ZBD Solutions

Sainsbury's trials in-store price comparison scheme

Sainsbury’s announcement that it will trial its Brand Match scheme is typically well-considered and in stark contrast to the language and style at the start of the current price war.  The Asda CEO’s original ‘copper bottomed-guarantee’ at the beginning of this year, followed by Tesco’s ‘10% cheaper or double refund’ - and the subsequent rather embarrassing retraction – has done little to improve business or reputations.  Sainsbury’s measured response however – if rolled out – will give them hugely valuable ‘KVI’ price positioning as well as extremely cheap market intelligence.

To me it looks like the beginning of the next phase of this campaign: open and sustained price competitively rather than attention-grabbing.  It might be called ‘the consumer-benefit phase’.

Sainsbury’s recognise that they can only achieve their aim reputably with the aid of technology.  ‘Price match’ data on paper tickets is too quickly out of date and expensive to maintain.  A single point service, like Sainsbury’s Brand Match, is progress.  Ultimately however, retailers will want to put their best and most persuasive information at the shelf-edge itself – where over 60% of buying decisions are made – with self-scanners, PDA apps or the new generation of graphic electronic shelf-edge labels.

And by the way, watch out for ‘guerrilla pricing’ Where there are long established price wars, soon someone will start to flex prices in select stores for short periods with the specific aim of wrong-footing the competition. 

Jann Naef
Product Marketing Director
Jann.naef@zbdsolutions.com

ASDA takes Tesco hostage

So my prediction in January that some retailers could make themselves a hostage to fortune with the current grocery price war turned out to be 100% right (‘copper-bottomed guarantee’ blog 13/01/11).  I just happened to be 100% wrong about who might be the loser. Tesco’s response to the ASDA initiative has caused them embarrassment and may look to have been ill-prepared.

Watchers of the ASDA-Tesco price war will have seen Tesco somewhat humiliated by their attempt to curtail Andy Clarke’s ASDA Price Guarantee; ‘If we're not 10% cheaper on your comparable grocery shopping we'll give you the difference. Guaranteed!’  In response, Tesco’s PriceCheck campaign promised ‘we’ll check the price of your grocery versus ASDA, then email you with your results. We’re confident you’ll find your shopping cheaper at Tesco, but if not, we’ll refund double the difference”. Tesco have now been forced to apply a bunch of caveats and limits to their offer.

Ingenious shoppers have been checking personal finance websites and conducting their own mystery shopping to create value baskets. One example published by journalist Rebecca Smithers, writing for guardian.co.uk, recently noted 4 bottles of wine and Cider, 2 bottles of moisturiser and a packet of mature cheddar (now that’s a party I’d go to…!) was a whopping £20.98 cheaper at ASDA: Tesco has been refunding claimants £41.96. There are plenty of claims noted on the web – including one from a Manchester shopper for £600.

As a result, there may be some pertinent questions asked within Tesco while they announce new limits on the PriceCheck campaign. How effective was Tesco’s competitor price monitoring, and what processes did they put in place to be able to respond to tactical or dynamic price changes?

ZBD’s light touch wireless communications system – ‘Bounce’ - enables an entire store to be easily equipped with 2-way communications coverage for a small number of ESLs - electronic shelf-edge displays. Just a couple of hundred ESLs in store would enable any retailer to track promoted and volatile products such as KVIs (known-value items) and keep them in line – in real-time - with competitor pricing.

ZBD’s fully graphic screens also mean that electronic shelf labels can be reassigned to new products in a moment – just as long as it takes to scan the new product and to scan the ESL display – beep-beep, job done. 

Jann Naef
Product Marketing Director
jann.naef@zbdsolutions.com

Micro-market pricing: The new price war

ASDA CEO Andy Clarke has offered a ‘copper-bottomed guarantee’ that they will give customers a voucher if their basket isn’t cheaper than their rivals.  We haven’t seen the small print yet on this offer yet, but it looks dramatic – and some might think it may make ASDA a hostage to fortune.

