Walter Adamson

The myth of “It’s only 1%” and why to fear it

When Harvey Norman founder and Chairman Gerry Harvey launched a barrage of criticism of the “Internet” at the release of his most recent financial year results I couldn’t help reading on. In fact I was intrigued to read on.

Why was I intrigued to read on?

Well there are a number of reasons. Firstly because having been labelled a “dinosaur” for his previous “Internet denial” e.g. online retail, and having now started an online store he now has real online experience, and yet still decries the potential of that mode of selling – I wanted to see why.

Secondly, he IS a very successful retail business founder and owner – he’s often epitomized as one of the great Australian retail success stories. And he is; although that journey may be coming to an end as reflected in the 31.6% drop in full year net profits for 2011/2012, and the 7% fall in revenue.

Thirdly, Gerry Harvey always says it like it is, he’s that kind of guy, and I always enjoy straight talk. This article was headlined “Gerry Harvey sick of internet 'spin'” and knew I’d been in for a good non-nonsense read – whether I agreed with it or not.

So I read on.

I loved his comments about the marketing spin and “omnichannel”:

"You devote all this time to your omni-channel and integrated bloody ... and you go on with all this bullshit and the result is that it is 1 per cent of your sales. But if you don't go on with the bullshit you are out of fashion, you are not with-it."

He went on the say that retailers were “almost forced to come out with spin to plump up their online strategies to the market”. He's right there, let's admit it. 

"I am reluctant to do it but I do it, because if I don't they label me a dinosaur. I'm out there labelled as a bloody dinosaur."

All good stuff and can’t agree more that it looks totally stupid for CEOs to be spruking “omnichannel” guff and especially when inside they think that the Internet and social are all BS. I do have some sympathy for them because if you followed the recent Australian Marketing Institute Marketing Conference 2012 you would have NOT seen a SINGLE tweet mention of "omnichannel" - the CEOs are caught up in already dead marketing jargon.

Now, here’s where Gerry Harvey and I disagree.

Only 1 per cent of your sales

While like the style of what Gerry says, the content concerns me:

...“when you check with Myer or David Jones, whoever, JB Hi-Fi, Good Guys, it’s nothing of their sales, somewhere between half and one-and-half per cent”, says Harvey

"I get out there and tell it like it is, but I get bloody castigated and pilloried."

Gerry's saying that online gets the media attention but the facts are that it is not doing anything significant.

Let's consider a few points of reference:

• National (Australian) retail sales are dropping – the trend is down;
• Department stores sales tumbled 10.2 per cent, making them the largest single contributor to the July retail sales fall, according to the Australian Bureau of Statistics. So-called 'other' retailing fall 2.8 per cent while clothing, footwear and personal accessory retailing slipped 0.9 per cent in the month;
• In contrast, online sales are growing at up to 25% per annum – the trend is up;
• Online purchasing rose by 24 per cent to a record $11.7 billion over the year to July, according to the National Australia Bank online sales index, released in August;
• Online sales accounted for 5.3 per cent of the retail market, up from 4.9 per cent in January, NAB said.

 What does that mean?

It means that if Gerry Harvey and his cohorts are only seeing “half to 1 percent” of their sales in online then they are under-performing the current online market by at least 5 times. You might say that their product categories are just misaligned with the online market, but that's not what Kogan sees as they report explosive sales growth and record sales for the month of July 2012, and Appliances Online also reports explosive growth (from a low base).

So if your sales as a whole are dropping in a segment which is trending down, and your online sales are performing at 1/5 of the average in a segment growing at 24%, then what's the straight-talking prognosis? I'll leave that to you!

Place your bets please gentlemen

Now if you were to place your bets on online versus “the Gerry Harveys” which would you choose?

Jack Welch once said "If change is happening on the outside faster than on the inside the end is in sight".

On that basis some commentators have called for Gerry to sack himself, "not because he's too old or frail — he remains whip-smart — but because his initial success in building Harvey Norman blinds him from imagining a different future for it".

On face value that's a fair call.

Why are they researching and not buying from us?

In recent comments Gerry Harvey also observed that customers did do price and product research online.

"A lot of them [Harvey Norman franchisees] say people do research online and so the number of people that are researching our product online has jumped 25 per cent but our sales haven't jumped at all."

