IRIs Weekly News Update - w/c 13th February 2017

IRI Weekly News updateYour window on the latest trends in Packaged Groceries

Stephen Hall

Friday 17th February

Copyright © 2015 Information Resources, Inc. (IRI). Confidential and Proprietary. 2

• Consumer spending slows and footfall fell in January• Growth in Ireland’s grocery market slows; Dunnes takes top spot• Investigation finds Tesco has been ‘overcharging’ customers• B&Q to debut small-format store in north London• Valentine’s Day could provide £687m boost for retailers, research suggests• Fate of 34 Budgens stores in balance• IGD reveals top grocery shopper saving tactics• Waitrose, Iceland and M&S win Which? Awards• Britons spending more on food and leisure than booze, smoking and drugs • Morrisons launches drive to recruit more UK suppliers

Weekly News Summary – 13th February 2017


Consumer Spending Slows And Footfall Fell In January

Further evidence of a slowdown in retail spending in the New Year was revealed in two separate sets of data released today.

Visa’s UK Consumer Spending Index showed that whilst overall spending was up 0.4% on the year in January, it was down from an increase of 2.5% in December – marking the second-weakest rate of expansion in just over three years.Spending split by channel indicated that e-commerce continued to outperform face-to-face categories. That said, e-commerce increased at the slowest annual rate in five months (+4.1%). Meanwhile, face-to-face spending declined at the quickest pace in four years (-3.1% on the year), after a marginal rise in December (+0.6%).

Kevin Jenkins, UK & Ireland Managing Director at Visa, said that the data suggested that consumers were starting to rein in their spending as they monitored rising prices on everyday items and how this would impact their disposable incomes.She added: “Clothing and household goods retailers experienced a particularly difficult January. The traditional start of year sales did little to lift clothing spend, which saw the biggest drop in nearly five years. The high street as a whole suffered a disappointing month too, with spend falling at the quickest rate in four years.”

Meanwhile, data from the BRC and Springboard showed that retail footfall in January was 1.3% down on a year ago, the steepest drop since the 2.8% fall in June 2016 and lower than the three-month average of 0.8%.

Helen Dickinson Chief-Executive of British Retail Consortium, said: “January’s sluggish non-food sales, which undoubtedly corresponded with the dip in footfall below last year, go some way to explaining these underwhelming figures. Stores bore the brunt of the sales slowdown; posting their deepest three-month decline on record as online was the preferred shopping channel for the month’s clearance sales.”

Diane Wehrle, Marketing And Insights Director at Springboard, added: “The results are consistent with longer term footfall trends, with an underperformance of shopping centres against high streets and retail parks. Of significance is that footfall is correlating closely with retail sales, with all sales results published so far showing a poorer performance in January than in January 2016. Springboard’s own data on bricks and mortar sales showed a -1.5% drop in January from January 2015.”

Source: NamNews 13th February 2017


Growth In Ireland’s Grocery Market Slows; Dunnes Takes Top Spot

The latest supermarket share figures from Kantar Worldpanel in Ireland for the 12 weeks ending 29 January 2017, reveal that retailers have not sustained the same level of strong growth achieved over the Christmas period. Grocery sales growth fell to 3.0%, down from 4.6% last month.

David Berry, director at Kantar Worldpanel, explained: “Dunnes Stores has returned to first place, capturing 22.7% share – only the second time it has managed to reach the top, having first held this position in November last year. This will be welcome news for the retailer but there should be some concern that its sales growth has dipped to 3.6% – the lowest level seen in more than a year.

“The slowdown in overall market growth has led to even stronger competition between the major supermarkets and it’s tight at the top of the market share table – only 0.3 percentage points separate Dunnes Stores, SuperValu and Tesco. This points to a good year for consumers as the retailers battle each other fiercely for their all-important grocery spend, keeping price inflation low. Grocery prices are only 0.7% higher than they were this time last year – which for the average shopper only amounts to an extra 17 cents per trip.”

Kantar Worldpanel said the supply issues affecting fresh produce in the last few weeks have contributed to the dampening of the overall market. Berry commented: “Southern Europe might be suffering from continuing rainfall but it’s having a substantial impact on Irish shopping baskets. Courgettes, cauliflower and spinach have all seen volume sales drop by at least 20% while a host of other categories including lettuce and cabbages have been affected to a lesser degree.”Elsewhere, Aldi continued to set the pace as the fastest growing retailer. Shoppers are now visiting the retailer 8.7 times every 12 weeks, compared to 8.1 times for the same period last year, and this has helped to increase sales by 6.3%. Aldi now controls 10.6% of the grocery market, ahead of the 10.3% from last year.

