Retail

Andrew Hill

I can’t remember a declaration of war as emphatic as the one made by Neil Ashe of Walmart on Wednesday. The chief executive of the US retailer’s ecommerce arm told the FT:

We own what we own, and we’re going after what we don’t. We can get to every customer in the world via ecommerce. It doesn’t matter where they live or how much they earn.

In Walmart’s sights: Amazon, the online jungle’s biggest beast. Read more

Not since Sweeney Todd has there been such uncertainty about what exactly goes into processed meat. This time, it isn’t the customers of the Demon Barber of Fleet Street but Romanian horses.

Andrew Hill

Horsemeat scandal leaves severe cracks in Tesco's reputation. Getty Images

Tesco has defined the limit of mutual responsibility for supply chains. Having inquired into the provenance of beefburgers that contained horsemeat, it has dumped Silvercrest, its supplier of frozen burgers, essentially for deviating from the list of Tesco-approved meat suppliers.

“The breach of trust is simply too great,” said Tim Smith, the UK retailer’s technical director, in a statement. (The owner and founder of Silvercrest’s parent told the FT earlier this month it had been “let down” by its own suppliers.) Read more

No corporate activity is as dispiriting, as futile, or, unfortunately, as common as blame-shifting. The tawdry process is familiar to anyone who has worked in business. However, the temptation to lay blame first and ask questions later is greatest at big companies with their web of complex, global suppliers.

Andrew Hill

I predicted that HMV would fail – two years ago. The survival of the venerable British brand, defying doomy analysts’ forecasts, the digital musical revolution and generalised High Street decline, was arguably more surprising than its eventual slide into administration overnight on Monday. It still hurts – even if there is sense in the cold argument that “zombie” companies need to be cleared out before recovery begins. Everyone has shopped at HMV. Its demise has left my son as an unsecured creditor, with £30 of unspent HMV gift vouchers that now have purely souvenir value.

The fact the company lasted this long was partly down to the misfortune of rivals like Virgin Megastore, Woolworths, Game and Zavvi, whose earlier collapse drove CD, DVD and computer game buyers to the few remaining physical outlets. Read more

Andrew Hill

Coffee chain to open in Vietnam. Getty Images

Much is being made of Starbucks’ plan to open an outlet in Ho Chi Minh City in February – “taking on Vietnam’s coffee culture”, as the FT headline has it.

In fact, Starbucks is a little behind schedule – it intended to open in Vietnam in 2012 – and, in any case, I wonder if the significance of the move is not in the headline but in the small print, where the Seattle-based group makes its now familiar commitment to “work closely with local farming communities”. Read more

The post-Christmas come down is a depressing time for a lot of people. For many retailers it is the final straw, when they have to admit that even the December shopping binge has failed to provide enough cash to keep the business trading legally.

As a result, insolvency practitioners and shrewd business journalists will be watching like hawks this week for filings at Companies House, when those in dire straits need to admit that they are planning to call in the receivers or look for a fire sale buyer. Read more

Andrew Hill

There is no need to ask who will be to blame if and when Tesco’s US adventure is brought to an end. Sir Terry Leahy, ex-chief executive of the UK retailer, has already admitted it will be him.

The Fresh & Easy venture comes under “Courage” in Sir Terry’s book Management in 10 Words, published earlier this year. In the book, he called the investment in the new brand “a calculated risk” and pointed out that “even if the entire investment ultimately had to be written off, it would not threaten Tesco’s underlying viability”.

He reiterated that he was “certain that Fresh & Easy [would] be a success”, well-placed to benefit from economic tailwinds “thanks largely to the courageous people who stepped forward to turn an ambition into a reality”. Read more

Andrew Hill

Troy Carter, Lady Gaga’s manager, says he wants to know “how the fans smell”: he walks the arena during the star’s show to get a sense of how they’re receiving the act. Phil Clarke, chief executive of Tesco, has set in motion a retraining scheme for the UK retailer’s managers called “Making Moments Matter”, preparing them for face-to-face contact with customers.

Yet both men work for organisations (if Gaga can be described that way) that have also pioneered the use of technology – the Little Monsters Gaga fan site, the Tesco loyalty ClubCard – that helps them know their customers and run their businesses more efficiently.

The mixed approach they advocate illustrates a theme that emerged strongly from this week’s FT Innovate conference, where both men spoke: how to put the personal touch back in technology? Or, as Aimie Chapple of Accenture summarised at one roundtable session: how do you add the love to Big Data? Read more

Jeff Bezos is on a mission to seek out and destroy military metaphors at work. “You ‘target’ your customers,” Amazon’s chief executive told an audience in New York last year. “I’m, like, what? Why would you do that? That doesn’t make any sense.”

Andrew Hill

Royal Dutch Shell’s plan to reintroduce attendants to the forecourts of Britain’s petrol stations is bothering me.

Don’t get me wrong, I’m all in favour of better service, but, as everyone knows, such improvements – particularly the personal “shall I check your tyre pressures, madam?” service promised by Shell – cost money. I’ll drink a litre of unleaded if the Shell plan isn’t really based on selling more stuff. Read more

Andrew Hill

Jeff Bezos is famously smart but I wonder whether he has thought through all the political implications of Amazon’s strategy of becoming back-office ecommerce infrastructure provider to the world.

