Category Archives: Uncategorised

Ecosystem battle intensifies

G.A.F.A.M. Say it with me.

Google, Apple, Facebook, Amazon, Microsoft– yes, Microsoft. A year ago I didn’t have much hope that Microsoft would be a viable contender in the ecosystem war. Maybe I underestimated their potential- and their luck. What happened to bring attention to this? Google. Google’s recent serious move into Gaming legitimizes the category as another essential block in an ecosystem foundation. And Microsoft just happens to ‘check the x-box’ as a gaming entity. Right place, right time.

Haven’t been following the ‘ecosystem strategy’ wars? It’s based on these realities:

Technology is an inevitable and growing part of individual existence.

Humans can’t handle too much complexity.

It’s more desirable to have 1 all-encompassing #tech partner, than many.

It’s efficient for us to have 1 tech partner at a time (‘Digital monogamy’?)

Personal #Data is now so revealing & all-encompassing that many people want to consolidate/reduce the number of players with access to it.

If a GAFAM firm has no viable service/item in an ecosystem-relevant subcategory, they’re vulnerable! A customer may yield their data (+ trust + loyalty) to another ecosystem player who does provide it.

The ‘fronts’ for the ecosystem war include: calendar management, file storage & sharing, photo storage & sharing, social media sharing, home security & home device monitoring, interactive voice recognition queries & trivia, home audio speakers, mobile shopping, customer reviews, personal banking, mobile payments, chat apps, mobile phone, film viewing, amateur video production & sharing, communities for ‘sharing’ resources,…

I published this ‘subcategory’ list a year ago; as of March 2019, I’d add two: Gaming (Microsoft, Google are already established); and Personal Health Monitoring (Amazon has made huge strides as a personal health data tracker)

To whom is this relevant? If you’re a firm in one of these 2 new categories, but NOT YET affiliated with 1 of the G.A.F.A.M. group, your stock may soar! You may be faced with: being bought, or buried. If it hasn’t happened yet, a rep from one of the GAFAM group may soon come calling, to kick the tires. (Attention: Nintendo, FitBit, etc!)

NEXT UP: GOOGLE U? I predict that the next brick in the ‘2020 & Beyond’ ecosystem foundation is: online education. My rationale: (i) a constantly changing work world means everyone ‘retrains repeatedly’ throughout a career; and (ii) even traditional post-secondary education (let alone Continuing Education!) increasingly includes digital from/on increasingly capable education & assessment platforms. I expect your GAFAM ecosystem partner will play an increasingly explicit role in: staying atop new skills, updating your skills, taking courses, winning certifications. In 2015, Lynda.com was bought by LinkedIn (years ago, I suggested Microsoft buy LinkedIn- pity they didn’t- they’d be ahead on this front). The combined entity ‘LinkedIn Learning’ has already penetrated many post-secondary institutions; before long, I expect that LinkedIn Learning will “become self-aware, and ….”

Food Service Innovation

I urge college students do plenty of storechecks if they want a career in #Retail or #FMCG industries; I also suggest they attend Trade Shows to gain understanding in #B2B or #Service industries. Here’s a fine article with a slideshow summary- an astute observer’s reviews of Food Service #innovations at a recent Show (note how several of the ideas involve smart tech, energy conservation, sustainability, process control): https://www.supermarketnews.com/news/six-technology-innovations-nafem

#Global #Retail – who’s got the ka-ching?

It’s always cool to read expert comments on hot #global #retailers – Enjoy! https://stores.org/2019/03/01/top-50-global-retailers/

SpongeBob … couture???

bet you never expected to see ‘SpongeBob’ and ‘couture’ together.

Seems avant-garde fashion is about to see a new brand- from deep-down. Benefits of licensing deals include: added revenue, added exposure, appeal to new audiences. Drawbacks? Streching and diluting a brand.

When a certain revered Motorcycle brand launched branded dog harnesses & dog clothes imo they jumped the shark.

While I was managing Dr Scholl’s- consistently pushing for performance perfection in orthotics and footcare- Head Office licensed out the name to a shoe marketeer who put ‘my’ brand on imported el-cheapo everyday walking shoes sold at discounters. Wince.

Is this a step too far, even for SpongeBob? Not necessarily, as long as they ‘keep it light’ ie don’t take the fashion items to seriously. https://www.licenseglobal.com/apparel-accessories/spongebob-goes-couture-amsterdam

#SoMe trends

terrific little article!

Trend Tidbits

Several ‘hot’ new food and beverage ideas recently voted as winners:

http://www.canadiangrocer.com/top-stories/water-kefir-drink-wins-top-innovation-prize-at-sial-paris-83595?fbclid=IwAR1l9b_iZYX6CdIWLBM0h-mjpCjQ31X6YLtfIDK-jrG4ulj7Kttq5-1NyUU

And a cool eco-packaging / ‘Loading’ idea from the strategy masters, P&G:

https://www.drugstorenews.com/center-store/pg-unveils-tides-new-eco-box-packaging/

Enjoy!

