Playing the loyalty card with every acquisition.

There was a time when big was beautiful. When economies of scale for the mammoth supermarkets pushed more product out to more depots and into ever expanding trolleys in what became known as the 'space race' to become your one-stop-shop for everything. Soon this was mirrored by homogeneous coffee brands, casual dining chains and even monotone bed factories. While it does mean fewer rollout costs, staff and admin headaches, it also means fewer deviations from the plan. And eventually that has lead us all down a dark cul-de-sac of rancorous disapproval.

During all this empire building, the struggling independent operators lamented the lack of support from government, media and us the general public as we upped sticks and flocked to our new cathedrals of cheap. A few stayed, remaining loyal despite the treehugger label, but not enough to arrest the demise of our greengrocer, butcher and baker once so prominent on the high street. The holy trinity of shopping days gone by.

Recently however the trade winds have changed tack across the retail landscape. As high streets dwindled to resmble back streets, we found ourselves forced to forage further afield. It was a novelty at first, but everyone piled on and now it's just a bunfight at the till. And with petrol prices skyrocketing, the trip out of town for the weekly shop has lost it's appeal as well as any potential savings on that 2-for-1 voucher.

One of many documentaries on how suppliers are treated by supermarkets.
As consumers we read stories of how some of our favourite brands weren't paying their taxes fairly. Or were forcing farmers to dump veg that was the wrong shape. (One onion grower who frequented our old pub in Bedfordshire said he ploughed 3 tonnes back into the ground.) Or paying dairy farmers less than cost price for their milk. Every month there seemed to be another story of supermarket dominance until finally we got to Horsemeat, the daddy of all the scandals. Supermarkets had put so much effort into winning the race to the bottom, they finally scratched the barrel floor. Had we at last had a glimpse of the fat little man behind the curtain who convinced us he was Great and Powerful?

Tom & Barbara brought us self-sufficiency
Now add in a never-ending spate of unpredictable weather, changing work patterns and a grazing culture of dining out to see why some of those profit bubbles are bursting. Tired of jostling in the aisle, we have finally embraced the one-click browser experience and forced retailers to come to us instead of trundling out with our list and a bag for life. Younger shoppers are buying less albeit more frequently, baby boomers are rediscovering the Good Life and their joy of allotments (Fifty Sheds of Grey?), while pensioners conjure up that post-war spirit which has led to such popular TV shows as Super Scrimpers and Rip Off Britain. Heck, even my own work colleague Ian made the national press by shunning supermarkets for a year. Good on him, we cheer.

35 years later, it's back into fashion.
So where is all this heading? Well you could be forgiven for thinking the independent operators are finally on the up and up. The smart ones are, to be sure. However multinationals didn't get to be multinationals without adapting to market forces and consequently are very quick to learn, and emulate. This I believe is where the battle is morphing into something more deviant. The Big Four may have steamrolled their way across the shopping landscape, but they have made shedloads of cash along the way and now it's time to use that cash pile to beat the independent's at their own game.

Ever so stealthily, supermarkets (as well as fast food brands and PubCos) are moving into new markets in ways they haven't done before. Who could have imagined Tesco becoming a silent partner in an artisan coffee chain such as Harris + Hoole? Or as I mentioned in my previous posts here and here, buying out a standalone restaurant chain like Giraffe to install into larger stores? Or Sainsbury's going into the high street takeaway business? Or that king of consistency, McDonald's varying their decor and hamburger prices according to region?

These clandestine measures are more of a threat to independent operators than many realise because they are taking them on at their own game. The smaller operators could always differentiate themselves due mostly to some very niche targeted marketing, bags of energy, a fanatical focus on customer, staff and supplier relationships and of course by offering the one thing the big nationals couldn't replicate up to now, that personal touch.

But with the big conglomerates hiding behind smaller outfits which are tightly integrated into their local community, they will undoubtedly seduce people into believing the new brand cares about us more than the old brand did. I saw this very clearly demonstrated by the 1600-outlet Mitchells and Butlers group when they relaunched the Kings Arms pub in Cardington (our nearest competitor some years ago) in a re-branding exercise that termed the General Manager as your new "village pub landlady". A hugely successful move at the time and a sign of things to come.

Artisan traders can compete for sure, even if they don't have the safety net of astronomical hoards of cash to underpin their business model. But how are they going to tackle this newly evolving threat? I think this quote from Peter F. Drucker sums up that challenge very neatly:
Innovation is the specific instrument of entrepreneurship. The act that endows resources with a new capacity to create wealth."
As long as our independent operators continue to relentlessly innovate in meeting their customers' needs and exceeding their expectations, the multinationals will find it takes more than a cheque book and pen to re-write that Customer Service Promise which up to now hasn't really been worth the paper it's written on.

Take three tablets...

Here's an iPad ad that screams "Wild!"... "Bright!"... "Together!"

Meanwhile on his commute home "...every evening, at exactly 6:07 District Manager Thomas M. Wilkes" does this on his Dell XPS...

Or in meetings, this young hipster executive daydreams of escaping a world full of spreadsheets on his Microsoft Surface Pro...

Which lifestyle do you aspire to?

Bonus: And can you guess which tablet has the biggest market share in unit sales?

The Profit's In The Pudding. 

How often have you requested the bill at the 'end' of your meal, without being asked if you would like a dessert by your waiter?

It never fails to surprise me that any restaurant, especially an Indian or Chinese one for example, would pass up the massive opportunity to tap into the profitability that desserts - and liqueur coffees, cognacs or malt whisky - can be to their bottom line.  

Let's think for a moment about the costs involved in selling a steak or even a chicken tikka masala: 
• You have to invest heavily in a marketing campaign to get the customer in the door. 
• You have to invest substantially in the fixtures and fittings to get the venue right. 
• You have to invest in your linen, menu printing, crockery, cutlery and glassware to get the presentation right. 
• You have to ensure great ingredients to get the product right.  
• And you have to invest heavily in your team and your training to get the customer experience to the right standard. 

All this to sell that main course before simply allowing a lazy or incompetent waiter present the bill and letting them walk away without a further sale.    

With just a tiny addition to one or two of the above investments, your ability to sell a dessert makes the enterprise far more profitable, since the hard work has already been done in getting the point of sale already. 
With this in mind, lets think about the additional costs of tagging on that dessert on their bill:
• other than an engaging dessert menu, no extra marketing is needed since you all ready have your clientele 'in situ'. (Although more diners will be attracted on the promise of a decent pudding selection to round off their meal.)
• the fixtures and fittings have been admired so nothing extra required there. 
• The additional linen, menu printing, crockery, cutlery or glassware required is negligible since it was required anyway and therefore already in place.  
• There is an added cost due to the extra ingredients required, however this is instantly converted to profitable revenue with each sale. (In fact I would almost consider this an investment  - chefs will disagree, unless they gratefully count the cash at the end of the night.)
• The service staff are already in place. (And with these happier customers consequently paying bigger bills (and therefore leaving bigger tips), they will be highly incentivised to take on board the small additional training required to make that sale.
• And I have yet to meet a chef who does not want to do more with their knowledge and skill in the area of patisserie. Development in this key area could be just the incentive they need to stay longer with your team. 

If you want to enjoy your 'just desserts' through increased dessert revenue, here are three simple rules:
• Mobilise your team: if they believe they have a fabulous product, they will sell it.
• Sell the experience: an engaging menu that tells a story will pique the imagination. (Perhaps you recently served a celebrity... Share that story and people will want to try the dish they had.) 
• Keep it simple: reasonably priced, homemade, classic puds served elegantly will always win through.