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Marketing News:
How loyal are your shoppers?..
Any strategy that doubles your business is remarkable. But a strategy that sees your business multiply by 10 times? That's phenomenal.
David Hall, the owner of Sydney's The Clean Plumber came up with a simple strategy that did just that. Within six months his business, which was 18 years old, grew from a business of four employees to forty.
His strategy? He changed the business's name, he started giving customers what they want, and he created a customer loyalty program that keeps the customers he already has coming back. The whole rethink took him three days to brainstorm and six months to implement.
What's in a name?
Back in 2002, Hall's business had an image problem. Customers were calling to complain that his plumbers were dirty and late. "We were typical Sydney tradesmen. We didn't care when we turned up, we were flannelette-wearing, dirty tradies. I demanded more from the people I did business with," Hall says.
Hall sat down with his team and asked a big question: what was it that his customers actually wanted? Punctuality, respect and cleanliness were lacking. It was this customer insight that inspired a dramatic shift in the company: "The Clean Plumber" was born. Months later the local paper announced the new business name, with David's business offering $30 cash if his plumbers were late. He also promised customers homes would be left fragrant and spotless.
It's all about the reward
With 10 times more business after the name change, Hall's confidence in marketing had paid off. Six years later, he has a list of customer rewards and direct marketing campaigns longer than most big businesses. Here are a few:
- he sends letters to customers with The Clean Plumber currency attached. The 'dollars' can be exchanged for services (for 'wow' factor he uses actual coins he had minted);
- each plumber leaves a bag of mints behind when they finish a job (so that the house is left in "mint condition");
- customers who refer their friends are often awarded $50 in cash and a bunch of flowers personally delivered; and,
- 'Priority Customers' (previous clients) are offered free home plumbing inspections to ensure minor plumbing problems don't become major catastrophes.
This innovation is my favourite: because he promises to be on time or do the job for free, he has bought a motorbike to make sure his employees are never stuck in traffic jam.
"I don't understand businesses who do a $2000-$3000 job and walk out the door thinking they're never going to see that customer again. Why not look at each customer as an opportunity to get repeat jobs?"
"Consider customers not as dollars, but as long term friends," Hall says.
This sounds twee but Hall is spot on. It makes sense to fight to keep the customers you've already got. So how can you do this? By establishing your own loyalty and referral scheme that works.
Define your objectives
For Hall, the first step was to decide what he wanted to achieve. He wanted to retain customers and encourage customer referrals. You might decide to focus on retaining the most profitable customers.
What motivates your shopper & consumer?
Motivations vary enormously. Try to drill down to what motivates the customers you are trying to influence. Hall, for example, has figured out that a great freebie is cleaning the gutters for free (he's got apprentices at each job, why not put them to work?!). It may be that you also have something in your business that is easy to offer, but of high value to your customers - an express service for repeat customers? A $3 latte for the client you're about to charge $90 for a haircut?
Use insights
Any loyalty scheme represents an opportunity to create a huge database of customer information. Woolworths Rewards makes their customers register online - this data will presumably be used to collate buying patterns and allow for more targeted marketing. Collect as much information about your customers so you can tailor your rewards and your products and services.
Knowing why your customers came to you in the first place - or why they're considering leaving you - might change your business model for the better.
Source: SMH
Price checks bogged in the detail...
SHOULD shoppers be told how much it costs to buy one roll of toilet paper? Or would it be better to reveal the price per sheet? How do you compare two-ply and three-ply and does it matter if it is made from recycled material or has a floral pattern?
These are some of the questions at the centre of a battle between retailers and consumer groups over grocery unit pricing, which will be one of the important changes flowing from the Australian Competition and Consumer Commission's report on grocery prices.
The Prime Minister, Kevin Rudd, ordered the inquiry as part of an election promise to tackle the cost-of-living concerns of "working families", but the Government now faces having to adjudicate on very technical questions and manage expectations that the changes will cut the cost of the shopping bill.
Unit pricing allows shoppers to compare the price of products sold in different quantities. Consumers would be able to determine if a 325-milligram jar of jam was better value than a 600-milligram jar of jam.
But when it comes to an everyday item such as toilet paper, it is not so simple. Not all rolls have the same number of sheets and not all sheets are the same quality or thickness. Woolworths has told the Government that toilet paper should be excluded because a unit price measure would not be useful for shoppers.
The discount supermarket chain Franklins, which yesterday said it would introduce unit pricing from September, said it would list toilet paper on the basis of price per roll, as does Aldi, which began showing unit prices last November.
Woolworths is running a unit price trial at its Baulkham Hills store and says it intends to roll out the system to all supermarkets. Coles has pledged to introduce the system at a cost of $10 million.
But there is wide disagreement between retailers and consumer groups about the critical details of how a national scheme should operate and whether shoppers will benefit. There have been high-level behind-the-scenes warnings to the Government that if the big supermarkets do not get the system they want, it could lead to higher prices.
"While unit pricing is a simple concept, implementing the system presents a range of complications," said the Woolworths group manager
for government relations, Nathalie Samia.
Woolworths lodged a detailed submission saying a "flexible" system could be introduced quickly at minimal cost and would "help consumers compare prices and determine value"
But it said a stricter set of rules could cost it $30 million and possibly mean the end of last-minute markdowns, with all the leftover food sent to the tip. At present, only fresh meat and cheese must show unit prices.
An important disagreement is about which is the best unit measure to use. Ian Jarratt, a consumer advocate who was awarded a Churchill Fellowship to study unit pricing in the United States and Europe, is urging the Government to measure all products on the basis of one litre or one kilogram.
The big retailers want variable measurements, such as 100 grams or 10 grams.
Woolworths said it would be absurd to base all prices on one kilogram, giving the example of a product such as saffron, which is sold in a 10-gram jar. The unit price for the spice would be "a nonsensical" $133,000 per kilogram.
Mr Jarratt said a commonsense exception should be made for such products, but most groceries should be compared against one standard measure.
"The price differences are larger and easier to understand based on one kilogram or one litre. If it's based on 100 grams, the price difference might be 20 cents, but if that is stated as $2 a kilo, people understand that," he said.
Mr Jarratt, whose research is backed by the Australian Consumers Association, said this made it easier to not only compare foods in the same category, such as brands of potato chips, but also "substitutes", such as fruit and vegetables because they would all have a price per kilogram.
"You would be able to see, for example, that a packet of chips was $15 a kilo and apples $5 a kilo. If the price for the chips is based on 100 grams, it's not so meaningful," he said.
Woolworths said setting a unit price per 100 millilitres or 100 grams was consistent with the format for nutritional information on many products.
Aldi said unit pricing could reduce inflation pressures because it can deliver "substantial savings" and it backed a system where measures were consistent across product lines. "We believe it needs have flexibility, as the Aldi system has. It's not a one-size-fits-all exercise," said an Aldi spokesman, Andrew McConville.