Does that suggest something to you? I don't get it, this man has been so successful, what can't he see?

I do research online in a store, If I like the people I ask for a price match. If I don't like them I just go to another store where I like the people AND they price match. If they don't price match then I don't buy from them - it's that simple.

Here's the problem, I'll spell it out. I know that the pimply-faced kid in Dick Smith is just trying to sell me the thing that gets him the highest commission, same in Harvey Norman in the mobile and computers. Sure, the guy in whitegoods is older and smoother but he's just flogging the aircon or washing machine with the highest commission as well. Officeworks is staffed to the lowest cost, and that's the only thing I'm interested in there. And all of these people are totally uninformed, which you can establish by spending 2 minutes on the Internet. Now you are the expert with 2 minutes investment - and these sales people and shop owners expect us to take them seriously - that they add value? That's a 1990s joke I'm afraid.

Playing to the reality

In fact the Masters CEO Don Stallings CEO of the Woolworths/Lowes Masters hardware chain says that an amazing 50% of customers do online price comparison while in-store. That’s a reality and it seems that Woolworths and Masters are playing into that reality, not fighting it. They unveiled their online store in June this year.

"MORE than half the visitors to Masters' hardware stores who are shopping for whitegoods are using a smartphone to check out competitors' prices before making a purchase".

“Customers have the power at their fingertips and Masters fully intends to cater to every customer, regardless of how, when and where they want to shop with us", said Stallings at the launch of their online store.

You'd think that Blind Freddy could see that Masters is on the right trajectory. They know people are researching in their stores. They build a strategy around that reality. They know the people researching will know more about the products and the alternatives than their staff. They know that they have to have an in-store price which is within a "warmth factor" of the prices found online.

So they have to win by trying to capture the customer's heart - build a connection, build a reason to like the staff as people, a reason for customers to want to take their kids with them to Masters and even pay a fraction more but enjoy the experience.

Of course, all this also requires a deep belief in the power of social technologies and especially social enterprise technologies to make a difference. If you don't believe that then prepare now to see your sales shrink in all channels.

Conclusion - place your bets now

So I'm placing my bet on those retailers who know that online might only be minuscule now, but who also understand that they have to adapt and who also appreciate that getting a disproportionately small share of a rapidly growing online segment is a big big red flashing light.

Jack Welsh's observation is a keen one, and closer to home Rohan Lund the new COO of Seven West Media Group was recently quoted in the Australian Financial Review saying that the thinks that the next 5 to 10 years will be transformational for Australian business.

"I think retailing will fundamentally change from what it is today".

Just to remind you of what Gerry thinks:  "it’s nothing of their sales, somewhere between half and one-and-half per cent”.

Where are you placing your bet?

Are you comforted by the "it's only 1% argument"?

Gerry Harvey is not a dinosaur and I don't agree with him being portrayed as one, but he does have his head in the sand on this issue.

Walter @adamson
http://xeeme.com/walter
Join me on G+

Related: Paul Wallbank just posted Goodbye to the electronics store
Related: The great online shopping debate — how the locals can win
Related: Customers queue overnight outside Topshop Sydney October 4, 2012

PS: Today (20 September, 2012) comScore released a study on U.S. smartphone behavior with respect to retail and shopping. The study found that 4 in every 5 smartphone users ... accessed retail content on their device in July. If this smartphone usage ratio applied in Australia then it would represent about 12m users! (Australia has a mobile penetration rate of 130% and 66% of mobiles are smartphones, and the 2nd highest smartphone penetration rate in the world after Singapore.)

PPS: Another proof point: a survey just released (26 September, 2012) by Choice, a consumer advocate group, identified Harvey Norman as having the lowest customer service rating among large Australian retailers with "pushy, poor service" and a "lack of product knowledge". Somewhat predictably Gerry Harvey responded that Choice has "got an agenda" and claimed "our service is fantastic". Oddly enough, those retailers that topped the list did not claim that the survey was poorly conducted or biased or had "an agenda"!

PPPS: Also reported today (26 September, 2012) that Dick Smith who rated a mention from me in the post as an example of a past-use-by-date retail model is to be sold for a song by its owners. For a business that a short time ago had 380 stores, and recently wrote down $420m, today's valuation of between $10m and $50m is a testament to the dangers of denial in retail today.

