Working the Full Ball-park, Instead of Playing Centre-of-Pitch

By Brian Moore, Global Retail Consultant and CEO of EMR-NamNews

Given these unprecedented times, where over-caution and risk-aversion continue to win advancement in the public sector, it can be tempting for private sector NAMs to slip into risk-averse mode and restrict their major customer manoeuvres to the relatively safe, but limited middle section of the ball-park.

In other words, by ‘over-interpreting’ business rules and regulations, NAMs can limit their options, while their better-informed competitors appear to enjoy the scope and freedom of the entire pitch, often winning accolades in the process.

And besides, this apparent freedom-of-movement by competitors can sometimes cause our risk-seeking customer to view our over-caution as a restraint, frustrating their attempts to optimise current opportunities…

It is becoming obvious that, given the structural shifts and pace of change in the retail market, NAMs now need to change attitude, and embrace risk-management as an integral part of the new role and tool-kit in order to optimise supplier-retailer relationships. Success in this role demands a systematic evaluation of market opportunity, a realistic assessment of our willingness to take the necessary chances and a determination to operate at the limits, the leading edges of our business relationships.

In practice, this means placing the customer in a global, EU and UK context. With Walmart leading the way in terms of scale, profitability and down-to-earth, common-sense retailing, they have to be a standard for retail everywhere, as Amazon stands for state-of-art online…

All other customers need relating to Walmart’s performance in evaluating the reality of their ability to achieve their growth objectives in a UK shifting fundamentally in terms of the Big 4 ‘squeezed middle’ retailers co-existing with rampant discounters and Waitrose command of top level demand, whilst their online efforts have to stand comparison with the 1-click ordering, ‘instant fault-free’ delivery and the ‘no quibble’ returns process of Amazon.

Next is it essential to label the customer ‘risk-seeking’ i.e. willing and able to take calculated chances amidst uncertainty, or risk-neutral i.e. willing to take some risk but sacrificing some opportunity in the process. It is hopefully obvious that there is no place for risk-aversion in the current climate.

Risk-neutral customers will need encouragement to operate closer to edges of the pitch, whilst the risk-seeking players may need restraining in some aspects of the game…

They both need NAMs that are suitably qualified in category risk-assessment and management. Remember that you are meant to be the broad, but shallow, expert in how the category can be sold, everywhere, thereby complementing the retailer’s in-depth, but narrow expertise in all aspects of optimising their retail business model. It is the combination of your breadth and their depth that releases the synergies necessary for growth in flatline…

This means the NAM needs to be a mix of risk-seeking and risk-neutral in order to optimise relationships with either type of customer. In practice, and by way of building in some insurance, it helps to develop a clear understanding of promotion and competition regulations, seeking to understand the spirit rather simply the letter of the law, hopefully guided by corporate lawyers that try to help you find a way forward, rather than hold you back.

Unlike ‘normal’ sport, the NAM game is played with the customer, in competition with other members of the category, all within the same ball-park. Apart from assessing their depth of pockets (ROCE, etc.) this means that the NAM needs to also label each competitor as risk-seeking, or risk-neutral and attempting to anticipate their willingness and ability to operate safely at the perimeter.

At this point it is only practical to assume that not all competitors will have fully assessed the risks, verging on recklessness, or are focused on keeping to the letter rather than the spirit of the law, giving them some advantages in the short term but eventually causing their undoing, as the regulations are tightened and monitored more effectively, hopefully…

This in-depth knowledge of the edges, or limits of what the regulations allow in developing a category will help in assessing the impact on the business and the chance of occurrence of anything going wrong. This systematic assessment of risk will help to reduce some of the fear of taking chances in the NAM role.

Finally, it might be worth considering that if you don’t feel apprehensive, you are probably not operating close enough to the edge…

See KamTip: Using Risk and Opportunity to Scope Out the Limits of the Ball-park

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