Future retail leaders - Here is the most simple & effective tool for strategic positioning in retail.

©www.eysinksmeets.com
Eysink Smeets Retail Business Innovators
Future retail leaders.
Here is the most
simple & effective tool
for strategic
positioning in retail.

Rijksuniversiteit
Groningen
Oktober 19, 2015

I want to help you
develop new thinking
this afternoon.

To know what game
you are going to play
in the coming decade.

Give you a number of
rules & tools for the
next 4 decades of
your career.

Open up your mind.

Help you understand
those 1.000’s of things
that are happening.

I will tell you how a
simple game can help
you understand it all.

The
NoCompromise Game.

I will tell you how to
be a winner.

Just a a bit about my
relevance.

Goedemiddag!

Ik ben
Hans
Eysink Smeets.

I am a world-wide
retail strategy
consultant.

My specialty is
rapid changes to retail
or business formats for
the consumer goods
sector.

Bosses of very large companies call our mini-consultancy
to help them create a retail strategy.
Wij.

I have personally done projects
in 39 countries on 5 continents.

Our client ask us to
change their retail
strategy

Their questions are
always pretty simple:

Eysink Smeets Retail Business Consultants
Not enough consumers
are dragging themselves to our stores.
Mr.
Retailer

And when they leave, they are not excited
and have too little in their bags.
Mr.
Retailer

What we want is that many consumers
are running to our stores again.
Mr.
Retailer

And that we see them leave
with very full bags.
Mr.
Retailer

We want this proces to be repeated and repeated...
Mr.
Retailer

...and repeated and repeated...
Mr.
Retailer

Our task is to help them from figure 1 to figure 2.
Figuur 1.
Figuur 2. Mr.
Retailer
Mr.
Retailer

A good retail strategy starts with the assortment.
Mrs. Consumer must fall in love with our products.

Full of price-trust, she proceeds to part with her money.
With a broad smile on her face.

Put a roof over that loving exchange of product & money,
and you’ve understood the basics of retail & strategy.
Mr. Retailer

Figuur 1.
Figuur 2.
We do that for many retailers.
And many brand manufacturers.

The main trend in all
types of retail:
the NoCompromise
Revolution.

One thing is for sure:
we are living in
revolutionary
times.

How to position
yourself as player in
the FMCG sector in
these revolutionary
times?

You will understand it
too after this session.

It’s no rocket science.

It’s a game for the NoCompromise position.

A constant game, with simple rules.

First of all:
the objective
of the NoCompromise
game.

Seduce her,
the consumer.

Earn as many love-chips
from her as possible.

Then:
the players
in the game.

The Producers and the Retailers.

The Producers of consumer
goods or services.

The Retailers of consumer
goods or services.

Who is the best
seducer?

Winners?
Who gets the most love-chips?

Losers?
Who gets the most hate-chips?

There are many different players in the retail sector.
Importer
Agent
Distributor
Etc.
Producer
Retailer
Mrs. Consumer

This is how the
NoCompromise
positioning model
works.

Let’s open the box.

Put the players on the board.

And then I’ll explain the rules of the game.

eysink smeetseysink smeets
Look at the axis that Mrs. Consumer defines.
High
Price
Low
Price
Low
Value
High
Value

First there is Price.
High
Price
Low
Price
Low
Value
High
Value

What she prefers is not difficult to understand.
In most cases Mrs. Consumer prefers Low Prices.
High
Price
Low
Price
Low
Value
High
Value

Then there is Value.
High
Price
Low
Price
Low
Value
High
Value

What Mrs. Consumer prefers is pretty easy to understand too:
she prefers High Value
High
Price
Low
Price
Low
Value
High
Value

Value
Compromise
No
Compromise
Double
Compromise
Price
Compromise
High
Price
Low
Price
Low
Value
High
Value
Put together it looks like this.

Value
Compromise
No
Compromise
Double
Compromise
Price
Compromise
High
Price
Low
Price
Low
Value
High
Value
In most corners there are one or more Compromises.
Except one corner: the NoCompromise corner.
Love
Value
Hate
Price
Hate
Value
Love
Price
Hate
Value
Hate
Price
Love
Value
Love
Price

Old thinking.

How conventional
thinking plays on the
NoCompromise
diagram.

