Today is a hot day in Melbourne 34 degrees celsius or 93.2 degrees fahrenheit. It seems though it is never too hot to retail coffee in our fair city of Melbourne. Looking for a java fix I quickstepped down to the nearest caffeine haunt in docklands. I happened upon a new outfit called Cafenatics. Their coffee and food were both good. Their outdoor air conditioning was the total bomb. I freaking loved it.
They had set up a nice water misting system in both their outdoor dining area and even inside. It was just perfectly soft so that you didn’t feel wet, just cooled down. So amazing, I tweeted about it, posted in on Foursquare and even made the effort to write this and share some pictures of it (below). A simple idea I’ve never seen before.
The thing I like just as much is that this is clearly not a new technology…. the Romans probably invented it. Proving again that innovation is an attitude and there are probably a thousand low cost ways any of us could employ tomorrow to wow people. This certainly got me talking.
The curious thing is that, their coffee is what I came for, and their mist cooling system is the story I left with.
There’s a lot of talk in Australia about what makes a good Fish & Chip shop. It just so happens I know the answer to this question, and based upon this tweet by Heath, it has become clear I must share my rules right here.
Fish & Chip Shop rules:
- Cannot sell other food items which traditionally live outside of the Fish & Chip ecosystem. Namely pizza and kababs.
- Cannot be attached to another retail outlet such as a Milk bar. Must operate single business operation.
- Must have fish tiles on the wall.
- Must have wall poster of local fish population.
- Must wrap Fish & Chips in paper. Boxes are an unacceptable packaging material.
- Must not provide tomato sauce. Only salt and vinegar. Tomato sauce you have at home or go without. It’s just the way it is.
- Must sell pickled onions in a plastic tub on the counter, with the price written in a marker pen on the side.
- Must have traditional retro cans of beverage for sale in the drinks fridge such as Creamy Soda and Passiona.
- Drinks fridge must have a sign which says: “Please make selection before opening door”.
- Must make hamburgers and include a hamburger with the lot which has the options of beetroot, egg and pineapple.
- Hamburgers must be built on the grill while they cook by an expert burger cook.
- Must be run by hard working immigrant Greek family – the inventors & stalwarts of the local Australian fish & chip shop tradition.
- Must have home made chips from own potatoes. Frozen chips from bag are unacceptable.
- Must make potato cakes in house and dip in batter, just prior to dropping in deep fryer.
- Must provide both fired and steamed dim sims. These of course, must come from the frozen bag variety.
- Pricing board must be above the cooking fryers with prices written in chalk to allow for inevitable price inflation.
- Must have retro 1980′s arcade machine with a single game such as Galaga or Pacman.
- Must claim to be ‘local fish supplier’ of some random restaurant or pub in the local area.
- Must be located in working class area, preferably in the Western Suburbs.
- Should not be in obvious seaside location and counter intuitively be far away from waterway or estuary.
- Must be closed on Mondays.
- Must only be staffed by family members.
- Must have wide multi coloured plastic strip at door entry – to keep flies out.
- Must have cabinet at the front of the store window to display the ‘fresh’ fish.
- Must have semi inappropriate Chiko Roll poster on wall.
- Must sell ‘apple turnover’ oily apple pie with thick pastry.
- Must sell banana and pineapple fritters.
- Must wrap non-fried items in separate paper.
- Must use metallic industrial sized salt shaker to deeply cover chips in salt.
- Insert your rule here….
So why am I telling you this here on Startup Blog? Because sometimes the real innovation is about having the presence of mind to maintain a tradition in the face of change. While fish & chips might not be a thing where you live, I’m sure there is some kind of equivalent food or retail outlet. When change is the order of the day we can become worth talking about when we don’t change, or even bring back things of value which got lost along the way.
Leadership ironically, is sometimes about being a stalwart of the past.
These are the four worst words anyone can utter to a customer in retail. We all know they answer it gets 99% of the time – because we all give it.
