EDITOR’S NOTE: I sent the following business case overview over the weekend to select solution providers. The first response from Mintec is below.
Which of the five priority areas can your organization and solution help Target with? I highlighted the areas where you could provide an immediate benefit.
Retail Chain industry prospects (Target):
- Target, a barometer of the American consumer, said its sales last year fell for the first time since 2016. Now, it’s predicting a sluggish 2024 as shoppers are weighed down by higher prices. (Source: CNN)
- Target’s prices are also higher than Walmart’s. In February, Target’s prices were, on average, 8.6% higher than Walmart’s, according to an analysis by RBC Capital Markets analysts. (Source: CNN)
- Target said in October that it’s closing nine stores in major cities specifically because “theft and organized retail crime are threatening the safety of our team and guests, and contributing to unsustainable business performance.” (Source: CNN)
- But Target’s closures in New York, San Francisco, Oakland, Seattle and Portland may also be due more to the underperformance of Target’s smaller store locations, analysts say. (Source: CNN)
- Fierce right-wing backlash to Target’s Pride Month collection also took a toll on the brand last year. (Source: CNN)
Solution Provider Response (Mintec)
Why does any of the information below matter? As a solution provider to this industry for 43 years, this is what we see:
- Target’s shares lost 8% of their value.
- Total revenue declined about 3% from $25.32 billion in the prior year to $24.53 billion, resulting in a loss of $790 million.
These companies always look at their peers, so I highlight that we have proven, repeatable success in their industry and are, in fact, becoming the de facto standard for the grocery vertical. While I wouldn’t use the slide below in an outreach, I typically reference that almost every major player in the industry leverages Mintec.
It was mentioned that they were experiencing shrinking sales. “Mintec is providing services in the market that nobody else is able to offer. Much like most things in life, when there’s a service provider that’s meeting all your needs and is the top player in the industry, that’s setting themselves apart from everyone else, then you’re going to be able to keep your customers.” That quote is from Tesco and is a publicly used quote. Target said its comparable sales were down 3.7% in the most recent quarter, while Walmart‘s sales were up 3.8%, and Amazon saw increases as well. Both are Mintec customers. Target’s prices were, on average, 8.6% higher than Walmart’s, according to an analysis by RBC Capital Markets analysts. (Source: CNN)
In a downward economy, like we are today, consumers are more apt to forgo convenience or their “go-to” store if there are enough price savings at a nearby competitor. After a full year of sales declines, it’s clear American consumers are testing Target to prove its value as they continue to stretch their dollars and shop around in the face of higher interest rates and prices. Source: Target sales down amid fierce competition from rivals | AllSides
The company is also competing with other discounters, including Walmart, Aldi, and Lidl, that are chasing deal-hunting shoppers. Walmart, Aldi, and Lidl are all Mintec customers.
Source: Target (TGT) Q1 2024 earnings (cnbc.com)
The dynamic has particularly hurt the cheap chic retailer because it gets less of its sales from food than rival Walmart, which draws about 60% of its U.S. sales from groceries. That compares with roughly 20% at Target. Source: Target (TGT) Q1 2024 earnings (cnbc.com) In a down economy, when consumers switch to Walmart because of cheaper grocery prices (8.6% less), there is a higher probability those same consumers will purchase non-food items, while at Walmart purchasing groceries.
A tremendous number of their suppliers are Mintec customers. Unilever is certainly one of them and states:
“Mintec is widely used in the industry, so it is accepted by our suppliers as a source of truth. 21% of Unilever’s supplier contracts (on $9.5bn in purchasing spend) use a Mintec price series to index costs”
The net is that we can directly impact grocery sales, which equates to $4.9 billion dollars. (20% of $24.53 billion).
Finally, The Right Thing Is Missing
As you read the above response from the solution provider, do you notice what is missing?
There is no mention of the technology, features, functions, or benefits. Yes, there are a few company plugs, but they are used to demonstrate their market presence and influence. What is also missing is any mention of their position in this Quadrant or that solution map or promotion of all the industry accolades their tech has received.
They demonstrate industry understanding based on experience and expertise over several decades. While technology is essential, it is the final piece of the puzzle, not the first, and that makes all the difference in the world.
Today’s Takeaway: In 2007, I wrote an article titled Dangerous Supply Chain Myths—Enabling Technology, assessing a CAPS, ISM, and AT Kearny report. In addressing the report, I discussed in detail the complexity of supporting the Department of National Defence base IT infrastructure and how I introduced exciting new technology. It was the first web-based self-learning algorithm AI platform to manage the procurement of MRO parts. Being in high-tech and procurement for over 40 years, I can confidently say algorithms and AI are not new.