A study by the Queensland Consumers Association showed 25 typical well-known brand products costing $93.51 could be slashed to $49.28 by choosing the lowest unit-priced products - a saving of 47 per cent. A second study in which unit prices were used but the brand was unaltered found a 20 per cent saving.
Consumer groups also claim unit pricing helps shoppers find hidden price rises where manufacturers keep prices constant but reduce package sizes.
Source: SMH
Supermarkets now into Private Label lawyers...
Companies including the Co-op, AA, insurers and consumer rights group Which? are set to offer legal advice to consumers as an alternative to high-street law firms ahead of liberalisation of the legal profession. The idea behind 'Tesco Law' - shorthand for reforms that will enable supermarkets, banks and insurers to own law firms - is to make buying legal services as straightforward as buying a can of beans.
It's unlikely that you are going to find a solicitor at your local Sainsbury's dispensing advice from an aisle next to the garden furniture, certainly not until 2011, when provisions under the Legal Services Act 2007 are expected to come in. But already non-lawyers are increasingly encroaching upon solicitors' territory. So what kind of legal services are offered now by non-lawyers - and are they any good?
Which? recently announced the expansion of its legal services in anticipation of the reforms. The consumer group has an in-house team of 15 lawyers and advised on 60,000 legal issues last year. The helpline covers consumer problems such as disputes over buying cars, 'holidays from hell', and parking fines. It has just added tenancy, neighbour disputes and increased its employment advice. Subscribers pay £51 a year (£39 for members) and the promotional material says it is 'affordable expert advice from a name you can trust'.
'That captures what we are trying to do without sounding too cheesy,' says its head of legal Gordon Wilson. 'It is "affordable", not designed to make huge profit, and "expert" insofar as it is delivered by very experienced lawyers, not graduates or call-centre workers.'
Advice stops short of representation, so the service will only get you so far. But the kind of person who subscribes to Which? is probably predisposed to going it alone - a member recently received an award of £158,000 following a employment dispute without any other legal representation. 'The type of advice they can expect is either pre-emptive - for example, people want to know what to look out for when they sign a contract - or where something has gone wrong,' says Which? lawyer Joanne Lezemore. 'We offer tailor-made advice over the phone, including help to dictate letters. We'll do that right up to the court door if they issue proceedings in the small claims court.'
Ironically, given how this sort of legal service is popularly known, Tesco has not shown much enthusiasm for the reforms which have adopted its name. However, the Co-op has, claiming to have been the first non-lawyer business to offer a dedicated legal service. Styling itself as 'the alternative to the high street', it is available to its four million members (it costs £1 to become a member), plus 1.5 million policyholders who have legal expenses insurance attached to its motor and household insurance.
A six-day-a-week legal helpline is free for advice on wills, probate, conveyancing, accidents, employment and anything from 'resolving a problem with a neighbour to matters affecting your consumer rights'.
'The Co-op is someone you can trust, someone you know isn't going to let you down,' says Eddie Ryan managing director of Co-operative Legal Services. 'It has built its reputation over 100 years and is certainly not going to do anything that would compromise that reputation. You know that you can approach the Co-op with confidence when you're looking for legal services, as opposed to playing the Yellow Pages lottery.'
If the Co-op helpline can't sort out your problems, the group also offers a traditional fee paying service.
When asked how its prices compete with the high street, Ryan insists their service isn't just about undercutting lawyers.
The Halifax isn't so shy. It runs a legal service through a helpline (Legal Solutions) costing £9.99 a month. Again, there's a helpline, but the package claims to include a number of services that it prices against the high street, such as a will-writing service (they say the likely cost by a high street solicitor for a pair of wills for a couple with children is between £80 and £175) or drafting legal documents such as powers of attorney (likely cost £90-£100). However, what you are getting is an online document-drafting service: you create the documents which are signed off by a supposed expert. That is a very different service - and inevitably a lesser one - than that offered by a lawyer sitting across the desk from you.
The arrival of Tesco Law could be good news for consumers, reckons Steve Hynes, director of the Legal Action Group, which campaigns to promote access to justice. 'The promise is that legal advice reaches those of us who would not normally see a solicitor. The concern is that companies ransack the high street and take the money-making work - conveyancing, accident claims - but leave non-remunerative social welfare advice to a dwindling number of legal aid firms and advice agencies.'
If the Co-op wants to be 'the alternative to the high street', he argues, it should advise 'all its shoppers from those wanting to sell their house to those that are about to lose their homes because of dodgy landlords'.
Most of us already have access to free legal advice via our household and motor insurance policies, trade union membership or groups such as the AA or RAC. According to a Ministry of Justice report last year, almost six out of 10 people have legal expenses insurance (LEI). There are also six million union members benefiting from cover similar in nature to LEI.
Legal expenses insurers are gearing up for Tesco Law: they will be able to do away with the need for running panels of external of law firms and bring the work in-house. But critics say they will 'dumb down' advice, delegating more to paralegals and unqualified legal execs.
Legal expenses insurance attached to a household insurance is surprisingly wide, usually covering accidents at home or at work, disputes over faulty goods, botched double-glazing jobs, nightmare neighbour disputes and employment claims such as unfair dismissal. Typically, a family protection policy might cost £15 and buy you £50,000 worth of protection for those in your household, depending on the policy - unarguably good value for money.
The major problem is a practical one. People generally don't realise they have such insurance or are not sure what it means. 'The cheapness of LEI is because so many people have it but don't use it,' says Ian Winters, one of the authors of the Ministry of Justice report. He points out that many of us have double, even triple, cover through various motor, home and travel insurance policies.
Tom Jones, senior partner at law firm Thompsons, which provides legal advice for trade unions ranging from Unite and GMB to the Society of Chiropodists and Podiatrists, reckons that union members should avoid paying separately for add-on LEI unless they are sure it offers more than their union does. 'People don't need LEI more than once, yet insurers are taking £20 a time for it,' he says.
The DAS household policy is 'much wider than ordinary union membership', says Lyndon Willshire, head of sales at the largest legal expenses insurer, DAS. There are, however, limitations on legal expenses policies: the insurer has to be satisfied that there are 'reasonable chances of success' with your case (and might disagree with your view); some have qualifying periods between when the policy is taken out and when a claim can be made on it; and you will have to use the insurer's solicitor unless legal proceedings are started.
'We aren't writing an open cheque,' says Willshire. 'We have a portfolio of cases that we insure and we take a risk for a certain premium".
Source: The Guardian UK
Bread, milk, polio jab.... all in a morning's shop...