“No thanks – just looking”
These 4 words are revenue stoppers, barrier creators, and empathy evaporators. It just says to the potential customer – I’m too bored and uninterested to even use a sentence that isn’t expected, practiced or considerate of the fact that you are the person who pays my wage. But rather than simply pointing out that it doesn’t work, let’s discuss a couple of simple and effective alternatives. And I’ll do this by giving you an example and a retail sales person who gets it.
I was recently shopping for some new jeans in a Myer store in Melbourne. When the sales guy approached me he asked me a simple question:
“Are you after pants or tops today?”
A very smart move. Either answer starts a conversation we he can ‘be help’ instead of simply asking if I need it. If I answer ‘pants’ – we can start narrowing down the selection. Same if I answer ‘tops’. Or he might even get lucky and I say ‘both’. If I say ‘neither’ I just look like a fool, and we can both wonder why the hell I walked into the store in the first place. Needless to say, I told him and he helped me find a nice pair of jeans.
The trick is simple:
First – never ask an open ended question. They don’t solve problems or lead to results.
Second – ask two pronged choice questions for which both answers are good for the sales person.
Third – don’t feel guilty or pushy doing it. People wouldn’t (especially men) enter a store just for the sake of it, they want help.
So next time you go into a store with sales assistants, pay attention to the language they use and you’ll start to notice those who get it and those who don’t. This example might also serve as a good question or test when recruiting business development staff for your startup.
In 2013 I think we can all agree that there is no digital. There is only life. We all now move seamlessly between our digital and analogue selves. The transition is unnoticeable and omnipresent. It’s a surprise that most marketers and even some tech startups fail to realize this.
Key hint: If you have an on-line strategy something is wrong. The strategy is the strategy.
The increasing number of layers and channels is just another example of our world increasing in complexity and contextual differentiators. Something that will only continue on its current trajectory. And it is not just about retailers getting their digi-on. It’s also about those who live on line understanding how they can enter the physically world – it’s still where we humans live!
The advertisement below inspired this post. A great example of a few hallmarks in advertising:
- Humour when relevant
- Customer centric strategy
- Real world integration
Sadly most Australian retailers are still yet to realise we operate in a new world.
Every industry has its challenges. But few are faced with challenges as deep and far reaching as the FMCG industry in Australia. In fact, these challenges are taking away most packaged goods marketers ability to determine their own marketing mix. The traditional brand building media, such as TV, are becoming less effective. While the dominant retailers are controlling what products consumers get to choose from.
The Evil Duopoly
The two friendly giant of Coles and Woolworths are no longer partners of their suppliers – they are now their biggest competitors. And brand owners need to ask themselves the same question the supermarkets are asking:
Will consumers notice if brand X is removed from the shelf?
Where the word “notice” translates to shift their shopping basket elsewhere.
It seems Coles and Woolworths have no regard for the brands of their suppliers. They don’t have to. There are very few brands that any consumer would move their shopping baskets to another retailer for. And they know it. Coles and Woolworths will continue to delete brands from product categories until they have a little over 3 brands in each category. One of which will certainly be theirs.
It means there are only 2 survival strategies:
1. Be brand leader in the category. Even the number 2 player is not safe.
2. Innovate radically to invent new ways to distribute consumer goods.
The good news is that the technology is arriving that makes direct relationships with consumers possible. Just look at what has happened to department stores. FMCG brands must invent new ways to take control of their brand at the transaction end.
The TV Industrial Complex is evaporating in front of our eyes.
• We can no longer buy an audience on demand.
• It’s no longer a brand built monologue.
• Consumers and are now connected and in control.
• We live in a world of excess supply.
• And it’s harder than ever to differentiate consumer goods.
• Competition and price pressure is reducing margins.
• Advertising is becoming less cost effective as audience attention fragments.
Consumer brands are facing a structural change for the ages. To survive supermarket brands must mean more than being a product at a price point. They need to represent the value systems of today’s consumer.
Which might mean that everything they talk about is one layer outside of what they are selling. And instead be about brand value systems, what they represent, what the brand believes in, how it helps people, the environment, creativity, well being, brings families together and so on.
