Netto couldn't handle the UK's big boys

So now we know. Netto abandoned the UK by selling out to Asda Wal-Mart because the might of the country's big grocers ultimately caused it too much grief.

Speaking at the World Retail Congress in Berlin Claus Juel-Jensen, managing director of Netto International, admitted that the aggressive competition from the likes of Tesco, Asda, Morrisons and Sainsbury's made its life too difficult in the UK.

Although he says the offer from Wal-Mart involved a sum of cash that was far too tempting for Netto to turn down, there is no doubt that had life not been quite so tough for the discount supermarket then it would probably still be operating in the UK today.

Unlike in the other markets in Europe where Netto also operates, Juel-Jensen says the UK's big boys were on its case from day one. He suggested that with their big marketing budgets they have fought a very successful campaign to give shoppers the perception that the products in the food discounters are cheap because they are of an inferior quality - cheap and nasty.

Despite numerous taste tests that have suggested the contrary, the reality is that many UK consumers continue to believe that the products of Netto, Aldi and Lidl are of low quality. This has made life tough for all three of them, especially over the past year.

The aggressive moves from the likes of Tesco, which launched a range of own-brand goods squarely aimed at competing with the core products of the discounters, have had a big impact despite much media criticism of their moves at the time. It was all bad news for margins.

With the benefit of hindsight we can now see that the major grocers' efforts at fighting off the discounters - following their 'moment in the sun' at the height of the recession - has been very successful.

It has not only seen the departure of the UK heads of Netto, Aldi and Lidl but has (we now know) resulted in Netto throwing in the towel. Job done it seems.

Universal benefits of multi-channel

You'd have to be living down a very deep hole not to have recognised that multi-channel retail is the way to go for merchants that have a physical stores estate.

On day one of the World Retail Congress in Berlin this week delegates were given yet more evidence of the benefits of operating across multiple channels - in an integrated manner. Retailing legend Michael Gould, chief executive of Bloomingdales in the US, offered many insights into how he runs this iconic stores business and one of the most telling was how offering a number of channels had a massive effect on revenues.

He cited how 75% of the company's online sales had originally come from those areas where it had no stores, but that this had changed to a current 25%. The rest being from areas where it has a physical store. This just goes to show how significantly beneficial it can be to operate multi-channel as it is blatantly obvious that shoppers have a preference for engaging with retailers across more than one channel.

These multi-channel shoppers are also vastly more profitable. At Bloomingdales, Gould suggested they are 2.8 times more valuable than a customer that only goes into the company's physical stores.

Such is the growing power of multi-channel retailing that another speaker at the Congress Tony Stockil, chief executive of Javelin Group, believes it is now a "strategic issue" for retailers to go down this route. The differential between those that are creating a multi-channel proposition and those that are still sitting on the fence is developing into a very polarised situation of the clear winners and the clear losers.

Part two of a series on retail payments rip-offs

He knows the banking industry but they don't want to know him

Confusion reigns at the point-of-sale as retailers haven't a clue what payment cards they are accepting from customers.

It used to be oh so simple - it was either a debit or credit card. But this is no longer the case in this world of myriad choices where loads of different card types are being launched into the marketplace. To add to the confusion, retailers are being charged different prices by the banks for accepting the various cards (but that is a different story).

The problem for merchants is that the card issuers (mainly banks, although the likes of Tesco are among them) are in collusion with the card schemes and are issuing 'premium' credit cards that are not all the same. They might look it but they are radically different when you peel back the skin and look at the fine print.

These premium cards are costing retailers 30% or more to accept than the plain vanilla cards that they have accepted for many years. And it will get even worse. The issuers have seen a loophole in their agreements with retailers and are using it as an opportunity to re-issue new cards (with supposed added benefits such as contactless capability, a loyalty programme, or insurance).

Payment charges on cards are far from flexible for retailers

What they have chosen not to disclose during this re-issuing process is the hidden higher fees for retailers. They clearly hoped that retailers wouldn't notice and largely to date they haven't. But this is changing as the number of such cards in use is growing rapidly.

Over the last two years retailers will likely have seen growth in payments from such cards increasing from zero to 6% of their total sales, which represents a steep growth curve and one that is continuing on a sharp upward trajectory.

The first thing a retailer will know that they have accepted such cards for the payment of goods is when they receive their monthly bill from their acquiring bank and the payment charges have noticeably increased.

But retailers shouldn't expect to see any lined details on their bills with information on who has been issuing these offending cards with their significantly higher fees. They will look just the same as any other card on the bill statement.

So what action can retailers take?

The first step is to ask their card acquiring bank to list and identify the cards that are costing them a lot more money to accept. Secondly, this information should then be sent to Vince Cable with a note asking the Government what exactly they are going to do about yet another example of the banks' greed in the UK.

Vince Cable: more talk than action so far

Cable can't keep pontificating to the market about taking action when to date we have seen absolutely no action whatsoever.

I'll be back soon with further depressing stories for retailers but in the meantime, if you didn't catch my first column in July then here it is - Column One.

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Consumers couldn't care less about reducing waste

The big downside to retail is that it involves consumers. This fickle, and sometimes annoying, bunch can be a real pain in the neck. Nowhere are they more irritating than when it comes to waste, recycling and anything else to do with saving the planet.

Loads of waste - lovely

They send out so many conflicting messages. In only the past couple of weeks we have seen just how schizophrenic the good old consumer can be. Research from MyVoucherCodes.co.uk showed that 63% of Britons wanted brands to reduce packaging. And a hefty 72% expressed 'concern' over the amount of packaging used by grocery brands.

This looked like great news for the environment. But then this was followed by the disappointing news that Cadbury would not be repeating its 2009 trial of using sustainable cardboard boxes for its Christmas tins of Roses. These reduced packaging waste by 45% but were deeply unpopular. Apparently the tin is too much of a festive tradition for shoppers to replace it with crappy cardboard.

One of these or a planet? It's an easy choice.

None of our supposedly environmentally conscious consumers was in the slightest bit interested in saving the planet at Christmas it seemed - unlike dogs, planet-saving appears to only be for other times of the year.

This example highlights how there is such a massive divergence in what customers say and what they actually do. They have for many years spouted off about the environment being high up their agendas but there is so much hard evidence to suggest the contrary for the vast majority of the consuming British public.

I wonder what this hypocritical bunch (you can tell I'm not a retailer) would have made of the brouhaha this past week over Sainsbury's and its excessively packaged Taste the Difference beef roasting joint. The supermarket was taken to court  by Trading Standards in Lincolnshire.

The offending excessive packaging - where's the meat?

The grocery chain was surprised as it argued that it had already reduced the level of packaging on the beef by 53% since February. Since its new reduced look consisted of plastic shrink wrap, a plastic tray, a plastic lid, and a cardboard sleeve I wonder what exactly its former planet-wrecking packaging could possibly have also included? 

This week Sainsbury's avoided a court showdown by volunteering to reduce the packaging on its beef. But this came on the same day that the grocer's retail and logistics director Roger Burnley was telling delegates at the IGD Convention 2010 in London that the council had listened to Sainsbury's argument that less packaging caused more food wastage and that the councillors had agreed with it. Oh really.

I think the only conclusion to be drawn from all this is that when it comes to sustainability then both consumers and retailers are just a little too schizophrenic to make much sense.