Sep 8, 2011 | Customers, Management, Marketing, Operations, Small business
The mulitnational Heinz has been in the news a bit recently.
First, they announce a restructure, which means closing plants, and consolidating production, in this case to NZ, and to a remaining Australian plant that will get a bit of a kick-along. Wonder how long that will last?
Then the worldwide CFO Art Winkleblack took aim at the retail duopoly in Australia, citing it as a reason for the difficulties Heinz has had, and as a basis of the restructuring decisions. I bet the local sales management loved him for it, the next time they had to front Coles and Woolies!
In a short period, the challenges of the industry are laid bare, the $A making imports cheaper, the power exercised by the retail duopoly, and the necessity of manufacturing and marketing scale to counter it.
If Heinz, a global business turning over close to a billion dollars in Australia, and many more globally has these problems, put yourself in the position of the SME, with little marketing leverage, a plant that needs capital, banks that are so risk averse, and so stripped of people who understand small business they simply choose not to engage, how can the little guy hope to sustain his business?. Pure bloody mindedness and determination is about the only answer you will come up with, mixed in with a spirit of being prepared to really have a go, and screw the buggars!.
We wonder why we have more imports of packaged food products into this country than we produce, the position Heinz finds itself in demonstrates why.
Sep 7, 2011 | Collaboration, Communication, Customers, Marketing, Small business, Social Media
Chatting to a very successful distributor during the week at Sydney’s Fine Food trade show, he said he simply did not “get” facebook and Twitter as marketing tools. “I will wait till my 14 year old daughter gets interested in the business, and does it for me” he said, “but I guess I should be doing something, just too busy to think about it”
Pretty typical in my experience of SME’s and their relationships with social media, just something else to do, and no more time to do it in!
So here are a few thought starters, simple things to do with facebook to turn it from something else to do, to the most important tool ever put in your hands to engage with your customers.
- Change the “face” regularly, the picture on the landing page, the animation, put up some simple recipes of the day, week, or season, just make it interesting. Even Google changes their landing page almost daily, putting up some design that is topical for some reason .
- Have a page where visitors to your site can engage, you just become the facilitator. In the case of food marketers, a place to exchange recipes, cooking techniques, photos of finished dishes, and people enjoying them seems like a sensible idea.
- Make sure you have a spot where other platforms that may be of interest to visitors can be reached, allow them to add their own links to spots they like.
- Have good quality, relevant content, and make sure you keep it fresh.
- Have a range of incentives rolling through, these might be anything from samples and deals, to points type accumulation programs for a prize.
- Make giving easy. If we are talking food products here, and I am, create seasonal hampers and gift to a friend offers, a Xmas hamper delivered to a customers friend with seasons greetings will always go down well.
- Enable Q & A pages, and conversation streams. This may be on the page, or in a linked blog if the topics are a bit more serious. In the Australian food game, SME’s are struggling for survival in a retail oligopoly where housebrands are being pushed by retailers, and imports are growing on the back of the high $A. There is plenty to talk about, some of it commercial and perhaps not engaging for consumers, so keep it linked but separate and do not be afraid to tackle serious stuff, just be a bit careful.
- Be responsive to posts fans put up, engage in the conversations yourself, just don’t try to dominate it.
- Make sure you have a strong call to action, not too overtly commercial, but the point of it is ultimately to get a sale, so find creative ways of asking for the order.
- Ask for visitors ideas, views, and thoughts. Where better to test a new product idea, and do some focussed qualitative mrket research than with those already engaged.
- Watch and learn from what others are doing, the web is a great big learning experience. Social Media Examiner is one site that often puts up very useful information, here is a list of the top 10 SME sites from around the world they have just judged, some good pointers in there.
- And last of all, make it fun, and never let down someone who visits and engages!
This is all pretty easy stuff technically, it just takes time to plan, assemble the content, and make it happen. My distributor friend can probably get his 14 year old daughter to do it for fun, you don’t have to pay someone big bucks, you just need to engage in the conversation as you would over the back fence to your neighbour.
Aug 26, 2011 | Change, Management, Marketing, Small business, Strategy
The decision yesterday by the federal Court to allow Metcash to purchase Franklins from Pick n Pay, then onsell, presumably with tied supply agreements is another nail in the coffin of competition in the retail trade, despite the interpretation of the law by the courts.
Now you have Coles, Woolworths and Metcash with a share above 90% of the supermarket trade, limited choice for consumers, a nightmare for suppliers, particularly the decimated local suppliers who have struggled against the increasing power of the retailers for 30 years, and have largely failed.
Several things will emerge that will accelerate change in the supply landscape.
- Scale should dominate the strategic thinking of suppliers. You need to be a gorilla to play with gorillas, so get big or get out. The only alternative is to back off and be a small specialty producer, concentrating on the small share of retail trade not controlled by the 3 gorillas.
- It will be increasingly difficult at the smaller end of the size scale. The businesses left that turn over between a couple of million, and 50 million, many of them regional, with extreme pressure on their finances at a time when banks are not being helpful despite their advertising, will struggle. There are only a few left, and many of those will go to the wall.
- Competition between supply chains, from growers through to retailers will increase. Soon, if you supply Coles, you will not be able to supply Woolies, without risking your position with Coles. Suppliers will need to make choices, and gear up to integrate themselves into a supply chain system, losing their independence, and closing off options. This may not be a bad thing, but it is a substantial change from the current practice and way of thinking, and it limits the scope of customer base available through which to reach consumers with your product.
