Archive for the ‘Consumer Retail’ Category

Why some energy firms going bust in UK?


In 2021, some small energy firms went bust in UK. Why did it happen?

These firms were re-sellers meaning they didn’t produce any gas or electric of their own. They bought wholesale gas/electricity from large producers and sold it to customers.

When customers signed up with them, these firms promised a price say £x. They used to buy energy at wholesale rate of £w (where x – w = their profit).

Since wholesale energy price went up suddenly, these firms had to buy energy at a rate W which is more than x, i.e. what customers paying them.

They can’t simply ask customers to pay more because they had contract with customers where customer would pay fixed price £x as previously agreed.

So these energy firms can no longer afford to purchase energy at cost W and in return get only x from their customers. So their business is no longer sustainable and hence they went bust.

Why Microsoft created Windows 8 Metro interface?


There was nothing wrong as such in Windows 7. However, unless businesses can make working things obsolete via upgrade to newer versions they won’t make enough money!

So Microsoft introduced Windows 8. However, unlike previous versions of Windows, they tried to force new Metro interface which is more suitable for touch screen devices. Most users were unhappy and wanted to revert to Windows 7 like interface. But why Microsoft introduced it in first place?

Metro and legacy Windows applications are not compatible. An app designed for Metro interface won’t run in traditional Windows environment. Metro apps can only be downloaded via Windows Marketplace. Now this is a very crucial difference. In earlier Windows, you could download apps from literally millions of websites. However, in Metro interface, your only option is Windows market place. This is similar to Apple’s AppStore concept. Microsoft did at because they wanted to capture 30% of all app sales. They can only do it if those apps are sold using their own app store only.

The trouble for Microsoft started when consumers did not like Windows 8. In fact various statistics show PC sales have been slowed down because consumers shunned Windows 8. Now Microsoft is caught between devil and deep sea. Backtracking from their Metro interface means potential loss of profit in future and acceptant strategic failure. However, if they continue to force Windows 8 Metro interface to consumers they may face continued backlash.

This is also the reason why Microsoft does not offer any option to start Windows 8 straight into legacy desktop! Because they want consumers to adopt their new Metro interface. Some consumers are using third oath apps to make Windows 8 behave like Windows 7.

But now you know why Microsoft did not offer these simple options themselves!

Why Apple is suing Samsung?


Lately it has been a trend to big multinationals suing each other’s over patent infringement cases.  The Apple vs Samsung battle is the latest one. No doubt Apple got a favourable verdict in a court which is just few miles away from their Californian headquarters.

It is difficult to comment how reasonable Apple’s claim is because nowadays most phones look and behave in very similar way.

But what is the real reason for Apple’s move?

Samsung itself is a very big conglomerate and powerful rival to Apple. The executives in Apple are very well aware that Samsung (and other competitors) will come up with many innovations some of which will invariable be better than Apple’s own.

In today’s cut throat consumer market, first movers do not have advantage for long. Within months (if not weeks) competitors can bring out a better model of the gadget. So majority of profit needs to be reaped as soon as the product is released. At least, before a cheaper better clone is released by competitors.  By suing Samsung, Apple at least made sure their competitor will lose some market share (!) in short term.  In current consumer market popular gadgets sale in huge numbers and majority of other models just lag behind (like what Nokia’s Windows phones are doing now).  That means even a very short term but massive market lead can bring billions in profit.

Whether Apple’s strategy is counterproductive or not, only time will tell. The sentiments of posters in social networking sites and blogs indicate that most people are actually favoring Samsung on this case. So this might be a boomerang for Apple.

Gurantee vs Warranty


Warranty = manufacturer will repair (usually free of charge) if product breaks down or does not perform as expected. Consumers may be charged for a warranty – which works somewhat like an insurance policy e.g. extended warranty.

Guarantee = There may be a possibility of getting replacement/refund under law if product/service fails to meet the requirement of buyer. Gurantee is usually free and legally binding.



Unexpected item in bagging area


Typical self-checkout till


This is common message you hear if you have ever used self-checkout tills at supermarkets!

Supermarkets are increasing using self-checkout tills to reduce cost (i.e. they don’t have to pay someone to manage tills). Most shoppers just hate these self-service tills.

