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Re: [OM] Do financial statements mislead?

Subject: Re: [OM] Do financial statements mislead?
From: Bob Whitmire <bwhitmire@xxxxxxxxxxxxxx>
Date: Sat, 13 Apr 2013 10:10:59 -0400
Cogent explanation. Thanks.

--Bob


On Apr 12, 2013, at 6:19 PM, Moose wrote:
> 
> You can make special cost deals, pay slotting fees, and, maybe, get them in. 
> If they don't sell adequately, they are 
> OUT. Each cube of shelf space is evaluated for profit and ROI. There are 
> categories and items that are simply required, 
> even if contribution is below standard, because of customer expectations. You 
> can't, for example, have a camera section 
> without C&N. a cleaning section without P&G, and so on.
> 
> It may even be that the other stuff is mostly there to provide a broad enough 
> range of apparent choice. Long ago, some 
> folks at the huge retailer I worked for decided to get rid of some under 
> performing SKUs. I don't remember the exact 
> numbers ... The best selling brand of hair coloring had say 12 shades, and 3 
> or 4 accounted for 80+% of sales. So they 
> tried cutting back to 4 shades. Sales dropped like a stone. Apparently, 
> buyers need to look at a range of options - 
> before buying the same thing as everyone else. Without the range, they simply 
> buy elsewhere. Some categories must be 
> evaluated for contribution as a whole, not individually. (Fortunately, 
> we/they were savvy enough to only try it in a 
> handful of stores.)
> 
> Whether this applies to cameras, I don't know, but the mass market business 
> is chock full of such arcane realities.
> 
> The old systems of spiffs to counter people, if not long gone, don't apply 
> here. You have to sell the consumers on your 
> goods to get them in the big stores. Yes, I know, it's terribly frustrating 
> for lots of sellers, a real chicken or the 
> egg situation. But that's the way it works. New lines do break in, like 
> Method cleaning products, but it requires 
> something special that appeals to consumers in a new way, preferably one that 
> retailer buyers can see easily.
> 
> It seems to me that Oly may have a couple of extra problems. Unlike Sony and 
> Panny, they don't have an ongoing sales 
> relationship with the retailers*. Like Panny, they don't have a line of 
> DSLRs, and unlike Panny, their line of compacts 
> is obscure and mediocre, except perhaps in tough cameras.
> 
> I know we may not 'get' it, but I'm betting a majority of people who walk 
> into a BB to upgrade to a 'real' camera' 
> expect to buy something relatively large, of a certain form factor and black. 
> They may well be wrong about what would 
> serve their needs best, but nobody in the store is going to talk them into 
> something different.
> 
> I wouldn't be surprised if it were true that Sony NEX cameras sell in part in 
> the big stores because their lenses are so 
> big and macho looking. They MUST be better, mustn't they?
> 
> BB and the rest LIVE or DIE on volume. You probably can't believe how much 
> that is so. If the product doesn't move fast, 
> they can't afford to stock it. Non big business people get hung up on margin, 
> and forget turns. Half the margin, 2.2x 
> the turns, and you just made about 20% more ROI. And inventory, goodness, 'ya 
> gotta keep that down, too.
> 
> Ex Mass Moose
> 
> * If you've broken in before, and failed to sell, getting another chance is 
> really tough.
> 
> -- 
> What if the Hokey Pokey *IS* what it's all about?
> -- 
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