Guest Slot – Recruitment Insider-Nigel Sapsed

Who’d have thought that the best thing you could do with an outlet was to spend puny amounts of money on it. Yes, it could genuinely be detrimental to spend loads of money on a unit in these days when overt branding and homogenised offers are increasingly turning-off consumers.

Homogenised: Maybe okay for milk but not pubs.

We are mainly talking about pubs but to some extent it might also be applicable to other leisure outlets and certain retail stores – depending on the category.

It is fair to say the effort in branded pubs is all skewed towards creating the identikit look for the building, the food and the drinks offer, whereas there is comparatively little spent on the day-to-day running of the operation.

This is in sharp contrast to what I’d call true pubs where modest expenditure goes on retaining the character of a building but the bulk of the focus is on the day-to-day softer elements including caring, managing and loving the business – in effect the bits that impact directly on the customer.

These thoughts were formulated following a recent conversation with Toby Smith, chief executive of Town & City Pubs – that operates the Yates’s and Slug and Lettuce chains, who has been mulling over what exactly makes a pub?

This coincided with my experiencing what might well be my ideal pub - The Thomas Lord at West Meon in Hampshire. What was a tired old leasehold boozer has been transformed. But not by any radical change to the building, but instead by the input of some rickety old furniture, odd chairs, and sofas that are the embodiment of shabby chic with the stuffing falling out.

On my visit a fire crackled in the inglenook and the garden was dotted with tables, not formally lined up as you’d find in many unappealing beer gardens. They were strategically placed to take advantage of the different aspects of the garden.

And the food was faultless. It was not traditional pub food and neither was it trying to be Michelin star cuisine. It was local, seasonal, flavourful food that had been cooked to perfection, in my view and I eat out a lot in my job.

The Thomas Lord: A faultless experience.

There were no mainstream beers – except Guinness – just two ales from a local brewery and a single lager. No over-complicated ludicrously large choice. And to ensure the right atmosphere an original wooden screen helps to halve the size of the pub at quieter times.

Simplistically, what they’ve done is match the food and drink offer to the building and included the customers within this. It would have been complete madness to create a high street offer in this location.

The reality is the world is changing.  We’re moving away from spending time in excessively branded pubs. We all harbour a desire to spend time in what we each define as a real pub. We’re saying that the chains are not the true pub.

Yes, the high street branded outlets have their place – on the drinking circuit – but even the people who visit these places at weekends will search out homely local pubs at other times of the week. Increasingly people of all ages are seeking out authentic places. Even in fast-paced London they are searching out what we could call proper pubs.

Having lost around 5,000 pubs over recent years there is the opportunity for true pubs to stake their place in the community by being a lot more than simply the local pub. They need to offer much more than just being the nearest pub to the customers.

 But what they don’t need is great amounts of money spent on the fabric of the building or the employment of an agency to concoct a costly brand. Love and care for both the pub and the customers will ultimately reap much greater rewards.

Nigel Sapsed is director of executive search specialist Sapsed Stevens

Innovative Retailers - The People's Supermarket

Brought to you by Retailinsider.com and PCMS

The Name: The People’s Supermarket
The Place: Lamb’s Conduit Street, London

The Story: A supermarket which is a co-operative, membership-directed, ethically run, anti- food waste haven founded by  Kate Bull, an ex-M&S executive and Arthur Potts Dawson, Mick Jagger’s nephew. Beloved of David Cameron and his big society. Not quite so beloved of Camden Council rates department who have been involved in a long running to and fro court process over whether the People’s Supermarket should qualify for discounted rates as a charity organisation or whether it should continue paying full commercial rent.

How many supermarkets can really say they are for the people.

Where are we at with that? The People’s Supermarket actually lost that legal battle and are paying full rates but they did get the government to change the advice they give to councils so that they are now advised to let co-operatives pay lesser rates.