The first part of FT colleague Barney Jopson’s series on the etailer was full of insight, but it was the comparison between Amazon and investment banks that struck me most forcefully. As Barney writes:

One investment banker says Amazon’s position is reminiscent of Goldman Sachs’ dual role as a broker and trader at the centre of capital markets. “People complain about conflicts of interest. But you still have to do business with them.”

Like Goldman and others, Amazon has set out to simplify the life of its clients, so they can concentrate on what they do best.  One business identified by the FT investigation – RJF Books and More – has delegated the “selling, shipping, customer service, payments and complaints” functions to Amazon, which left me wondering what else was left for RJF to do. Simplification was a strong theme of my recent trip to Silicon Valley, where countless start-ups, and a few larger businesses like NetSuite and Salesforce.com, are offering businesses the opportunity to “plug in” their operations to outsourced back-office services and payment systems. Read more

Andrew Hill

I can’t help thinking that Jesse Boot and Charles R Walgreen Senior were destined to meet eventually. With Tuesday’s deal between the UK’s Alliance Boots and Walgreens of the US, the paths of the two pharmacy chains, each founded more than 100 years ago, finally cross. Boot – son of the original founder John – was said to have a “talent for business”; Walgreen, though he built his business more slowly initially, “instituted a level of service and personal attention unequalled by virtually any other pharmacy in Chicago”, according to the company history. Read more

Andrew Hill

I wonder what Sir Terry Leahy, former chief executive of Tesco, makes of the fanfare about rival UK retailer Marks and Spencer launching a bank with HSBC. According to Marc Bolland, M&S boss, the rationale for putting 50 bank branches inside its stores goes as follows:

This bank will be built on M&S values; putting the customer at the heart of the proposition and delivering the exceptional service that sets us apart from the competition.

 Read more

Andrew Hill

There were some interesting foretastes of Monday’s deal between Amazon and the big UK bookstore chain Waterstones in comments made by the latter’s managing director, James Daunt, at the FT a few weeks ago.

Mr Daunt – who had previously called the etailer a “ruthless, moneymaking devil” – spoke at a roundtable in early May to launch the Financial Times and Goldman Sachs Business Book of the Year Award. You can listen to a podcast of his initial interview in which he pointed out that all bookshops had to find ways to make the environment for book-buying attractive again. He added:

The largest of us face the additional challenge of how do we become a relevant part of this new digital world, in which, clearly, a substantial part of the reading that our customers engage in is going to take place.

  Read more

Andrew Hill

With scent and skincare giant Coty’s $10bn bid approach for Avon Products, the descendants of Johannes Benckiser have put Bart Becht straight back to work.

Lady Gaga’s first perfume 'Monster', made in conjunction with Coty, is due to be released this year. Image by AFP/Getty

Lady Gaga’s first perfume 'Monster', made in conjunction with Coty, is due to be released this year. Image by AFP/Getty

Mr Becht stepped down last summer as a highly acclaimed (and paid) chief executive of Reckitt Benckiser, the listed household goods and personal care group in which private family company Joh A Benckiser has a 15 per cent stake. By November, with the applause of Reckitt’s investors still ringing in his ears, he had stepped in to chair another Benckiser holding – unlisted Coty, the biggest fragrance company in the world, with perfume brands from Calvin Klein to Lady Gaga’s forthcoming ‘Monster’.

For all the soft-focus marketing of Coty’s products, Mr Becht’s “Dear Andrea” letter to his Avon counterpart Andrea Jung is as direct as the sales pitch for his former employer’s popular Cillit Bang grime-cleaner. The Dutchman writes:

We were surprised and disappointed that Avon’s Board of Directors has no interest in a discussion to explore our acquisition proposal…. We do not understand how your Board’s unwillingness to discuss our proposal can serve the best interests of Avon’s shareholders.

 Read more

KFC tempura chicken strips get progressively spicier, the deeper you penetrate inland China. Iglo’s frozen fish fingers used to have four different colours of breadcrumb, depending where you bought them in Europe.

Andrew Hill

Luxury goods companies increasingly seem to inhabit a parallel universe.

Many ordinary shopkeepers – at least in the recession-blighted west – are grappling with slumping sales, falling share prices and the threat of bankruptcy.

In the US, in an effort to offset worse than expected post-Thanksgiving trading, many stores caused confusion, according to the New York Times, by bringing forward “Super Saturday” – a day of pre-Christmas discounting – to December 17. In the UK, the bleak outlook for the likes of HMV, Peacocks and Blacks Leisure, is a symptom of what one analyst forecasts will be the worst Christmas for a decade.

Contrast that gloom with the great expectations of the luxury brands. On Wednesday, Mulberry announced it would appoint Bruno Guillon, a director of Hermès, the high-end French company, as its next CEO. He’ll lead the UK bagmaker’s push into Asia. The group’s shares added another 3 per cent, having risen 60 per cent in the past year. Read more

John Gapper

Whoever thought up Amazon’s latest idea for squeezing other retailers – offering money off to people who scanned prices in US stores with its smartphone app and then bought the goods on Amazon – deserves an award for bad timing.

John Gapper

J.C. Penney, the department store chain, has pulled a fast one by nabbing Ron Johnson, head of Apple’s retail stores as its next chief executive.

The runaway success of Apple’s stores, despite early predictions that they would go the way of other capital-intensive efforts by product manufacturers to reach consumers, have prompted many imitations but none have worked as well. Read more