Grocery Guru Ep#27: Nett Revenue Management and How it Relates to Supermarkets

Join Andrew Grant and Darren A. Smith in the twenty-seventh episode which is about What is Nett Revenue Management? And how it relates to supermarkets. Plus, where did NRM come from, and how can it be used. They also share their NRM Pyramid model.

You Can Read the Full What is Nett Revenue Management Episode Transcript Below:

Darren A. Smith:

Welcome to episode 27 of the Grocery Guru. We're here with Andrew Grant. Andrew, how are you doing?

Andrew Grant:

Morning Darren. Are you well?

Darren A. Smith:

Hey, I'm very well. There's a lot going on in the world, but let's focus on grocery. And let's focus on a trending topic, NRM.

Andrew Grant:

Oh, got me there. Is that a rapper? An '80s rapper?

Darren A. Smith:

What, like Run-DMC?

Andrew Grant:

Well no, I was thinking more, as we're talking grocery, maybe a confectionary wrapper.

Darren A. Smith:

Oh, I see. I was thinking you mean [inaudible 00:00:35]. So NRM. Not really managing? No, what's it stand for?

Andrew Grant:

Could be. Could be. I think it's net revenue management. I'm taking a wild guess there.

Darren A. Smith:

It is. So we're going to talk about what is nett revenue management now. Net, N-E-T or N-E-T-T?

Our Net Revenue Management Training Course covers a model and process for effective day-to-day NRM

 

Andrew Grant:

Oh. Oh that's a very [inaudible 00:00:56]. I don't think it matters, does it?

Darren A. Smith:

I don't know [crosstalk 00:00:58].

Andrew Grant:

I'd go with N-E-T-T, because that's a bit more accountancy and finance-y.

Darren A. Smith:

It is supposed to be the right way is N-E-T-T, but I'm sure no one really cares. The Google searches have been going up and up over the last three years, because we can track what people are searching for, what volume. So it's going up and up and up. It's getting more and more popular. Net revenue management, or NRM, or optimizing revenue, what the hell is it?

Andrew Grant:

Well, I think it is actually very topical. And if you are watching the Google stats it's probably not surprising it's starting to peak again, because I think it's going to become incredibly important the next six months. Do you know the background? Where it came from?

Darren A. Smith:

I know it's about the airlines, but I'm going to leave that to you. Go on.

Andrew Grant:

Yeah. So as most of these things, I think it's American derived. Basically grew up out of the low cost airlines in the States, whose sole purpose is obviously to fill planes as profitably as possible. If you're running an easyJet or a Ryanair model and selling seats at 7.99, you've got to maximize the revenue from every single bum on every single seat. And that's where, I mean Ryanair is the classic. Some of the more outrageous revenue raising tricks occur. Was it Michael O'Leary was going to charge for using the toilet at one point on Ryanair flights? But you charge for your baggage, you charge for refreshments, you charge for meals. You're charged if you want to sit in the first 10 seats. That is effectively net revenue management in action, but possibly at its worst.

Andrew Grant:

I think, well, it's going to become incredibly in vogue the next few months. If you think about it, the economy is going to open up fully on May the 17th, is it?

Darren A. Smith:

Yep.

Andrew Grant:

You're going to have the hotels back open, you're going to have restaurants open for indoor dining, and you're going to have the airlines flying again. And they're all, after a year in limbo, they're all going to be desperate to be maximizing the revenue from every single customer. Now something, there's supermarkets coming onto the grocery trade obviously have done very, very well during the pandemic, and they seem to have done it without any perception of the customers being overcharged or stung. Your worry is with, or you're already seeing it with holiday lets in Cornwall and Devon twice...