They just want to get back to the lentils right? Well, it’s a bit less lentils and quinoa than you might think. Bull is a seasoned supermarket executive who worked in store development, as a regional manager and abroad for M&S. She says her commercial and business skills are all totally relevant to this job too. So, you can buy lots of branded goods in this ethical supermarket – Heinz baked beans, Angel Delight, and cover your ears children, even evil Pampers.

Now I’m confused: Basically this shop is on a mission to use the supermarket business model to bring together a community around food. They have to stock branded goods otherwise people will not use the shop as a supermarket – i.e. do their whole shop there. And as Bull says they can’t stock, for example, locally sourced milk because they are in central London.

Cue Nisa Today’s: Absolutely. Last year’s deal with Nisa to provide the branded goods needed could be seen as a dilution of values but you won’t find anyone at the People’s Supermarket saying that. It’s a win-win for them they say. They get the best value from the wholesaler but as Nisa is also a co-operative they share some parts of their ethos. Bull is very definite that “we will never be a NISA branded store” but one third of their products are branded and they will use the NISA deal as a platform to support the opening of more stores.

So not much is local after all? Au contraire. A lot of the fresh veg comes from 500 metres away from various city growing projects. A growing plan is going to be decided upon to co-ordinate the suppliers so gluts are avoided. They use a large nursery off the M25 but will use the small local places for herbs and okra etcetera.

Right, down to basics, is it making any money? Well now there’s a question. Obviously it is a not-for-profit, but even so Bull says it is touch-and-go all the time on whether it can stay open. Everything they use (fridges, seats, tables) was donated in the beginning of the venture. They still have no external investment and couldn’t even open a bank account for six months. She is very frustrated by the lack of vision of banks and claims that if she were a large just for-profit company she could walk into a bank and get money immediately. The People’s Supermarket does not have even an overdraft. Instead when they need to do something they go to their members. They raised £7,000 in a week from them at the end of 2011.

And these members are very rich then? There are 1,139 of them who have paid a £25 membership fee. And 70% of them are active – that is they donate four hours of their time to the venture every month and in return get a discount of 10% on goods in the shop. 75% of members have walking distance post codes and 50% of them do shifts in the shop. The others give their expertise in different ways. They even have members in Berlin and Thailand who will clearly never come in to the shop but who pay the membership fee which is then used to pay for a local unemployed person who cannot afford the membership fee to join and work in the shop.

And who are the big spenders? There are a lot of offices in the area and Great Ormond Street Hospital is opposite. This lot pour in every day to buy leftovers. Back in November 2011 The People’s Supermarket won an electric car. In a new departure this is now to be seen whizzing around Bloomsbury delivering the leftover range to lots of corporate clients.

Pardon? Most supermarkets throw away vast amounts of food. Not here. Every morning from scratch they make main meals, cakes and snacks to sell from the produce that is not sellable on the shelf anymore. They shift 1,000 of these a week and employ four chefs. It’s their biggest selling line, followed by organic milk, bacon from a small farm in Devon and – wait for it – Coca Cola!

What's next for them? There is big interest from Cardiff, Exeter and various other cities in opening a similar venture but as Bull points out you do need a lot of money to set up a supermarket. Cue Hackney Council and Viridian Housing who have asked the management team to take over (for free) a totally vast site opposite Homerton station. A 10-week consultation led to 500 people pledging support for the idea which will also house a creche and cafe – selling the leftover range of course. Initially Bull walked off but she’s decided to give it a go. They just need £1 million and are using a ‘Brick by Brick’ fundraising campaign to get things going. Bull says they need to maximise the Olympics and must trade in some form by the beginning of June 2012. But it’s a difficult site and anyone with a spare kitchen should get in touch pronto!

Plenty of work to do before this one opens.

Localism rocks then: Indeed it does. Bull tells a story that the People’s Supermarket is the only shop open until 10pm on the street which had suffered from some alcohol driven anti social behaviour. The members decided not to stock any cheap drink, and the police tell them that since they opened the crime rates have actually dropped. Now, what other supermarket in the country can say that?

PCMS Group is a leading independent supplier of software and services to the retail industry; PCMS Store and Multi-channel solutions have been chosen by over 98 retailers including Arcadia, John Lewis and M&S.

