03 February, 2012

Nigella Versus the Supermarkets

Melbourne Herald Sun, Friday February 3, 2012

Nigella Lawson walks into a quaint old-fashioned greengrocer's and spouts lovingly about the beautiful vegetables and fruits in their handsome cane baskets.

She picks up a pair of eggplants, holds them above her ample bosom and drools about how fresh they are. Meanwhile your wife wonders why you have suddenly developed such an interest in TV cooking shows.

For the most part, though, buying fruit and veg is not such a sensuous experience. We dash into the supermarket, grab a few spuds and greens, and rush off to prepare for tonight's dinner.

Greengroceries are a staple that we cannot live without, and they represent $15 billion of our annual spending. As we know from the posters and ads that follow us from the kinder to the nursing home, we should all eat more fruit and vegetables, they are good for us and necessary for our daily health.

Not that we have been taking much notice. Surveys by researchers Morgans show that in the past eight years our spending on fresh fruit and vegetables has barely changed.

What has changed is where we buy our greens. The supermarkets have put relentless advertising pressure into pulling us into the stores, knowing that once inside we won't buy the potatoes without the meat, gravy and trimmings.

So the category becomes a "lost leader". That's where the supermarket cuts the price of goods to below cost just to drag the customers in. It's the same trick they have been using with milk.

There's a lot of this going on right now, if you leaf through the pages of this newspaper. Coles lost a lot of ground in their produce department under the relentless advertising of "Woolworths the fresh food people". Morgan's found a severe drop of Coles market share against Woolworths, from 2005 to the present day.

This week Coles launched their campaign slashing their green prices by half. What's surprising is that it took them so long to respond to the challenge.

In the fresh foods area, Woolworths sell $8.6 billion as against Coles' $6.3 billion. In greens the proportion is greater - 26 per cent versus 19.6. Coles had to fight back.

Unfortunately this battle between supermarkets makes everyone else become the tortoise in the field when the elephants fight. Already the two giants, Coles and Woolworths, own half of the business, with just one third of the nation's expenditure going to fruit shops and traditional markets.

The vicious price-slashing is easily done by the huge corporations that will just budget the losses as marketing expenses. For the little strip greengrocers it will be further pressure in their decline.

And it's no point in turning for help from governments of either colour. As far as they are concerned, cheaper grocery prices make them look good and as in the past two decades, when questions of unfair competition are raised they will look the other way.

So it comes down to us as consumers to change our buying behaviour. We are more aware of good food than in the past, thanks to shows like MasterChef and My Kitchen Rules, and celebrities like Jamie Oliver and of course Nigella.

We need to use this new enthusiasm to give support and encouragement to the Marios and Kostas and Borises of the shopping strips. They understand their vegies, know them far better than the schoolkid trimming lettuce in the supermarket.

Get talking to them to learn more about a bigger range of greens and exotic dishes. Oh, and keep your eyes open for lovely ladies and lads who take the time and care to smell the fruit.

ray@ebeatty.com

30 January, 2012

Kodak and the Death of Dinosaurs

Melbourne Herald Sun, Thursday January 26, 2012

I hate repeating myself, but some stories keep happening again and again. Anyone with any doubts on the science of evolution only has to follow the events catalogued in the endless flow of this Business Daily.

Here we see the survival of the fittest, the extinction of some of the greatest dinosaurs to ever walk the planet, replaced by the nimbler, more resourceful mammals.

What I'm talking about is the death of that great brontosaurus Kodak. Yes, along with many of its species, it is now under US bankruptcy protection - the palliative care ward for American businesses.

Of course we were warned well in advance, when the Australian operation closed in 2004. Already the writing was on the wall. The US operation was so much bigger, it took longer to die. But did it have to?

As always it is never just one event that causes the demise. Did they cling to their legacy business - film, paper and cheap cameras - too long? Yes. But it was, and is, still big business. What will yet rise up from the grave is still to be seen, but it surely will be a ghost of the proud 131 year old company that passed on.

Kodak were undermined on price by competitors like Fuji. Digital cameras came on with a rush - it's like everyone acquired one overnight. And the explosion of smart phones means that everyone now has a camera in pocket or purse.

How can such a giant falter? Last year we saw Borders collapse in a stack of books and in the States, American Airlines is doing its own Chapter 11 taxying right now.

The irony is that Kodak could have made it, they had all the ingredients and there's no doubting their muscle. Did you know that a Kodak engineer created the first digital camera? They invested lots of time and money into developing the technology and intellectual property still earns them huge royalties today - from other camera makers who have leapfrogged them.

But they never really believed that digital was going to overrun film so completely, so quickly.

They were like Xerox, who were developers of the key ingredients of today's computers - the graphical user interface, the mouse, the laser printer. Yet while Apple and many of the upcoming computer companies made fortunes, by 2000 Xerox were staring at bankruptcy.

Fortunately a new company president, Anne Mulcahy, who started in sales, suggested they talk to the customers - and saved the company.

This is what Kodak didn't do. Or maybe they were talking to the wrong customers. They didn't have the Apple design flair or the insight to extend their products out through web communications or social media - which is what all their competitors are doing now.

They developed the first wi-fi enabled camera, but when it didn't reach the sales targets they killed it off. Can you see the pattern here? When the going gets tough, the big run off.

Like IBM, who gave us the most successful personal computer system, but abandoned it to the clones. I always felt that the carpet bazaar haggling and trading that is the PC market never sat comfortably on those grey-suited shoulders.

When I look at the torment of these dinosaurs I see the big corporation curse: inflexibility and bureaucracy. So many of the key ingredients of today's technological revolution were not invented by Bill Gates or Steve Jobs but by Xerox and Kodak and IBM.

Where were these corporates , I wonder, when the young turks were plundering their basements? Probably in committees discussing the distribution of paperclips.

ray@ebeatty.com

Blog: themarketeer-raybeatty.blogspot.com