WH Smith Munch – A brand with fake values is a brand that is destined to fail

I was at east Midlands Airport recently and they have something of a captive market for their meal deals with both Superdrug and WH smith offering meal deals for £3.99. On the surface this looks like great value.

WH Smith is a brand that started 224 years ago in 1792 in London and has 1,351 outlets with 615 on the high street and 736 travel outlets in airports and stations. It turned over nearly £1.2 BILLION in 2015 and employs 14,500 people.

So with all of these years of experience, heritage and the sheer number of interested parties, you’d think they would understand the concept of authentic brand values. Built on this history and surviving the worst of the high street recessions they really ought to know better.

But they don’t. They have an own brand product in store called ‘Munch’ which is entirely fake.

WH Smith Munch Sandwich a brand with totally fake values
WH Smith Munch Sandwich a brand with totally fake values

Munch, which is a range of sandwiches and wraps, tells you you can ‘Grab a bite of the good stuff’. A pretty compelling proposition for food on the go. They back this up with a brand support statement that says ‘Gloriously delicious food-to-go. So irresistible everyone wants to get their paws on it! Satisfies even the wildest of appetites…’

WH Smith Munch Sandwiches with a brand statement that is totally fabricated
WH Smith Munch Sandwiches with a brand statement that is totally fabricated

But the sandwich was disgusting. I didn’t want more, I never want to eat it again, I never want to eat anything for sale in WH Smith. I didn’t even want to finish the sandwich. Eating it, made me feel ill and dirty. Eggshell in the egg mayo didn’t help and even the bread was stale and unnatural. So I had to have look at the ingredients.

This was a total shock. I was genuinely horrified with what it contained and it bore no relation to the brand values all over the packaging whatsoever.

WH Smith Munch Sandwich - The ingredients 100% horrible with an added of 18% of total shit
WH Smith Munch Sandwich – The ingredients 100% horrible with an added of 18% of total shit

Even trying to ignore the fact that claimed ingredients added up to 118% (It must be all the shit they have piled in to make it taste less natural and healthy) the list was not all all irresistible. In fact it was entirely resistible.

I won’t be eating ‘Munch’ again. I’d suspect that if this is how WH Smith run their business, they are in trouble. I’ve talked about Tesco in the past and the start of their problems being with the quality of their products, which all came true. Any brand that says one things and delivers another like Abercrombie and Fitch will be found out soon enough. WH Smith are that brand.

I’m no whistle blower, but if I had any money invested in WH Smith, I’d get it out fast. This is a brand heading for the gutter.

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The real health of the Tesco brand

Dave Lewis, Tesco chief executive

 

We saw recently that Tesco announced a quite staggering £6.4bn loss on trading. A huge headline figure, but in reality a total myth to allow the business the time and money to restructure.

The loss was caused by £7bn of one off write downs including a property write down of £4.7bn. Now, I’m no accountant, but if my maths are anywhere near right, this will meant they can reclaim at least £1.4bn in tax on their profits they paid last year and maybe claw some back from previous years too. So rather than lose £6.4bn, they have actually made £2bn in actual cash profit in the last 12 months. With me so far?

On the day that Tesco made the announcement, their share price fell by 5% to 223p. But in reality it had been at a low of only 150p during that same year and it is a huge growth in actual value over the same period. It’s at around 216p today. Hardly the sign of a business in crisis in the eyes of the market.

The disparity in their profit is far stranger when you consider how they got away with such a HUGE property write down when Helical Bar, the (mainly) London based Property Developer announced yesterday that their portfolio had increased in value by 27% in the previous 12 months?

Each of the other supermarkets seems to have followed suit with huge portfolio write downs, which only goes to confirm that it is another corrupt accounting practice each of them is employing to claw back tax.

Jack Welch, the former GE CEO said in a famous interview that with bad news, you have to get it all out fast, as it’s going to come out anyway. This feels to me what Tesco have done. They have painted a picture that is even worse than reality to shock the expectations lower.

This will give them the time, money and opportunity to take stock and rebuild the brand by putting in front line staff. They need to rebuild relationships with suppliers and build trust with customers. They need to listen, adapt and listen some more. And then they need to action their ideas fast, before the market moves again.

The Tesco brand is not dead, it’s just sleeping. It’ll be back and hopefully with a little more grace and a desire to please customers rather than only focus on the profit.