Unless there is a significant, ownable point of difference, brands cannot just talk about what is sold inside the bottle or the pack. Those that do are destined for commodisation and ultimate the demise of profitability. What brand marketers must do is be part of important conversations with their audience. They need to augment lifestyle even if in a subtle way. It’s only when we do this that we can have a point of view in the new ‘attention economy’.
Brands that have a share of voice in the new media landscape will be ready to participate in emerging distribution channels when they arrive. Because in the coming years technology will evolve to the point where promotion and distribution will merge into the one seamless process.
What I’d be doing if I was an FMCG company in Australia is investing all of my advertising investment in channel innovation – I’d move all that consumer money across. To the boring area of distribution – the area that has been ignored for the past 20 years… Who they sell to. “We’ll just sell to who we’ve always sold to”. I’d be finding new ways connecting the communication and distribution using smart phone technology, and emerging NFC and RFID technology. I’d be collaborating with other packaged goods concerns to invent new channels, and I’d be working out ways to sell directly to my consumer and circumvent the retailer entirely.
Sure, Australia is a tiny market on a global scale. In fact it is inconsequential to most global consumers goods organisations such as Kraft, Proctor & Gamble, Unilever and co. But what is happening in Australia, is a sample of what is to come in larger markets such as the USA, Europe and Asia. Dominant players like Walmart will continue to call the shots, and eat into suppliers business via backwards vertical integration. If large FMCG companies were smart they’d be using the Australian market as a test case for a new strategy to distribute their products. But that will probably never have for one simple reason: The people that run these companies would never ‘over invest’ in their companies. The only future any CEO cares about in this day and age is the short term growth in the share price for their options and their impending bonus at year end.
Subject: Order on line
I am trying to buy a wallet on line – but there is no way to add item to shopping basket.
To: “Sammartino, Steve”
Subject: RE: Order on line
Our online store currently offers watches and audio product only. For a larger range of our clothing and accessories please visit our preferred online retailer here:
Subject: Re: re: Order on line
Hmm – that’s pretty 1996 don’t you think?
Surfstitch.com.au don’t have the item I want… ?????
Can I order over the phone and pay via credit card and get sent to me that way?
Let me know,
I’m yet to hear back from these guys yet. Although they did give their initial response within 30 minutes. I’m still waiting for the second response. A person with credit card in hand, ready to buy.
Ignoring the fact that it is totally ridiculous to sell some things on line and not others, it is more ridiculous to not call me back (they have my number), take my order, take my money, go down to the warehouse and grab the item and put it in an express post or fed ex bag.
When it comes to selling on-line, being half committed is often worse than not being involved at all.
Journalism is dead. No, newspapers are dying. Writing has never been more omnipresent or important.
The music industry is dead. No, more artists are making more music. It’s just not in a record store.
TV is dead. No, TV is different. ‘t now has 6 billion channels with www. addresses rather than 200 numbers to choose from.
Advertising is dead. No, we no longer “tell then sell”. We now collaborate and create before hand. The 4th P is now the 1st.
Print production is dead. No, we print on our desktop. We print millions more pages than ever.
Book stores are dead. No, stories and reading continue to grow via the screen and home delivered books.
Retail is dead. No, it’s growing rapidly. In different places, in different ways, all digitally augmented.
The point is that anything that is culturally or economically important will never die. Humans will find new ways to keep them alive, or more truthfully make them more alive by knocking down the previous barriers to entry held in place but the profitable incumbents. They loved their systems because it made them rich from keeping us out.
My question to all entrepreneurs is this; how are we making the most of the change old dying systems are presenting us?
As far as I can tell this is the strategy of every large FMCG company – (Fast moving consumer goods – think super market and convenience stores).
Keep prices low. Never take a price rise.
Sell to who we’ve always sold to.
Only make things the factory can make.
Focus on volume, that’s what keeps the factory busy.
Deliver short term quarterly profits.
Innovate incrementally. Flavours, sizes.
Only invest in a brand if there is an immediate return in sales.