Back to the future with vertical integration

The brewing industry is a great example of how the vertically integrated model of doing business is making something of a return.

The Bull in Highgate: returning to an old business model

Where once there were lots of brew-pubs around the UK, there have been none for some time. But in recent years there has been a return to this business model as brew-pubs have been springing up all over the place.

Many down-and-out boozers are rejuvenating their proposition by the addition of home brewed beer. Take the Bull in London's Highgate that had been boarded up for 18 months. Yes, even in affluent leafy Highgate the pub with a duff offer is a failing beast.

But it is now a brew-pub whose beers have been so popular with its customers that it now only stocks its own ales. The fact it has a unique offer is a massive upside in these tough ultra-competitive times.

And it's margins are significantly enhanced when compared with having to buy in other people's beers. Needless to say, the brewing industry is not the only sector to re-visit vertical integration.

Retailers are coming round to thinking that combining manufacturing and selling has both defensive and offensive attractions in today's market.

As highlighted in his recent column on Retailinsider.com Dan Coen of Zolfo Copper cited Card Factory (click here) as a great example, with its store estate flogging cards that it has designed and produced in-house.

The likes of Clintons Cards are getting hammered on price because it is reliant on buying its cards in from wholesalers. And to make matters worse these products are available elsewhere so there's no USP or margin for poor old Clintons.

Hotel Chocolat is another vertically integrated operator that has gone a significant step beyond combining retailing and manufacturing - it owns a cocoa plantation on which it grows the crucial raw material for its chocolate goods.

Hotel Chocolat: pointing the way forward

But Angus Thirlwell, founder of Hotel Chocolat, told Retailinsider.com that it is not exclusive products, or speed to market, or protection of your intellectual property, or even healthier margins that are the most important factor in vertical integration. No, it's the fact it shows "ultra commitment" to the product.

"We grow the cocoa, we make the products in the UK, and we then sell them in our own stores. It's called ultra commitment," he says, adding that this is exactly what consumers are demanding today.

In a similar vein, having its own farms and abbatoirs has helped Morrisons differentiate its offer from the other supermarkets. Like most 'modern' retailers its rivals are advocates of the lean business model where pretty much everything is outsourced.

But maybe we are entering an era when the fat model is again back in vogue and the skinny variety, which has been more appealing in recent years, is becoming increasingly less fashionable.

Guest Slot - City Insider – Dan Coen

Since the last turkey sandwich was eaten we’ve been awash with Christmas trading statements. But while like-for-like sales figures are great entertainment for media types, these numbers are masking the true picture so don’t be fooled.

Far too many turkeys this Christmas 

This is due to a number of factors. One being the two days of extra trading retailers enjoyed this year because of Christmas Day falling on a Sunday.

These two days were fortuitously Saturdays (one in December and one in January), so with each equating to approximately 20% of a typical week’s sales this substantially boosted this year’s festive trading. In contrast, last year retailers lost two lots of 20% with Christmas Day falling on the Saturday.

Even when you factor in lost sales on the two Sundays (the day of rest accounts for approximately 8% of a week’s sales) this year then you still end up with an enforced like-for-like increase in sales compared with last year simply because of the timing.

This makes something of a mockery of the like-for-like trading figures being trotted out by all the retailers. When you take this into account then you find many retailers dropping from positive into negative LFL territory.

‘Relatively strong’ performers such as Sainsbury’s, N Brown, Signet, JD Sports, Dunelm and Morrisons all join their weaker compatriots languishing in negative territory. What it shows is that there has been very little growth in the sector over Christmas – especially when you take into account VAT.

When you also factor in the mild weather this Christmas versus the snowy weather of 2010, it makes the like-for-like numbers even more unreliable.

Overall then, it has been a terrible festive period and we are starting to see the casualties among the weak and weakish players in the market. The problem for many retailers is that we are in a market-changing environment, but many merchants have failed to recognise this fact and many are using yesterday’s business model (and balance sheet) for today’s operating environment.