Value
Compromise
No
Compromise
Double
Compromise
Price
Compromise
High
Price
Low
Price
Low
Value
High
Value
Michael Porter tells us
that you have to make choices.
Michael Porter

Value
Compromise
No
Compromise
Double
Compromise
Price
Compromise
High
Price
Low
Price
Low
Value
High
Value
Michael Porter tells us that you cannot survive
in the Double Compromise corner.
Michael Porter

Value
Compromise
No
Compromise
Double
Compromise
Price
Compromise
High
Price
Low
Price
Low
Value
High
Value
And high costs for high Value
will kill you in the desirable NoCompromise corner.
Michael Porter

Value
Compromise
No
Compromise
Double
Compromise
Price
Compromise
High
Price
Low
Price
Low
Value
High
Value
Michael forces you
to be stuck on Compromise Alley.

Value
Compromise
No
Compromise
Double
Compromise
Price
Compromise
High
Price
Low
Price
Low
Value
High
Value
And that is how compromised format positioning happens.
Full-service supermarkets, soft-discounters, hard-discounters.
FuS
SoD
HaD

New thinking.

Things have changed
in the past 15 years.

Value
Compromise
No
Compromise
Double
Compromise
Price
Compromise
High
Price
Low
Price
Low
Value
High
Value
We have experienced that old boundaries
are fading away.
Hans Eysink Smeets

Value
Compromise
No
Compromise
Double
Compromise
Price
Compromise
High
Price
Low
Price
Low
Value
High
Value
ValueCompromise players have moved to the right,
while retaining low costs.
HaD
Hans Eysink Smeets

Value
Compromise
No
Compromise
Double
Compromise
Price
Compromise
High
Price
Low
Price
Low
Value
High
Value
ValueCompromise players have moved to the right,
while retaining low costs.
NoCo
Hans Eysink Smeets

Value
Compromise
No
Compromise
Double
Compromise
Price
Compromise
High
Price
Low
Price
Low
Value
High
Value
Once NoCompromise players obtain sufficient share,
the market dynamics change.

Start to understand the game?

Getting an idea of where the winners will be?

Some Dutch
examples.

Or Lidl’s sister company Kaufland:
no doubt a NoCompromise supermarket.

And Albert Heijn.
©nocompromise-model

Yes. Albert Heijn.In Belgium
AH
Nederl
AH
Belgie

Today’s
NoCompromise chains
outperform the
market on most KPI’s.

Value
Compromise
No
Compromise
Double
Compromise
Price
Compromise
High
Price
Low
Price
Low
Value
High
Value
site map | searcheysink smeets business consultants
NoCompromise chains outperform the market on most KPI’s.
In primary, secundary, tertiary costumers.

Value
Compromise
No
Compromise
Double
Compromise
Price
Compromise
High
Price
Low
Price
Low
Value
High
Value
NoCompromise chains outperform the market
on the most important KPI: Share Of Wallet.

To grab that position
you need first of all:
structural changes in
your thinking.

Value
Compromise
No
Compromise
Double
Compromise
Price
Compromise
High
Price
Low
Price
Low
Value
High
Value
PriceCompromise players’ natural relex to any threat:
move upmarket, increase value, increase price.
FuS

Value
Compromise
No
Compromise
Double
Compromise
Price
Compromise
High
Price
Low
Price
Low
Value
High
Value
With the effect that they move off the game field.
FuS

Value
Compromise
No
Compromise
Double
Compromise
Price
Compromise
High
Price
Low
Price
Low
Value
High
Value
PriceCompromise players have great trouble
to move towards the NoCompromise corner.
FuS

Value
Compromise
No
Compromise
Double
Compromise
Price
Compromise
High
Price
Low
Price
Low
Value
High
Value
Moving south is hard for most companies.
Game-tip from NoCompromise:
You cannot make
this jump without
fundamental
company
innovation.
Game-tip from NoCompromise:
Your costs will be
too high, your
speed too low.
FuS

Getting
it sofar?

Than we’re making it
slightly more complex.

The playing field is
moving with time.

Let’s look at
lessons from
the fashion sector.

The market will always move
in the NoCompromise diretion.

DeSt

That means that the whole game-field
moves to the right.

And below.

Mrs. Consumer embraces the new NoCompromise.
And has forgotten all about the past.