It usually consists of 3 slabs. On left most slab, you keep your items. On central slab you scan barcodes of each item and then put them on bags on your right hand slab.

The machines checks that weight of scanned item (as obtained from store’s database) should equal to the actual weight on your right hand slab (which has a weighing gauge internally).

When you scan an item and place on the bagging area, the computer cumulatively adds the weight and expects the theoretical weight be equal to actual weight of items placed on bagging area.

If shopper scans something and barcode is read wrongly by the computer (a very common problem), it then finds that weights on scanner vs bagging area are not matching and shouts “unexpected item in bagging area”. It requires a store employee to reset the terminal for further use.  Naturally this irritates the shopper. From supermarket’s point of view, this message indicates a fraudulent behavior from customer. They think customer might be trying to steal something and thus not placing it on the bags by not scanning! Thus, the message is heard loudly which is to attract attention of a store employee.

In contrast to other European countries, in UK shoppers are often likely to start a conversation with till operators (although this tradition is dying down within younger generations) and thus UK shoppers hate (especially older generation) absolutely hate self-checkout tills.

Why restaurants give free peanuts but charges for water?


Usually more peanuts you eat, more alcoholic beverages you are likely to consume. These beverages have high profit margin for restaurants. However, if you are given free water, then you are more likely to buy less food or other drinks. So water becomes substitute of other drinks where as peanuts actually works like appetizer. That is why restaurants penalizes you for drinking water.

Do adults play with Lego?


Although Lego is predominantly meant for children and grown ups, there is a significant number of adult fans who play with Lego. They are known as AFOL or adult fan of Lego.

Lego estimated that around 5% of theirs sales are adults buying Lego for themselves. It should be noted that not all Lego themes are popular with adults. Most AFOLs find interest only in Technic, Modular cities and electronics.

There are several internet forums for where adult Lego fans exchange ideas.

Indeed some of Lego Technic sets are too complex for children.

Why do restaurants have Chef’s Specials?


All restaurant items can be broadly categorized into following 4 segments.

  1. Star – Popular item with high profit margin
  2. Plowhorse – Popular item with low profit margin
  3. Puzzle – Unpopular with high profit margin
  4. Dog – Unpopular with low profit margin

The Chef’s Special usually belongs to category 1 or 3. It is a way of maximizing their profit. If Chef’s Specials are shown on menu, usually they are featured in such way that it will attract most attention – often with box and pattern.

There are also many other tricks restaurants follow. For example, if you ask for water, they will ask mineral or sparkling. You should simply say tap water. They are often bound (if local law applies) to serve tap water for free. If you ask recommendation for items from menu, they always tend to up sell (i.e. offering something more expensive).

Which whole milk and skimmed milk cost the same?


Whether whole milk is cheaper than skimmed milk or not, depends on where you are buying it.

Milk is produced as whole milk (i.e. with fat). Then it is pasteurized (i.e. killing of bacteria via heating the milk but not altering its taste or nutrition value). After this, the excess fat is removed to create skimmed or semi-skimmed milk. Now removing this fat is an additional process for skimmed milk. So that indicates skimmed milk should be more expensive. However, the removed fat can be put for other uses – so there is an intensive to selling skimmed milk

The price of milk often reflects whether it is placed as a lifestyle choice or based on actual cost of processing. For example, in UK, whole milk and skimmed milk cost the same to encourage people consume less fat. However, in India, whole milk costs more than skimmed milk because the former contains additional fat.

Why supermarkets are going to stop giving plastic bags?


They claim it is for environment. Plastic bags are non bio degradable and thus not Eco-friendly.

However, most people use these bags as bin bags. Instead, supermarkets encourage buying biodegradable reusable bags, often termed as bag for life.

You need to pay for this bag initially (for ~10 pence) and then when they become unusable, you can exchange one for free. But there is a catch, if you lose your bags, you won’t get a free replacement! So, in a way, supermarkets found a way to sell something which they were supposed to give us free. Supermarkets thrive for profit and when they say this opportunity to grab additional profit (which is considerable based on how many bags customer use) they love to make full use of it.