Having taught various retail marketing courses for over twenty-five years, a phrase that I often use to shock students (or more realistically to wake them up during a lecture) may become somewhat redundant in the United Kingdom shortly. When I get bored in a lecture, I have a tendency to shout BOGOF. This catches the attention of the students but it does have meaning within the context of the retail sector. BOGOF refers of course to that ubiquitous promotional offer used by supermarkets which stands for Buy One Get One Free.

In February 2016, it was rumoured that the Competition and Markets Authority (CMA) had plans to announce a tightening up of the regulations on misleading advertising and promotions that are currently offered in abundance by the large supermarket groups. More accurately referred to as multi-buy deals, they reflect offers such as BOGOF and reduced price promotional offers for a limited period of time.

It is estimated that over 55% of all goods sold in UK supermarkets are based on such promotions. This contrasts with over 29% for Europe. For instance in France and Spain roughly 20% are sold using these methods and in Italy it pans out at approximately 33%.

Why is this government agency becoming so angst-ridden over BOGOFS?

A study by the consumer group; Which, indicated that shoppers on average overspend by as much as £11.14 per week as a result of being tempted by such deals and offers in the supermarkets. This equates to almost £1,300 annually.

Such deals it appears, can be difficult to assess and compare. Only 2% of respondents to a survey carried out by the Money Advice Service organisation were able to select the optimum deal from four sets of multi-buy offers.

Hey, why don’t I test you on one of these offers?

Of the following options for milk, which represents the best deal?

a). Six pints of milk for £1.80p

b). Four pints of milk for £1.40p

c). Two six-pint cartons of milk on offer for £3.50p

d). Two four-pint cartons of milk on offer for £2.

The answer is given at the end of this blog. Please wait!!!

This survey by the Money Advise Service also indicated that around 76% of the respondents regularly overspent on their weekly shop.

The other negative aspect associated with such multi-buy deals is that they encourage people to buy more than they need. This results in a lot of waste in the form of items not being consumed and fired out in the bins at the end of the week or month.

This discussion and proposed changes to the legislation appears to be having some effect. Sainsburys; one of the big four supermarket groups in the UK announced in February 2016 that it was planning to phase out all of its multi-buy promotions by the autumn. It based its decision on the fact that it is more transparent and effective to offer shoppers in their stores lower prices at quantities that are more relevant and appropriate for them.

The impact of the discount retailers such as Aldi and Lidl should not be under-estimated either. Increasingly shoppers are making use of their stores to save money. People that never went there before but have discovered them since the deep recession in recent years, have been surprised by the low prices but also by the perceived quality and value of their business proposition. In short, lower prices may act as a stronger incentive to shop in such outlets.

It should be acknowledged that the CMA has denied that it will explicitly prohibit the use of multi-buy deals in the future: instead it claims to be seeking greater transparency over the way in which products are priced in retail outlets.

Will shoppers miss such promotions if they disappear from the supermarket shelves and gondolas? It is debatable. We have become conditioned over the years to expect a raft of promotional offers when we make our way around the aisles. As mentioned earlier, shoppers are more likely to seek better value that can be identified through lower prices than complicated special offers. Arguably some shoppers are becoming more conscious of environmental issues that spin off into the area of reducing waste: a clear problem with the tendency to “overbuy” as a consequence of these offers.

In an era where supermarkets have undergone major criticism over many aspects of their behaviour: unethical sourcing, misleading shoppers and so on, any activity that attempts to make them more credible and transparent to their target markets is more likely than not, a positive development. Every-day-low pricing (EDLP) such as that advocated by Asda / Walmart certainly addresses the issue of greater transparency.

However we are unlikely to see the total eclipse of BOGOFS; unless of course they are banned, and this appears unlikely. Multi-buy offers allow retailers to widen their range of options when competing in a market-place that is driven by ever greater focus on lower prices and lower costs. We are likely to see less usage of such tactics however. As we know from our basic understanding of competitive analysis and strategy-making, retailers are challenged with the task of constantly trying to come up with the “latest wheeze” which might turn out to be a game-changer and lead to that all important competitive advantage.

Various tactics such as loyalty cards and multi-buys go in and out of vogue. We may see a period where retailers will focus more fully on lower prices and more targeted offers to its customers. This is likely to be driven by the ever-increasing amounts of “big data” which they hold on their customer base. In theory this should present numerous opportunities to come up with more creative ways in which to develop promotional offers that reflect the shopper’s personal preferences and shopping habits. It can be argued that this ultimately, will lead to shoppers capturing better and more customised value from their visits to their retail outlet.

