Othaim is eating Panda alive: How is Al Othaim spearheading when it is operating less outlets but more profitable?
Did the previous management fail on Panda, Hyper Panda and Pandati? Yes! Because they never had a strategy and clearly confused strategic and tactical approaches. This has cost Panda a fortune over the years.
They failed to educate the customer on the purpose of Hyper beyond discounted supermarkets. The management failed to deliver the values of convenience through Pandati. While Baglas major footfalls are soft drinks, cigarets and basic items shoppers, Pandati focused on the basic items shoppers and this narrowed the segment that Baglas enjoy but yet Pandati went ahead like a furious lion to open across the country to get the Baglas out of business and they had their share of ill intent. Baglas, on the other hand, are offering both delivery and emotional closeness (the delivery culture is huge and it has a strong emotional value). Pandati never enjoyed the loyality Baglas enjoyed and still enjoy. The management and marketing focused only what Data said but failed on “How To create a value and Deliver”. Unfortunately we have data Marketers who can’t create values beyond understanding what the data says.
What were the key lessons learned from their failure? First, to launch all these without a strategy and clear approach is futile. Second, engaging in a private label fiasco without grounding shoppers’ trust is also futile. A private label is heavily based on “trust” and when shoppers hardly trust you, they stay away from any private label that carries your name! Get it?
A year and half ago, I published a post on LinkedIn about Panda and it went viral. The summary of this post is that I argued Panda is in serious trouble. Also, I published a post on Pandati when it was first launched and presented why I think it is a failing concept. Today, all that I predicted has materialized. The point you have missed in these posts is that I was never articulating my insight to battle you but to shed some light and pull your business in the right direction.
Back then the marketing department of Panda took things personal and I understood why but they were professionals. Unlike the former heads of marketing in Alnahdi, Rabea and Cofique who literally went on personal attacks in their social posts but “I NEVER RESPOND TO PERSONAl ATTACKS”, my only response was time will tell. Few years down the line none of the above work for the respected brands and my predictions were SPOT ON. I wish them all the best, the only adivse never go on personal attacks and harass over social media that’s what small minds do, great minds discuss subjects.
Today here is my advice to whoever is reading this article!
If you keep ignoring my free advice, you will face what Cofique, Rabea, Panda and Alnahdi went through. Yes, I am extremely confident of my criticisms and claims.
Today, Panda management is busy closing outlets more than opening. The rational behind this is restructuring while system remains the same. The idea of marketing under commercial is mind disturbing, My free advice? Don’t do it, this is crazy, you will be doomed! I’ll remind you in future posts
In Panda’s management, some are misinformed on what comes first, commercial or marketing functions and unfortunately the are key decision-makers who take decisions based on ill-informed knowledge on how marketing functions beyond managing advertising agenies. On commercial and marketing approaches, each has a completely different task in business. I suggest you keep marketing away from commercial FREE ADVICE!
The reason why commercial and marketing approaches need to be as far as possible is because of the nature and function of each. Commercial is plain trade and it shifts values created by marketing. Think, for example, how would you place “Marketing & PR” under commercial? Commercial is trade and price-oriented while marketing is concerned with creating choices. We can now put the question more simply and answer: What comes first, price or choice? Of course, it is choice! Because this is basic and plain, I think I can generalize and draw the conclusion that corporate managers in our region are dead dumb on marketing.
While commercial is purely retail trade, someone needs to manage both perception and value. I doubt your management understands the importance of perception and value to all operations and the flow to sustain long term results over short term tactical returns. This kind of structure only digs a bigger hole and hardly moves the demand side of the organization to attain greater results or build a sustainable brand.
Now brand should never be under commercial –period! Get it right, Sherlock!
The private sector in our region works based and favoritism over experience and credentials. Most of the stakeholders are picked by the social merits of their last names or the same origin. We have to accept the truth that favortisim is the heart of our business culture not teamwork and that’s one of the primary weaknesses. I have seen unqualified people join company boards and get heavily paid and their last name is their own merit. The problem is far bigger than brand and marketing. It is people’s mindset and ethics. If you hire a friend because it is a friend, you should question your morality. This is something that has to be completely eradicated for every organization to serve its core purpose. As long as such unethical practices exist across the region, the private sector will fail to add value to any economy.
Many of us wish regional brands like Panda to do great but Panda’s current management is too busy pointing fingers at the previous management. This is what the beginning of failure looks like. Al Othaim supermarkets are actively taking a big chunk of Panda’s share while also exhibiting sustainable growth on volume that is achieved through means other than opening new stores.
Constant Engagment builds loyality and improves bottomline ROI “FREE ADVICE”
Al Othaim aims to reach 207 stores by end of 2019 and this my friends will flip the entire modern trade leadership in the kingdom. Al Othaim stopped listing brands that contribute less than 3% and deactivated those that contribute less than 3%. Clearly, volume is key to any supermarket but this also greatly improves the margin on trade. In the first quarter of 2018, Panda massively declined by 50%. Many non-profitable stores were closed but again Panda always failed on stores to creat volumes. The size of their stores, category arrangements and footfall were always off. Panda comes in many shapes you cannot figure out if this a price brand or an experience brand.
Their approach to improve margin and volume was to hit the low price. Typical trader mindset not marketers. They applied this tactic last Ramadan and they managed to cut the decline but are nowhere close to compete with Al Othaim. This is a very traditional approach and a commodity mindset to seasonal marketing. Hello CEO, here is some questions for you: Is Panda a price or discount brand? The two offer different values and experience. Why is price your ultimate value without creating choices for your customers? As crazy as it sounds, this why you chase bottom-line without vision and sustainability? Exactly. I did get your answer.
Al Othaim’s growth is store volume which is brilliant but why? Let’s look at these key points Al Othaim delivers:
A. Less choices and great quality. Al Othaim does well on private label, why? Known as ethical and trusted brand.
B. Heavy investment on footfall to shift from Panda and Tamimi, offers experience over price (I did not mention discount, do not get all fired up).
C. Import division that started three years ago to lure the segment that’s attached to Danube. Great assortments, big threat to Danube.
D. Al Othaim name hits localization. What to understand the relevance of localization? Read my book, “The Power of Belonging”. If Al Othaim improves the value and keeps innovation at the heart of their operations like they did in the recent years, they will take over by the end of 2019.
E. Saudization and customer service, two things they nailed right and showcased national pride.
One last question: Where are you on technology Mr AlOaithem.
They have invested well on functional values but a lot to work on in regards to emotional values.
Panda did not only lose trust from shoppers but also FMCG brands. Most FMCG brands are living a painful experience because of Panda’s hiccup.
Corporate mindset should change from trading to choice or we are doomed in the next two decades. The problem is the mindset across all sectors, not the economy! Stop blaming the economy when you lack basic foundational knowledge on how to build bottom up markets. Stop saying that consumer disposable income dropped when you actually lack ideas to lures engagement. The problem with corporations today is their fear of change and inability to embrace fundamental demands for sustaining long-term growth. The economy is not stupid; you are ego tripping. Panda needs to reconsider everything what Panda is today!
Thank you to all those that helped with Data and contributed to this article.
Together we strive and thrive, change or die! Change is inevitable!