HP Marketing and social media via Marc Farley 3Par

Repost Quote:

The social media people assembled there included influential bloggers;  Ilja Coolen, Alessandro Perilli, Chris Evans, Greg Knieriemen, Paul Miller, Chris Mellor (yes, Chris Mellor from The Register, who spans both traditional journalism and social media), and HP insiders; Tom Augenthaler, Kristie Popp,  Chris Purcell, Andy Bryant, Lee Johns and Calvin Zito. The group dynamic was terrific - a lot of energetic conversations and humor.

via www.storagerap.com

While reading Oakleaf's Systems tremendously useful resource on Windows Azure I came across their article about cloud storage portability, and Roger Strukhoff's article. It also mentioned Marc Farley of 3Par which was recently "sucked into" HP as he wrote in his own blog www.storagerap.com where he also described one his first HP marketing events in Barcelona.

The title "Working Socially in Barcelona and the future of EVA" was lost on me until I got to the section which I clipped above, where he mentioned the attention to social media given by the HP Marketing team.

They invited influencers, and sat them in the front row. So the list is a nice list of influencers for one of your own lists, and also the people in HP who are active. You can see that it paid dividends with a complimentary article from Ilja Coolen for example, who also appears to have been an "influencer guest" at an F5 marketing event in July. So he has good brand reputation and appears to be in demand.

Chris Evans gives a more in-depth post, and while I can't see that either Greg Knieriemen or Paul Miller have written specific posts their sites are a mine of relevant information, I particularly noticed Miller's post The Cloud has a place,even inside heavily regulated industries which "counters the widely held view that regulated industries like financial services cannot make use of Cloud Computing. They can, and they do." (GigaOM Pro subscription required) Chris Mellor, describing himself as one of sundry journalists invited to Barcelona wrote a straight-laced piece (Mellor is reputed to be most read storage reporter in the world).

The HP insiders wrote informational pieces about the HP Pod, a good video at Kristie Popp's post, Lee John's used his personal Twitter and Calvin Zito wrote a more personal kind of recall on his HP blog.

It appears, no science here, that HP achieved good coverage for their storage announcement, coming on top of their 3Par acquisition, which may have otherwise got no further than a press release since in the main the influencers said "hey this is a great step forward for HP but still represents an undifferentiated position in the market".

Just like HP was not a company that sprang to mind with regard to leading storage solutions, it also wasn't one that sprang to my mind in relation to social media. I think IBM, EMC, Cisco, Microsoft, Dell... but not HP. Perhaps this event has moved both of those profiles a fraction higher.

Are you aware of HP's social media efforts - what are they?

How do you rate HP's social media efforts versus the industry leaders?

http://xeesm.com/walter

Related articles

• On the Call: EMC CEO addresses HP-3Par deal (seattletimes.nwsource.com)
• HP taps 3Par chief to head its StorageWorks (news.cnet.com)

Sticky start to Vaseline's 140th Anniversary promotion

By accident I came across a promotion for Vaseline's "140th birthday". It's a product owned by Unilever - a company which boasts 1H2010 sales of €21.9 billion, "underlying volume growth 6.6%, underlying sales growth 3.8% and underlying price growth (2.6)%, underlying operating margin up 30bps with continuing strong gross margins offset by significant investment in advertising and promotional expenditure, up 180bps and a net cash flow from operating activities €2.2 billion, up €0.2 billion".

It's big outfit, with massive resources - more than 13,000 people across North America alone  – generating nearly $10 billion in sales in 2009.

As the promotion byline Vaseline asks “How Do You Flip for Vaseline Petroleum Jelly?” and "to celebrate the wonder jelly’s 140th anniversary, Vaseline is compiling the ultimate list of uses by inviting fans to share how they flip for Vaseline Petroleum Jelly".

The campaign centres on social media, and in particular their Facebook page:

...where loyalists can share their favorite uses. The 140 ways Vaseline likes best will be showcased in a video montage highlighting the wonder jelly’s versatility. Everyone who submits a tip will be entered for a chance to win1 a limited edition jar of Vaseline Petroleum Jelly which has been bedazzled with Swarovski crystals.

Nice :)

Where it gets a bit sticky is that the Facebook Page isn't there?!!!