Getting your travel injections and tablets could become easier and cheaper thanks to a controversial pilot project launched last week. The supermarket Sainsbury's is setting up travel clinics within 21 of its stores, allowing shoppers to consult nurses for free and have injections carried out on the spot. As well as offering free consultations, the supermarket claims it will undercut existing travel clinics by around a third.
Last week, we checked some of the supermarket's prices against those in specialist travel clinics and found it was significantly cheaper. A three-injection course of Hepatitis A and B immunisations costs £150 at Sainsbury's, for example, compared with a typical price of £195 at the specialist clinics; a combined diptheria, tetanus and polio injection costs £20 at the supermarket compared with £31; while 12 anti-malaria Malarone tablets costs £27 at the supermarket, compared with £44.
'We will provide an efficient, good value one-stop-shop for people's travel health needs - from a first aid kit to immunisations,' said David Gilder, head of professional services at Sainsbury's.
Sainsbury's is trialling the new clinics in stores within the M25, but if successful will roll them out nationwide. Tesco last week said it had no immediate plans to launch similar clinics, but 'wouldn't rule it out'. However some medical professionals are voicing concerns, arguing travel medical advice is too complicated to be sold alongside baked beans and bananas.
'People often have the impression it's simply a case of looking up a chart and seeing which vaccines are needed,' said Richard Dawood, a specialist in travel medicine at the Fleet Street Travel Clinic. 'But cases can be far more complicated than that, plus we give people advice on how to behave while they're away, what to do when things go wrong and so on. My worry is that travellers will be sold the cheap vaccines, but won't get any health advice, support and follow-up
Source: The Observer UK
Top 10 food myths busted...
Our mums are always telling us fresh is best, our friends insist carbs are evil and our boyfriends say oysters are an aphrodisiac. They're all wrong...
1 Oysters are an aphrodisiac
Say it's not true! Everyone says oysters have aphrodisiac powers. However, oysters don't have a secret chemical agent that boosts your sex drive. Sure, they contain zinc, which is great for men (a bit of lead in the pencil) but will not make him toey. Sydney-based dietitian Susie Burrell says: "Zinc is linked to the sexual hormone but does not have an effect on libido. However, some people say oysters are an aphrodisiac because they look like parts of the female anatomy." Libido is mostly in the mind so maybe it's the romantic restaurant that's doing more work than the oyster entree.
2 Long-life milk is full of chemicals
It makes sense to think if milk can sit on a cupboard shelf for months it would need preservatives but it's not true. The secret lies in the application of high-temperature technologies. Karen Fischer, nutritionist and author of The Healthy Skin Diet says, "Milk is heated to 135 degrees then quickly cooled. That makes 'bad' bacteria perish, but all the minerals are retained. So long life milk is great as a stand by if you run out of fresh milk."
3 Light olive oil is "light" on calories
The "light" refers to the colour, not the fat content. "Shoppers are tricked into thinking light olive oil is better for you. That's impossible: it's still oil, it's simply lighter in colour. This is a case of really having to check the labels," Fischer says.
4 It is not safe to refreeze meat after it has thawed
Most mums have trotted out this myth ... however, it is actually safe to thaw and refreeze meat. But you do have to be very careful. The meat must be thawed in a fridge at five degrees or less. At this temperature, most bacteria responsible for food poisoning cannot grow and those that can, do so very slowly and are killed by subsequent cooking. "Keeping it cold will keep it safer. I actually do this myself," Burrell says. So no defrosting on the kitchen sink then chucking it back in the freezer or you'll be driving the porcelain bus. And just a warning, thawing and refreezing meat makes it lose its juices and go tough.
5 Carbohydrates cause you to gain weight
Carbohydrates do not cause weight gain unless they contribute to excess calorie intake. The same holds true for protein and fat. Burrell says it's all in the selection: "The trouble with carbs is they can be easy to overeat. If they are highly processed, like white flour and pasta, it is turned into sugar quickly and means you don't stay full for long. So you need to choose the right sort."
Fischer adds: "I'm a big fan of carbs. They help you concentrate. It's a good brain food, just don't overeat. High-protein low-carb is a fad diet and not a life choice. So choose good-quality wholegrain carbs; they are more fulfilling and keep you satisfied longer."
6 Fresh vegies are better than frozen
Many frozen vegies are just as nutritious, or in some cases even more nutritious, than fresh ones. Frozen vegetables are usually processed within hours of picking and few nutrients are lost in the freezing process, therefore they keep their high vitamin and mineral content. Fischer says: "Fresh vegies can take weeks or even months before they reach the dinner table and some vitamins are gradually lost over time." Burrell adds: "But vitamin loss also has to do with the cooking method. If vegies are boiled to within an inch of their life, they'll have no vitamins because it seeps out into the water."
7 Made in Australia means it's 100 per cent Aussie
According to the Australian Chamber of Commerce and Industry, "Made in Australia" means a product is substantially transformed in Australia and at least 50 per cent of the cost of production has been incurred here. "Product of Australia" means all significant ingredients come from Australia, and all or virtually all of the manufacturing or processing is carried out in Australia. So Product of Australia is a stronger claim.
8 The healthier option at a restaurant is a vegetarian dish
Well, it depends on the dish, but some vegetarian meals are high in fat, especially if they're fried or are made with cheese or pastry. "There are a lot of unhealthy vegetarians out there so don't be fooled," says Fischer. Burrell agrees: "The problem with vegetarian meals is that cream-based sauce or butter is used to make them tasty. If you choose a pasta or risotto it has to be very plain tomato sauce to be the low-fat option." In fact, red meat can be low in fat if it's lean and all the visible fat has been removed. A great low-fat option is chicken without the skin, or fish that has been steamed.
9 It's best not to eat after 7pm
It's not when you eat but what you eat that counts. Eat more calories than you burn and you'll get fatter. But late snacking can push your calorie intake over the edge. Burrell: "It's best to have regular mealtimes so you can keep track. And having 10-12 hours without food supports hunger so you start the day with a healthy breakfast." Fischer adds: "Eating just before you go to bed can hamper sleep patterns in that it messes with your insulin. I'd suggest you don't eat for two to three hours before bed."
10 Fat-free equals calorie-free
Munching on fat-free foods may seem the guilt-free way to lose weight but a lot of fat-free foods have the same amount or even more calories than regular versions. Fischer says: "You're just as likely to gain weight from high-sugar products as high-fat products." Get the facts on fat-free foods by checking food labels for the serving size and number of calories per serving
Source: SMH
Where is the innovation?...
Are you managing the social impact of your business? If the answer is no, you should be.
Right now, the biggest problem many companies have to deal with stems from rapid globalisation. It is the risks associated with supply chains that stretch all over the world: deep into China, India, Vietnam, Africa, and back again. For some, this is a challenge on a grand scale. Nike has 800,000 workers all over the world, for example.
