Pubs should run rings around Olympics

To any overseas visitors coming to these shores for the Olympic Games the organisers of the event would have you believe that the main beers produced in the UK are Heineken and its sister brands John Smith's and Strongbow.

London + Olympics = Heineken!

They'd also have you believe that we don't have anything more exciting than these brands. It's simply untrue of course because the craft brewing revolution, combined with some great innovation from the country's more progressive larger brewers, has filled the country with some great beers.

But since Heineken are the sole sponsors of beer at the Olympics, all the events venues and advertising around the competition will be in the hands of the Dutch brewer.

It's not so much that the company is not British it is just that the three products it will be promoting during the Games are not reflective of the high quality of beers and ciders now being produced in the UK.   

The heavy-handed approach taken by the London Olympics' Organising Committee to ensure that its beloved sponsors' rights are protected means the capital's pubs are also strictly prohibited from any form of promotion of their Olympic-related activities.

Thankfully research has shown that 60% of visitors to the UK state that they will visit a pub during their stay in the country. This means that whatever dodgy line the sponsors and the organisers attempt to spin, and try to get people to consume, the majority of visitors coming over for the Olympics will be taking a trip to a London pub.

London is now a true world city of beer.

Hopefully in these dens of equality they will encounter what we really have to offer in the UK by enjoying some finely crafted British beers in some of the country's best pubs. To help promote the capital's pubs and the various beers available during the period of the Games CAMRA (Campaign for Real Ale) has  launched a website London City of Beer that lists tastings, brewery tours, and various other activities that have nothing to do with the Olympics.

But for those tourists - and natives - who want a break from the Games and the promotion by Heineken of the official beers of the Games it will highlight many Gold medal-winning breweries and their beers. I guess I'm not even allowed to say that?

Retailinsider.com Top 25 Drinks Retail Websites

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Welcome to the inaugural Retailinsider.com monthly 'Drinks Retail Website Index' that ranks the Top 25 UK websites for drinks retailers, which has been produced exclusively by website testing specialist Sitemorse.

The objective is to give a cross-section of the category with the constituents comprising large grocers, pure-play operators, and specialist multi-channel retailers, that combines a mixture of transactional sites and those of a purely informational nature.

For this first month the Index is published on Retailinsider.com it is notable how strong the top two in the table perform - with both Spar (UK) and The Whisky Shop achieving credible scores of over seven out of 10, which website Sitemorse regards as a standard that all retailers should strive towards.

To produce the Top 25 Index the web firm runs automated software that page-by-page reads the first 125 pages of each website and analyses on the basis of six key criteria - function, code quality, user experience, accessibility, performance and SEO capability.

It is then a sharp drop to third-placed Budgens that is a full 0.9 points behind The Whiskey Shop. However, it is still some way ahead in scoring terms of many other players, with many big names putting in disappointing performances. In the bottom five are Marks & Spencer, EH Booth and The Sunday Times Wine Club.

The latter suffered the steepest fall with a drop of 14 places (since the sites were tested in March), with a score of only 2.05 out of 10. In contrast, the biggest rises of the month were Bargain Booze that leapt 10 places to sixth position and BEERMerchants.com that moved up 13 places. It represents a growing number of online-only operators that are providing tough competition to the existing high street players.

BEERMerchant.com's growth is contributing to the ongoing strength of the beers, wines and spirits (BWS) category on the internet. The IMRG Capgemini e-Retail Sales Index reported a year-on-year jump in March of 13% and a month-on-month increase of 9% over February for BWS.

Top 25 Drinks Retail Websites – April 2012

Company Name                      +/-       Score out of 10

1.      Spar (UK)                    same   7.80

2.      The Whisky Shop         same   7.10

3.      Budgens                      +1        6.22

4.      Aldi                              +2       5.91    

5.      Fortnum & Mason -2        5.72

6.      Bargain Booze             +10       5.60

7.      Lidl                              same     5.19

8.      The Wine Society         same     4.82

9.      Iceland                         -4         4.49

10.  Sainsbury’s                  +1        4.22

11.  BeerMerchants.com    +13       4.14                

12.  Londis                          -2         4.02

13.  Naked Wines               +1        3.92

14.  Asda                            -1         3.46
15.  The Drink Shop            same    3.41

16.  Majestic Wine             -4         3.40

17.  Virgin Wines               +5        3.38

18.  Tesco                           same   3.28

19.  Selfridges                    -2         3.10

20.  Waitrose                     +1        3.10

21.  Marks & Spencer        -1         2.58

22.  EH Booth & Co          -3         2.48

23.  Sun Times Wine Club  -14       2.05

24.  Laithwaites                  -1         2.04

25.  Slurp.co.uk                  same   1.26

Cookie Reports offers a unique level of automation and precision to map retailers' ‘cookie landscape’, producing reports that will help secure legal compliance, combat data leakage and improve site performance.