So how will ASDA monitor competitor prices in all stores and how will they then implement local or national price changes to maintain its differential – or will it bother?  Will its shoppers become its ‘mystery-shoppers’?

It could add up to a difficult or expensive challenge.  If a competitor makes a regional or temporary price change, how will it respond – and how will it get its response to the shelf-edge without error, on-time, synchronised with its EPoS so as to avoid misleading consumers?

There are new technologies now to help drive competitive and dynamic promotional pricing – to automate this whole process. Cogenta (www.cogenta.com) is one of a new breed of B2B service providers that can gather and deliver competitor pricing from a range of store and online sources.  ZBD's graphic electronic shelf labels (www.zbdsolutions.com) can deliver this competitor pricing information – and responsive pricing – to the shelf-edge within minutes of it appearing in the public domain – in-store as well as online, synchronising multi-channel retailing.

Being competitive is now an order of magnitude more difficult than in the old days of ‘one size fits all’ pricing. Micro-market pricing is just part of retailers’ moving to more granular and scientific systems. This new price war – with estimates than price-cutting by the big 4 will save the consumer £500m in January – may become a war that will be influenced by some impressive new technology.

Jann Naef
Product Marketing Director
Jann.naef@zbdsolutions.com

Why are Price Wars ruinous?

At the risk of getting into a messy analogue, why are any wars messy?  Without exception, it is because the weapons used are ill-directed and based on poor intelligence. I won’t go on...

Price Wars are a bad thing for retailers.  There have been 2 or 3 occasions here in the UK in recent years where a Top 5 retailer’s share values have taken an immediate dive as a result of the announcement of a price offensive: ‘Thousands of Price Cuts to benefit consumers’.  The simple fact, though, is that most retailers simply do not have the means to assess whether any particular batch of price cuts has delivered the hoped-for business targets. 

There are too many inter-related factors: substitutions, cannibalisation, halo effects at the item, department and store level.  Even consumers could not tell you with accuracy whether any price campaigns have genuinely benefited them in the medium term.

Optimisation technologies can now provide scientific tools to propose and analyse promotional activity – but strangely, not all retailers are ready and willing, or indeed able, to adopt these new techniques.

The long-term winners in Price Wars – where everyone is fighting on several fronts – will have a set of attitudes as well as technologies quite distinct from those who will eventually lose out. 

Losing retailers will typically consider that price is not a strategic focus: their price decisions are fragmented across the business and hampered by poor communication.  These retailers have their price planning and tactics driven by the competition and tend to have little data available to support fact-based price recommendations.  And worst of all, there is limited or no visibility of the overall effects of their pricing decision and a culture of repeating past practices.  The simple fact that a 1% improvement in price will have between a two-fold and four-fold better impact on profit than either variable costs, fixed costs or sales volume may be understood but cannot be acted upon.

By contrast, leading-edge retailers do see pricing as strategic and one of their key marketplace differentiators (along with positioning, promotion, place, planning…).  To drive this, the price decision would typically be owned by a centralised group, with significant involvement from cross-functional groups, and with scientific/academic credentials.  Importantly, these retailers segment their estate by behaviours and pricing power – giving them price zones.  This enables them to evolve (and that’s the key word) pricing strategies supported by end-to-end planning and impact analysis: their smart guys may well wander around using terms like ‘heuristic models’.  Sales data is analysed at a granular level to provide insight into how consumer demand changes due to movements in price - and other factors: maybe external factors such as weather and events, or internal factors such as other category activities.  Price change impacts are continuously monitored and their tendency to deliver the retailer’s business objectives is continuously gauged.

KPMG/SPL’s assessment of Price Wars is damning. They are typically tactical and reactive – ‘knee-jerk’ to you and me - rather than positive re-merchandising or genuine clearance.  The resulting changes in behaviour erode ‘shopping experience’ - which is absolutely not in the retailer’s interest and untenable in the long-term.  Price War promotions make retailers’ future prospects less transparent and predictable and can simply result in ‘Sales-growth-by-value’ dropping – a trend that can’t be sustained ad infinitum.