The same
deadly disease is
hitting other large
surfaces.
Like hypermarkets.

In developed countries like Germany
the hypermarket is at the end of its life-cycle.
12000 m2

But in Switzerland the same is happening.
12000 m2

12000 m2

In many countries hypermarkets
are at the end of their life-cycle
12000 m2
HyM

The NoCompromise
curve is determining
products and
assortment
architecture too.

These were the good old FMCG brands.
A-brands, B-brands and C-brands.

Value
Compromise
No
Compromise
Double
Compromise
Price
Compromise
High
Price
Low
Price
Low
Value
High
Value
This is the old-fashioned way to look at assortments.

And how the private labels find their position.

Value
Compromise
No
Compromise
Double
Compromise
Price
Compromise
High
Price
Low
Price
Low
Value
High
Value
The NoCompromise curve
applies to the positioning of brands as well.

Value
Compromise
No
Compromise
Double
Compromise
Price
Compromise
High
Price
Low
Price
Low
Value
High
Value
The Retailer’s private labels position themselves
along the NoCompromise curve in well structured positions

Value
Compromise
No
Compromise
Double
Compromise
Price
Compromise
High
Price
Low
Price
Low
Value
High
Value
The price-distance is always the same
from country to country.
+0/40%
-60/70% -40/50%

Value
Compromise
No
Compromise
Double
Compromise
Price
Compromise
High
Price
Low
Price
Low
Value
High
Value
Rationalization of the assortment architecture
is a logical result.

Value
Compromise
No
Compromise
Double
Compromise
Price
Compromise
High
Price
Low
Price
Low
Value
High
Value
This looks like the shape
of a modern rationalized assortment.

To fight off hard
discounters,
German full service
retailers go a bit
overboard in
richness of
assortment.

In the upmarket Zurheide we counted 91 SKU’s of honey.

Which would look like this when we scribble it
on the NoCompromises GameField.
Low
Value
High
Value
Low
Price
High
Price

Or 84 SK’s of honey in a regular Edeka.

Looks a bit less confused, but still.
Low
Value
High
Value
Low
Price
High
Price

Or 24 SKU’s honey at a Rewe City in Köln.

Starting to get a bit better.
Low
Value
High
Value
Low
Price
High
Price

In Aldi Süd we recently counted 4 SKU’s of honey.

Much better.

In Aldi Süd we recently counted 4 SKU’s of honey.
Low
Value
High
Value
Low
Price
High
Price

When you ask producers and retailers
they will tell you that less choice is less value.

But when you ask the consumer,
she will tell you that a good pre-selection is fine by her.

Don’t believe me: believe the consumer.
Look what has happened in Germany.
©eysinksmeets.com
43%
57%
Marketshare in money
65%
35%
Marketshare in units

The rationalization is
not leading to a
limited choice.
On the contrary.

The choice of a multitude of brands looks impressive.
But is very limited on close inspection.
54654
21 321
21321
21 321
21321
21 321

The retailer labels can offer much more choice.
If only because they don’t have the volume pressure.
54654
1 2 3 4 5
6 7 8 9 10
11 12 13 14 15
16 17 18 19 20
1 2 3 4 5
21 22 23 24 25
21 321
21321
21 321
21321
21 321

Just to show how that
works, let’s look at a
hypermarket in Dubai.

The aluminum foil department.

Like good hard discounters do,
we analyzed assortments ourselves.

Not only so many brands,
each brand has many varieties

site map | searcheysink smeetseysink smeetsHome
We counted 8 brands of aluminium foil.
1 2
3
4 5
6
7
8

Not only that, many of the brands
offered a pretty full range.

Aluminiumfoil brands Varieties >
1 2 3 4 5 6 7 Total SKU’s
Falcon 1 1 1 1 1 1 1 7
Diamond 1 1 1 1 1 1 1 7
Sanita 1 1 1 1 1 0 0 5
Wrap ‘n Roll 1 1 1 1 1 0 0 5
Scotch Brite 1 0 0 0 0 0 0 1
Delmond 1 0 0 0 0 0 0 1
Club 1 0 0 0 0 0 0 1
Greens 1 0 0 0 0 0 0 1
Own brand 0 0 0 0 0 0 0 0
Total 28
We put that in a spreadsheet
and saw that there were 28 sku’s, but only 7 varieties.

