September 9, 2009
It’s all over then? Economists certainly think so. Data published by the National Institute for Economic and Social Research, a think tank, suggest the recession ended in May. There’s plenty of circumstantial evidence as well. House prices are apparently stabilising and the City seems to have been gripped with merger fever as the FTSE 100 brushes 5000 for the first time since Lehman’s collapse last year.
Not everyone agrees, however. One eminent dissenter, whom I met this week, is Hermann Simon, co-founder of international strategy and marketing consultancy Simon-Kucher & Partners. He’s not impressed by the uptick in economic activity and warns of a ‘W-shaped’ – or double-dip – recession. In his opinion, a lot of credit failures have yet to materialise. He’s also suspicious of the economic statistics coming out of China. Exports are 40% of China’s GDP – and in June they dipped 26%. The state says it will make up the deficit from internal growth, but Simon is not convinced.
“There’s no easy way out of this recession,” he says. “We won’t get back to where we were merely by cost-side solutions. What we need are revenue-side solutions.”
Handily enough, he has some; 33 in fact, which form the core of his new book Beat the Crisis – 33 Quick Solutions for Your Company. That’s too many to enumerate here. But the gist is, whatever you do, don’t get involved in slashing prices because of a reduction in demand. By all means offer added value, as Hyundai did in the USA with its 3-month guarantee against job loss, or give a discount on bundled products, but don’t cut the price of individual items. One arresting example of price support is the champagne industry. In 2008, it sold 340 million bottles of French bubbly. This year, it reckons on selling only 260 million, so it has taken the extraordinary step of destroying excess volume. Simon says this has worked. Prices have remained stable, despite champagne being a luxury, discretionary item associated with the good times.
July 29, 2009
BMW: Odd timing
A wry thought crossed my mind after I heard that BMW was going to pull out of Formula One. Yes, all right, they’re bad losers. They’ve frittered squillions of pounds a year on a sport that has brought them no glory. Their shareholders are upset, their workforce is incandescent – especially those now facing redundancy as a result of the worldwide squeeze on the car industry. Toyota and Renault will surely follow suit, etc…
But the timing of the announcement seems a little odd. After all, wasn’t BMW one of the leading lights in the prospective Fota championship breakaway? And wasn’t that, ironically, all about stymying FIA president Max Mosley’s plan to impose sensible, manageable budgets on the racing teams?
Now for the thought. Perhaps the increasingly “inappropriate” behaviour of F1 ringmasters Mosley and Bernie Ecclestone played a role, ever so small, in the framing of BMW’s decision?
June 30, 2009
Tamara Minick-Scokalo, head of Cadbury Europe, is leaving the company at the end of July. That much we know for a fact. The more interesting question is why.
According to Cadbury ceo Todd Stitzer, the departure is no more than a delayering exercise aimed at surmounting the “cost challenge” belabouring us all in these straitened times. Ignasi Ricou, currently head of Cadbury commercial operations Europe, looks like being the gainer. He will become president while retaining his commercial functions.
But wait a minute, wasn’t Minick-Scokalo Todd’s blue-eyed girl? That’s certainly what the P&G-bred marketing executive was billed as. She joined only two and a half years ago, from Elizabeth Arden, as global commercial chief and was catapulted to president of Europe last January.
It’s strange, even careless, to let your head of Europe go after six months in the post. Perhaps there were personal reasons? Perhaps she wanted to move on? Maybe. In which case it’s a curious coincidence that her departure has been wrapped up in a management reshuffle that also involves the legal department.
At any event, Fallon London (of ‘Gorilla’ and twitching eyebrows fame) should watch its back. She was the agency’s biggest champion.
June 29, 2009
Suppose the world around us, political and economic, is irrevocably changing. Imagine, instead of long periods of uninterrupted prosperity, punctuated by sudden but short-lived economic contractions, an era in which the management of crisis has become the new normality. Only it’s not a piece of dystopian scenario planning, but a fast-developing fact.
That at least is the belief of marketing guru Philip Kotler who, with co-author John Caslione, has just published a book called Chaotics, The Business of Managing and Marketing in the Age of Turbulence. If their vision is borne out by reality, it will make a nonsense of many of the assumptions which govern current marketing and management strategy.
It’s meant as a short read for C-suite executives on a mid-haul flight. If air turbulence doesn’t cause them to fasten their safety belts, the book certainly ought to.
For more, see this week’s column in the magazine, out on Wednesday.
June 5, 2009
At last, the silver lining in the cloud hanging over Parliament that we’ve all been looking for. Apparently, it’s great for business, especially small businesses, according to an article in the FT. The bizarre reasoning runs as follows. Politicians are attracting all the flak. That means the media is no longer saturated with gloom-filled stories about rising unemployment and companies going bust. Which in turn is persuading consumers that the worst is over and that they can now start spending freely again.
I’m not entirely convinced. And more importantly, nor is Stephen Alambritis, spokesman for the Federation of Small Businesses. If there really is good news about the economy, the preoccupation with politicians and their misdeeds is probably preventing it from trickling through. “We may be pleasantly surprised when the expenses debacle subsides that the recession is not getting any worse,” he concludes. That good, eh?