In summary the use of multi-buy tactics such as BOGOFS is more likely to stall and decline, rather than disappear of the supermarket shelves. Simpler and clearer pricing should lead to a reduction in the level of confusion which appears to exist in the minds of many shoppers.

Maybe I can still shout BOGOF at my students into the future!

By the way the answer to my question posed earlier in the blog is???

D (it works out at 25p per pint).

More than you might think!

We are familiar with discount retailers such as Aldi and Lidl operating successfully in many parts of Europe. Since the start of the global recession back in 2008 or thereabouts, these retailers have made inroads on the more established retailers such as Tesco, Carrefour, Ahold and so on.

We are also used to harsher versions of discount retailing such as Poundland. This retailer has made great play of its ability to offer items in its outlets for one pound sterling.

In a wider context many of us have flown with EasyJet, the low-cost airline originally established by that Greek entrepreneur, Stelios Hajl-Ioannou, in 1995. Along with Ryanair and other smaller European airlines it has redefined the price of airfares for many people in Europe.

Since this launch, Stelios launched further “easy” concept businesses such as easyGym, EasyHotel, EasyBus and easyMobile. One or two earlier concepts such as easyCinema have fallen by the wayside. In early 2016 he launched what might be described as the ultimate discount retail concept store: “easyFoodstore”.

The basic principle behind this value proposition is that it offers around eighty items in its spartan stores for 25p. The retailer’s slogan is “No expensive brands. Just food honestly priced.”

Frozen foods, tinned food and dry food in general make up the merchandise that is available in the store. The concept takes the term “spartan” to even more extremes than the likes of Aldi and Lidl. A recent article described it as WA grim, concrete warehouse-like space, no bigger than a small corner shop, which more recalls a Soviet-era ration store than the glossy aisles of today’s supermarkets. (Daily Mail; February 3^rd, 2016).

So far the shop has attracted many different categories of shopper; from charity workers to families and people who simply urn up to gawk at the concept.

The concept was undoubtedly prompted by the change in shopping patterns that has been brought about by the recession. People generally have become more conscious of the need to save money on their food shopping and have become more responsive to low-price operators and bargains than ever before. People shop more often and make smaller purchases than before. Stelios tried to launch this concept in 2013 but failed to get planning permission.

At the end of February the special price point of 25p will move upwards to 5op. At present it does not carry fresh food or fruit and vegetables.

The new store is being supplied by Euro Shopper, a brand produced by Dutch non-profit buying alliance AMS.

In a recent article published by Retail Week (10^th February 2016) it described it as looking more like a stock room than a shop.

What future does this concept have? Plans are afoot to open similar stores and to increase the number of items (SKU’s) carried in the store. The price of items will rise as mentioned earlier. Will people come in sufficient numbers and buy in sufficient quantities to generate a meaningful profit for the operation?

If it lasts for a year or so, will it provide a viable threat to Aldi, Lidl and the “Big Four” food retailers? The trend in the last couple of years is for the latter retailers to reduce price and engage in price wars in order to be as competitive as possible.

Some people feel that Aldi and Lidl are beginning to trade up to more expensive items. Aldi recently introduced some champagne brand and more expensive wines to its product range. Is it possible that they will leave a bigger “space” at the bottom end of the discount spectrum? Is it possible that the easyFoodstore could step up to the plate and address this potential gap?

In its present state, this is unlikely. Carrying around 100 items is not going to send the pulses racing among shoppers. People are likely to put up with spartan shopping conditions and facilities as long as they can make some meaningful purchases across a range of product categories. Aldi and Lidl typically carry around 3,000 to 4,000 items in their stores. The likes of Tesco, Morrisons, Asda and Sainsburys carry many thousands of items more than that.

If we “buy into” the Wheel of Retailing theory we would accept that Aldi and Lidl trading up to more expensive items is proof that such a concept still applies. What if easyFoodstore gradually moves its prices up and increasing its product range to a point where it is clearly charging less than Aldi and Lidl? It is too early to say what might happen. Let’s review it again in a year’s time.

What do you think?

Self-service has been around for decades in virtually all areas of the retail sector. As retailers continuously seek to reduce costs, speed up operations and generally become more efficient, self-service presents an attractive option. It reduces the need for as many personnel to man the outlet. It empowers customers to proactively select and process payment for their purchases. In the case of the latter, self-service checkouts address this aspect of shopping and have been around since the end of the last century: that’s still only sixteen years ago!