Innovative Retailers - Poundland

Brought to you by Retailinsider.com and PCMS

The Name: Poundland
The Place: 389 stores in the UK and 10 in the Republic of Ireland.
The Story: Founded in 1990 with a store in Burton upon Trent Poundland is said to have brought us the whole concept of price point retailing over from America. Initial scepticism from some top brand owners about selling their precious products on such shelves quickly dissolved once they realised that Poundland was going to sell shedloads of it, whatever it was. And in May 2010 the private equity big guns waded in and snapped up Poundland for £200m and appointed the very able Jim McCarthy to run the ship.

Just try walking past and not getting sucked in.

I hear they’re quite good but of course I’ve never been in one: Pull the other one. Some reckon around 10% of Poundland’s customers are from the A-B Group. Moreover it is a physical impossibility to walk into a Poundland shop and emerge empty handed. If you did not know before you went in that you wanted Sellotape and an oven glove then that’s your problem.

Well, moving on. Are they recession proof? Judging by Christmas sales figures yes. Like-for-like sales up 6% on 2011. That’s 24.5 million Christmas cards sold and enough tin foil to practically circumnavigate the globe.

So something tells me that this is a shop for the ladies out there? True, Poundland attracts predominantly female shoppers and if you need proof of that – they sold 4 million Toblerones too. But along with the squeezed middle classes, students and the elderly also make up a sizeable share of the punters who just want those Kodak batteries for £1.

Yes, your's for a quid.

Gosh. Do they really sell Kodak batteries for £1? Well, anyway, how do they do the ‘Everything for £1’ deal with the company’s stores in Ireland? Ah, the whole concept innovates into something else. Fixed price retailing is dropped and of course the name is different. It trades under Dealz. Allegedly Euroland did not go down well with the customers.

Quite. But are they constantly having to change product lines to keep within the £1 price? They are cleverer than that. They quite often change the product size and package – tiny changes the customer may not even notice. For instance the famous battery packs will vary in size and the packs of sugar can vary in weight reacting to commodity prices. Most people do not notice whether the sugar weighs 1.2kg or 1kg.

It’s genius! And moreover lots of suppliers actually reconfigure their product especially for Poundland so the pack size of After Eights you buy there for £1 is the only place you can buy that size. And it is of a quantity that makes sure everyone makes their cut while the customer is happy with a top brand at a lower price.

Gosh. Do they really sell After Eights for £1? Certainly do and they like to keep the suppliers very sweet too which helps with all this. McCarthy points out that whilst most companies expect suppliers to come to them, Poundland does the opposite - choosing who it wishes to deal with and then approaching them. Suppliers, he maintains, need brand reach and supermarkets are not always best placed to deliver on all sections of the community. Poundland customers visit 1.8 times each week and 4 million of them a week are served.

So the suppliers are queuing up: They should be. McCarthy says his company pays on time and in full. None of this “cheque’s in the post” or “our system’s down” nonsense. The result is that 1,000 branded products are now on its shelves.

Tip Top. So am I to understand that the demise of the British high street has been exaggerated? All I can say is that Poundland opened 62 stores last year, 60 the year before that and 50 the year before that. Now that’s going some. In addition, its sales are believed to be well in excess of £700 million for this financial year, and although it is not a major goal McCarthy reckons store numbers of up to 1,000 are possible.

That's another one added.

Cripes. Imagine if they went online? You don’t imagine a company like this is not considering all the options do you? McCarthy says that new markets and new channels are both up for grabs. But above all this the company is strictly focused on improving the offer to customers, keeping costs down, and maintaining the “big distance between us and the others”.

“The others”? The competition, my friend. PoundStretcher, 99p Stores and the like. Although one must always remember they may not take AMEX.

Poundland takes AMEX!? Mais oui. McCarthy admits to being mildly surprised by the level of take up which has unsurprisingly been mainly in the south of the country. The card spend, he says, is higher than on other payment cards.