It’s fair to say it is positively Darwinian out there. It’s not necessarily the strongest that are surviving but those who’ve adapted the best. There are clearly reasons why certain retailers are successful and one element is online.

Retailers can learn much from this tome

But shifting your business to the internet is not necessarily the panacea that many people believe it is. It’s more a case of retailers having gone through the painful process of re-structuring as a multi-channel business.

They need to have realised change has been taking place, to have reacted to it, and recognised how consumers are choosing the way they buy today, and the new ways in which they are choosing to communicate - through the likes of social media. 

Those who’ve not been addressing these changes are now too late to catch up. Among those who left it too late is Blacks Leisure. I’d argue there is no place for a fashion-led outdoor clothing company on the high street in a market that is driven by price. Shoppers are instead going to the likes of Mountain Warehouse that has equally high quality products at half the price - and the company enjoys twice the margin of Blacks.

Clinton Cards is another such case. It still operates on the wholesale/retail model whereby it buys wholesale and sells retail. This doesn’t work any longer when you have Card Factory with its vertically integrated model of designing and printing its own cards. So competitive is its pricing that it has no problem whatsoever in opening new outlets opposite a Clinton’s store on the high street.

One argument put forward is that the likes of Clinton Cards and Thorntons are hampered by their legacy store estates holding them back from employing leaner multi-channel models that are enjoyed by others.

The reality is that such businesses have seen this market-changing environment coming for years but the weight of the problem has been too great to deal with quickly enough and now they are paying a very heavy price. And the full cast of retail names to hit the wall following Christmas has not yet been fully revealed by any means.

The full line-up will ultimately show that it has been a much tougher festive period than those largely pointless like-for-like numbers have so far suggested.

Dan Coen is Business Development Director at Zolfo Cooper

Movers & Shakers Q&A with Tom Allason of Shutl

Brought to you by Retailinsider.com and K3 Retail

Tom Allason, founder of Shutl

1. What is the greatest opportunity for your business?

Becoming the delivery standard. I would like to see Shutl influencing consumer buying behavior globally with shoppers gravitating towards retailers that offer ‘shutl’ and away from those that don’t.

2. What is the biggest challenge to your business?

Integration with retailers because while the ROI for Shutl makes offering it a no-brainer commercially (increased customers, conversion and profits) the implementation is not simple. It involves integration with the web front-end, stock management systems, changes to store processes and particularly in the case of a large retailer it will cross many different areas of responsibility. Our challenge is getting through to the right person within a retailer who has the vision to understand the impact of the proposition on their customers and who also values the commercial benefits of this impact over the work that is required to implement Shutl properly. We usually find ourselves competing for space in a retailer’s development roadmap with a number of other projects which while not having the same impact on a retailer’s business are much simpler to implement.

3. With the benefit of hindsight what would you have done differently so far?

I’d have taken Shutl live much sooner - albeit with a far less refined product. In some ways we spent too much time ensuring that we went live with the best possible service. But had we come to market six months earlier - albeit with a far more basic product - we would have given ourselves another Christmas and we would be six months closer to world domination.

4. What is the future of the physical store?

As this market becomes even more competitive retailers are going to work even harder at satisfying shoppers’ needs as well as their shareholders demands. In my mind this means giving customers what they want when and where they want it, which will necessitate changes across all of a retailer’s business and not just their stores.  This means having all channels (web, store, phone, mobile, social etcetera) equally good at helping customers discover/buy/return products. For me this means physical stores will need to be much smarter (at knowing who customers are and where stock is) and also much leaner (selling more goods without buying more by being more efficient with distribution of stock). This will mean smaller stock positions in each store. Stores will also need to be more flexible at being able to fulfill a lot of the back office functions like fulfillment.

5. What will the high street look like in a decade?

Although the stores themselves will evolve rapidly in response to customers’ expectations increasing as a result of what the retail innovators are doing (expectations only go 1 way), the high-street will probably not change too much.  There will always be the experiential and social part of shopping that cannot be satisfied digitally.