So, Price Optimisation – implemented and supported properly – provides the opportunity to replace the old blunt tools and guesswork of price campaigns with surgical, learning technology that can respond to micro-market demand.  In practice, it really can respond to consumer reaction: providing dynamic, ‘real-time promotions’.

But the weak link in any technology is of course when it is reliant on people.  The majority of plane crashes are either caused by people, or by people reacting inappropriately to suddenly changing conditions.

With price and promotions, a scientific decision can easily be compromised - and any intended benefit lost by delays or errors.  Electronic display technology such as streaming media and graphic Electronic shelf-edge labels (graphic ESLs) can reinforce promotions.  When scientific Price and Promotions management is coupled with an unrestricted shelf display system, Price Wars need never break out.

Jann Naef
Product Marketing Director
Jann.naef@zbdsolutions.com

A fresh solution for reducing product wastage

Further to our recent news announcements that Hungary's Unio Coop and CBA stores have implemented our electronic shelf labels within their fruit & Veg department, it's becoming more common for grocery retailers to deploy ESL within their 'fresh' departments. These departments, which offer perishable products, are often responsible for significant financial losses every year through the inability to sell products nearing their sell-by date.

One way of eliminating product wastage is to reduce prices and make pricing more attractive to customers. Where markdown prices usually displayed on paper labels can devalue the product, with ZBD's electronic shelf labels, price markdowns can be made in seconds, and are invisible, protecting retailers' margins at the same time.

It often isn't feasible for many retailers to udpate pricing manually, potentially several times a day. However, implementing electronic shelf labels within perishable departments enables stores to make price changes quickly and wirelessly, saving store staff from having to print out new paper labels and distribute them within store, which help to make the store more efficient. ESL should also enable the store to sell more products at a lower price, eliminating costly product wastage.

We know that not all grocery retailers are ready to go down the route of deploying electronic shelf labels storewide quite yet. But installing them within a department gives them a chance to test the benefits first hand, without having to commit to rolling the solution out.

These are just one of the cooperative retailers that we're working with, and we'll be announcing more very soon. 

Sarah Hool
Marketing Manager
sarah.hool@zbdsolutions.com

The grocery price war - whose side are you on?

There was apparently an Easter skirmish in the ongoing grocery price war in the UK: and hands up anyone who couldn’t buy rhubarb for love or money thanks to British chef Delia Smith’s rhubarb brulee recipe at Waitrose?

The BRC (British Retail Consortium) yesterday announced the lowest food inflation for 3 years with competition ‘even fiercer than usual’.  But apart from competition on known-value items, how do retailers determine where to apply cuts and promotions, and how do they measure the effectiveness of their tactics?

Price competition is of course a long-term campaign, with immediate price cuts playing second fiddle to consumer price perception.  And consumers are easily mistaken on price perception: The 2008 OC&C Price Perception report showed consumers consistently underestimate store pricing by 11.8% - although only about 4% for grocery, compared with 23.5% in fashion.

The long-term winners in ‘Price Wars’ – everyone is fighting on several fronts – will have a set of attitudes and technologies distinct from those who eventually lose out.  I was reminded of Accenture’s (the global management consulting, technology services and outsourcing company) excellent report of the distinction between what they politely call ‘conventional’ retailers versus the leading-edge:

The losers:
Typically they consider that price is not a strategic focus: price decisions are fragmented across the business hampered by poor communication.  These retailers have their price planning and tactics driven by the competition and tend to have little data available to support fact-based price recommendations.  And worst of all there is limited or no visibility of the overall effects of their pricing decision and a culture of repeating past practices.