And what are all these people spending their hard earned cash on? It’s back to basics - health & beauty, food, and of course those batteries. Poundland’s super effective MO is to lure people in with the big brands and then once inside sock them with the own-brand stuff. 70% of it is produced in the UK and where they see a gap in the market then they develop it. Their own-brand confectionery range Sweet Heaven, for example, was a direct response to the loss of Woolies on the high street. In fact, we might be seeing more shelves of things like Nescafé cappuccinos for £1 in future, because food and drink is a big winner for Poundland.

Do they really sell Nescafé cappuccinos for £1? Oh for pity’s sake, just go into one and see for yourself.

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.
 

Movers & Shakers Q&A with Simon Russell of John Lewis

Brought to you by Retailinsider.com and K3 Retail

Simon Russell, director of retail operations development at John Lewis

1. What is the greatest opportunity for your business?

We have a great opportunity to further integrate a very successful department store business and a rapidly growing online business to produce a really compelling omni-channel business. Naturally our focus is on customers and a key driver to become a truly omni-channel business is to ensure we offer them a more convenient, really joined up and engaging shopping experience. It also allows us to showcase the John Lewis brand in parts of the UK where we currently have no physical presence.

2. What is the biggest challenge to your business?

Consumer confidence is key for non-food retailers and often a good indication of sales. And the economists are not predicting significant change over the next few years.

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

Hindsight is a wonderful thing! Whilst very pleased with the investments we have made there are always one or two that we didn’t make that would have made future technology changes much quicker and cheaper.

4. What is the future of the physical store?

Shops will continue to play a critical role in a customer’s omni-channel shopping journey. Technology in shops will help make a customer’s experience more hassle free and inspirational whilst allowing us to extend the assortments and services we offer. Shops will have to continue to evolve too and ensure they can differentiate compared to other channels whether that be about the experience, visual inspiration or expert advice.

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

I am sure that omni-channel retailers will become the norm and certainly dominate the high streets in primary and secondary locations. The mix of retailers may change with services playing a greater role alongside more online collection points.

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

Mobile will see rapid growth for sure and be a primary research tool generating sizeable sales, increasingly with a role as a payment device alongside personalisation. Tablets, which occasionally are classed as mobile, will also increasingly play a key role replacing laptops and desktops in the home. However, shops will remain the primary sales channel.

7. What other retail business do you admire?

I admire Wiggle as a relatively new pure play retailer that has a good specialist assortment backed by good service and value, which has gained respect quickly in a competitive market.

8. If you hadn't been a retailer/provider-to-retailers what would you have liked to do?

I always fancied being a trader in the city.

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

I hate marking myself as I am always challenging myself about how I can do things better. Let’s just say I am proud of what I have achieved so far but have lots more that I want to achieve.

Guest Slot - Alan Giles questions vertical integration

Vertical integration is back in fashion. (we think so, as you can read here). Morrisons recently bought a fish processing plant in Grimsby, having purchased a flower wholesaler last year. Sports Direct’s Mike Ashley has been buying up brands – most recently Firetrap – almost as fast as his football team have been acquiring Premier League points.

Mike Ashley: vertical integration is not black and white issue.

There are clear success stories. Zara’s seemingly unpromising strategy of sourcing about half their garments from their own production facilities in La Coruña has allowed them to invent the notion of “fast fashion”, demonstrating that higher production costs don’t matter if you can improve sales and markdown rates enough.

Most of the major food retailers, most notably The Cooperative Group, Waitrose and Morrisons, have made a virtue of owning upstream operations which address consumer’s worries about food provenance and sustainable behaviour.

But in many other cases it’s less obvious that owning upstream production has helped. It can lead to corporate schizophrenia; is Thorntons a retailer that happens to own a factory in Derbyshire, or a manufacturer that happens to own some shops?

Is American Apparel’s much lauded vertical integration really a success? Despite housing all the production processes in a single building in Downtown LA the company enjoys only a modest level of profitability.

I have some personal experience of vertical integration. One of my first jobs in retailing was as the Product Manager for own brand medicines at Boots, where I felt like a political football stuck between the production planning constraints of the Beeston factories, and the customer-facing motivations of the shops.

Boots: as Alan Giles might remember it. 