- The move to housebrands will accelerate, further enabling global sourcing by retailers, squeezing local suppliers. The $A has punched this process along over the last couple of years, adding more pressure to local suppliers who, having lost shelf space for their brands, were relying on contract packing to stay afloat
- Retailers are lousy marketers, good at sales, but lousy marketers. With housebrands coming to dominate categories on price, attractive to consumers in tough times, where will the innovation come from? Where is the incentive for local suppliers to risk their limited capital in doing something different?.
The ACCC, governments at all levels and the courts implicitly decided years ago that the SME end of the food industry was fair game, the survival of the fittest, and all that, and from an economic perspective, it may be the right thing to have done, but at what cost in human terms. The old question I have used in many seminars to make the point about retailer power:
Question. “Where does the 400kg gorilla sleep?”
Answer. “Anywhere he bloody likes”
Aug 8, 2011 | Customers, Demand chains, Marketing, Small business
On Friday I made a very modest contribution to the proceedings of the Organic and Green trade show in Sydney. A bunch of committed, passionate people, working their collective butts off to build businesses that deliver on the organic promise to consumers.
The numbers however are daunting.
The Australian grocery trade is north of $106 Billion, the organic market, counting everything, (perhaps twice) with the most optimistic assumptions is $500 mill, including all the cosmetics, soaps, candles, recyclable bags, et al, many not included in the grocery figures, and probably constitutes 50% of the total. In other words, perhaps 1 in every 5,000 dollars spent in Australia on food is spent on organic food. How do you win in that arena?
Answer, one person at a time building a tribe, connecting them, giving them a reason to connect with others, supporting the ways they can connect, and working 20 years to be an overnight success.
Organic products are at what I believe to be a unique point in time, the confluence of two great social impacts.
The first is the tools to connect being given to us by the web 2.0.
The second is the sudden realisation that food matters more than as just fuel, that there is a powerful social and familial force present when you prepare and share good food, on top of the obvious benefits of the impact of healthy food on the individuals health.
Had you told me 3 years ago that a TV reality show would contribute to a major change in behavior, I would have told you to stop smoking illegal stuff, but perhaps the change was lurking, and Masterchef just provided the catalyst.
May 22, 2011 | Small business, Social Media
They are.. Just look around at what they are doing. I wish I had written this post.
May 11, 2011 | Leadership, Personal Rant, Small business
Amidst all the blathering following the federal budget Tuesday night I have not seen one comment, political or otherwise that points out the crisis in manufacturing, particularly food industry related manufacturing.
Sure, lots of puff about how hard it is for exporters, but the terms of trade are better than any time in the last 140 years, so, by implication, how bad can it really be?
The food industry is now dominated by large firms, two retailers have a stranglehold, most of the products you buy are imported, and there is precious little manufacturing done here anymore. Australia is now a net importer of food, yes, a net importer, according to the AFGC State of the nation report 2010, try telling that story around the BBQ on Saturday, “they won’t believe you”
One of my clients, one of the few SME’s who have survived the onslaught of the last 20 years, yesterday missed out on a contract to supply one of the big two retailers on a housebrand contract, missed out does not describe it, his cost of production is just under the landed prices of competitive quotes. If you adjust for the exchange rate of two years ago, he may have won the business, but now!!!
The other side of the terms of trade is how cheaply stuff can be imported. OK for electronics, we do not manufacture them, but Food??. We are no longer self sufficient, and if this small bloke goes under, as most of the others have, 15 people in a modest sized country town lose their jobs, and he loses his house, super, and 30 years of effort. When the exchange rate goes back, after China and India slow down, as they will, and new mines in Africa and South America come on stream, it will be too late for him, and us.
But do you hear anything about this?, does anybody care? Judging by the blather, the answer is NO, or perhaps it is just too confronting a problem for the pollies to acknowledge until they get dragged screaming to it. Much easier to blather.
Update: June 11 2013.
Nothing has changed, Simplot anounced closures last week in Bathurst and Denvenport, Rosella went bust a few months ago, and a host of SME’s in the food industry are no more. In the wider economy, the mining investment boom has slowed right down, manufacturing is still in the crapper, and unlikely to find much succour in the $A being just below parity for the first time in several years. The headline example is Ford announcing last week the closure of local manufacturing, which galvanised the pollies to announce lots of “support” for the workforce, luckily heavily unionised, or they would get nothing, like the Fairfax journos shown the door a few months ago without a political peep.
Meanwhile, the Treasurer talks about the strong economy (well it is compared to Portugal) and almost full employment, but the statistical definition of “employed” is nonsence, meaning there is a huge weight of hidden underemployment around, and as a result nobody is spending. Nobody is taking up the NBN, even if they are the lucky few who are strategically located in a politically sensative spot, and may have the opportunity to do so, and the reluctance has nothing to do with asbestos. The speculation today has been all about the liklihood of Gillard still leading the labor party in September, let alone the country. The PM is in QLD, sprouting the “Gonski” Education reforms as the saviour, quoting numbers emerging from the modelling that has been done as the evidence of her committment, and we know how well that worked in several previous initiatives.
Can the labour party stop talking about itself?? We do not want to hear!
It really is Cloud Cuckoo land.