May 26, 2009
Psst! Want to achieve immortality as a character in the next Frederick Forsyth thriller?
I hear the best-selling author of The Day of the Jackal, The Odessa File and The Dogs of War has come up with a novel way of raising money for his favoured charity, Leonard Cheshire Disability.
For a price, you can star in his next book, which is expected to be published in September 2010. I’m afraid there’s no hint of the subject matter, yet. But he does assure us, oh lucky one, that you will a force for the good. “The character can be male or female and will definitely ‘be a goodie rather than a baddie’, representing the forces of law and order! “
The price is what your name achieves in auction, end date September 1 this year. The opening bid is £2,200, and it is being raised in increments of £100.
Interested? Here’s the link: http://www.buyoncegivetwice.co.uk/lots/frederick-forsyth-character
Think of the Hollywood possibilities.
May 19, 2009
Another set of dreadful results from Marks & Spencer: annual pre-tax profits down nearly 40%, and the dividend sliced by a third.
Could anyone else, in the circumstances, be doing a better job than executive chairman and retail doyen Sir Stuart Rose, who must shortly retire from M&S? Headhunters are actively putting together a list of potential successors. Strongly favoured is Justin King, who has turned around the once-hopeless case of Sainsbury’s. King says he’s not for sale, at the moment. All the same, he’s beginning to look like the uncrowned monarch of British retail.
More on King’s reputation in this week’s column, out tomorrow.
May 18, 2009
We now know that Woody Allen’s reputation is worth only half what he thought it was. But, at $5m, it’s still quite a lot compared to yours or mine. That was the sum fixed out of court to settle an acrimonious libel case with American Apparel owner Dov Charney after Charney took Allen’s name in vain by featuring him, without his consent, as a Hasidic jew in a series of billboard posters. The image was pinched from a slapstick personality who appears momentarily in the film Annie Hall.
Now if I were Charney, I’d say: cheap at the price. It’s an old trick, meretricious maybe, but effective in drawing attention to your brand name. And last employed to great sensationalist effect by Oliviero Toscani in the service of Benetton, featuring such timeless tastelessness as the AIDs patient and prisoners on death row ads.
I don’t for a moment accept Charney’s tortuous explanation that the Allen image in some way drew an ironic parallel between his own situation and that of Allen as two social outsiders. He’s having a laugh, but at least it’s quite funny.
Whether his brand of sensationalism actually sells clothes, any more than Toscani’s, is open to debate. But maybe I’m straying from the point.
May 11, 2009
Greig: KGB agent?
One of the best things about the Evening Standard relaunch has been the projectile vomiting it induced in ex-editor Veronica Wadley.
After dismissing the new look as nothing more than a lickspittle propaganda-sheet modelled on Pravda, she turned her most withering contempt on her hapless successor, mild-mannered ex-Tatler editor Geordie Greig. “As for Geordie Greig, well, Etonians have a history of collaborating with the KGB.” As if he were the Sixth Man, up there with Maclean, Burgess, Philby, Blunt and Cairncross.
Alas, when I looked at the paper I was disappointed to find little that was red, and still less that was revolutionary. The dominant colour ways seem to be an upbeat sunshine yellow and a subordinate showbiz mauve more reminiscent of its rival the London Paper than any Soviet era newspaper. Reassuringly Chris Blackhurst, city editor, is still there and so is grandee Anthony Hilton. Neither of them seems to have changed their stripe.
In fact, the overall impression was evolution rather than revolution. Which is probably just as well. The Standard, or London Evening Standard as it is now called, has some serious fence-mending to do with its existing readership. The “sorry” campaign, in criticising Wadley’s regime, was also implicity attacking the values of those readers (500,000 of them according to her) who had the decency to remain loyal.
It just shows the value of consumer insight when divorced from common sense.
For the record, Veronica, only one of the Cambridge Five – Burgess – went to Eton, and then briefly.
May 8, 2009
A Dickens of a dilemma
It was the best of times; it was the worst of times. It was the age of wisdom, it was the age of foolishness.
“The old adage is: make your move in a downturn and profit in an upturn,” says Andy Street, managing director of John Lewis. Street and his boss Charlie Mayfield are putting their money where his mouth is by launching up to 50 “pocket” stores in the midst of the recession. We don’t know what they’ll be called yet, but we do know that they will contain electrical goods, furniture and kitchenware, aimed at taking share from the likes of Ikea, DFS and Currys.
Now compare and contrast Best Buy, the giant US electrical retailer that owns half of Charles Dunstone’s Carphone’s retail outfit. Best Buy’s aggressive European expansion strategy seems to be shrivelling before very eyes. The plan was, you’ll recall, to open 100 mega consumer stores in the UK by 2013, starting this year. First we’ve had the plan postponed to next spring, now we’re told it is to be scaled back to 80 stores. Robert Willett, chief executive of Best Buy International, is still talking the talk, but this looks like a serious tactical withdrawal to me.
Either Willett is right to be cautious, or Street is right to be bold. OK, they appeal to slightly different markets, but there is overlap. One of them must be wrong, but which?