Sunday, 30 November 2008

Tesco - Relentless Price Rises Not Peanuts

Tesco Value range - relentless price rises aren't peanuts

The story so far: Last week I wrote that Sainsbury's was taking shoppers for a ride with steady price hikes on its 'Basics' range - rapidly narrowing the price gap between budget and premium brands. I noted Tesco was at it too with their 'Value Range'.

Tesco has almost doubled the price of its Value Roasted Salted Peanuts since August - when they were 20p for a 200g bag. By October the price jumped to 30p, then 32p and this week another 15% to 37p. Perhaps Tesco is building up to a Christmas 'half price offer' i.e. back to the original price before they doubled it...

The Daily Mail phoned me this week to ask about my Sainsbury's Basics Tinned Chopped Tomatoes story. The paper is investigating recent price rises on tinned food - the journalist told me one reader had discovered a tinned salmon price rise of 130%.

Supermarkets seem to be under the illusion that if the price is peanuts to start with no one will notice when it increases a few pennies more. Wrong! We do. We don't like it and we start shopping around.

Thursday, 27 November 2008

Dixons - Close to Death

DSG International, owner of Currys, Dixons and PC World announced a pre-tax loss of £61m for the 24 weeks to 18th October. It is their first loss in 20 years.

Last time I wrote about the terrible service at DSG one of their Tech Guys posted me to complain. Sorry, here comes more bad news about why the company is going down the toilet.

Yesterday I was in the Glasgow aiport branch of Dixons Tax Free (its a very small branch, with very few items, less than a handful of computers) looking at an Advent web notebook 4213. The sales sticker claimed 'mobile broadband without the dongle'. I'm in the market for such a thing, so I asked the assistant if 'without the dongle' meant the device was tied to a particular mobile network - if so whose mobile service would it provide? (Vodafone, 3, etc)

He looked blankly at the machine and then the ticket. Then he phoned a friend in the branch at the other terminal building. You do need a dongle he said when he came off the phone (after having an entirely irrelevant friendly chat with his mate). 'Why does it say 'without the dongle' then?' I asked - pointing back at the ticket. 'Perhaps mobile means you can carry it round' he suggested helpfully. No honestly, he really did say that. Numpty. Or was I the numpty for asking about a technology thing in a DSG shop?

Chief executive, John Browett (he emailed me, remember) said he was going to change the 'very DNA' of Dixons group. Mmm.

Back at home I looked at the Advent 4213 on Amazon. Amazon explains you insert the mobile broadband sim card inside the machine, you don't need a dongle. Amazon doesn't have sales staff, just useful information and competitive prices.

DSG International looks like it may soon join MFI and Woolworths by vacating the high street. Permanently.

Friday, 21 November 2008

Virgin Active - but only at CEO level

Inside every Virgin Active Membership pack is a Service Promise
Is it worth the card its printed on?

Gyms famously make most of their profit from members who don't use the club, not those who do. Members who sign up, but visit rarely, get caught in a 'guilt inertia'. If they cancel they'll never fulfill their desired level of fitness, so they keep paying their monthly fees for a service they don't use.

Virgin Active is unusual for a health club - its still growing and profit is increasing. Impressively, unlike many others, it allows members to cancel at a month's notice - no annual contracts. For a modest fee members can also 'freeze' their membership when they go on holiday. These are attractive benefits. Virgin Active is very customer focused. Members know this because inside every Membership Pack is a Service Promise. The Service Promise is very important to the owners and senior management, but it appears to be treated with contempt at Club level.

My partner joined Virgin Active in June. In August she emailed and telephoned her VA club (Glasgow) to 'freeze' her membership during her holiday. They didn't do this, they didn't reply either, but they did debit her bank account the monthly fee of £44. When her bank statement arrived she followed this up with the club by email. Their reply, left on her voicemail was that the member of staff responsible for membership services had left the company and they had failed to check her email or voicemail, but they would now refund the money, albeit 2 months after she'd contacted them.

Which should be the end of the story. Except then I started reading the membership pack. The boastful Service Promise makes two claims which caught my eye. Firstly 'We will promise a response to your questions, suggestions or complaints within 24 hours', and secondly 'We promise that we will call you within 30 days of joining to ensure our Service Promise is being delivered'. Virgin Active had failed to fulfill both these promises, but the failure to ensure delivery of the promise invokes the final promise; 'If we do not deliver on our Promise in the first 30 days we will refund your joining fee.'