Well, it is there, but empty!

The promo urges you to log on to the Vaseline page and share your tips and usage. And the Wall breathlessly urges:

The Official Vaseline Facebook Page Have you seen all of the new, exciting things happening on our page? Check out the "What's New" tab for a chance to win some cool prizes!

When you click on the What's New Tab, which has also been set as the landing page for facebook.com/vaseline, then you see COMING SOON.

Fair enough. These things happen, but I was a bit taken aback that a massive concern like Unilever doesn't care to coordinate it's PR and "buzz" with the ability to capture that buzz at the destination. It's a bit sloppy, maybe the rollout logistics got stuck in the Vaseline jelly?

Just as another thought about the campaign, although they did manage to get their Twitter page up and running, there is no link or integration to the campaign as a whole. The Twitter URL goes to a generic product page, which again has no connections or links to the Facebook page and campaign. Yet the PR builds this expection of a cross-linked event:

For 140 years, people have been talking about their favorite ways to use Vaseline Petroleum Jelly and now Vaseline is crowd sourcing some of the best tips from fans. The campaign will engage consumers via a newly launched Vaseline Facebook Community (www.facebook.com/vaseline) and Twitter page (www.twitter.com/vaselinebrand) where loyalists can share their favorite uses. The 140 ways Vaseline likes best will be showcased etc etc

I just wonder if anyone thought about the implementation of this linkage as the Twitter page is a dead-end, and from there I'm unsure how anyone would battle back to find the Facebook page.

I also wonder if it struck Unilever that there is a great coincidence gone begging - that the 140th anniversary and the 140 ideas they wish to select and promote coincide with the 140 characters of a tweet? To me this would have provided a vehicle to make some buzz, and to also provide more links between Twitter and the Facebook "community". I don't know what, I'm not that creative, but perhaps they could have used the 140-140-140 to be a really special focus on Twitter as the centrepiece of the promotion - as a hub to spoke out to Facebook?

When you sit back and look at these various aspects of the campaign and how it's been executed so far, it looks a little half-baked don't you think? I'm sure that Unilever can do better, but unfortunately in this case a whole lot of wheels have come unstuck (or got stuck depending on your perspective!).

But you know I am actually curious about the best 140 uses of Vaseline, I think that we could be amazed, so I've liked their empty Page.

How do you think this effort became unstuck in the corporate labyrinth?

How should have Unilever verified the rollout better?

How did their social media team break down?

Do you agree with me that their Twitter connection appears to be a dead-end in terms of this promotion?

Would you agree that the 140 years and 140 ideas could have been "buzzed up" with a connection to the 140 characters of Twitter?

http://xeesm.com/walter

Related articles

• Vaseline Asks "How Do You Flip for Vaseline Petroleum Jelly?" (eon.businesswire.com)

How Small Business uses Facebook for B2B

It's a question which is still asked everyday - isn't Facebook for friends and consumer brands why would I use it for B2B?

We all know about the big B2C guys, the Starbucks, Pringles Adidas etc, but how about smaller businesses and B2B? The big B2B guys are all over Facebook e.g. Intel, Cisco, IBM, we'll stick to small SMB examples.

Here are 5 SMB B2B Facebook pages:

How about Mid West Laboratories, for "analysis you can trust"? Tied to their blog, a basic but functional one, they take full advantage of a Facebook presence. They are obviously tracking news and keywords, as this is often the topic of a blog post, which in turn is fed through to their Facebook page (that tracking is easy to do using Google Alerts).

Who'd have thought, staid McKinsey's have a Facebook page, and they are dealing exclusively B2B and with the very top C-level! They have a good selection of videos, and the link on their main Facebook profile goes to their Twitter account, not their homepage! I guess McKinsey's isn't really a "small business" however it's more the point about their C-level audience and Facebook which is the surprise.

Or how about Parature on Facebook, one of my favorite examples. Parature sells Customer Service Software to companies, like Southwest Airlines What I really like about this example is that Parature also provides for the use of Facebook Pages themselves as a customer service portal. They also make full use of the Video, Slideshare, Events and Conferences elements of their Page.

Allied Building Products Facebook Page makes good use of the Events in particular, and you can also search the status of your job application.