1 2 3 4 5 6 7 Total SKU’s Costs per SKU
€ 30.000
Falcon 1 1 1 1 1 1 1 7 € 210.000
Diamond 1 1 1 1 1 1 1 7 € 210.000
Sanita 1 1 1 1 1 0 0 5 € 150.000
Wrap ‘n Roll 1 1 1 1 1 0 0 5 € 150.000
Scotch Brite 1 0 0 0 0 0 0 1 € 30.000
Delmond 1 0 0 0 0 0 0 1 € 30.000
Club 1 0 0 0 0 0 0 1 € 30.000
Greens 1 0 0 0 0 0 0 1 € 30.000
Own brand 0 0 0 0 0 0 0 0 € 0
Total 28 € 840.000
If you guestimate 30,000 euro per SKU
it would cost Safeer supermarkets 840,000 euro.

If you understand this,
you understand hard discount.
Aluminiumfoil
€ 30.000
Falcon 1 1 1 1 1 1 1 7 € 210.000
Diamond 1 1 1 1 1 1 1 7 € 210.000
Sanita 1 1 1 1 1 0 0 5 € 150.000
Wrap ‘n Roll 1 1 1 1 1 0 0 5 € 150.000
Scotch Brite 1 0 0 0 0 0 0 1 € 30.000
Delmond 1 0 0 0 0 0 0 1 € 30.000
Club 1 0 0 0 0 0 0 1 € 30.000
Greens 1 0 0 0 0 0 0 1 € 30.000
Own brand 0 0 0 0 0 0 0 0 € 0
Total 28 € 840.000
€ 30.000
Falcon 0 0 0 0 0 0 0 0 € 0
Diamond 0 0 0 0 0 0 0 0 € 0
Sanita 0 0 0 0 0 0 0 0 € 0
Wrap ‘n Roll 0 0 0 0 0 0 0 0 € 0
Scotch Brite 0 0 0 0 0 0 0 0 € 0
Delmond 0 0 0 0 0 0 0 0 € 0
Club 0 0 0 0 0 0 0 0 € 0
Greens 0 0 0 0 0 0 0 0 € 0
Own brand 1 1 0 0 0 0 0 2 € 60.000
Total 2 € 60.000
Difference with todays situation € 780.000
Calculated on total store
Number of alu-like categories 300
Extra cost per category € 780.000
Total costs overhead € 234.000.000

Than we’re making it
even more complex.

The game field
changes position
much more rapidly
today.

Ii’s called the
Information Retail
Revolution.

We need a new version of the NoCompromise Game.

New players force their way into the game.
Fast and powerfull.

They are the children of the
Information Revolution.

The grown-up Information Retailers
are accelerating the NoCompromise changes.

Information Retailers are here!

They cause the Information Retail Revolution.

The IRR in reality.

Let’s walk to my
office,
as I do when I’m in
town.

The more information there is in product and/or process,
the more impact the Information Retail Revolution has.
Information
Tangible
Product Process

For sectors like porn, music or banks,
which all are pure information, the impact is huge.
Information
Tangible
Product Process

The principles of retail
don’t change in the
digital age.

Retail on digital media is not different from real stores.
Mr. Retailer

Also in digital not enough consumers
may be dragging themselves to our stores.
Mr. Retailer

And when they leave, they are not excited
and have too little in their bags.
Mr. Retailer

Mr. Retailer
What we want is that many consumers
are runing to our e-stores once again.

And that we see them leave
with very full bags.
Mr. Retailer

A good retail strategy starts with the assortment.
Mrs. Consumer must fall in love with our products.
Mr. Retailer

Mr. Retailer
Full of price-trust, she proceeds to part with her money.
With a broad smile on her face.

Put a digital roof over that exchange of product & money,
and once again you’ve got the basics of retail.
Mr. Retailer

New speed of change.

The Information
Retailers make the
game field move
faster than ever.

site map | search
eysink smeetseysink smeetsEysink Smeets Retail Business Innovators
The nice status quo before the Information Retailers.
Sony, MGM and some others ruled the music market.
Old
©eysinksmeets.com

site map | search
New Information Retailers fought their way forward.
They redefine Price as well as Value.
©eysinksmeets.com
Old

This is the new reality for Mrs. Consumer.
The old retailers are not in it.

