Retailers & Distributors

Digital Media: Heart of Tesco's Strategy

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In his keynote at The Guardian Changing Media Summit 2014Tesco CEO Philip Clarke defined his vision of digital marketing as the heart of the modern retailer.

Tesco CEO Philip Clarke

Philip Clarke took over as Tesco Group CEO in March 2011. Before this, he was their Asia, Europe & IT Director. Clarke joined the business in 1974 and has held a number of roles in store operations, commercial and marketing.

He runs a team of over 530,000 people in 12 markets dedicated to bringing the best value, choice and service to customers making 75 million shopping trips every week.

In 2009, Tesco opened 100 phone shops in UK and in 2010 their first imternational phone store opened in Slovakia.  Today they run well over 200+ phone stores in their Tesco Extra stores and 50+ pop-up phone stores in the UK. These outlets offer mobile phones and devices, broadband and the latest mobile accessories.

Most recently, Tesco has launched its own tablet, the 7-inch Hudl tablet. The Hudl was, according to Tesco, designed and built from scratch, tailored to customer needs and ease of use. 

"You might think this is an unusual platform for the CEO of a supermarket chain," said the CEO in addressing The Guardian conference. "After all, we're retailers, not a media company. In fact Tesco is the largest retailer in the UK and the second largest in the world."

He continues..."But I'm going to use the next 20 minutes or so to tell you why our industries are facing pretty similar challenges, and why digital media is absolutely at the heart of my strategy to create the leading multichannel retailer for the future...."

Go CEO Clarke Explains Tesco's Digital Strategy

Amazon Threatens Distribution

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Amazon has proved itself a significant etailer in major markets across the world, and technology, including mobile accessories, is increasingly a strong category for the company. However recent moves into the wholesale business in the US through its Amazon Supply arm, highlighted by an in-depth Forbes article, suggest a much more disruptive move by the giant.

Amazon has proved a lucrative channel for accessory vendors, distributors and resellers in the countries it addresses in Europe. These are currently the UK, France, Germany, Italy and Spain. Vendors and distributors have have often been successful with Amazon themselves, while resellers have been able to extend their reach through the Amazon Marketplace. In all cases, understanding how Amazon operates, and working wisely within these frameworks, has been the best recipe for success.

Amazon Supply

The Forbes article highlights Amazon Supply as the unsung initiative that could threaten wholesalers and distributors in every category Amazon covers. Amazon Supply leverages the company’s scale, logistical excellence, and low margin business model to offer access to much of its catalogue at wholesale pricing.

Vendors and distributors in the US are already starting to review their relationships with Amazon. For many distributors, the company is a good customer, while vendors have longstanding distributor partnerships to consider. The potential for conflicts of interest are significant, and how much these are a concern to Amazon remains to be seen.

Amazon Supply has not launched in Europe yet, but is an initiative worth tracking, in particular by distributors. A good time to review the fine print in those Amazon agreements perhaps.

Go Forbes on Amazon Supply

Go Amazon Supply

Go Amazon Services Europe

Dixons-Carphone Warehouse Merger Update

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Following the 24 February announcement of a possible Dixons-Carphone Warehouse merger further details emerge on the situation-- the Takeover Panel grants a negotiation extension.

Dixons CPWInitially the Panel set a 24 March deadline for the deal to create a mega CE retailer worth around £3.5 billion. However the retailers "require more time to evaluate a potential merger of the two businesses," and thus deadline has been extended to 19 May 2014.

"Discussions are still ongoing and there can be no certainty that a firm offer will be made," a joint statement reads.

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Russia's Megafon Returns to iPhone

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Second-biggest Russian operator Megafon returns to the iPhone after 5 years of break, with plans to buy "at least" 750000 iPhones from Apple over the next 3 years for resale purposes. 

MegafonReuters reports the Russian operator is also committing around $28 million (1 billion rubles) on iPhone marketing, advertising and promotion over the 2013-2016 period.

Megafon stopped carrying iPhones in 2009 following a sales guarantees dispute. Vimplecom, the 3rd biggest Russian carrier, signed a similar deal back in Q3 2013. 

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RadioShack to Close 1100+ U.S. Stores

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Sales fell 20% to $935.4 million during Q4 2013, while the retailer's net loss hit $191.4 million. It was the 8th consecutive quarterly loss. And sales at stores, the ones open at least a year, sank 19%.

Radio Shack front

So what do you do? RadioShack's new management plans to close up to 1100 stores. Which stores get the axe will be determined by location, area demographics, lease duration and financial performance.

The average size of a RadioShack store is 2426 square feet. That compares to Best Buy with 1200 square foot Best Buy Mobile stores as well as 20,000, 30,000 and 45,000 square foot Best Buy big box stores.

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