We now share an additional midweek Fix, going deeper on core topics. Today Merchant and we alternate with newTV. We will get this onto a separate database - but if you want to unsubscribe but not lose Fix / Friday let me know. And I would love your thoughts on how we make this better - hit reply.
The Covid effect
The FT headline captures the moment; A nation of shopkeepers shaken by the shift online
New stats on shopping behaviours give us more proof of the dramatic shift to online. As well as all the issues of dealing with this new type of demand, it has a colossal impact on the traditional retail model. As the FT says;
The sector that best typifies these changes is online grocery. In lockdown they saw business boom but couldn't deal with all the demand. They are all now building capacity and see this as a key part of their future.
Ocado are hoping they can profit from this surge but are about to switch grocery supplier from Waitrose to M&S - not the best timing and Waitrose are keen to switch customers from Ocado to its own delivery service. Watching new partnerships in this space is always worthwhile and the new Morrisons at Amazon service is interesting. I think Amazon need to buy a supermarket to achieve real scale in the UK grocery market and their closeness to Morrisons is evident. Morrisons has the advantage of being well integrated vertically, so their supply chain is one of the best in the business
As the online channel grows the app becomes more and more important. Switching supermarkets used to mean driving to a new destination and familiarising yourself with the store layout. Now it’s just a click to a new app. Something else to worry about.
Action - do all your products have mobile hero images in all your retailers? Unilever know it makes a huge difference
Perhaps the most contentious issue in commerce is the idea of lifetime value - considering the revenue or - even better - the profit earned from a customer over a number of transactions. Turning this into a lifetime value can encourage wishful thinking in projections and can overestimate the closeness of any relationship or loyalty.
But if you can engineer a sense of belonging for the brand and the customers, this can be really valuable.
A FT story on the demerged wine businesses Majestic and Naked covers lifetime value, with the FD of Naked saying;
The slight flaw in this is (possibly) that the business has been running for just 12 years. So yit’s still a forecast. The article is worth reading as it shows you can take quite different approaches as a Merchant - both the store focused Majestic and online only Naked are doing well.
Both agree that the app store is a good thing for everybody. But if you are Spotify or Fortnite, it’s an expensive thing.
A new Matthew Ball podcast covers Epic in some detail and after listening I sort of understand why Epic are taking this stand - less about their greed and more about their desire to eliminate friction - so the market grows.