Later, when I worked at WHSmith, the company owned the largest wholesaler of newspapers and magazines, WHSmith News, and was the largest retail newsagent. Other retail customers – not unreasonably – suspected that WHSmith stores received “favoured nation” treatment on terms, and products in short supply.

Meanwhile WHSmith stores themselves felt that precisely the opposite was true; the external customer - who in most instances could take their business elsewhere – was treated better than the captive internal customer. It was a constant source of tension, and unsurprisingly WHSmith divested its wholesale arm in 2006.

There has always been a temptation for publishers to own booksellers or vice-versa, with the most recent UK example WHSmith’s short-lived ownership of Hodder Headline from 1999 to 2005. Previously both Penguin and Collins publishers had owned bookshop chains.

It’s always been tempting to look greedily at the margin the other link in the supply chain is making. But the skills and culture of retailing and publishing are profoundly different. I can’t think of a single example where this strategy has worked for a sustained period.

Can it ever make sense? Certainly as a last resort to protect an important channel to market. The major record labels recently acted to try to safeguard HMV’s future. It’s not vertical integration per se, as they clearly don’t have control, but nevertheless it is a direct investment in a downstream activity. Similarly Adidas have played a part in the measures just announced to provide financial security for JJB Sports.

ChokaBlok: Taking Tesco into interesting areas.

Many retailers are also becoming impatient at their supplier’s poor record of product innovation in a sluggish market. Kingfisher has invested in a team of fifty at its recently opened innovation centre in Lille to provide more impetus on product breakthroughs. Similarly Tesco has established its venture brands team to research and develop unique products where there are gaps in the market.

Perhaps owning the R&D capability, but then outsourcing production to third party manufacturers is the optimum approach. Many clothing retailers have been doing this for years – Marks & Spencer used to refer to it as “manufacturing without factories”.

Alan Giles is chairman of Fat Face and former chief executive of HMV Group

Retail Species - The unlikely entreprenuer - Claire Robertson of Wellchester

The Person: Claire Robertson

The Company: Wellchester
The Job Title: Manager

This is going to be a feel-good column isn’t it? It certainly is a good British story involving pluck, underdogs and pick and mix. Claire Robertson started at high street stalwarts Woolworths as a Saturday girl way back in the day. And eventually rose up to be the manager of the large store in Dorchester.

Fantastic. But where does the pluck come in? On the sad day in January 2009 when Woolworths went to retail heaven Claire Robertson and her numerous team were given their marching orders. Some of the staff had worked there for decades. Ms Robertson was not happy – she had after all not built up a very good business for this.

OK. Not a lot she can do though is there? Au contraire. Two months later the same site is back in business with largely the same team. Chris Evans launches the grand re-opening and Claire Robertson is a national heroine.

Crikey. Was she a closet entrepreneur all the time? She says she liked the idea of doing something like this but had never had the chance. Fate handed her the baton and she grabbed it. She knew how good a store it was and knew it would leave a massive gap in Dorchester. And as she puts it ‘ I learnt I could do more than I realised.’

Did she have to plough a lifetime of savings into the project? No, not a penny. The whole thing was funded by the landlord of the premises. In fact it was he who approached Claire knowing that the site would probably stand empty and asked for suggestions. A throwaway comment is how she describes it but one which has changed her life.

How so? To say that the press loved the story is a huge understatement. Dorchester was inundated with media types and even foreign film crews. And as the poor woman was trying to organise a refit she also had to cope with a BBC crew trailing her every move for a documentary aired a month after she opened entitled ‘How Woolies Became Wellies’.

I expect the attention turned her head did it? Absolutely not. A customer is likely to be served by her on the till, or see her stacking shelves and on the shop floor is where she is most of the time. The only concession to the tourist destination status of the shop is a range of Wellworths merchandise.

What no tantrums at all? Listen, this is a very calm, self-possessed person. She learns, she moves on and adapts. If something goes wrong it is dealt with and she always stays calm. She says she utilises people to the best of their abilities although on the negative side she does admit to being scatterbrained. She has been in big demand to talk to groups – she cites talking to bankers in the city who hung on her every word as a particularly memorable occasion – and they always want the personal side of her story. They want the emotional journey from redundancy to resurgence and it makes them feel good.

The documentary made them look like lovable amateurs though didn’t it? She only has good things to say about the documentary. People still come to the shop to talk about it now and it was great for business.