So I drafted my partner an email requesting the refund of her £10 joining fee. This request was declined - because apparently the Club had tried to telephone her mobile in June to ensure their Service Promise was being delivered, but there was no answer. So come on be reasonable I hear you say, they left her a message didn't they? Er... no actually. But because this is such an important Service Promise they must have called again? No, that was it, one quick phone call, no reply. Tick, member 'ensured' satisfied. Anyway, their reply continued, they couldn't refund the joining fee because she had used the club. If she didn't like this response she could email via the website.

I looked at Virgin Active's press release for last year's Annual Report. It boasts of their 'relentless focus on Customer Service'. So I waited until Saturday, when I guessed VA's Chief Executive would be looking after his own email via his Blackberry and emailed him. Did Chief Executive Matthew Bucknall wait 24 hours before replying? No he was back within an hour, promising to investigate. Impressive.

On Tuesday Virgin refunded the £10 Joining Fee. However they were a bit weaselly about the detail. So I dispatched a further email suggesting that as their service had fallen so far short of their Service Promise and that we had provided invaluable feedback about the way the Promise is implemented at club level that VA now refund all the monthly fees. I didn't expect them to, nor did they, but another month was refunded as good will. So £54 in return for emailing the Chief Executive.

It's a shame members have to email the CEO to get such paltry sums refunded. Proper training at Club level would free up valuable time at senior level to grow the business. My partner won't be going back to Virgin Active. Not because it isn't a nice facility, it is. But because they made her a Promise and didn't really care whether they kept it. Like many members who deliver monthly payments she didn't use the Club as much as she hoped, but when they abused her loyalty she withdrew hers - permanently.

Update 3rd December: My partner received an email from a colleague asking if she had benefitted from Virgin Active's £9 cut in monthly subscriptions available to employees of the company. Needless to say Virgin Active hadn't notified her. After a further exchange of emails with the UK MD and CEO she is £18 better off. Ironically if the Glasgow branch had simply refunded the £10 service promise VA would be £62 better off. Since raising the matter directly with CEO Matthew Bucknall refunds to date are: £10 Service Promise refund, £44 monthly subscription good will refund, £18 for 2 months of over-charging. Total refunds = £72. Not bad for a few emails...

Saturday, 15 November 2008

Sainsbury's Basics Chopped Tomatoes = Huge Profits

Sainsbury's Basics Chopped Tomatoes
Sales leap = Price Soars

As food prices have skyrocketed we've all begun experimenting with the supermarket budget labels. The supermarkets have reassured us they're on our side, their budget brands offer excellent value and quality. But buyer beware - you can't trust the supermarkets, because now they've converted us they're already ripping us off.

Until September Sainsbury's charged 21p for a tin of 'Basics' chopped tomatoes. I know it was 21p becuause in October the Richmond store still displayed a shelf label showing 21p but scanned them at 30p. I kept my receipt because the store manager refunded the mis-price after checking himself. In fact the computer was right, the shelf was wrong - the price had dramatically increased to 30p - a staggering 43% increase.

October 2008 was the month The Telegraph ran a report in which Sainsbury's boa
sted Basics Chopped Tomatoes was now their best selling line - shifting 2 million tins a month as shoppers turned to store cupboard staples to cook their own credit crunch chilli. No wonder Sainsbury's was full of glee - A 9p price hike on a tin of tomatoes multiplied by 2m units equals an extra £180,000 a month profit.

This week, in the teeth of recession, Sainsbury's reported a rise in first half year profits. Sales of the Basics range have increased by 30%. This week the price of chopped tomatoes has increased another 10% to 33p. Or to put it another way, if monthly sales are still 2m cans the extra profit (over the old 21p price) is £240,000. Yes £240,000 That's just short of quarter a million pounds extra profit - on a single item. Just one item in over 40,000 lines of inventory.