Meanwhile, almost three quarters of Irish shoppers visited a Lidl store in the past 12 weeks; having encouraged another 26,000 new consumers through its doors the retailer has posted positive sales growth of 2.8%.Grocery market inflation over the period stood at 0.7%, consistent with that seen last month.



Investigation Finds Tesco Has Been ‘Overcharging’ Customers

Tesco has pledged to take action after an investigation found customers were being short-changed on promotions which had expired but were still advertised on shelves.

The probe by the BBC’s Inside Out programme found that in 33 out of 50 stores visited by its reporter, multi-buy promotions were marked on the shelf, but the time-limited discounts were not applied at the checkout. In some cases, the deals advertised on the shelves were weeks and even months out of date.

Martin Fisher from the Chartered Trading Standards Institute told the BBC that such mistakes could break the law by falling foul of The Consumer Protection from Unfair Trading Regulations 2008. He suggested other supermarket chains could have similar issues, saying: “The underlying problem is that people don’t complain because they don’t realise. Very few people remember [the price] from the shelf to the till so complaints are extremely low.”

In every case where the discrepancy was brought to light, Tesco staff honoured the offer. However, after reporters pointed out the discrepancies, some stores still failed to remove out-of-date labels.

As a result of the BBC’s investigation, Tesco has pledged to double check the accuracy of the price labels at all its 3,500-plus stores across the UK.

A spokesperson for Tesco said: “We take great care to deliver clear and accurate labels for our customers so they can make informed decisions on the products they buy. We are disappointed that errors occurred and will be working with the stores involved to reinforce our responsibilities to our customers”.

Vickie Sheriff, Director of Campaigns and Communications at Which?, commented: “To avoid confusing their customers, supermarkets need to be clear about how long offers are running for. We don’t want people to get a nasty surprise when they reach the till and find out the cost of the goods are higher than expected.”



B&Q to debut small-format store in north London

Home and DIY retailer B&Q is set to debut its small-format store on the high street at the beginning of March when it opens on Holloway Road, north London.

With the “home improver” as its target consumer group, the stripped-back version of B&Q will feature tools and hardware, but not building materials, wood-cutting or other services often found in the larger B&Q outlets.

A second B&Q small-format store also slated to open towards in Leyton, east London, in the latter half of March.The decision to open smaller-format B&Q stores comes as Australian DIY retail chain Bunnings began its takeover and conversion of Homebase with the opening of its debut warehouse in St Albans.

In November, B&Q’s parent company Kingfisher PLC has recorded a strong third quarter, with like-for-like sales going up by 5.8 per cent in the three months to October 31, and its overall revenue growing 1.8 per cent to £2.96 billion.

The smaller B&Q stores form part of the parent company’s One Kingfisher strategy.

Source: Retail Gazette 13th February 2017


Valentine’s Day could provide £687m boost for retailers, research suggests⌂

Valentine’s Day sales could be set for a boost this year, with new analysis from Savvy suggesting the event could be worth £687m to the retail sector, up £30m on last year.

The research revealed that 38% of UK shoppers planned to spend more this year, while 43% tended to trade up to buy more expensive food and drink.

Other key findings from the research include:• 55% of shoppers say that they don’t mind spending more to make the day special• 54% of shoppers plan ahead for which items to purchase

Alastair Lockhart, insight director at Savvy, said: “Valentine’s Day is set to provide a positive kick off to the 2017 event calendar.

“Our research shows that shoppers are so far shrugging off concerns about Brexit and remain confident in their immediate spending plans.

“We find that, among those planning to celebrate Valentine’s Day, many expect to spend more this year and that is set to benefit retailers – especially in food and clothing.

“While Valentine’s Day sales look placed for a boost, the outlook for the retail events calendar for the rest of the year is more challenging.

“The summer sporting calendar is quiet this year, putting the onus on retailers and brands to keep shoppers interested and engaged. Also inflation is expected to creep up over the following months. Rising prices will lead to more cautious shopping behaviour.”

Source: Talking Retail 13th February 2017


Fate of 34 Budgens stores in balance

The future of more than 30 Budgens stores hangs in the balance after The Food Retailer Operations business went into administration last Friday.

The company operates 34 c-stores under the Budgens fascia across England, Wales and Scotland and Independent Retail News reported on 20 January that a company voluntary arrangement had been launched to pay creditors and allow it to keep trading.

It was first stated that 12 of the Budgens stores were likely to close, but the fate of all 34 outlets, along with other non-trading stores and the former head office of the Somerfield supermarket business, was in doubt after administrator PwC was appointed last week.