Steven

 

Drinking Up some GROWTH

Drink Up another example how marketing behemoths (especially FMCG players), grow by monitoring closely who is growing, then candidly and honestly gauging whether it’s wiser to Build a copycat (Coke launching PowerAde to combat Pepsi’s Gatorade) or to Buy (Dr Pepper-Keurig buys CORE)  

https://csnews.com/keurig-dr-pepper-acquire-enhanced-beverage-company

For DrPepper, adding CORE beverages boosts strength in ‘USDA-certified’ organic water, and ‘nutrient-enhanced’ water– err sorry, ‘Hydration vehicles’. Scoff if you will, but fruity water, organic water & certified water is hot; and accounts for a growing share of occasions for beverage drinkers. This buyout adds incremental consumers, consumption occasions & channel credibility (particularly with health shops, organic grocers, restaurants & cafeterias offering ‘organic’ fare,  fitness/bodybuilding shops or gyms).

DrPepper already has a huge stable of ‘any occasion’ sports/ activity/ energy/ rehydrating beverage brands that would give a marketer a week’s worth of drawing classes on Positioning Maps (Snapple, Keurig, Motts, Venom, Bai,…and now CORE)

CORE’s channel credibility & Influencer cred may boost Influencer support for ‘the rest of DrPepper’s stable’; this is critical. Arch rival Coke has PowerAde, Dasani and (now) BodyArmor;  Pepsi has Mountain Dew, Lifewtr and Gatorade (imo presence in ‘high-cred’ Influencer-rich outlets keeps the Pepsi group ahead of Coke’s  line, in terms of having a reputation for being more viably ‘athlete-credible’ or ‘health-credible’ but the purchase of BodyArmor def help out Coke!).

The CORE acquisition certainly raises the efficiency of each DrPepper sales call, however imo something more exciting is that DrPepper gains credible beverage brands that might be expanded into solid foods- eg protein supplements, protein snack bars, meal replacements (these are huge, active markets -imo with exciting futures given Gen Y/ Gen Z tendency to eat & snack on the run &/or possibly as vehicles to pursue opportunities in medical/ serious nutrition counselling markets, or even with Seniors).

Steven

 

if organic growth fails… BUY!

Now that Sobey’s parent (Empire) has bought FarmBoy, it’s time to re-review some of the main reasons for acquisitions:

  1. Cheaper to buy than build- and removes one strong competitor too!
  2. Buys existing brand equity, store traffic pattern, loyalty
  3. Immediacy– sales generated the day you sign the check (now that’s fast incremental sales!!!)
  4. Less risk, Less work: signing a check for a proven successful business does indeed reduce the risk you might learn it’s not that easy to hire/redeploy a sufficiently skilled team, and then build it from scratch

Loblaws nicely integrated Shoppers locations and their Optimum team into its operations stable and T&T without losing some of those acquisition’s best assets or people. Canadian Tire is a master of wise acquisitions. The Empire-FarmBoys news is well covered here, though it’s too early to say whether it will be seen a wise buy in the long term:

http://www.canadiangrocer.com/top-stories/headlines/empire-deal-to-fuel-aggressive-farm-boy-expansion-83027

alas we must also mention some of the risks of acquisitions:

Overpaying for an asset: sometimes there are liabilities unaccounted for in the books (ask pet giant Mars about their purchase of destined-for-lawsuits Greenies!); sometimes the valuation seems mighty inflated (eg Chipotle?); sometimes there are bidding wars that push a price above rational levels when Executives are desperate to be seen to ‘win’ (just as any one has seen happen at a live auction:  Disney-Comcast-Sky, anyone?).

Messing up the execution: WalMart and Target both bought existing Canadian-based retail chains – and, after extensive location analysis & store remodeling, both launched. Only one of the two remains in business today: hint:  it’s NOT the one that messed up their launch execution.

Messing up the corporate culture analysis: Well executed efforts include TD buying Canada Trust and tapping into some of their best executives, brand icons, etc. And a certain (Cincinnati?) CPG firm although noted for ‘gutting’ the staff at virtually every acquisition target, then replacing them with their own staff, is actually pretty adept at doing this well.  But there are many examples of inept people management eg when merging vastly different cultures:

  • HP= Sales; Compaq = Engineering/Tech Expertise;
  • I suspect Amazon-WholeFoods cannot be a comfortable fit;
  • Scotiabank (Canada’s least tech savvy bank) buying tech innovator Tangerine???
  • 3G Capital bought Tim Hortons- soon after, Tims’ Oakville office staff were gutted, spending on community charities was cut, food/beverage staffing was ‘cost optimized’ – and now franchisee rebellion is in the air

Messing Up the Brand: no matter how hard P&G tries, it just can’t stop… being P&G! Safe, strategic, sound— but never edgy, irreverent or fun.  They bought Clairol’s Herbal Essence haircare (riding a share peak based on the success of irreverent positioning & saucy “Orgasmic” ad campaign) but evidently they just couldn’t un-P&G themselves; the next few years we TV viewers witnessed some of the most awkward, cringe-inducing, ham-fisted ads ever aired. Just about as sexy, saucy & irreverent as the iconic couple in Grant Wood’s American Gothic.