Why ‘The Apprentice’ is bad for business

Lord Alan Sugar of The Apprentice
Lord Alan Sugar of The Apprentice

For years I’ve been avoiding avidly watching ‘The Apprentice’. Last time I watched it, I saw them attempt a dreadful rebrand of Margate. But this week, I was asked to give it another go and I found myself hating it even more.

The group had the task of creating a new dessert product to sell into the major supermarket groups and the team who did worse only managed to create and sell 15,000 units in their allotted few days, whereas the winners sold 23,500. So why do I think this is so wrong?

1. The competitors behaviour in the boardroom was horrific. Initially they worked as teams but were encouraged and delighted by the fact that they should back stab their other team members in front of “Lord’ Sugar. I’ve been in business for a long time and maybe I’m the naive one, but a situation where the other person has to lose for you to be able to win is not a situation I recognise or respect. I don’t believe it sustains good business.

2. ‘Lord Sugar’s’ feigned ignorance was appalling. He sneered at one of the competitors for referring to their target audience as ‘grazers’ If he genuinely didn’t understand this term, is he qualified to judge such a programme?

3. The situation itself was completely ridiculous. For young people to believe that it’s the norm to pop into a development kitchen and create a new dessert without even a nod towards costing it up properly (more Saffron anyone?) is bad enough, but for them to carry on the myth by pretending they had secured pitches in front of Tesco and Waitrose is even more ridiculous. For them to pretend that they then ordered units without any production ability or drawn out negotiation just perpetuates the stupidity.

4. And then it came to the judging. The esteemed ‘Lord’ Sugar decided who he wanted to belittle first. A young lady with an idea about a healthy eating restaurant chain emanating from Sunderland was literally laughed out of the boardroom. But what had changed? That was the business idea she had pitched to get onto the programme, so when did it suddenly become something worth ridicule? It was nasty and spiteful and all to do with bullying on TV. She had been set up for that fall since she agreed to join the programme.

For me, business is built on the old fashioned values of mutual respect, trust and hard work. Throw in some luck and grasping the good opportunities that present themselves, whilst knowing which ones to pass over, is the difference between success and failure.

The Apprentice is X Factor business. Nothing to do with ANY of these business values and everything to do with creating shocking TV and making money at any cost, despite how many people you harm on the way. If this is the impression we give young people about how business behaves, in my opinion, very few of them will choose to join us. Those that do will be horrendous colleagues trained in the very worst of business behaviour.

This isn’t an apprenticeship, It’s an ugly beauty parade that’s causing harm to the future of business.

Thanks to TV Choice magazine for the picture of the pin up boy for business, Lord Sugar.

Waitrose, Tesco, trust and horse burgers

Horses wouldn't be served at Waitrose, because we trust them and it's in their values
Horses wouldn’t be served at Waitrose, because we trust them and it’s in their values

I did a workshop at Nottingham Trent University yesterday and one of the key points I wanted to get across was brands who work with very focussed brand values have clearer marketing messages. More than this, they have clearer business propositions and it would seem to me that they are ultimately more successful as businesses too.

Take two companies, Tesco and Waitrose.

Tesco brands says ‘Every little helps’. What this says to me is that they chip away and chip away at every tiny little cost to try and drive the price down to one that is almost unsustainable by the supplier. I’m not saying I agree with them throwing a horse in with the beef to make a value burger, but I do think it may have de-specced the product to such a degree they just needed to add the protein to get them to the 63% meat content that their recipe demands (which is higher than Birds Eye’s Value burgers 45% meat!), so really, what do we expect?

A horse didn’t just fall into that beef vat by accident. Someone threw it in, knowing they needed to add some cheap meat to make up the weight of their consignment. That’s supplier desperation in action.

Waitrose work on the core brand value of ‘Trust” and for me, this comes trough everywhere. I just don’t believe they would buy their meat on the open market, without knowing where it came from. I trust them. For me, they have almost become curators of good food choice. If they sell it, then we know it’s going to be pretty good – certainly for supermarket food and we can be pretty sure it won’t contain horse.

It’s too easy to take pot shots at the giant that is Tesco, but they deserve it in this case. Their values are wrong and too many of us care about what we eat for them to remain as the force they are now. They need to change their values, change their brand behaviour to be a little more loveable and change the way they treat their suppliers. Or, they’re off……

The trouble with Tesco

tesco_logo
Tesco - a brand to trust? Hmm, Not in my opinion.

Tesco as a business isn’t doing badly. It’s profits are still huge, even if they are slightly down on previous quarters in the UK.

