elsuive and theatrical “wow” factor. “My local supermarket stocks waxy, tasteless tomatoes from Chile and Mexico and Florida,” Godin says, “when local tomatoes are delicious”. Defending the supermarket’s decision not to “wow” with tomato quality, Godin asserts: “This supermarket, like most supermarkets, is a checklist institution, one that is in the business of providing good enough, in quantity, at a price that’s both cheap and profitable.” But what if the supermarket “programmed” its stores, as theatres do, to provide something “magical or terrific” — something that would be “worth the trip”? Wouldn’t that be better, Godin appears to imply?
I think that Godin has missed the point about supermarkets and what consumers want to get out of the experience. Over the last five years (more…)