It is not just the issues springing from labour and manufacturing in developing economies that are creating these challenges (although the importance of responsible and ethical manufacturing cannot be talked about and written about enough).
Increasingly it is the environmental impact of transport and logistics. It is the hidden cost of doing business at every stage in the supply chain.
It's about time that businesses got serious about the impact their business is having on the world. Until now most of the work in corporate sustainability has been focused on public relations and communications - as if the most valuable part of their work is telling the public all about it.
Real innovation needs to start occurring around the implementation of these policies, and thought needs to be put into the future. Adopt a CSR perspective when considering new projects and investments. Constantly monitor the social and economic impact of the firm's operations.
Are there reporting requirements? Publish them. Are there videos of factory floors? Stream them live on the internet. Are there figures? Put them in context.
If you're Cadbury and you're spending $96 million over the next decade on one million cocoa farmers in Ghana, India, Indonesia and the Caribbean, give us the complete picture, not just a piece of the puzzle. Tell the public that far from helping lift these farmers out of poverty you're handing out cash to boost the productivity of cocoa farmers.
In short, show us proof that the feel-good ads flanking trucks are true representations of corporate social responsibility. Show us that you're committed to the rules you claim to live by. Wouldn't that be real innovation?
Source: SMH
Keeper of Coke's secrets forced to sell...
SunTrust, the bank which holds the secret formula for Coca-Cola in a vault in Atlanta, has been forced by the credit crunch to sell its $2bn stake in the soft drinks maker.
The Atlanta-based bank has held on to its Coca-Cola stake - regarded as its "family silver" - for almost 90 years, but decided to offload the 43.6m shares to bolster its capital position after mounting mortgage losses led to a 21% drop in second-quarter profits.
SunTrust said yesterday it had sold 10m Coke shares in June and donated 3.6m shares to its charitable trust. It has also set up a process to sell another 30m Coke shares over the next seven years.
Shares in Coke fell to a 52-week low on Monday and closed at $49.60 a share. After the announcement they climbed 3.5% to close at $51.35 yesterday.
By disposing of its stake, the large southeast regional bank will break some of its long-standing ties with the world's largest soft drink maker. Both companies are based in Atlanta.
The two companies have been tied together for more than 100 years, and SunTrust has held Coke shares since 1919, when its predecessor, Trust Co of Georgia, helped take the soft drinks maker public. It also has a copy of the secret formula used to make Coke.
"The impetus for the transactions announced today was exclusively related to SunTrust's own capital optimization goals," said SunTrust chief executive James Wells. "We retain the highest degree of institutional respect for the Coca-Cola Company as one of the world's leading companies with whom SunTrust has enjoyed a long, positive and productive relationship".
Source: The Guardian UK
Australian
News:
Starbucks hit by tightening of US belts...
Last month Starbucks announced it would close 600 company-operated stores in the US, costing up to 12,000 jobs after it continued its rapid expansion while the US economy slowed.
The company said 70 per cent of the cafes slated for closure had opened after the start of 2006. The chief financial officer, Pete Bocian, said that meant Starbucks would close 19 per cent of all US company-operated stores that opened in the past two years.
He said a Starbucks store's revenue dropped 25 to 30 per cent when a new one opened nearby.
Near Wynyard alone there are three Starbucks cafes, with outlets in George Street, York Street and Martin Place.
The company operates more than 16,000 stores around the world, including 85 in Australia
Following on from this....Starbucks further announced that it is set to close 61 outlets in Australia that have been underperforming. The company said that the move would enable it to concentrate on three core cities, Brisbane, Melbourne and Sydney, and their surrounding areas, a step that will leave the company with 23 outlets in the country. Starbucks said that it would release a list of affected outlets by 31 July after employees are informed of the company’s decision. Starbucks also said that as part of the restructuring Jason Bell would become managing director from 1 September, making the step up from outlet development manager for Australia.
Following on from the announcement the company’s global chief executive, Howard Schultz, said that it would not be closing any other outlets internationally. In a statement Schultz said: “We are well into the implementation phase of transforming Starbucks and we believe that this difficult, yet necessary, decision to close stores in Australia will help support the continued growth of our international business. While this decision represents business challenges unique to the Australian market, it in no way reflects the strong state of Starbucks business in countries outside of the United States.”
Source: SMH & Planet Retail
Aldi brands Coles & Safeway as retail bullies...
Aldi has accused Coles and Safeway of pushing out smaller rivals by striking deals that prevent them from setting up business in suburban shopping centres. The discounter has called on the Australian Competition and Consumer Commission to investigate practices it says have limited its ability to trade in Victoria. Aldi claims its ability to open stores has been restricted because the leases - some 20 years old - effectively guarantee Coles or Safeway exclusive access to a site. "There are a large amount of centres where we are restricted from entering because of covenants," according to Aldi's managing director for Victoria, Tom Daunt."It can be an outright restriction on the use of land by a previous owner who might be a developer for a major supermarket.
The other case is clauses in leases of major supermarkets which effectively restrict competitors with quite dramatic rent reductions (if a rival becomes a tenant in the same centre). Covenants on available land and clauses in leases, they are all similar. They are all restrictions of trade
Source: Planet Retail
Indian looms for Woolworth's
CASHED up and keen to increase its retail empire beyond Australia, Woolworths may soon expand its presence in India, a leading broking house said.
While India had been on the cards, it had always ranked behind New Zealand, said a Citi analyst, Craig Woolford.
But a drop in consumer spending in New Zealand has boosted India's contender status, as Woolworths is regarded as unlikely to be able to buy the majority stake in The Warehouse group in NZ from its founder, Stephen Tindall, any time soon.
Woolworths must look overseas for acquisitions to help maintain its double-digit profit growth as there is little left to buy in the highly concentrated Australian market, especially amid the glare of the Australian Competition and Consumer Commission inquiry into grocery prices, due to be finished this month.
Woolworths has a wholesale consumer electronics business as part of a joint venture with Tata, one of India's largest companies. But it could easily expand this by moving into groceries and general merchandise, Mr Woolford said.
The electronics joint venture, Infiniti Retail Group, has ambitions for 40 stores under the Chroma brand by 2010. The possible expansion to include groceries and a Big W-style general merchandise retailer was hinted at last year by Infiniti's chief executive, Ajit Joshi.
Mr Joshi said the partnership may ultimately extend to include all of Woolworths formats, although by local law they cannot carry the Woolworths name.
The Woolworths chief executive, Michael Luscombe, has been tight-lipped about such plans, preferring to focus on domestic operations. If no acquisitions are made in coming months the Woolworths chairman, James Strong, has promised to return surplus capital to shareholders, most likely by a share buyback. But Mr Woolford said this was unlikely given it would not add much to profit growth.