But for me, this is masking a much bigger brand problem and that is because nothing they offer is special any more. They don’t make customers feel valued, they don’t surprise or delight us, they just keep chipping away at prices by chipping away at suppliers who have no choice but to chip away at the quality.

We have always believed that the way a brand should behave is to decide a price and then see how good you can make the product for that target price. To me, Tesco look like they are aiming to produce all of their goods as cheaply as possible and not seeing how good they can make them for the money.

This is a short term profit boost that leads to long term decline.

Look at the section with motoring and cycling products. If you are even slightly into either pastime, you will see that what they are selling is utter crap and not cheap either. This is one tiny category in a huge store, but it’s reflection reaches far and wide in perception. If everything in the store is as badly produced and as nasty as this, why would I trust the brand overall?

Unless they up their game, start focusing on quality again and start treating their customers as intelligent individuals who do have a choice, this will be the first of very many profit warnings to come.

Tesco sandwiches and health

I had a bit of a wake up call yesterday with the discovery that I have (very) high blood pressure.

Now I’m not (that) fat, I think I eat pretty well and almost all of my food is cooked fresh as I love cooking.

But initial feedback is that my salt intake is probably much to high, so I’ve started looking at everything I eat.

Not sure that LoSalt and others like it are much of a solution as a friend of mine pointed out yesterday that it just swaps sodium for potassium, which is different but still bad.

This was highlighted years ago in this BBC report from 2007.

But nothing seems to have been done about it. The lowest salt sandwich in the whole of the Tesco lunchtime offer (including all their ‘healthy options’) delivers you 19% of your total daily recommended intake. The highest is over 43%, which is horrendous. Weirdly, the sandwich fillers they sell are all quite low fat in themselves, which has to point the finger at their bread.

I guess I am going to have to start making my own lunches, as Tesco aren’t changing fast, if at all.

Brands that kill their customers, die in the end themselves too.

Tesco and Robin Hood – Rob from the poor to give to the rich

Tales of Tesco Hood
Tales of Tesco Hood

I have written before about empty shops in cities and what I believe is the solution. Flexible rents for start-ups and some understanding in the payment of business rates. The latest move reported by the BBC that Tesco were to take over the former Tales Of Robin Hood site in Nottingham, proves it’s still not being addressed in any effective way.

As one of those unfortunate enough to be on the receiving end of the presentation from the Bass Museum team who did have plans for the site, this is a real shame, but no real surprise. That proposal was so flawed as to be embarrassing.

So why would Tesco move in and not look for longer to find a decent alternative tenant?

Let’s say that the rent on the site would be £100k per annum and as we know, Tesco own the head lease. After six months empty, they will have to pay a full business rate, which adds another £41.5k to their bill. So, for them to leave it empty, costs them £141.5k per year. Therefore, as long as they lose LESS than that as a Tesco Express store, then it’s worth them opening it.

In effect they are being incentivised by the system to open up all over the place.

Surely it would be better for the long term good of the city to have some retail diversity?

Or maybe a Robin Hood attraction, or even a permanent exhibition.

Let’s set the Sheriff of Nottingham on ’em.

Thanks to the somewhat out of date Nottingham Tourist Guide for the image.

Christmas shopping – Online shopping

I may not be that normal in many respects, but I do often get onto trends quite early and this year, I have shopped for Christmas differently to any other year before – and I think shopping may never be the same again.

I’ve written lots about the perfect economy, price driven shopping and how branding can help build differentiation. I’ve even written about online/offline price matching but this year it all clicked into place and a few online retailers got all my business.

Some examples.

Fifa 11. RRP £52 HMV high street price £39.99. Game High Street Price £39.99. Amazon price £24.91 delivered. Using the Red Laser App on my phone, I actually bought it on my Amazon account on my phone standing in HMV. I hope Red Laser are taking a commission.

Red-Laser-Logo

Morse the Complete Collection. RRP £199.99 (yeah right!) Morrisons £50. Amazon price £34.97 delivered. Again, bought standing in Morrisons.

And I bought from Boots, Tesco, Dixons and a few others too. All turned up in plenty of time and I saved a small fortune without having to brave the ridiculous queues at the tills in the stores. There must have been 50 people queuing in the unsurprisingly poor performing HMV. They are playing into the hands of online retailers.

Again, I don’t think i’m particularly tight, but I can see no reason at all to pay more for an identical product and the privilige of buying on the high street.

If the high street doesn’t just want to become a gigantic Amazon showroom, it needs to find a way of reflecting the price of the online retailers.