Doubling Down at the expense of other opportunities: this ‘Opportunity Cost’ drawback is imo the least visible flaw in making an acquisition, since it can take years (or decades!) to see the ‘true cost’ of a huge acquisition. When Kimberly-Clark bought Scott Paper in 1995, good or bad, it lifted their share in current categories but cost them the capital for any major further acquisitions or forays into new business for decades. Tissue & diapers aren’t hot ‘unit growth’ categories in Western economies; KC’s current CEO could legitimately blame their low-growth reality on the unimaginative –  but safe!- 1995 Exec team who depleted the WarChest for decades to come by doubling down on ‘current category share’. Same argument for HP- by now, they might have become an IBM or a Google or an Oracle- but the buyout of Compaq in 2001, inflated their short term share in PC’s/ Laptops, yet cost them the chance to be serious about paying attention and resources to new categories.

Steven

Hotel category- lil stats, big importance

Rarely do I see a business article use data with such clarity & insight

https://www.thestar.com/business/2018/07/17/less-room-at-the-inn-for-toronto-conventions-report.html

This surprisingly well written business article (esp for Canadian publication)  supports oft-ignored lessons about Market Assessment; your boss will want to know  1. category size; 2. category growth,; 3. factors influencing growth and also 4.  competitive SWOT’s. The data/ considerations should look out a few years.

Given the need for a ‘future focus”, many ppl may assume the Conventions/ Tourism Biz should be consumed about airbnb data. Not so fast. Despite the popular media’s focus on casual shared accommodation, the reality is that Bed & Breakfasts & airbnb-type accommodations don’t influence a location most meeting managers would select for a convention; what DOES influence it is a city’s perceived safety, transport & services infrastructure, entertainment options, meeting halls/ convention centres – and the capacity & service level of legitimate inns & hotels. And Toronto isn’t faring well on that front.

There are some extremely relevant figures here – on prices & capacity/ market. The Convention Biz is big- with big ripples to all aspects of a city’s economy. The data seems to indicate Toronto has an uphill climb to continue to be a ‘world class’ convention site. This Biz Category invites a market share fight as would any big category; I hope Mayor Tory takes time from ‘detail management’ to review this Big Picture opportunity – and to strategize/ invest accordingly.

In his favour? Mayor Tory’s business background, and his common sense actions to ease road traffic congestion on major routes.

Discouraging signs? A still-woeful regional transit ‘system’; a myopic decision to spend billions of taxpayer $ to BYPASS a borough with a subway; a brutal lack of accountability on transit car supply; road construction contracts that still seem to still be poorly written, unenforced, or both (youre hereby invited to play: “Let’s see if any work is done in the closed lanes of Hwy427 today!”)

SL

C-Stores: unusual & oft untapped retail partners

A fine new list is out, reminding me how promising Convenience Stores (‘C-Stores’) are as a distribution partner, notably for:

  • impulse-oriented items (snacks, gift cards, etc)
  • off-hours purchases
  • on-the-run commuter items (water, antifreeze, sunglasses)
  • cottager or vacationer items (last-minute HABA items**, bug repellent)
  • addiction-oriented fill-in purchases (caffeine, smokes, lighters, energy drinks, soda,…)

The 1st new promotion I brought to P&G Canada was to suggest P&G try a first-ever C-Store display event (Kudos to SalesMerch colleagues JFM & MattG!) targeting summer cottagers en-route, or at point of destination. Within P&G, we referred to it a the “Small-Size” event; the name understates the importance of these comparatively ‘low volume’ events.

  1. Although the event wasn’t just about making profit, it was nicely profitable (small sizes typically being the most profitable sizes!).
  2. It was strategic, preventing OUR customers (Crest, Scope, Always, Pampers buyers) from leaving our brand due to a temporary shortage. Holding loyalty before that was much of a revered idea elsewhere.

[side note: A big tip of the hat to the “crazy risk-takers” in the Sales Merch Dept who creatively massaged a way through P&G’s conundrum-creating criteria #2. ie It wasn’t hard to prove it’d pass #1. “On Strategy” nor #3. “Profitable”; the dilemma for entrepreneurish staff was showing an idea is already #2.”Proven” – when it has never been done before!]

C-Stores’ potential goes WAY beyond selling gas, lottery tickets, tobacco, rolling papers, Doritos. I worked in one for years & respect their resilience; when grocery stores added late-night hours, C-stores profited by selling lottery tickets. By the time grocery stores started selling lottery tickets, C-Stores had significantly upgraded their self-serve coffee & brought in lines of 24/7 RTE fresh prepared meals. Now, some C-Stores sell fine-quality fresh-cut flowers. And other- get ready for it- sushi!

So don’t count’em out. C-Stores are wiley; they’re flexible; they’re open-minded to make a buck. And they might be your next distribution partner!

The Top 100 USA list is here: https://csnews.com/top-100-convenience-store-chains-2018

Steven