Sainsbury's aren't the only Supermarket who've comforted the cash strapped customer but are now taking them for a ride. Tesco has rebranded as Britain's Biggest Discounter. In the summer I discovered Tesco Value Roasted Salted Peanuts were very good value at 20p (200g). Recently the price jumped to 30p and by this week the price has climbed to 32p - a 60% increase over the price in June.

Tonight I checked the price of budget brand chopped tomatoes on the price checking site
MySupermarket . Suddenly, for the first time the big 3 (Tesco, Sainsbury's, Asda) are all charging 33p a can for a tin of chopped tomatoes.

What's going on? Do all the supermarkets share the same chopped tomatoes supplier? Has the supplier upped the price? Or, as the Competition Commission has failed to prove despite several inquiries (3 in the last 8 years) are the supermarkets mirroring each other's prices in a cartel?
Earlier this year The Office of Fair Trading raided supermarkets for evidence of collusion on prices. In September the OFT said they believed prices are being shared between supermarkets via their suppliers. If the case is proven (as it was in 2002 with sportswear retailers and England shirts) the supermarkets face fines running into millions - which will quickly consume the chopped tomatoes profits. Watch this space.

Sainsbury's shouts about helping stricken shoppers feed their families for a fiver. Meanwhile it lines its own pockets to the tune of a quarter of a million pounds every month, on chopped tomatoes alone.

Saturday, 8 November 2008

Every Home Should Have One

The Electrisave - this much information can really change your electricity use

A couple of weeks ago I was loaned an Electrisave, also known as The Owl. An Australian invention, you can buy them for around £30. The sat nav equivalent for home electricity consumption, it shows you minute by minute how much of the expensive stuff you're using.

For years electricity was relatively cheap, but with 30%+ price rises we all know fuel really does cost dearly these days. Since I connected the transmitter (not pictured) round the power cable leaving my electricity meter I've acquired a compelling urge to see how much electricity I'm burning my way through. The receiver (pictured) is programmed with the price of each KwH of power (17.2p on my tariff) and displays the real time cost. These devices aren't 100% accurate - but they give a realistic guide.

I can't get the background count below 2.1p - probably all the clocks, modem etc ticking away hour after hour. But put the oven on and the cost jumps to 48p an hour, the kettle 39p an hour, the shower pump 12p an hour microwave 25p or the iron 38p.

I've always been one for turning the lights off... mainly. Each 60w bulb appears to cost around 1p an hour to burn. I used to leave the kitchen lights on all evening, but no longer. Recently I've taken to switching the oven off a few minutes before the end of the cooking time and boiling less water in the kettle.

In a year long study currently underway monitored by the Institute of Public Policy Research, 8 homes in 8 streets in 8 cities across the UK have been seeing how much energy they can save (Green Streets). Changing behaviour has proved as significant when it comes to cutting fuel costs as fitting loft insulation or energy saving light bulbs.

I've changed my energy behaviour since monitoring the electrisave. Perhaps every home should have one?

Friday, 7 November 2008

Westfield White City - What Recession?

Last Thursday (just across from the BBC - which was deeply embroiled in the Jonathan Ross / Russell Brand phone call scandal) the giant new Westfield Mall opened. After ten years of construction and planning and a billion pounds spent it is a cathedral to consumerism. Of course, as many newspapers pointed out, the timing of its completion could not be more calamitous. Or could it?

On the opening evening I went along to have a look. I had to shuffle along the pavement outside in Wood Lane, while marshalls controlled the crowds. We filed inside and could barely believe the scale of the place. Shiny and new it is the most impressive mall I have ever seen in the UK, and it's certainly World Class when it comes to planning and design.

I've recently returned from San Francisco where Westfield operate another prestige mall. I was wowed by the curved escalators (I've never seen curved escalators before) and the delicious food from around the world on offer in the basement food court. Spotlessly clean the communal dining areas were always packed - day and night. I still miss the Vietnamese shrimp Spring Rolls - well I did until Westfield opened in White City. The dining option looks equally enticing and yes they even have Vietnamese Spring Rolls with fresh shrimp.

Last weekend White City and Shepherds Bush ground to a halt as shoppers and sightseers travelled for miles to wonder at the new mall. As we dip into recession it makes you wonder if Londoners really do plan to spend their way out - as Mayor Boris urged when he cut the opening tape.