Gaining a foothold in the Indian retail sector could be lucrative given that the size of the market is projected to double over the next eight years from its present $35 billion in sales.
The large number of wholesalers and low level of market consolidation mean there are profits to be made out of streamlining purchases by removing up to eight layers of "middle men" in the India system.
But even local companies such as the Indian supermarket chain Reliance Fresh have hit fierce resistance to their plans to replace the often unclean "neighbourhood" stores with international-style supermarkets.
They were picketed and threatened with "suicide squads" after wholesalers and small traders said they would lose their livelihoods if Reliance spent $5.5 billion on new stores
Source: SMH
Food bills not as bad as you think?...
You might think your grocery bill has grown faster than ever in recent months, but retailers and retail analysts say otherwise.
While petrol prices have soared to record levels, things are apparently not as bad in the supermarket aisle, with Woolworths today announcing food inflation had fallen in the past three months.
The retailer reports that food inflation for the three months to the end of June was 2.9 per cent, down from 4.5 per cent for the previous quarter.
But the figures didn't ring true for Nick Clarke, who went grocery shopping in Pyrmont today.
"I think it's definitely picked up in the last three to four months," Mr Clarke, 34, said. He said his weekly grocery bill had risen about $35 in that period.
"It's pretty much a rise in everything. In some things it's a small amount, like fruit and vegetables, but there's been a big rise in things like milk and yoghurt and definitely bread."
Citigroup analyst Craig Woolford said cheaper fruit and vegetables had helped curb the rise in overall average grocery prices.
"There hasn't been an acceleration of food inflation over the last three months in the same way as petrol," he said.
"The main issue is deflation. Prices have been going down in fresh produce categories, particularly fruit. In other categories, in diary and wheat products, Woolworths did say prices had gone up."
He said fresh produce prices had fallen due to increased supply - the result of better weather conditions in growing areas and the continued recovery from cyclone Larry, which had crippled the Queensland banana industry.
The good news about local food prices today came on the back of a warning overnight from US Federal Reserve chairman Ben Bernanke, who said rising food prices were elevating inflation risks.
Consumer group Choice said the consumers were now more aware of higher prices in the supermarket.
"Anything we've heard is anecdotal, but there's no doubt consumers are feeling the pinch of higher fuel and grocery prices," a spokeswoman said.
"We don't have any evidence that [prices have jumped more in recent months], but ... higher prices are now in everyone's consciousness."
Aimee Majurinen, who also went grocery shopping today, said price rises had slowed in recent times, but that she felt the pinch more now as other costs had risen.
"It's hard to assess, because now I'm focused on the mortgage I've got to pay," she said.
Data on the average price of basic items such as milk, bread and fruit and vegetables for the last three months won't be available from the Australian Bureau of Statistics until the end of this month.
Felippe Costa, 22, said prices had not really changed in the six months he had been in Sydney. But he placed local worries in context.
"As I'm from Brazil, everything here is cheaper," he said.
The Australian Competition and Consumer Commission was reluctant to comment on recent price trends ahead of its report on grocery pricing, due to be delivered to the Government at the end of the month.
However, an ACCC spokesman said the Government had flagged it may have a role monitoring prices in the future.
Meanwhile, higher costs of living might be increasing queues at the office microwave, with more Australians trying to save money by taking lunch to work.
In a survey of more than 1500 working Australians, research firm CoreData found three out of five were now more inclined to bring their own lunch to work than they were three months ago.
About the same number said they were less likely to dine out, and just over 50 per cent said they were now buying less food, or buying more food in bulk, than three months ago.
"It's hard to assess, because now I'm focused on the mortgage I've got to pay," she said.
Data on the average price of basic items such as milk, bread and fruit and vegetables for the last three months won't be available from the Australian Bureau of Statistics until the end of this month.
Felippe Costa, 22, said prices had not really changed in the six months he had been in Sydney. But he placed local worries in context.
"As I'm from Brazil, everything here is cheaper," he said.
The Australian Competition and Consumer Commission was reluctant to comment on recent price trends ahead of its report on grocery pricing, due to be delivered to the Government at the end of the month.
However, an ACCC spokesman said the Government had flagged it may have a role monitoring prices in the future.
Meanwhile, higher costs of living might be increasing queues at the office microwave, with more Australians trying to save money by taking lunch to work.
In a survey of more than 1500 working Australians, research firm CoreData found three out of five were now more inclined to bring their own lunch to work than they were three months ago.
About the same number said they were less likely to dine out, and just over 50 per cent said they were now buying less food, or buying more food in bulk, than three months ago.
"It's hard to assess, because now I'm focused on the mortgage I've got to pay," she said.
Data on the average price of basic items such as milk, bread and fruit and vegetables for the last three months won't be available from the Australian Bureau of Statistics until the end of this month.
Felippe Costa, 22, said prices had not really changed in the six months he had been in Sydney. But he placed local worries in context.
"As I'm from Brazil, everything here is cheaper," he said.
The Australian Competition and Consumer Commission was reluctant to comment on recent price trends ahead of its report on grocery pricing, due to be delivered to the Government at the end of the month.
However, an ACCC spokesman said the Government had flagged it may have a role monitoring prices in the future.
Meanwhile, higher costs of living might be increasing queues at the office microwave, with more Australians trying to save money by taking lunch to work.
In a survey of more than 1500 working Australians, research firm CoreData found three out of five were now more inclined to bring their own lunch to work than they were three months ago.
About the same number said they were less likely to dine out, and just over 50 per cent said they were now buying less food, or buying more food in bulk, than three months ago.
"It's hard to assess, because now I'm focused on the mortgage I've got to pay," she said.
Data on the average price of basic items such as milk, bread and fruit and vegetables for the last three months won't be available from the Australian Bureau of Statistics until the end of this month.
Felippe Costa, 22, said prices had not really changed in the six months he had been in Sydney. But he placed local worries in context.
"As I'm from Brazil, everything here is cheaper," he said.
The Australian Competition and Consumer Commission was reluctant to comment on recent price trends ahead of its report on grocery pricing, due to be delivered to the Government at the end of the month.
However, an ACCC spokesman said the Government had flagged it may have a role monitoring prices in the future.
Meanwhile, higher costs of living might be increasing queues at the office microwave, with more Australians trying to save money by taking lunch to work.
In a survey of more than 1500 working Australians, research firm CoreData found three out of five were now more inclined to bring their own lunch to work than they were three months ago.
About the same number said they were less likely to dine out, and just over 50 per cent said they were now buying less food, or buying more food in bulk, than three months ago
Source: SMH.
Wesfarmers tight-lipped on Coles revamp
Coles owner Wesfarmers Ltd has hit back at analysts' claims that it has moved too slowly with its planned transformation of the supermarket chain, saying several initiatives were underway.