The winners:
Leading-edge retailers do see pricing as strategic and one of the key marketplace differentiators (along with positioning, promotion, place, planning…).  To drive this, the price decision is owned by a centralised group, with significant involvement from cross-functional groups, and with scientific/academic credentials.  Importantly these retailers segment their estate by behaviours and pricing power – giving them price zones.  This enables them to evolve (and that’s the key word) pricing strategies supported by end-to-end planning and impact analysis: their smart guys may well wander around using terms like ‘heuristic models’.  Sales data is analysed at a granular level to provide insight into how consumer demand changes due to movements in price - and other factors: maybe external factors such as weather & events, or internal factors such as other category activities.  Price change impacts are continuously monitored and their tendency to deliver the retailer’s business objectives is continuously gauged.

Which side are you on? If you’re not using or evaluating price optimisation technologies and electronic shelf-edge displays the chances are you may not have the tools to win.

Jann Naef
Director of Product Marketing
jann.naef@zbdsolutions.com

ZBD at EuroCIS 2010

ZBD exhibited at EuroCIS, Europe's leading trade show for the retail sector in Dusseldorf, Germany, last week and the interest in our solution was overwhelming, with enquiries from retailers and potential partners from around the globe. There is often talk about electronic shelf labelling (ESL) not taking off, but if last week's show was anything to go by, then the interest is most definitely there. And with the retail sector still experiencing strong price competition, with frequent promotions, VAT rate changes, plus increasing legislative product and price labelling requirements, then it is only a matter of time before the solution becomes even more widely adopted, as retailers recognise the multitude of benefits that it brings. 

When we discuss our ESL (electronic shelf label) solution with a potential customer or partner, they all agree that our epaper displays are well designed, and visually appealing. But what resonates most with each and every one of them, is the lack of infrastructure required to support our solution in store. We show them the Bounce Communicator, which is roughly the same size as a laptop battery pack, and that's it. No wires, no cables. It really sets our solution apart from others in the market.

Sarah Hool
Marketing Manager
sarah.hool@zbdsolutions.com

ZBD @ NRF's 99th Expo: attendance figures up and signs of global retail recovery

It’s hard to believe that NRF just concluded its 99th Annual US-based Exposition in New York City. The fact that any professional organization has been in existence for 99+ years is truly amazing and a testament to NRF’s value and integrity. When NRF began, it was focused on the Specialty Apparel and Department Store retail markets. Over the years, other retail associations have come and gone. There was NMRA (National Mass Retailers’ Association) focused on the likes of K-Mart, WalMart and smaller retailers in the mass merchandise category, and there was Retail Systems focused on most retail store verticals save Food and Grocery but these expositions and organizations no longer exist. Food and Grocery has historically been served by FMI (Food Marketing Institute) in the US. FMI, however, seems to have fallen from grace with the trade show of choice now appearing to be NRF.

This year, the 99th Annual NRF Exposition attracted retailers from all retail sectors to include department, specialty, mass-merchandise and food & drug. They came from across the globe. Top Tier retailers from the UK, Europe, South America and Asia were present in force. The exhibition floor was filled with retail industry representatives looking for solutions and new ideas to increase profitability as well as ways to attract and keep customers through better communications and increased customer service. If a retailer had a problem to solve or was in search of a “better alternative” or a creative idea they did not have to look far to find a viable solution.

This year, ZBD Solutions was an active participant at the exposition. Our stand was located in a featured section on the exposition show hall referred to as “Innovation Station”. Here, a select number of solution providers demonstrated new and creative product offerings destined to change and/or impact the “ways of retail”. Through one-on-one product presentations and pre-recorded interview videos featuring executive officers of the participating “Innovation Station”  companies and their customers, attendees were provided with a thorough understanding of the offerings, origins, functions and proven benefits. Through observing a featured video track, ZBD’s Chief Executive, Shaun Gray and our most recent US customer’s Chief Information Officer, PCC Natural Market’s Gary DeBoer, guests were able to better understand the “how’s and why’s” of “ZBD’s E-paper for Retail” .