On the face of it, what’s not to like about such technology? However the reality may be different. A couple of weeks ago I wanted to purchase a couple of magazines in W.H. Smith at Glasgow Airport. I went to pay but saw no one manning the tills. On closer inspection I saw about eight self-service checkout “thingies”. All of them were in use. Some had queues of three to four people. I saw some people using them comfortably. Others however looked puzzled and frazzled by the experience. I was a fully paid-up member of this latter category.

I am a self-confessed technophobe and immediately looked around for someone to help. I eventually spied an employee who came over to me. His first action was to ask for my boarding pass. After reading about the controversy over this a few months ago, I refused and asked him what it was required for. With practised ease he informed me that it had nothing to do with saving money on taxes but all to do with “collecting information on shopper’s habits so that “we can sell products that are relevant”. I looked at him cynically. He looked at me in the same way! He processed the payment on my behalf, sending a strong signal that he thought I was somewhat retarded.

My point of this anecdote? I found it difficult to see any material benefit to the shopper in this exercise? Even people who had no problem in using the technology still took as much if not more time processing the payment as if they had to deal with a manned till. People still had to queue for these checkouts. Some, like me, found it to be a frustrating experience. In one or two cases, I noticed that the technology had difficulty processing notes and in one or two cases, kept on returning the currency note in question to the shopper.

No doubt, retailers will tell us that shoppers will get used to the technology and in time it will become “second nature” to them. No doubt also, technology will continue to improve and will reduce the “wrinkles” associated with inaccurate scanning of data or rejection of currency notes.

No doubt also, the retailers will make some efficiency savings as a consequence of reducing and perhaps eventually eliminating manned tills and checkout staff.

In an era of ever-increasing use of technology and technology convergence, I could be accused of being an idealist or “dreamer” if I was to suggest that we reverse this trend and hark back to the days when such staff were there to deal with this mundane aspect of shopping.

That said, I left the W.H. Smith outlet questioning whether any benefits that existed lay fully with the retailer and not the shopper. Indeed with the problems that were encountered by some of the shoppers and the need to call on a staff member to deal with the payments, hinted at the possibility that for the present at any rate, the customer service costs may be higher than originally anticipated. Personally I would like to see the option of having one checkout which was manned by an operative in that situation.

Despite my cynicism and frustrations, I recognise that this technology is here to stay.

UN-BENETTON?

When I think of Benetton I am reminded of the raft of outdoor and TV adverts that they launched in the 1980’s 1990’s and into the noughties. Images of a mercenary with a person’s limb in his hand, a person suffering from aids at the point of death, Obama kissing the Chinese president and so on still resonate in my mind.

These adverts were designed to shock people and in so doing, draw their attention to the Benetton brand. Its creative director Oliver Toscani, developed a world-wide reputation for his consistent ability to come up with such adverts.

The retailer enjoyed a great deal of success throughout these decades and expanded its operations to become a global retailer in every sense. The nagging question however was whether or not its success was due to the marketing campaigns. In particular, did the advertising encourage people to purchase merchandise or simply become aware of the campaigns?

As might be expected Benetton underwent some significant changes over the past few years. In 2012 it delisted from the Milan Stock Exchange and it reverted back to family ownership. In 2014 it split into three divisions: retail brands, manufacturing and real estate. The son of the founder (Lucian Benetton) Alessandro, took over during this time and recently stood back and left it to the Directors to run operations. John Mollanger took over the retail brands category.

We have witnessed a change in direction with regard to Benetton’s advertising strategy.

Gone are the “shock” adverts and in are softer, more focused messages.

Mollanger describes the change as follows.

“We have moved away from pointing a finger at what we thought was wrong and instead we want to actually improve what we think is wrong” (Sunday Telegraph; 25 October 2015)

An upcoming ad will be released via social media and features five women taking it in turn to interview each other on Scandinavian styled chairs. One is Asian, another is in her seventies and it contains no black women. They discuss issues such as the contraceptive pill as a form of sexual freedom and the challenges of being a woman living in a male-dominated society. The “hard edge” nature of the older adverts is missing.

Benetton has also launched an initiative with the United Nations to improve the quality of women’s lives world-wid.  It has set up a £1.5 million foundation to address this challenge.

What do you think of this shift in direction with regard to its marketing communications in general and it’s advertising strategy in particular?

Do you think that this is simply a more subtle and cynical way of playing with people’s emotions in an attempt to get them to buy Benetton merchandise?

Is it a genuine and more measured response to a changing environment where individuals are showing more concern about ethical and socially responsible issues? Increasingly, within Western Europe at any rate, people are showing a stronger inclination to pay more for products are ethically and socially based.

I would welcome your views and opinions.