Whilst there can be a temptation in times of crisis to keep one’s head down and look busy, the NAM operating at the supplier-retailer interface is probably best placed to assess and explain the impact of Lockdown. This role can be simplified by attempting to place trade developments in a realistic context in order to aid understanding and communication.
In fact, NAMs have been using ‘context’ for many years via that old selling cliché, ‘a cost of the equivalent of the price of a pack of cigarettes per day…’.
Success as a NAM is now about the ability to place numbers and issues within a context that facilitates understanding and helps communicate why action is necessary. For instance, when discussing a possible trade investment of £10k in a major customer, simply using a bare figure is not sufficient. However, if a supplier is making a 5% net margin, then ‘giving away’ £10k means having to generate incremental sales of £200k to cover the cost. This should be a reflex NAM calculation for every use of company money…
Similarly, when a mult criticises that £10k trade investment as being ‘very little’, a NAM pointing out that within the context of a retailer’s business model with its net margin of 2%, then incremental sales of £500k are required to generate £10k. However, data and issues can sometimes come without context and in using the raw figure, like the £10k trade investment, much of their persuasive power can be diluted or even lost.
To increase the use of numbers and issues as a selling tool, it is important for the NAM to supply a context within which to think, and then use that context as an aid to persuasion…
Lockdown could be characterised as an unprecedented crisis that has relied on very little ‘context setting’ since its imposition in March 2020. We ‘know’ that Lockdown has resulted in unprecedented damage to the economy, but building in context can help business people to appreciate the consequences and inevitabilities of shutting down an economy for 14 months. Seeing the crisis within a suitable context can even help in finding sustainable ways of surviving and growing.
BTW, it is key to regard this context-setting not as ‘doom & gloom’ but rather view it as a positive attempt to take appropriate action. For instance, in the case of key sectors of the economy, context can be used as follows:
Travel retail: Gradual relaxation of a virtually total shutdown of air travel has meant that travellers face up to seven hours wait at passport control at Heathrow, both ways… As airlines report up to £700m losses in 2020, we begin to examine a business model where 10% of passengers travelling in business class provide 75% of the profit, and ‘even we’ can see that recent airline announcements such as ‘bookings are encouraging but are still only 15% of pre-lockdown rates’ are no basis for optimism. Add the context of Zoom making any business travel a basis for thinking again, not only in terms of cost but even time, makes it relatively easy to work out the implications for the airline industry…
Hospitality: An industry that facilitates and relies upon social proximity falls apart under social distancing restrictions. Pubs and restaurants that made the cost of rents and business rates manageable by optimising space can barely survive on a return to ‘normal’ of at least 70% of pre-Lockdown business.
Retail: Grocery has been more fortunate than most retail in managing to provide essential supplies in spite of the imposition of social distancing, not only in terms of additional cost, but especially re the consequences of the impact of sales-resistors in going against every principle in retailing… Any NAM placing these factors as context, and really thinking through their impact on ‘non-essential’ retail, can generate inevitable implications in terms of impact on their customers.
Add the context of online’s accelerated development in Lockdown in order to fully appreciate the fundamental shift in how Lockdown-consumers have changed their shopping behaviour, forever…
But the fundamental takeaway of Lockdown for a NAM has to be the need to apply realistic context to the health of their major customers.
In other words, this means facing up to the possibility of some distressed customers not being able to survive and succumbing to takeover by another customer that happens to be on different terms. In these circumstances, the need for a context of harmonised ‘prices & terms’ becomes a no-brainer. However, it is the case of a customer actually going bust that cries out for context. Hopefully, 14 months of Lockdown has given NAMs the time to ponder on the fact that a customer going bust owing a 5% Net Margin company £250k, means incremental sales of £5m in order to get back to square one…
Such is the value for NAMs in their role of applying context to Lockdown. All else is detail…