Buy media on mainstream channels.
Buy startups who innovate in our category.
Conduct significant research to test ‘everything’. Make all changes research suggests. Safety in research.
Roll out good ideas from one market (Country) in all countries.
And this industry wonders why it fails to grow, increase revenue or attract change agents. As someone who has worked in the space for many years, it’s time someone told the industry to forget everything they think they know. This strategy isn’t working. It’s why companies like Kraft foods have the same share price they had 10 years ago. That is zero capital growth. It’s one example of many large multinationals with a similar financial performance.
So far the consumer goods industry has been quite lucky. They’ve been insulated from the effect the web has had. But this is all about to change. The squeeze is about to come, and unless they reverse their strategy over the last 50 years, the future is not bright. In fact they need to flip everything they currently do:
The new FMCG strategy (for those who want to thrive more than survive)
Innovate so that price is not an issue. Make stuff people will pay a premium for.
Open up new channels of distribution. Over invest. Compete against their retailers.
Make things people want. Focus on the design of the product, not compiling it. (Manufacturing)
Focus on revenue. Ignore volume. Remove it from all tracking and all documentation. Report everything in dollars.
Do not give the market forecasts. Report results on year end only once.
Innovate dramatically. Embrace failed launches. Most fail anyway, so get more to market.
Invest in brands without expecting a short term revenue boost.
Build your own brand media channels.
Set up startups in your category. Put them in a skunk woks facility. Different space for a new culture. Then sell the startup to your competitors. Do it again.
Do not do market research. Only research what can be done & know how to do it. Invent the future for the audience
Sack all global marketing & innovation teams. Innovate locally.
This wont happen in any large FMCG company ever. There is too much to protect. Things like reputations, executive bonuses and careers. But 10 years from now every FMCG will be asking what happened, just like information industries and the car industry did. The change is coming whether they like it or not.
TV was the first entertainment screen in our lives and belonged in the living room. And it stayed there for the best part of 30 years before it multiplied. Slowly, it made it’s way into the other rooms of the house. It was linear and unidirectional, but it was also the start of a new culture. A culture that would shape more than entertainment.
In less than 20 years since the birth of the graphical web, screens in all shapes and sizes have started to pop up all around us. They’ve made things simpler, easy to understand, and just made life better. So much so, that screens now permeate virtually every aspect of our lives.
I call it screen culture.
And it’s much more than TV, web browsers and smart phones. It’s every screen we see. All web enabled, all around us and consumers expect the screens to serve them without a hitch.
They’re in our pockets, they’re on our desk, the car dashboard is now a screen, on the back of airline seats, the airline check in counters, supermarket checkouts, shopping centre directories, in all retail spaces, in the back seat of taxi’s, bus shelters, community spaces. They exist where ever communication and commerce does. Every machine now has a screen. Every time we interact with technology, the interface is increasingly screen enabled. And we often attend to multiple screens concurrently.
The more we learn about the screen, the more it learns about us. The best screens can be manipulated, touched, caressed, controlled and even spoken to. It’s our job to humanize the screens so that they are culturally sensitive. They need to intuitively know what we want… and lead us to that solution. The interface has to be the instruction manual. Screen culture demands that we teach people “how”, while they interface. That the learning, and the solving, happen simultaneously. The screens need to serve us. We must be able to navigate the tight spaces of the small screen, if we can do this, then conversion to the big is easy.
This can only happen when we design as humans, not technologists.
Known as the most innovative industry for much of the commercial world from the 1950′s, consumer goods have got caught napping.
Retailers are cutting their lunch through some classic backwards vertical integration – that is, making the products their suppliers make.
So my question is this, why aren’t the global fast moving consumer goods companies taking on the retailers at their own game? What they should do is simple. Develop a consortium of supermarket suppliers and buy a supermarket chain. The missing link in their marketing mix – distribution control. They need to get back some control at the retail level or the long term picture is one of reduced shelf space, and more retailer erosion of their business. Consumer goods companies need to compete with their retailers in the same way the retailers compete with them.