But it is keeping its cards close to its chest in a challenging retail environment characterised by rising food prices and inflation.
"What we will not be doing is flagging specific details of our turnaround strategy for the world to see," chief executive Richard Goyder told a business forum in Melbourne.
"This is a competitive industry and we're not going to give anyone a heads up on what our specific plans are.
"You won't see blinding changes reveal themselves on a particular day or date.
"But a series of changes are now occurring within the business to lay the foundations for Coles' transformation program."
Mr Goyder said divisional structures had been set up for Wesfarmers' various retail assets, and five year plans and budgets for each division had been completed.
"We've taken over 1,000 people out of above-store functions to create a flatter, more efficient structure," he added.
Mr Goyder said those who accused Woolworths and Coles of operating a duopoly were ignoring "ever-increasing levels of competition in food retailing".
"For the record, Coles has less than a quarter of Australia's food retailing market share."
He warned that food demand would skyrocket, putting upward pressure on prices.
"Global demand and competition for the type and quality of food we take for granted in Australia is going to be intense.
"The OECD and the United Nations recently released a report which forecast global food prices will rise well above what we've seen in recent years.
"We need to think about the entire food value chain and consider carefully and strategically how to do more with what we have at hand."
Mr Goyder said the Australian food industry would be directly impacted by the increasing frequency and severity of drought.
"The rising cost of fuel and transport, which is likely from any emissions trading scheme, will have a major influence on food costs going forward," he added
Source: SMH
Foster's newcomer steps into the breach...
FOSTER'S GROUP has turned to a recently appointed director to take over as interim chief executive while it searches for a replacement for Trevor O'Hoy.
Ian Johnston took over the reins yesterday, on Mr O'Hoy's final day in the job.
Mr Johnston has been on the board of the beer and wine company for less than a year, but was appointed for his experience in food and beverage companies, including Cadbury Schweppes and Unilever. It is expected he will be replaced by the end of the calendar year when a new chief executive is appointed.
Mr Johnston, 61, will help Foster's chairman David Crawford on his review of the company's wine business, a process Mr O'Hoy began in April.
The review, and Mr O'Hoy's departure, were triggered by disappointing results from Foster's wine business, most of which it gained when it bought Southcorp for $3.2 billion three years ago.
The company has been forced to write down its wine assets by up to $700 million and has admitted it paid too much for Southcorp.
Mr O'Hoy, 53, had been with the company for 33 years after starting as a cadet executive.
A company spokesman, Troy Hey, said the company had not taken the usual step of promoting a deputy chief executive because it did not have anyone in the understudy role.
There has been a board clean-out since the company decided to buy Southcorp, with more than half the current directors having been appointed since then.
But....O'Hoy's scalp will be no immediate panacea for Foster's problems.
The write-downs are too small, goodwill has been transferred from the wine operation to brewing, leading beer brands such as VB are under pressure from archrival Lion Nathan, the local wine operations are yet to fire and the overall outlook for sales growth is sombre.
While the wine business has not been run nearly as well as it might have been, its No. 1 problem was Foster's paid too much in the first place: in the order of $7 billion for assets which on Merrill's numbers are generating a mere $450 million in EBIT.
This brings us to the numbers on acquisitions generally. Most "aggregation" plays, that is companies that go on acquisition sprees using their high-priced scrip to buy lower-rated companies, blow up at some point. And in general, most big acquisitions fail to generate adequate returns.
The admission by Foster's chairman David Crawford that the company's wine acquisitions had failed is a a timely reminder that most big acquisitions do not work for shareholders. It was also refreshingly honest.
Foster's is by no means alone in ballsing up acquisitions. It is, it fact, in the majority. While Incitec's spectacular purchase of WMC's fertiliser business paid for itself in a year, the likes of Computershare and Worley and Metcash have yet forged a savvy expansion path - and a rash of deals in the resources sector such as Xstrata's bid for MIM which had the luck of rising commodities prices - are feted as examples of value creation, just as many end up dogging shareholders for years.
Analysts do studies on this from time to time. Just gazing at the top 100 though is evidence enough.
Look at the experience of Australian banks offshore, the building materials companies in the US - before CSR's Rinker and James Hardie finally came good. Then there's Toll bid for Patrick and the present plight of Asciano, and the uber-acquisitive satellites of Macquarie and Babcock which are now under pressure, not to mention their shadows Allco and MFS. In property there is Centro, whose disastrous US foray hastened the end.
There are glowing examples of those which work. Incitec's purchase of WMC's fertiliser business is one beauty.
In insurance, the disastrous UK acquisition by IAG was, like Berringer, struck with sharp private equiteers on the other side of the deal. The big lumbering corporates are often sold a pup by private equity, which often has already stripped out the cash and run down costs to breaking point.
The jury remains out on Suncorp's acquisition of Promina - that one was struck at the peak of the insurance cycle. Even now, two years later, there is no consensus that this was a bad deal - but it is surely evident in the Suncorp stock price.
The armies of PR people and advisers at the revelation of a big acquisition, not to mention the carefully manicured pre-prepared spiels concocted for analysts and institutions, mean most deals are embraced at the outset. The market loves a deal, management loves a deal.
For a couple of years management can muddy the accounting waters and after that memories fade of the grand claims once made
Source: SMH
Organic agriculture booming...
The market for organic food in Australia has seen dramatic growth in recent years, with farm-gate sales increasing by 80% since 2004, a study has found.
Organic farm gate values were estimated at A$231m (US$223.4m) in 2007 and retail value reached A$578m, the University of New England's Australian Organic Market Report, commissioned by Biological Farmers Australia, revealed.
Biological Farmers Australia director Andrew Monk attributed the boom in organic farming to soaring consumer demand.
While drought has hit the Australian agricultural sector, Monk suggested that organic farming techniques made soil more resilient to drought and flood.
''More organic matter in the soil means a more resilient soil structure. If you get a deluge you don't lose the topsoil and secondly you have water retention capacity during dry periods," Monk said
Source: Just-food
Global
News:
NZ: The Warehose wins appeal...
THE Court of Appeal has overturned a lower court's ruling that had allowed rival grocery firms to bid for New Zealand discount retailer The Warehouse Group.
The decision, a minute of which was made public yesterday, prevents Australia's Woolworths and the New Zealand co-operative Foodstuffs bidding for The Warehouse, New Zealand's largest listed retailer, in a deal that could be worth more than $NZ2 billion ($A1.55 million).
Foodstuffs and Woolworths each has a 10 per cent stake in The Warehouse and last year succeeded in their application to the High Court to overturn a Commerce Commission decision blocking potential takeovers.
The Commerce Commission appealed against that decision. Yesterday it welcomed the ruling as a "victory for supermarket consumers and competition in markets".