The Food Retailer Operations bought the stores from the Co-op in July 2016, but it has “experienced difficult trading conditions”. Joint administrator Mike Denny said the company had faced “pricing pressures, intense competition and structural change across the food retail sector”.

“We are continuing to trade all 34 stores, while engaging with interested parties for the sites and the other leasehold interests of the company,” he said. “We will work closely with the employees over the coming weeks.”

The Co-op said if no buyer could be found for the stores, it would make “every effort” to find alternative employment for those employees affected.

Source: Talking Retail 13th February 2017


IGD Reveals Top Grocery Shopper Saving Tactics

New research from IGD reveals food prices top the list of factors UK shoppers think will have the most impact on their financial circumstances in the coming year, with two thirds (65%) saying this will have an impact.

Meanwhile, energy bills (58%), petrol prices (53%), not having a wage increase (31%) and interest rates (28%) make up the remaining top five factors shoppers say will have an impact in the year ahead.

IGD’s research also highlights the top tactics being used by savvy shoppers to save money on groceries. Overall, cooking fromscratch or with leftovers tops the list of things shoppers do to save money, with 83% claiming they do this. Some 65% have visited two or more stores on the same shopping trip and 63% have made packed lunches.

Meanwhile, 37% of shoppers have taken products out of their grocery basket, in-store and online, before they get to the till to save money. A further 28% have grown their own fruit or veg and over one in five (19%) have skipped a meal to save.

Highlighting savvy shopping habits to bag a bargain in the grocery aisles, over a third (33%) of UK shoppers have shopped at a specific time of the day to benefit from ‘reduced to clear’ reductions and over one in ten (13%) have asked a member of staff toreduce the price of a grocery products that was damaged or at the end of its shelf life. Those in London are the most likely to ask for a reduction, with 18% of shoppers in the region claiming they have done this, compared to just 10% in the Midlands, which is theleast likely region to do so.

Vanessa Henry, Shopper Insight Manager at IGD, commented: “UK shoppers are really switched on where personal and wider economic circumstances are concerned. It’s therefore no surprise that we’re seeing such a proactive and creative approach to grocery shopping. With food and drink prices continuing to show year-on-year price deflation for the time being it’s encouraging to see that consumers are ahead of the curve by adopting such savvy tactics to save money. Savvy shopping behaviour has become ingrained in the shopper mindset and our research highlights that even when a grocery bargain is not on offer, consumers are not afraid to ask for it. While the reduced shelf may not have been first point of call previously, today’s shoppers are not only actively using it, but timing their shopping around it.”

Furthermore, it seems coupon culture is also playing a part in UK shopping habits as 77% of shoppers claim to have used a couponto reduce their overall bill and 31% to have collected a coupon or receipt from someone else to benefit from a loyalty scheme orspecial offer in the past six months. Meanwhile, one in five (18%) claim to have paid for shopping at the checkout in two parts in order to benefit from a loyalty scheme or special offer.



Which? survey reveals UK's favourite supermarkets

In the poll involving more than 7,000 consumers, Waitrose and Iceland were rated as the best supermarkets for in-store and online experience respectively, while Marks & Spencer topped the first ever Which? convenience store satisfaction survey with its Simply Food stores.

Shoppers were asked to rate stores on factors such as store appearance, ease of finding products and overall quality of fresh products. When it came to the online ranking, shoppers were asked about relevance of substitutions for products, value for money and delivery driver’s service.

Both Waitrose and Marks & Spencer won praise for their store appearance and quality of own-label and fresh products.Aldi and Lidl shared third place and were the only two supermarkets in the survey to be awarded top marks for value for money.

Morrisons was the biggest climber from last year’s survey, moving up from eighth to fifth place. Shoppers praised its easily navigable aisles and fresh food.

Asda fell below Tesco and Sainsbury’s who came in eighth and seventh place respectively. Which? said the supermarkets were ranked lower due many customers’ favourite products not being in stock, difficulty finding items and low scores on value for money.

In the online category, Iceland Online came top for the second consecutive year, with customers particularly happy with convenient delivery slots and friendly drivers. Ocado came in second place for online.

Despite finishing runners up in the in-store category, Marks & Spencer's Simply Food convenience stores came top in the first ever Which? convenience store satisfaction survey. Budgens, Nisa and Spar occupied the three bottom places of the convenience store survey.

Richard Headland, Which? magazine editor, said: “With concerns over rising prices the competition among supermarkets is fiercer than ever. While value for money remains a top priority, in-store appearance and the availability of quality and fresh products can also go a long way to satisfying shoppers’ needs.”

Source: Retail Bulletin 16th February 2017


Britons spending more on food and leisure than booze, smoking and drugs National survey suggests fall in number of smokers and rise in culture of eating out and recreational activities Britons are spending more than £45 a week on restaurants and hotels for the first time in five years, figures show.