6. Will mobile devices be the primary sales channel in the future?

I don’t think there will be a primary sales channel in the future. There will just be customers and retailers and different means of satisfying customer needs.

7. What other retail business do you admire?

Apple for transforming what people thought was possible through retail. John Lewis for establishing a culture and values that are meaningful and evident in everything they do. And also Amazon: for not being afraid of anything, putting retailers and manufacturers onto the back foot, and for forcing innovation.

8. If you hadn't been a retailer what would you have liked to do? [rather silly question for a non-retailer – ed]

Found a company that could enable immediate delivery of online purchases.

9. What marks out of 10 do you give yourself so far for achievement?

A 6. By most measures 2011 was a good year as we took our service live across multiple (very different) major retailers and established that our value proposition makes sense to shoppers, retailers, couriers and our shareholders. We have also demonstrated that our service can operate beyond London. However, we would have liked to have done all of the above much quicker. I think there is room for a 50+% improvement this year and so I’m aiming for 9+.

Amazon to attack grocery market

Amazon entered the UK grocery market last year with a rather strange offer that failed to impress anybody other than those people who recognised that this was just an opening gambit.

More in the Amazon grocery bag than you think

It utilised its Marketplace platform to accept orders from customers and then have the individual product vendors deliver the goods to them. Only 15% of goods are delivered direct from Amazon. The result has been customers receiving multiple orders, which achieves little more than annoying most people.

However, where it has worked best is for bulk orders - especially from small businesses - where a modest number, or even single-product orders, are delivered to the firm's premises.

But with the recruitment of Ajay Kavan from Homebase and former Asda executive Doug Gurr, as well as the parachuting in of US head of grocery Bram Duchovnay to oversee the UK operation, Amazon clearly looks to have big plans for grocery retailing.

You simply don't bring this firepower in unless you have serious intentions. But what can it achieve in the very competitive UK market when there are already Sainsbury's, Asda and Tesco along with Ocado slugging it out for online orders?

The answer could well be in a focus on non-perishable goods. The guys at Research Farm reckon there is a proven opportunity for Amazon in non-food items such as health and beauty and household cleaning products. They point to feelunique.com as doing pretty well in this part of the market.

Unlike fresh products there is no need to chill, freeze and worry about sell by dates of goods etcetera. And the other great thing is that many non-perishable goods are recurring purchases so toilet rolls, nappies, and shampoo have a regular monthly, bi-monthly purchase pattern for most consumers.

Plenty to go for in non-perishable products 

Tapping into such recurring ordering patterns was the model for Quidsi, which Amazon bought back in late 2010. The company owned Diapers.com that started out selling just nappies and branched out into other baby products, and it also operared Soap.com that was its everyday essentials products website.

With this business under its belt Amazon will no doubt have learned much about perishable goods retailing. Now what it needs to do is create a centralised fulfilment capability in the UK. This has not been necessary with its Marketplace model so far and it would be a big ask. But whatever Amazon has tackled in the past it has typically been successful.

It must have also accumulated a great deal of knowledge of order/delivery patterns both in a company-wide sense and on an individual customer basis. This will all add to its capacity to stake a claim for a slice of the non-perishables grocery pie.

And of course it could buy Ocado - as previously discussed on Retailinsider.com - for its expertise in grocery delivery and whose market value continues to fall as its business model comes under intense scrutiny. Housed within the Amazon business it would be a different proposition.

Expect to hear lots more from the Amazon grocery business this year.

Meal Deal - Hotel Cipriani in Venice

Here's the latest instalment of a new series where leading retail executives recall memorable occasions spent celebrating a new job, cutting a big deal, winning a large order, or just enjoying life in a specific pub, bar or restaurant.

Richard Pennycook, group finance director at Morrisons recalls a trip on the Orient Express and a meal in the renowned Fortuny Restaurant at the Hotel Cipriani in Venice.