The very essence of
what you are selling is
changing
fundamentally.

That’s leading towards
paradigm shifts.

Eysink Smeets NoCompromise GameField
When the movements of the GameField are incremental
Sub-optimization is still a solution.
LP’s
I need an LP.

I need a LP.
The CD didn’t change the business-model of music stores.
It just led to some reshuffling on the same GameField.
CD’s
I need a CD.

I need a LP.
Downloads did change how people define their needs.
CD’s
Down-
loads
I need a CD.
I need a song.

I need a LP.
Streaming music is easily adopted by Mrs. Consumer
but the companies have trouble changing.
CD’s
Down-
loads
I need a CD.
Stream
I need a song.
I need an
atmosphere.

I need a LP.
The business model are changing fundamentally
CD’s
Down-
loads
I need a CD.
Stream
I need a song.
I need an
atmosphere.
I need to be
the best
CD-store
I need to be
the best
download site
I need to be
the best music
streamer

I need a LP.
Those jumps are real paradigm shifts.
CD’s
Down-
loads
I need a CD.
Stream
I need a song.
I need an
atmosphere.
I need to be
the best
CD-store
I need to be
the best
download site
I need to be
the best music
streamer

With books the paradigm shifts
are equally disturbing.
Books
eBooks
Netflix
I need
reading.
I need
to spend time.
I need a book.

With books the paradigm shifts
Books
eBooks
Netflix
I need
reading.
I need
to spend time.
I need a book.
I need to be
the best
book-store
I need to be
the best
eBook site
I need to be
the best
time-filler

With tangible products the paradigm shifts
Dealer
Car
share
Skype
I need
transportation.
I need
contact.
I need a car.

With tangible products the paradigm shifts
are equally disturbing, although the nee.
Store
3D
Print
Home
3D
print
I need a
cup.
I need a
cup.
I need a cup.

Or the way the accommodation game has changed.
Hotel
Home
share
I need
a room.
I need
...
I need a hotel.

Hitting FMCG too.

But the great new Information retailers
are going into food too.

Amazon is offering fresh categories
in Los Angeles and Seatle and soon in San Francisco.

Including all fresh categories;
vergetables, fruit, bakery, meat and seafood.

With tantalizing pictures

Until you get to the ordering pages

They apply all the new IRR-techniques
to FMCG.

You need to be
athletic and agile for
the IRR.

A? B?

Make them think
outside the box.

You can make that crucial challenge
to get out of the box.

Help your new colleagues by taking a blank sheet of paper
and scribble the NoCompromise GameField.
Low
Value
High
Value
Low
Price
High
Price

Ask them to plot everybody on the GameField.
Low
Value
High
Value
Low
Price
High
Price
Us
A
B
C

Tell them that they have to forget about
Porters Compromise Diagonal.
Low
Value
High
Value
Low
Price
High
Price
Us
A
B
C

And explain to them that you need to position
on the NoCompromise Curve.
Low
Value
High
Value
Low
Price
High
Price
Us
A
B
C

Tell them that the GameField always moves.
Low
Value
High
Value
Low
Price
High
Price
Us
A
B
CLow
Value
High
Value
High
Price
Us
A
B
C

Remember and use the NoCompromise game
and think of me in the next 40 years of your careers.
Low
Value
High
Value
Low
Price
High
Price
Us
A
B
CLow
Value
High
Value
High
Price
Us
A
B
C

Any questions?
Low
Value
High
Value
Low
Price
High
Price
Us
A
B
CLow
Value
High
Value
High
Price
Us
A
B
C
hans@eysinksmeets.com
www.eysinksmeets.com

www.eysinksmeets.com
www.eysinksmeets.com / ©eysink smeets business consultants bv / 2006 / singel 26 / 1015 AA amsterdam / the netherlands / phone +31 20 6265573

eysink smeetsworld wide retail strategy experts
www.eysinksmeets.com / ©eysink smeets business consultants bv / 2006 / singel 26 / 1015 AA amsterdam / the netherlands / phone +31 20 6265573

Future retail leaders - Here is the most simple & effective tool for strategic positioning in retail.

Future retail leaders - Here is the most simple & effective tool for strategic positioning in retail.

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Future retail leaders - Here is the most simple & effective tool for strategic positioning in retail.