The commission said its case had focused on concerns about competition in the supermarket sector where there was, in effect, a duopoly, except in the three regions where The Warehouse operated supercentres.
Commission chairwoman Paula Rebstock said consumers knew more competition was needed in the supermarket sector. "The commission considered that the presence of an innovative third party - such as The Warehouse - had the potential to increase the level of competition in this important market," she said.
Guy Hallwright, an analyst with Forsyth Barr, was not surprised by the decision.
"If the decision had not gone this way then, firstly, it would have basically made the Commerce Commission into a toothless body," he said.
Most people would not have thought that any ruling made by the Commerce Commission could be taken to court where it would be overturned. That would have put parties in a strong bargaining position with the commission, he said.
Second, a decision in favour of the rivals "would open the way for duopolists in any area of business to overtake new entrants in the early days, on the grounds that competition is not substantially diminished because there's not much competition there yet," Mr Hallwright said.
There could be further appeals, but, in the meantime, The Warehouse was safe from a takeover by the supermarket operators.
The Warehouse's share price was already somewhat lower reflecting that position, but he expected it to fall a little further.
The Appeal Court hearing was held three months ago, when the company's share price topped $NZ6. It closed yesterday at $NZ3.22.
Source: SMH
UK: Aldi & Lidl grab record share of grocery market...
Consumer spending in discount supermarkets has soared to record levels as UK shoppers tighten their belts and scour for bargains, according to figures out yesterday.
Discounters such as Aldi and Lidl accounted for 5.9% of grocery spending in the UK in the 12 weeks to July 13, the highest figure on record, research company TNS Worldpanel said.
"Discount supermarkets are the fastest-growing sector of the market," said Chris Longbottom, head of TNS Worldpanel.
The top three discounters are Aldi, Lidl and Netto. Aldi's year-on-year growth stood at 20% while Lidl's was 14%.
"More people are using discounters more often," said Longbottom. "It's a little bit of a tilt in the see-saw. As times get tighter more people are giving them a whirl. They tend to use them for items such as toilet paper and tinned products. They are opening stores all the time."
There are 1,092 branches of Aldi, Lidl and Netto in the UK, compared with 1,002 this time last year, an increase of 9%.
The total grocery market grew 7% year on year, driven by food inflation and a better performance from supermarkets than other retailers, the survey showed.
Many retailers are struggling amid signs indebted shoppers are cutting back because of surging fuel and food costs.
TNS Worldpanel said Tesco, Britain's biggest retailer, was growing fractionally slower than the overall grocery market, but retained a dominant market share of 31.3%. Sainsbury's and Waitrose lost a small amount of market share.
The market share of discounters is modest compared with some European countries. In France they account for 11% of grocery spending and in Germany 38%.
Source: The Guardian UK
UK: Mars pulls offensive Mr.T ad...
Mars has pulled a Snickers television commercial in the UK after receiving a complaint from a gay rights group.
The advert, the second in a series featuring Mr T, was withdrawn after The Human Rights Campaign Foundation criticised the ad for using negative gay stereotypes.
In the commercial Mr T accuses a speedwalking man of being a "disgrace to the man race".
"This ad is the second in a series of UK Snickers Ads featuring Mr T, which are meant to be fun and have been positively received in the UK," a spokesperson for the US-based confectionery giant told just-food.
"However, we understand that humour is highly subjective, and it is never our intention to cause offence. Accordingly, we have pulled the Mr T Speedwalker ad globally," the spokesperson concluded.
Source: Just-food
UK: Cadbury & Kellogg's food groups join obesity fight...
Food manufacturing giants including Cadbury, Kellogg & Mars have pledged more than GBP200m (US$398m) to support a UK government-backed scheme to tackle obesity in the country.
The likes of Kraft, Nestle & Pepsico have also joined the consortium of manufacturers, retailers, broadcasters and fitness groups in supporting a campaign dubbed Change4Life, which hopes to encourage people to eat more healthily and take more exercise.
Food companies, backed by the Advertising Association, will incorporate messages from the campaign into their advertising and will also offer free air-time and cash.
Advertising Association chief executive Baroness Buscombe said industry was "part of the solution" to tackling obesity in the UK.
"By harnessing the immense talents in this country in advertising, marketing and media, we believe we can make a real difference, bringing about real change," she said.
The problem of obesity is growing in the UK with government figures estimating that two-thirds of adults and a third of children are overweight or obese.
Government forecasts published last year predicted that, by 2050, 60% of adult men, half of all adult women and a quarter of children under 16 could be obese.
Health Secretary Alan Johnson said last night (23 July) that obesity is the "biggest challenge" the UK faces.
"Tackling obesity requires a much broader partnership, not only with families, but with employers, retailers, the leisure industry, the media, local government and the voluntary sector. We need a national movement that will bring about a fundamental change in the way we live our lives," Johnson told the Fabian Society.
Johnson said "vilifying" the obese did not change their behaviour. "Commentators who point and shout at pictures of the morbidly obese simply fuel the problem," he said. "Those whose seriously unhealthy lifestyles are not advertised by their waist lines will simply say: 'Well that's not me. I don't need to change what I do.' But if you present the message more intelligently - if you explain to parents that many children, regardless of their size, have dangerous levels of fat in their arteries or around their organs, and this may reduce their life expectancy by up to 11 years - then people respond."
The Change4Life programme will be officially launched in the autumn
Source: The Guardian UK
INDIA: McDonald's to adopt new strategy...
According to reports in the local press, McDonald’s India intends to adopt a new strategy, which is focused on driving profits at the company. The move will see the company introduce premium, high-margin products, varying prices and strategy according to geographical location and adding outlets in high-end multiplexes, food courts and high street shopping areas.
The shift in strategy comes as the chain aims to start boosting profits, having established itself in the market. Speaking to the Economic Times, McDonald's (North) India managing director, Vikram Bakshi, said: "All along, we have based our strategy on building volumes, but driving profitability is very much the focus now. We are tweaking our strategy so that we are able to achieve both, improving profitability and adding to volumes. The idea is to capture a bigger spend from the customer." He also commented that the company had no plans to remove its value menu
Source: Planet Retail
UK: Mars to launch new Asian cuisine line...
Mars Food is set to unveil its first new brand in the UK in nine years.
PurAsia is a new brand in Asian cuisine developed to "inject excitement" in to the GBP594.5m (US$1.2bn) wet cooking sauce category.
The range consists of a set of three blends of spices, herbs and pastes, assorted to "help cooks recreate their favourite restaurant Asian meals at home in under thirty minutes", the company said today (21 July).
The product comes in six varieties inspired by cuisine from India, Thailand and China.
Paul Aikens, marketing director for Mars Food, said: "With meal preparation time averaging at 41 minutes and a desire to produce restaurant quality Asian meals at home, our product will help achieve this in under 30 minutes. Because the meal involves a level of consumer participation there is a greater sense of fulfilment and engagement for the cook."