"Seven or eight years ago for my wife's 40th birthday we went to Venice on the Orient Express and while in the city we decided to dine in the restaurant at the Hotel Cipriani. Before the trip I mentioned this to Egon Ronay [the late pioneering restaurant critic] who had become a friend of mine after we'd worked together for Welcome Break [before I joined Morrisons].

We were just chatting and he raved about it as being a great place and suggested I mention his name to the Maitre d' who had been working there for donkey's years. So during our visit to Venice we went for the birthday dinner at the Cipriani. We had a fantastic table with wonderful views over the water and we passed on Egon's regards. The tradition of chefs eating in each other's restaurants is to offer a free glass of Champagne and my wife and I received the same.

We then had the most fabulous meal that went on for hours and we toasted Egon and chatted about life in general. But then when we came to pay the bill there was no way they would take a payment from us. We really had indulged and we were so embarassded at not paying. I was just pleased I'd not gone for an 1850 Chateau Margaux or something! This was typical of Egon and I'm still not sure what words he had said to them."

Location: 10 Giudecca, Venice, Italy
Likely to spend Euros 70 on two courses.
Likely to spend an arm and a leg on a bottle of wine.
Likely to find Spider-crab Venetian style in its own shell on the menu.

Aurora Fashions - the most multi-channel retail business?

Fashion chain Aurora operates the Oasis, Warehouse and Coast brands and just might be the most multi-channel thinking retail business in the UK.

Aurora: a bright light in multi-channel 

Many businesses suffer from internal battles being fought between their various channels as they argue over the internet cannibalising store sales, which ultimately kills off innovation and progress.

But at Aurora there has clearly been sufficient conviction and support from its top executives to ensure that its move to a seamless multi-channel operation is truly happening.

From the chairman Derek Lovelock and chief executive Mike Shearwood down there is belief in multi-channel. Some of the early foundations were laid by another multi-channel advocate John Bovill, the former Aurora IT director.

Its internal structure highlights how its thinking is strongly geared towards integrating all its channels. It must be the first retailer to appoint a omnichannel director - Ish Patel - who is responsible for IT distribution and the multi-channel technical team. And the former multi-channel director Hash Ladha moves up to the role of deputy managing director at Oasis where he will undoubtedly spread his evangelistic views on multi-channel.

Another such example of Aurora appointing digital-savvy individuals into broad roles is the bagging of former French Connection director of e-commerce and digital marketing Jennifer Roebuck into the marketing director's position.

Such moves have been crucial to the business developing a model that now incorporates some of the most forward-thinking multi-channel initiatives in the UK.

For instance, it last year opened an Oasis store in London that has thrown out most of the fixed tills and replaced them with iPads that are taken around the store by the shop assistants.

iPads in-store for Oasis 

Goods can be ordered from them and delivered to customers' homes or into the store for future collection. The delivery options are also cutting edge as they include 90-minute delivery (provided by Shutl).

But most interesting is its new stock management system that allows goods ordered online to be fulfilled from either the central distribution depot or directly from the group's shops. This is cutting edge stuff and takes the business to the holy grail of multi-channel - a single view of stock.

Early signs of this benefiting the business came from a trial involving 60 stores that helped boost online sales over the festive period by 20% - equating to £1.2 million. Expect this to make an even bigger impact in the future.

It played its part in Aurora delivering an impressive 13% increase in like-for-like sales over Christmas, which sets its apart from the rest of the pack - just like its multi-channel thinking is differentiating it from the many also-rans in the retail sector.

If it isn't the most multi-channel thinking retailer in the UK then just who is?

Innovative Retailers - No watering down of Amazon's ambitions

Brought to you by Retailinsider.com and PCMS

The Name: Amazon

The Place: HQ Seattle, USA and practically every connected house on the planet

The Story: Who hasn’t heard of Amazon? Launched in 1995 it is the largest online retailer on earth with annual revenues bigger than the GDP of most of the countries in the world. Their mission is as follows: “To be earth's most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.” So they think big over in Seattle. And with third quarter results up 44% to $10.88 billion they can afford to.

Amazon: continuing to woo early adopters 

Getting motivated for innovative change in such a huge company must be like turning a tanker? 