However, as exciting as the tech was, it was the last part of a three-step process. In short, using an agent-based versus equation-based model, we did not lead with technology but with industry understanding. The above answer from the solution provider reflects that same approach, which has consistently worked right up to the present day.
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Procurement Insights
Finally, A Solution Provider Gets the Big Picture, And It Isn’t AI
Posted on June 11, 2024
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EDITOR’S NOTE: I sent the following business case overview over the weekend to select solution providers. The first response from Mintec is below.
Which of the five priority areas can your organization and solution help Target with? I highlighted the areas where you could provide an immediate benefit.
Retail Chain industry prospects (Target):
Solution Provider Response (Mintec)
Why does any of the information below matter? As a solution provider to this industry for 43 years, this is what we see:
These companies always look at their peers, so I highlight that we have proven, repeatable success in their industry and are, in fact, becoming the de facto standard for the grocery vertical. While I wouldn’t use the slide below in an outreach, I typically reference that almost every major player in the industry leverages Mintec.
It was mentioned that they were experiencing shrinking sales. “Mintec is providing services in the market that nobody else is able to offer. Much like most things in life, when there’s a service provider that’s meeting all your needs and is the top player in the industry, that’s setting themselves apart from everyone else, then you’re going to be able to keep your customers.” That quote is from Tesco and is a publicly used quote. Target said its comparable sales were down 3.7% in the most recent quarter, while Walmart‘s sales were up 3.8%, and Amazon saw increases as well. Both are Mintec customers. Target’s prices were, on average, 8.6% higher than Walmart’s, according to an analysis by RBC Capital Markets analysts. (Source: CNN)
In a downward economy, like we are today, consumers are more apt to forgo convenience or their “go-to” store if there are enough price savings at a nearby competitor. After a full year of sales declines, it’s clear American consumers are testing Target to prove its value as they continue to stretch their dollars and shop around in the face of higher interest rates and prices. Source: Target sales down amid fierce competition from rivals | AllSides
The company is also competing with other discounters, including Walmart, Aldi, and Lidl, that are chasing deal-hunting shoppers. Walmart, Aldi, and Lidl are all Mintec customers.
Source: Target (TGT) Q1 2024 earnings (cnbc.com)
The dynamic has particularly hurt the cheap chic retailer because it gets less of its sales from food than rival Walmart, which draws about 60% of its U.S. sales from groceries. That compares with roughly 20% at Target. Source: Target (TGT) Q1 2024 earnings (cnbc.com) In a down economy, when consumers switch to Walmart because of cheaper grocery prices (8.6% less), there is a higher probability those same consumers will purchase non-food items, while at Walmart purchasing groceries.
A tremendous number of their suppliers are Mintec customers. Unilever is certainly one of them and states:
“Mintec is widely used in the industry, so it is accepted by our suppliers as a source of truth. 21% of Unilever’s supplier contracts (on $9.5bn in purchasing spend) use a Mintec price series to index costs”
The net is that we can directly impact grocery sales, which equates to $4.9 billion dollars. (20% of $24.53 billion).
Finally, The Right Thing Is Missing
As you read the above response from the solution provider, do you notice what is missing?
There is no mention of the technology, features, functions, or benefits. Yes, there are a few company plugs, but they are used to demonstrate their market presence and influence. What is also missing is any mention of their position in this Quadrant or that solution map or promotion of all the industry accolades their tech has received.
They demonstrate industry understanding based on experience and expertise over several decades. While technology is essential, it is the final piece of the puzzle, not the first, and that makes all the difference in the world.
Today’s Takeaway: In 2007, I wrote an article titled Dangerous Supply Chain Myths—Enabling Technology, assessing a CAPS, ISM, and AT Kearny report. In addressing the report, I discussed in detail the complexity of supporting the Department of National Defence base IT infrastructure and how I introduced exciting new technology. It was the first web-based self-learning algorithm AI platform to manage the procurement of MRO parts. Being in high-tech and procurement for over 40 years, I can confidently say algorithms and AI are not new.
However, as exciting as the tech was, it was the last part of a three-step process. In short, using an agent-based versus equation-based model, we did not lead with technology but with industry understanding. The above answer from the solution provider reflects that same approach, which has consistently worked right up to the present day.
30
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