Finally how about Chinese Lawyer ,Shanghai, "International Lawyer for your business in China!" who has more than 2,500 "fans"!!

Hints: if you are looking for inspiration check out Custom Facebook Pages, they have a great gallery, and the tools, and more at Facebook Designs. And here are 5 Tips for B2B Facebook Pages from Hubspot, and Mari Smith is the ultimate guide for small business on Facebook. Don't forget that integrating your website and Facebook will get the best results, see "Social strategy: Web integration to leverage brand advocacy", and if you are looking for a tool to better manage your time spend in the social media generating leads or following thought leaders check out Xeesm.

http://xeesm.com/walter

Related articles by Zemanta

• Parature Brings A Customer Support Tab To Facebook Pages (techcrunch.com)
• This Week's Headlines on Inside Facebook (insidesocialgames.com)

| 09.11.08 | My weekly ramble in social spaces and places

Where I've been this week in the social web's places and spaces:

• Keen to get a quick update on Social Media Tools sign up for the Social Media Tools Week, starting November 16.
• Very level-headed article worth reading "the customer is the customer" and not necessarily always right.
• TeemingPod allows you to - share PPTs and collaborate around it - get user comments on each slide - tag slides with relevant keywords - recommend useful slides - through a "pod" or widget on your website.
• Linkedin Discussion: great case study from Australia "Zero to 40,000 fans. How Mudo built the largest and most engaged branded Facebook page in Australia" pdf.
• Cosmetics for a $1 - through a series of social media pushes and at home parties, cosmetic company e.l.f.'s business has exploded over the last few years.
• Mozy (online backup) won a social media award for their Twitter support and customer interaction - best business use of Twitter.
• Huffington Post - Andrew Cherwenka - The Problem With Social Media Agencies good comments.
• In a blog post, Twitter says it has started an experiment that will "show higher quality results for trend queries by returning tweets that are more useful".

http://xeesm.com/walter

From my brand or your brand to everyone’s brand

There's a lot of interesting and thought-provoking discussion about "who owns brands" being stimulated by the impact of social media.

For example from Beth Harte of MarketingProfs:

If you’ve hung out in social media circles long enough, I am sure you’ve heard “you don’t own your brand, your customers do.” Nothing can be further from the truth and why we need to be very careful with how we phrase this as marketers, consultants, agencies, etc.

FACT: You do own your brand and brand messaging

FACT: You don’t own relationships customers have with your brand.

And I've weighed in thinking that while brand is alive and yours, "branding" is dead as in sending messages which "position" your brand into the social media.

But I'm on the fringe, and so when someone at the heart of consumer marketing speaks, from a company active in social media, I listen. Here's what Jose-Alberto Duenas, marketing vp of ready-to-eat cereals of Kellogg U.S. said in an interview in BrandWeek:

BW: What’s the greatest insight you’ve learned from using the digital/social media space?

JD: It’s an enabler of the relationship between consumers and the brand. It strengthens what you have. It gives you an opportunity to listen to what consumers think and feel about the brand, and also, one of the biggest lessons we’ve learned is “transparency is key.” That’s basically because you are moving from “my brand” or “your brand” to, actually, “everyone’s brand”. And that is a very interesting [transition].

So it's everyone's brand, and the key is transparency - and it is a journey.

Planning the journey, recognising the true starting position, managing the risk as you go, understanding the organisational change, the cultural change - perhaps these are now the things on which we should be focused and not the debate.

	| | | | | | Save to Mobile Scan my QR Code	I blog about the IT Industry & the Cloud Shift, customer engagement & social media , and business value & innovation, and in particular where they overlap.
Melbourne Lead for Kinship Digital - delivering to business social strategy, tactics, monitoring, governance and tools. IT exec since way back, former Internal Auditor, blogging since early 2004, Tweeting since 2007, certified social business strategist since 2009, still learning. CoFounder and Partner of the Social Business Consulting Group. Qualified in Mathematical Statistics, Computing Science. Old eyes, new views. Give me a tweet. More bio here. Contact: walter@walteradamson.com  m: +61 403 345 632 Keywords: Social enterprise, social governance, social monitoring, community platforms, predictive analysis, IT strategy, customer value proposition,SaaS, cloud strategy, go-to-market, digital engagement.