The PurAsia range consists of six variants: Royal Korma, Tikka Masala, Thai Green Curry, Thai Red Curry, Szechuan and Black Bean. It will be priced at GBP3.29 and available exclusively from Tesco for the first nine months.
The launch will be supported by a GBP1m marketing and in-store campaign from July onwards which will include: advertising on Tesco.com, the clubcard statements, food club magazine and on in-store TV screens.
Alongside this, a PR campaign fronted by Celebrity MasterChef winner and England Rugby star, Matt Dawson and his partner, will commence in mid-July.
A national print and online advertising campaign will take place in September
Source: Just-food
SPAIN: Unilever sells Bertolli olive oil to SOS...
Unilever has sold its Bertolli olive oil and vinegar business to Spanish food firm Grupo SOS, it was announced this morning (21 July).
The Anglo-Dutch consumer goods giant struck a deal worth EUR630m (US$1bn) that will see SOS take on the Bertolli brand in olive oil and vinegar, as well olive oil and seed oil assets in Italy.
Unilever will hang on to the Bertolli brand in all other categories, including margarine, pasta sauces and frozen meals.
Vindi Banga, president for foods, home and personal care at Unilever, said: "Bertolli is a brand leader in olive oils in Europe, the US and Australia and we believe that Grupo SOS, with their deep expertise in this category, will further strengthen the business. We look forward to working with Grupo SOS to continue to build the Bertolli brand and to create further value."
The deal will see SOS, which owns Carbonell olive oil, bolster its position in the category. Chairman Jesus Salazar added: "This transaction is absolutely strategic to Grupo SOS and it reinforces us as worldwide leaders in olive oil."
The sale of the olive oil business is part of Unilever's plans to offload "non-strategic" brands worth over EUR2bn and which has seen the sale of Boursin cheese and US spice business Lawry's in recent months.
Earlier this month, Unilever sold Komili, the top-selling olive oil brand in Turkey, to local food group Ana Gida
Source: Just-food
GERMANY: Consumer confidence sinks...
Consumer confidence in Germany, Europe's biggest economy, dropped to the lowest in more than five years as soaring energy prices sapped purchasing power and the economic outlook deteriorated.
GfK's index for August, based on a survey of about 2000 people, fell to 2.1, the lowest since June 2003, from 3.6 in July, the Nuremberg-based market-research company said in a statement today. Economists predicted the gauge would fall to 3.5 from an initial July estimate of 3.9, according to the median of 25 estimates in a Bloomberg News survey.
Record oil and food prices pushed inflation in Germany to 3.4% last month, squeezing disposable incomes just as the euro's gains and a deepening US housing slump curbed demand for exports. Business confidence dropped the most since the September 11 terrorist attacks in 2001 and investor confidence fell to a record.
''Three things are weighing on sentiment: inflation, inflation and inflation,'' GfK chief executive Klaus Wuebbenhorst said in an interview on Bloomberg Television. ''And the European Central Bank raising rates also makes consumer loans more expensive.''
Citizens' Fears
A sub-index measuring income expectations decreased to minus 20 from minus 7.2 and a gauge of consumers' propensity to spend fell to minus 26.2 from minus 23.7. A measure of economic expectations plunged to minus 8 from 7.5.
Praktiker, the second-largest home-improvement retailer, in Germany cut its full-year sales growth forecast on July 23 as households curb spending. The Kirkel-based company expects sales to rise at a ''low-single-digit'' pace this year instead of the ''mid-single-digit'' previously projected.
''Along with fears of high inflation, many Germans are concerned that there will be a more marked cooling of the economy than previously anticipated,'' GfK said. ''News from the US of the continuing gloom in the financial markets support these assumptions and not least, the continuing high value of the euro represents a hazard to exports.''
Great Depression
The worst US housing slump since the Great Depression has pushed up the cost of credit globally and roiled financial markets. The world's biggest financial companies have posted almost $US470 billion in writedowns and credit losses since the start of last year after the subprime mortgage market collapsed.
Oil prices surged to a record $US147.27 a barrel this month and are up 61% in the past year. In the same period, the euro has appreciated 15% against the dollar, making European exports less competitive
German sales abroad dropped the most in almost four years in May and manufacturing orders fell for a sixth month. German business confidence fell more than economists forecast in July. The benchmark DAX share index has declined 21% this year.
''Continued pressure on purchasing power and the darkening economic outlook clearly argue against private consumption becoming a pillar of growth in the second half of the year,'' said Alexander Koch, an economist at UniCredit Markets & Investment Banking in Munich in an e-mailed note. ''The next consumer recession'' is ''already lurking around the corner.''
Unemployment Low
Still, unemployment has dropped to a 16-year low of 7.8%, which may provide some support to consumer spending as labor unions push for more pay. Deutsche Lufthansa faces disruptions as employees at Europe's second-largest airline stage strikes over pay.
The ECB raised its benchmark rate by a quarter point to 4.25% this month to curb inflation in the 15-nation euro region. It may raise rates again by March even as economic growth slows, Eonia forward contracts show.
''We haven't exhausted our room for maneuver,'' ECB council member Klaus Liebscher said in an interview last week.
Source: The Guardian UK
UK: Tesco to build straw powered plant...
Tesco is planning to cut its carbon footprint by building Britain’s first ever straw-powered power plant to supply electricity to its Goole distribution centre. The plant will generate approximately 5MW of electricity which is enough to power around eight superstores. The plant works by burning straw to power a steam turbine. As straw is a naturally grown product the CO2 produced at the power plant is offset by the amount absorbed during the growing process making the power plant carbon neutral. Tesco estimates that it will take six years to recoup the GBP12 million (USD23.6 million) invested in the project through the electricity produced at the plant being lower cost than the grid electricity. Building work will begin shortly and the plant should be fully operational by the end of next year
Source: Planet Retail
US: WalMart selects Oracle business intelligence...
Wal-Mart has decided to use Business Intelligence software from Oracle. The world’s largest retailer plans to deploy Oracle's ‘BI Suite EE Plus’ to run analyses on its logistics, transportation, category management, finance, human resources, real estate, merchandising, store and club operations and other business resources, within Wal-Mart and Sam’s Clubs. Wal-Mart started in 2007 to shift from inhouse developed solutions to packaged applications. The two most important vendors for enterprise applications, Oracle and SAP, both got in the race. Oracle firstly introduced the Profitlogic solution to Wal-Mart that helps the retailer to optimise markdowns of seasonal apparel. Later, Wal-Mart also decided to deploy an Oracle merchandise planning solution for its buyers. In October 2007, Wal-Mart opted to replace its legacy accounting and controlling system with SAP Financials.
Source: Planet Retail | 