Sports Direct match online to offline, and I’ve shown before that Waterstones and HMV don’t. Which do you think is likely to still be in business by February?

Waterstones v. Waterstones.com – I know the difference

I just went out to buy two copies of a book for my wife and her Mum and have learnt a lot about online/offline pricing in my little jaunt around the city.

Firstly there are only two real places you can buy a new book (other than the discount end of line retailers) and that is at Waterstones or WH Smith – who are a retailer of sorts.

Before I went out, I looked on Amazon for  target price. £7.49. Now that sounds like good value to me. £5.50 off list price but none in stock and my customers want this book NOW!

The Clean and Lean Diet 14 Days to Your Best-ever Body from Amazon.co.uk
The Clean and Lean Diet 14 Days to Your Best-ever Body from Amazon.co.uk

So it was off to WH Smith, the confused retailer that seems to have ‘buy one get one half price’ on almost everything. Isn’t that what Thresher did before they went bust too? Well, they had the book in stock, but only one of them, so the deal wasn’t that effective. They had a price of £8.44 online. If I had managed to buy the two of them in the store each book would have cost £9.75, so not far off a decent price.

The Clean and Lean Diet 14 Days to Your Best-ever Body - from WHSmith.co.uk
The Clean and Lean Diet 14 Days to Your Best-ever Body - from WHSmith.co.uk

And then onto Waterstones. The only decent sized book store in Nottingham. I was greeted by a friendly young man as I entered and asked him where on the four floors I would find this book. He confirmed they had five in stock at the full price of £12.99 on the third floor.

So I asked the kller questions.

Why could I buy the same book from them online for much less?

The Clean and Lean Diet 14 Days to Your Best ever Body from Waterstones.com
The Clean and Lean Diet 14 Days to Your Best ever Body from Waterstones.com

The answer?

Apparently, and I quote “Because they’re on the Internet, they don’t have the overheads we do.”

Oh, that’s it then, they’re not part of the same group or anything simple, or even based on exactly the same central distribution depot.

I wrote a piece a few weeks ago saying that their new logo was a bit silly and pointless, but did give them the get out clause that a new logo can be worthwhile if it marks a change in behaviour.

You judge for yourself whether this traditional retailer is behaving any different now it has an online presence, or if it is still making the same mistakes as Borders and all the other smaller book stores that have folded before them.

If you offer the same price online and offline (like Tesco and Asda and Sainsbury’s and everyone else with any retailing skill does) you may find that people still buy from your stores rather than looking at you as a showroom or a place of last resort.

Why Tesco want a minimum price for beer

Tesco - Every little (piece of government intervention and price fixing) helps
Tesco - Every little (piece of government intervention and price fixing) helps

Maybe I’m being simplistic, but to me it seems pretty obvious why Tesco are campaigning, along with the government, for a minimum price for beer.

They’ve never behaved altruistically before, I hear you cry!

Well, they’re not now either.

It is pure self interest.

If there is minimum retail price for beer in the UK, do you honestly think that will affect their buying price in any way at all?

No me either.

With the huge growth of global beer brands such as AB InBev, who own the likes of Stella Artois (wifebeater), Budweiser (simply vile) and Becks (iced water), it will allow tesco to do even better deals and grow their buy/sell margin to an even greater level.

Yes, the smaller retailers will have some protection as they will still be able to get their £3 for a four pack, but they’ll be paying £2.40 to Tesco’s £1.20 from their supplier and yet again the little man is crushed.

Beer brands are going through a mad level of consolidation and whilst I have written many times before about a brand backlash and choosing guest ales over the mega brands when we visit our local, it seems that more casualties are coming.

With Bass, Boddingtons and Flowers all up for sale by AB InBev, it seems that we will have fewer and fewer big regionals and be left with globals at the top and tiny locals at the bottom.

This has to present the most amazing opportunity for a decent entrepreneur in the middle ground to buy up one of those three amazing beer brands and build them back up again.

I’d be happy to help with the branding! (and tasting if required)

Updated

It would appear that the Bass brand isn’t really up for sale. In this great article by Pete Brown in the Publican, he gets to the root of what is really for sale. What AB InBev are actually selling is the UK only rights to sell the beer as a draft product. No rights to the name, no rights to the International business and no real chance of anyone being interested in that particular offer. What a real shame for beer drinkers. I certainly didn’t know that Bass and the famous red triangle was the first trademark in the UK. Globalisation isn’t really a good thing is it? It just makes it easier for our historical brands to be destroyed internationally, ignoring all the years of heritage they have created.