It’s just not true with this particular company. You have to admire Amazon. It feels like they launch something new every 10 minutes and it’s been doing that its whole existence. It starts in a garage selling books. And in next to no time it moves into music, videos, DVDs, computer software, consumer electronics and clothing and footwear. In 2011 alone it has added kitchen items, DIY, baby, jewellery, health & beauty, musical instruments and scientific supplies to its categories. Now, of course, they will sell you computer space in their computing cloud which puts them head to head with some of the biggest IT businesses in the world. They will in due course be selling everything you could possibly want. World domination will follow no doubt.

Really? Well, the deterioration in trading of bricks and mortar retailers follows on from Amazon’s entry into any category because they are so good at coming up with new ideas to tempt the consumer in. In fact they have always tempted other retailers in as well. Selling other people’s products on your site was unheard of back in the day. And also providing operated-websites for other retailers – some very large ones – was also pretty novel. And this is the clever bit, they charge around 10% for each transaction. But the real killer blow is that they do not give the company any customer data at all. They keep it and use it to tempt that customer back to their own site.

So tempt me now. Okay. This year they launched a Click & Collect scheme in some shopping centres in the UK – they already have a few in Seattle – where you buy online and then go along and pick up the goods from a locker at a location near to you. This is a perfect blend of online and physical store for what is a dyed-in-the-wool pure-play business.

More? How about ‘frustration-free packaging’. Seriously there are whole departments devoted to this.  Just so you can stop fiddling about with cardboard. Absolutely anything that might induce you to shop with them rather than someone else will be considered. And then of course there is ‘Prime’.

There is? The jewel in the loyalty scheme crown. In the UK it works as a subscription model. You pay £48 and you get unlimited free deliveries with no minimum order. Once that fee is paid customers have no interest in shopping around on price anymore. It’s Amazon all the way. The only snag is that Amazon is moving to free deliveries anyway in the UK soon so the unique selling point of Prime is somewhat negated.

Still need more tempting? Blimey. Right, they are also impressively innovative in m-commerce. They have developed an app which allows you to take a picture of a product you like and then Amazon will match it to something in their own catalogue.

OK, that is good. I haven’t even begun. They are absolute geniuses at the whole trade-in/used category, often aimed specifically at cash-strapped students. A dedicated electronics/gadgets trade-in store was launched in May 2011. All your gadgets get thrown into one big box and there is free shipping. Amazon does not tend to pay for trade-in goods but you get Amazon vouchers downloaded to your mobile within 48 hours making sure you buy on their site yet again. They are truly light years ahead in this whole loyalty thing.

Wowzer. And you haven’t even mentioned the K word…  I know I haven’t. I’m coming on to it now. Kindle. So having been originally a bookseller Amazon suddenly found that it had to make sure not to fall behind on e-books of all things. And in 2007 it launched Kindle which now has around 850,000 titles at its disposal. By July 2010 ebook sales outnumbered hard copy books for the first time by 1.4 to 1. They also make money on a mobile advertising service. You buy the Kindle for a discount of $25 and it comes with advertising – not in the books but as screen savers. For the last two years Kindle has been the best selling product on Amazon and the tablet Kindle Fire was launched in the autumn. Early indications suggest that its price is attractive enough to allow it to go head to head with the iPad as Amazon hoped. 

Goodness, they’ll be publishing their own books soon. Keep up. It was announced in August they are moving into publishing. They will tie authors into exclusive deals to sell their books in bookshops, as hard copy on Amazon, and also as ebooks and audio books.

Are there any challenges left? Yes, China. They want the stuff but they are not internet savvy. But if anyone can crack it then Amazon will.

So, on planet Amazon the only physical shops left soon will be coffee shops. Good point. I’ll mention it to the packaging department. They’ll have something sorted in no time.

PCMS Group is a leading independent supplier of software and services to the retail industry; PCMS Store and Multi-channel solutions have been chosen by over 98 retailers including Arcadia, John Lewis and M&S.