|Ken Daly: sales growth.|
Despite losing a massive customer, like-for-like sales are up at JML. Times of adversity are also times of great opportunity, argues group managing director Ken Daly.
I must admit at first I was surprised when I read recent reports that the trend for consumers to trade down to own-brand products is rapidly declining. In fact, rafts of shoppers are now apparently trading up to premium lines. Household goods company Reckitt Benckiser for example is in rude health, reporting recent hefty rises in profits as a result of the growing sales of its iconic brands.
But then I reflected on our own company. JML has traditionally seen strong sales during recessions. We are an innovative consumer product brand, and we sell items that ‘make life easier’, mainly in the housewares, DIY and health & beauty categories.
Whilst consumers are currently cutting back on expensive holidays and new cars, they still need to buy everyday items. And here many can afford to pay for the brands that cheer them up, one way or another. As well as providing innovative solutions to life’s little problems, we try to make our products and our marketing fun, so shoppers will feel good about buying from JML.
These qualities we believe, have put us in an excellent position to weather the current stormy conditions and we are currently experiencing significant sales growth on the same time last year. For most of the time, this has happened without the need for discounting.
JML is both a retailer and a company that sells to retailers. With six home shopping TV channels on the Sky and Freesat platforms, a major web business and mail order operation, we deliver our products direct to consumers. However, the largest part of our turnover in the UK and Ireland is through retail distribution.
You will find us in stores such as ASDA, Boots, Homebase,Tesco and Wilkinson. In many outlets we promote our products with digital screens. We supply the retailer with the screens, and produce the content in-house. We advertise our promotions with nationwide television, our commercials tagging the key retail stockists. This screen-to-screen concept has been a powerful sales driver for JML.
So despite tough times, the consumer is prepared to spend their hard-earned cash if the offer is right. So what about the retailer?
One of the upsides of a challenging economic environment is that retailers are much more likely to look at new opportunities. During more prosperous periods, these companies can become complacent, believing that they have the magic formula, and ‘no thank you’ can almost become a reflex reaction to every new product or idea that is put in front of them.
Change in attitude
But when sales become difficult to come by, there can be a dramatic change in attitude, and retail executives are prepared to look at revenue streams that perhaps would have been considered too complex or difficult for them previously. It is no coincidence, therefore, that JML has seen the biggest growth in its retail customer base during this and the last recession.
No more Woolies
However, it certainly hasn’t been plain sailing. Whilst we have gained many new locations for our products and promotions over the past year, the back end of 2008 saw the sad demise of Woolworths. With over 800 stores in the estate, we had nearly 2,500 screen promotions across the Woolworths chain. We had lost a massive customer.
The UK high street without Woolworths had seemed inevitable for a couple of years and we had been planning for such a scenario for some time. Nonetheless, it was a shock when the end finally came. As is often the case, adversity was the driver for a period of incredible activity. We weren’t going to let our sales numbers plummet, and our resilience was going to turn the situation to our advantage.
The period following the collapse of Woolworths saw our most energetic new-business drive in our history. As readers will know, landing new customers is usually a very long process, but the groundwork here had already taken place over many months. We simply had to secure the deals that we had been cultivating, and quickly. We succeeded in doing this but also to our delight, the phone started ringing with retailers calling us, keen to gain a slice of the action that had previously been enjoyed by Woolworths.
It wasn’t just the retailers that wanted to get hold of the JML products that had previously been in Woolworths. The consumer felt the same way too as we saw an immediate and sizeable uplift in like-for-like sales in our incumbent customers’ stores. Combined, the result has driven significant sales growth this year, despite the loss of what had previously been our biggest customer.
Key sales drivers
With customers out there ready to shop, the biggest sales driver, however, has to be great products, which fulfil a need. We are acutely aware of the necessity to keep innovating and to carry on bringing exciting new lines to market, whilst widening the distribution of our ongoing core winners. An obsession with product quality and great customer service is also more vital then ever in this testing environment. All obvious stuff perhaps, but with so many financial pressures on a business at the moment, it could be all too easy to take one’s eye off the ball in this respect.
There’s one more element however in the product development and marketing mix that I must go back to, and that’s fun. We all want to be cheered up at the moment.
Earlier this week I met the managing director of a company that is selling astronomical quantities of a bathroom towel, half of which is white and is labelled ‘face’ and the other half of which is brown and labelled ‘arse’. OK, perhaps not the most tasteful item to give the mother-in-law this Christmas, but huge numbers of people are prepared to pay a large premium to buy this and smile, rather than to pick up a dirt cheap and depressingly dull basic economy towel from the supermarket aisle.