Kingfisher / B&Q feeling the pinch?...

I think that one has to split out those who are unwilling rather than unable.

For retailers, those in the lowest income groups are not the most attractive customers.

So if one looks at those with access and who have spending power then the numbers increase significantly, and the "able-to-spend-but-don't-want-to-do-so-or-be-on-line" a small number and not interesting to retailers anyway.

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ISP.

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The base point is that a percentage are not using online commerce, it doesn't matter why, just that they are not.

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In your warped opinion, IMO...

|| I'm amazed that retailing never seems to cotton on to this: it's not || as if it's a new phenomenon.

This is because, by and large, the management teams are made up of 'professional managers' and not people who have spent time in the business. Most companies are run by complete wankers IMO.

Dave

It does to the retailers and other businesses. If they cared out universality of reach with their products and merchandising, there wouldn't be detailed analysis of each carried out by market research firms. As it is, there are shed loads of data and businesses certainly do try to target their activities to maximimise return and profit.

If those on line don't represent a significant business opportunity for them, why would they bother?

Well.... I didn't say that it was a good thing to have a section of the population disenfranchised from access to more choice of products and price competition, but that's the way it is.

No it doesn't, the fact is that people are not using online commerce, the reasons why and the solutions are beyond the retailers control so they should be worrying about other thing that they can have an effect on.

To a large extent, they are beyond the retailer's control, although some retailers do offer better prices for buying on line.

However, we do know that a large proportion of those not on line are in the lower income and expenditure groups and the remainder are those who don't see the value or just don't want to use E-Commerce.

The lower income groups are not so likely to be spending money on the higher value and margin items anyway, so this leaves those who choose not to be on line - perhaps 15-20% of the adult population max.

Then the question becomes how to reach them through the bricks and mortar stores and indeed whether they are susceptible to marketing anyway.

Small market share increments in retail are significant, but this group would be the hardest to reach. Given that situation and declining sales of existing products, altering the product mix to include higher margin items that will appeal to those with more disposable income and offloading some cost as well is a fairly obvious choice.

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They may well do, but if 'X' percent of people will not or can't use online comerce it's more or less irrelivant.

Your point being what exactly, other than to suggest that those lower down the income level don't spend money - which they clearly do.

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Can you cite a reference as to how you come to that conclusion, why do you assume that those on a lower income don't buy higher value and margin items - they might not buy so often granted.

Of course they are just as susceptible to marketing, ISTM that you really don't 'know' the people you are talking about, you seem to be making some wild and wide open assumptions. Do you really think that those in the top 1/3rd of the income scale would even bother with places like B&Q?

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Only as long as those people use the stores.

As it is, having been into my local B&Q today, and seeing how they have dragged out every odd bit of tatty stock from all the corners of the store room, I suspect that their problems are very deep...

|| As it is, having been into my local B&Q today, and seeing how they || have dragged out every odd bit of tatty stock from all the corners of || the store room, I suspect that their problems are very deep...

Exactly the same in my local one as well, piles & piles of complete tat in the main.

Dave

Very false reasoning. Any customer with cash is a better proposition than one with either a credit card or a cheque. The best customer is one with no money, because you can sell not only the goods, but also the money to pay with! As a retailer you need any customer you can get over your doorstep. Higher income customers are frequently not the best margin generators. Tesco's and Dixons grew to their present size by selling mainly to low income customers.

Regards Capitol

Andy Hall wrote: Given that situation and

Sainsbury's and M & S tried this, the results can be seen in their share price. It takes a few years to show for a big operation, but it really is the best way to wreck a company other than purchasing an American operation! I have a golden investment rule of always selling any British company's shares when it buys a US one. I've on average saved myself losses 2-3 years down the line 90% of the time!

Regards Capitol

Only for those people, not for the retailer.

If the retailer chooses not to address these people because the market opportunity is too small and there is lower hanging fruit, then that's his (calculated) choice. There doesn't have to be universality of supply.

Of course they do. The question is on how much, what, how and where. If that correlation is poor for the retailer, he can simply choose to put his efforts elsewhere.

One can look at family expenditure figures from the ONS.

In the 2003 data (last available), the spend as a percentage of income on household goods and services (closest to what a DIY store sells) is

However, taking the lowest 3 deciles, the expenditure is £11, £12.70 and £17.60 respectively on a weekly basis.

For the top 3 deciles, it's £36.70, £44.40 and £71.90

National average across all income groups is £30.20.

Not surprisingly, across a range of consumer durable product types there is much higher market penetration of some in higher vs. lower income groups. For example:

Over 80% of the lowest and highest decile income groups have a washing machine, central heating and a telephone.

However, it's 90% vs. 20% for home computers, 90% vs. 35% for tumble dryers and 70% vs. 10% for dishwashers, 90% vs 10% for internet connection......

These are national figures and of course there are regional, age and other factors in them.

Not at all. The figures are there.

From the marketing perspective, you have to be able to reach your target customer. It's a little difficult to reach somebody who doesn't have an internet connection with a marketing message delivered via a web site. My point was that somebody who goes out of their way to avoid a major form of communication but does not have economic limitations on access has an agenda for doing so.

I do. However, the only reason is for convenience and likelihood of getting everything in one place when I haven't had time to purchase in advance from an on line source.

Well..... There was a 10% reduction on everything weekend. That's enough to get people into the store. Having done that, it's the perfect opportunity to clear stock.

This seems to me to be a reasonable way to address excess and slow moving lines. I would be more concerned if they kept it in stock for an extended period.

I know. I didn't say it was a *good* idea, but it does appeal at first sight to bean counters.

I agree and have done exactly the same on several occasions.

The opposite way around seems to work rather better on average.

That depends on what you are selling in what volume and with what margin.

That's certainly true.

That depends on whether they are buying what you want to sell.

That was the early strategy. For a long time Tesco have taken a lot of trouble to match stock profile to customer base geographically and demographically. This has been responsible for much of the growth in recent years.

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Whilst, in the case of people like B&Q, loosing sight of their base custom...

I have to agree with you here. For many years I was happy to shop at Asda. This was at the time it was run and owned by Associated Dairies. As soon as they sold out, the store went downwards. Very soon, I learned that they were selling what they wanted me to buy, but not selling what _I_ wanted to buy. They would move goods from aisle to aisle, drop goods that I wanted to buy etc. It took me just a few weeks to stop shopping there. These days, if you look on an aisle devoted to prepared foods, you will find that they only sell their own brands. Choice? What choice?

Moving on to Tesco, they look like losing the plot as well. My local one has just been expanded by giving it an upstairs area. They are also brassing me off with them dropping lines that I like. (I am a green shopper and like organic things) If it continues any further, I reckon that I will move on to Sainsburies. At least the financial pages are saying that they are rising from the ashes at last. Apart from that, they do tend to have better totty roaming the aisle ;-)

Dave

Rant over :-)

Tell them so, by e-mail to as many contacts in the organisation that you can find.

OK I'll try that and see if it makes a difference

Dave

If lots of people did, it *would* make a difference - "don't waste your complaint - use it".

I've taken the trouble to 'demand/request' to see a 'manager' [they wear suits] at my local Tesco and asked why they've dropped items that I purchase from their shelves ? I'm referring to small low value items ... after a while the items have reappeared on the shelves ... adding "I only come here because you stocked XXXX and now that you no longer stock it I'll go to Sainsbury/Asda ' seems to invoke a response.

The stores only exist to satisfy customers ... no customers .. no stores!