Staffed by both US and UK personnel, the ZBD stand demonstrated the applicability of our epop displays to all retail sectors. Attendees were impressed with the superior contrast provided by our “white state” LCD electronic shelf labels as well as the ability of the Bounce software to support and assure the functionality of the total POP solution we offer. Most impressive and appreciated was the Bounce in-store infrastructure. Visitor after visitor was amazed when told of the ability of a single transmitter to support an entire store. A large flat screen monitor, integrated into the stand, ran store videos and customer testimonials from our installed customer base.

 
Early attendance reports indicate that this year's exhibition set new attendance records. A number of additional NRF venues are scheduled for 2010 and expectations are high that retailers are about to experience a significant increase in growth world wide as the economy recovers. That being the case most retailers recognize that maximum profitability will only be realized by those retailers who streamline their operations and capitalize on new technology. ZBD is ideally positioned to help meet that objective.

Alan Kahn
Account Director - US
alan.kahn@zbdsolutions.com

28 days, eh?

So the UK government has presented retailers with a concession that for 28 days after the 1st January 2010, provided the retailer displays a sign they can get away with showing lower prices at the shelf edge versus higher prices at the tills (as long as the difference is only the incremental 2.5% VAT).

Now, I don’t know about you, but my ability to remember the price of everything I buy when completing a weekly shop in my local supermarket whilst adding 2.5% to the displayed price where applicable is going to cause me some confusion!!

Nevertheless, this still means that retailers across the country will have to print and place hundreds and thousands of paper shelf edge labels costing the retail business as a whole somewhere in the region of £90million (according to the British Retail Consortium) to complete.

Furthermore, I think it is also safe to say that this won’t be the last time the UK's VAT rate will be on the increase - the current Government has not ruled out future increases in VAT and Shadow chancellor George Osborne has also declined to rule out increasing VAT to rebalance public finance.

Of course, if your retail store operated ZBD’s epaper solution, in 28 days you could have changed millions of individual shelf labels at zero cost ensuring your customers only paid the price they see at the shelf edge - With zero infrastructure and 3 different sized labels, ZBD has packages to suit all sizes of stores and budgets - from individual promotional displays to Fresh Food counters & departments through to a complete storewide solution.

Contact me today to learn more.

Rob Morgan
Business Development Manager
Rob.morgan@zbdsolutions.com

Are your customers confused?

According to an article in the Daily Telegraph recently, Tesco is planning to end confusing labels on meat products by enabling customers to see where all of its lamb, pork and chicken originates from – specifically, it is now going to report where the meat in any ready meal, pizza or sausage is reared, instead of (legally) labelling products as ‘produced in the UK’ when the meat actually came from another country.

Whilst all the above is good stuff and very commendable (and is sure to please the farming groups and the Conservatives’ Honest Food campaign who have been working hard to make this a requirement for some time), how can you really educate and inform customers of what they are buying?

ZBD offers retailers a low-cost option to dynamically show ‘sell-by’ dates and other key nutritional content, giving the customer more comfort that there is more information available, more often, more relevant and up to date - this has to be a good thing.

If you are reading this and are a food manufacturer – then you might even consider adopting and part-funding our electronic shelf label solutions in your retailer’s environment to give great customer content and 'fresh stamp' your credentials to their customers – as I’ve said in my last blog – it’s all about communication first, sales second.

Our epop (electronic point of purchase) electronic shelf labels offer complete flexibility when it comes to presenting information, not just with country of origin or where ‘Florence’ became a steak dinner (!), but also all of the other nutritional content that is important to the consumer when deciding what is going to be on the dinner table tonight.

Here at ZBD we know a thing or two about high resolution epaper labelling – it’s what we do for the 21st century retailer. If you are an innovative retailer and still looking at segmented LCD displays (or are ready to refresh your current shelf labelling solution), then see how we can help you communicate more effectively to your customers - Zero confusion guaranteed!

Rob Morgan
Business Development Manager
Rob.morgan@zbdsolutions.com