Britons are spending less on cigarettes, drugs and alcohol and more on eating out and hotels, according to the latest official snapshot of family spending.Weekly spending on booze, fags and narcotics fell below £12 for the first time since the survey began, partly reflecting the decline in the number of people who smoke.On the other hand, households spent more than £45 a week on restaurants and hotels for the first time in five years, the Office for National Statistics said. The figures are for the year ending March 2016.

Jo Bulman, ONS statistician, said: “While overall household spending didn’t change much in real terms since the previous year, we did see some interesting shifts in the types of things people are spending their money on.”

Spending on alcohol, cigarettes and drugs has fallen below £12 a week. The report showed that households have still not fully recovered from the financial crisis, with family spending still below the levels seen before 2007.

Average total spending – adjusted for inflation – was unchanged from a year earlier at £528.90 a week. Low income families continued to spend a higher proportion of their spending on food and energy compared with people on higher incomes.

Transport was the biggest costs for households over the year, averaging £72.70 a week or 14% of spending. It was closely followed by housing –excluding mortgage interest payments and council tax – fuel and power, which averaged at £72.50 a week.

Average weekly family spending in the year ending March 2016• Transport: £72.70• Housing, fuel and power: £72.50• Recreation and culture: £68• Food and non-alcoholic drinks: 56.80• Restaurants and hotels: £45.10• Miscellaneous goods and services: £39.70• Household goods and services: £35.50• Clothing and footwear: £23.50• Communication: £16• Alcoholic drinks, tobacco and narcotics: £11.40• Health: £7.20• Education: £7

Source: The Guardian16th February 2017

https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/expenditure/bulletins/familyspendingintheuk/financialyearendingmarch2016

https://www.theguardian.com/business/financial-crisis

https://www.theguardian.com/business/inflation


Morrisons Launches Drive To Recruit More UK SuppliersMorrisons has launched an initiative to recruit hundreds of new UK food suppliers over the next few years to cut its reliance on foreign products and enhance its British credentials.

The programme, titled ‘The Nation’s Local Foodmakers’, will see Morrisons aim to recruit more than 200 new suppliers from across England, Scotland and Wales in the first year. The group is inviting suppliers to pitch for their place in its 491 supermarkets via a series of 12 regional events, the first of which will take place in Yorkshire on 14 March.

The company said its priority was sourcing more local food to reduce the distance that products travel. It hopes the search will result in more customers being able to buy more food that was grown, made, picked or packaged within 30-60 miles of their local store.Morrisons is asking suppliers to apply through a new website www.morrisons.com/local. Selected applicants will be invited to an event in their region where they will be able to showcase their food to customers, Morrisons staff and Women’s Institute members as well as Morrisons buyers, who will decide who is selected to be listed in Morrisons supermarkets.

The move comes amid the launch of a new report, commissioned by Morrisons, which calls for the UK to be more self-sufficient in food production and new consumer research that shows a growing appetite from British shoppers for more local food.

The British Food report, published by experts on global food issues led by Professor Tim Benton from the University of Leeds, found that only half (52%) of food eaten in the UK comes from domestic farms. Professor Benton said that in light of uncertainties globally such as Brexit, climate change and potential trade wars, it makes increasing sense to build up a stronger local food sector in the UK. The reports says buying more food locally will increase the UK’s resilience to these risks and calls on British retailers, producers and customers to recognise the wider benefits of supporting local food making and production.

The UK exports £18bn worth of food, whilst importing £39bn, but even if all the UK-grown produce was consumed domestically, it would still fall below two-thirds of British demand.

The report adds that British customers have an increasing appetite to buy more local food because they believe it to be more trustworthy, and that it supports their local communities. This is supported by separate research from Morrisons which showed that British consumers are open to this shift with more than two thirds (67%) of UK shoppers stating a preference to buy British with the remainder expressing no preference.

Andy Higginson, Chairman of Morrisons, said: “Our customers tell us they want to see more food that is made just down the road from their own communities and that’s why we are looking for the next generation of British and local foodmakers to serve our 12 million customers.

“We want small UK food suppliers to become bigger ones – the Innocent Smoothies of tomorrow – and we also want to give our customers the option of more food that meets their local food tastes.”

He added: “Morrisons is already British farming’s biggest single customer and the publication of the report today from Professor Benton makes us more determined to produce more of our food and source more from local British suppliers.”

Source: NamNews17th February 2017

http://www.morrisons.com/local

IRI Weekly News updateYour window on the latest trends in Packaged Groceries

Stephen Hall

Friday 17th February