Talking about great for business can we mention … you know what? You mean the name change.

Yes. We’ll mention it in passing as it is not something she is wishes to dwell on but the owners of the Woolworths brand, Shop Direct Group, began to kick up a fuss when they realised that Wellworths might be the name of a chain of shops rather than just one shop. After failing to agree terms Wellworths became Wellchester in 2010. Robertson says it has done the shop no harm and they have moved on without any further fuss.

And is a chain on the way? She is not a ‘run before she can walk’ type of person although she admits that there are similar towns to Dorchester badly served for a general retailer and there are definitely opportunities. But for now the focus is still on the one store and an imminent website coming in around two months.

Ah, e-commerce beckons. They have been selling on Amazon for an experimental couple of months and been amazed by the response. With Robertson doing no marketing at all they are shipping stuff all over the country, particularly to the older clientele who make more use of categories like stationery and shoecare etc.

So if I walked into Wellchester now is it like entering Woolies-lite? Robertson has kept some things like store layout similar but she has expanded on high-selling areas. There is a DIY section, a craft section and a pet section. She and her staff know the town and customers so well that they respond quickly to a shift in demand.

And her dream retailers are? Well, she admits to an admiration for Wilkinsons and also for Primark for their ability to endlessly capture the market. But she also has a great liking for independents which she follows on Twitter a lot.

Is she a bit of retail guru now? Not really but she has spawned some notable copies. In April 2010 Faith shoe shops went into administration and in July 2010 the Chelmsford branch re-opened as Hope. Robertson was cited at the time as an inspiration.

Has anyone else ‘done a Wellchester’? Robertson herself is surprised that not more Woolies sites were snapped up for that purpose as they were always in prime positions. However the ill-fated Alworths chain of around 19 stores which went into receivership in March 2011 may have put some people off. Over-expansion is her verdict on the Alworths story.

Well, I don’t know about you but I’m feeling much happier. Now that’s the underdog phenomena I mentioned earlier. Along with a good helping of Black Jacks.

Why have we got it in for canned beer?

Bottled premium ales are a growing category for the supermarkets and selling through such outlets enables brewers to expose their goods to customers around the country - so long as they swallow the bitter pill of being paid a very 'competitive' price.

Supermarkets are finding such products very attractive.

This is something that Yorkshire-based Black Sheep accepts and now sells 20% of its products through the major grocers. This arrangement has pushed its Black Sheep Ale into the top 10 table of best-selling premium bottled ales (according to Nielsen data).

But it has not fared as well as some of its rivals in the list as they sell via various formats - different multi-packs, bottle variants and good old cans.

This has prompted the brewery to recently launch Black Sheep Ale in cans - originally in 500ml although this is being reduced to 440ml vessels - that have originally been "seeded" in Tesco, according to Rob Theakston, managing director of Black Sheep.

The brewery has sought to position it at only a "marginally" lower price than the equivalent sized bottle, which differs from the norm as the can has such a lowly image that it can command price-points significantly lower than bottles - even for exactly the same premium liquid.

In a Tesco near you.

Theakston rightly points out that cans open up other consumption opportunities (or 'occasions' as the supermarkets would call them). They are ideally suited to festivals and the travelling market because of their lightweight and limited prospects of being used as a weapon.

They also have sustainability benefits because they are lighter (and so much more cost effective) to transport and can then be easily crushed to ease transportation to a recycling plant. They also have very good recycling characteristics.

They also have beneficial effects on their contents because contrary to the widely held view they do not impart a metallic taste on their contents - actually they keep it in better condition than bottles because they preserve it from sunlight that can adversely affect the flavour of beer.

But what cans don't have is a good reputation. The perception in the UK is that they are at the fag end of the food chain. We conjur up images of drunks in parks and kids on street corners downing Special Brew and fizzy lager respectively.

Putting credible beer like Black Sheep Ale in cans and not charging the lowest prices will go some way to helping change the downmarket image of the can.

The canning of BrewDog Punk IPA will also have helped the cause as it brought in a younger more fashionable customer to the can category. And it was an unfiltered/unpasteurised brew (but that's another story). These younger drinkers are also more likely to be receptive to the environment-friendly credentials of the can.

There is no doubt that it will be a very long journey for the humble can to come within even a country mile of parity with the perception of the glass bottle. But I think we are on the way.

A can of Black Sheep Ale for the road anyone...