grocery sector insights april 2013

7/30/2019 Grocery Sector Insights April 2013

1/6CPM UK Insight & Planning Prepared By: Mark Berry

GROCERY INSIGHT UPDATE APRIL 2013

Sainsbury's forges ahead in latest market data

According to the latest retailer share data from Kantar Worldpanel, for the 12 weeks to 17 March 2013,

growth in the UK grocery retail market has continued to pick up, with sales ahead 3.9% (vs 3.7% in the

previous period). The Kantar measure of inflation is still above the market on 4.2%, but this has fallen,

indicating the rate of volume decline has slowed.

Retailer

12 weeks to

18 March

2012 (%

share)

12 weeks to

17 March

2013 (%

share)

Sales

growth

(Y-o-Y %)

Tesco 30.2 29.4 1.1

Asda 17.9 17.9 3.8

Sainsbury's 16.6 16.9 6.2

Morrisons 12.3 11.7 -1

The Co-operative 6.5 6.2 -0.3

Waitrose 4.4 4.8 12.5

Aldi 2.6 3.3 30.8

Lidl 2.7 2.9 10.5

Iceland 2 2.1 8.7

Farm Foods 0.6 0.5 -4.9

Other multiples 1.9 2 7.3

Total symbols & independents 2.2 2.2 2.4

Source: Kantar WorldPanel

Sainsbury's steps up a gear

With its growth rate up to 6.2%, Sainsbury's is well ahead of the other leading retailers, and the only one of

the four to gain share in the period. This contrasts markedly with Tesco where growth dropped back to just

1.1%, well behind the market rate, and Morrisons where the trend remained solidly negative on -1.0%. Both

retailers shed over half a percentage point of share as a result. Asda at least maintained growth more or less

at the market rate, sustaining its share at 17.9%.

Double figures again for Waitrose and discounters

Following the well-established pattern it's the premium differentiation of Waitrose and the value alternatives

of Aldi and Lidl that are outperforming the market, with all three claiming double digits. Waitrose's growth

saw the greatest acceleration, with its trend stepping up a full 3.5 percentage points in the period to hit

+12.5%. Meantime Aldi continues its very rapid growth, at over 30%.

Impact of Tesco Price Promise yet to land

Launched on 11 March, the new Tesco Price Promise, matching prices and providing money back coupons at

the till, arrived too late to have any significant impact on performance in this period. Upping the ante in price

matching activity, the Tesco Price Promise is the first to include comparative private label products, and it will

not be until the April data that its effects begin to become apparent. (Source: IGD)



TESCO INSIGHT UPDATE

One Stop to trial a franchise model

Tesco acquires Giraffe restaurant group

Tesco cuts lost sales by 45%

Convenience chain One Stop, a wholly owned subsidiary of Tesco, is to begin trialling a franchise model with

independent retailers.

The franchise model will allow independent retailers to continue to run their own businesses whilst also

benefiting from One Stop's brand, experience in convenience and the added support and investment One Stop

can offer. It is understood that through the franchise, retailers will also benefit from One Stop's low cost

operating and distribution models, which in turn means customers benefit from competitively priced everyday

essentials. It is reported a pilot store could open in the next few weeks. (Source: IGD)

Tesco has announced the acquisition of Giraffe, an award winning restaurant group for 48.6m. It is the

latest in a series of acquisitions by the retailer in the UK designed to develop revenue streams beyond its

core business.

In the Tesco blog, Kevin Grace acknowledges that the shift in general merchandise demand online creates

an opportunity to use store space in new ways and highlights the importance of foodhalls as an integral

feature of new shopping malls around the world. Incorporating Giraffe at a Tesco store location should help

build on in-store initiatives to enhance the quality of the shopping experience and drive footfall, though

Tesco will need to take care that the Giraffe brand retains its distinct identity. (Source: IGD)

Tesco has reported significant benefits following the rollout of its web portal, TescoConnect. Lost sales in

stores have been reduced by as much as 45% with manufacturers such as Kimberly Clark seeing an

availability benefit of 0.3 ppts.

TescoConnect shares real-time forecast data with suppliers assisting collaborative ways of working across

the supply chain. The system collates information that was previously difficult to share, presenting it in an

easier to use format. Joint planning meetings can be more focused with Tesco and its suppliers consulting a

single common information source. (Source: IGD)
http://www.google.co.uk/imgres?q=one+stop+shop&start=130&um=1&hl=en&biw=1440&bih=697&tbm=isch&tbnid=hyk5VJy9d_1UPM:&imgrefurl=http://www.chroniclelive.co.uk/news/north-east-news/robbers-hunted-after-raid-hazlerigg-1408132&docid=VPyJlaQ1R00_EM&imgurl=http://i2.chroniclelive.co.uk/incoming/article1384236.ece/ALTERNATES/s615/the-one-stop-shop-in-hazlerigg-139821787-1384236.jpg&w=615&h=409&ei=aa5eUdqRNILw0gX0t4D4Bg&zoom=1&iact=hc&vpx=14&vpy=376&dur=141&hovh=183&hovw=275&tx=183&ty=108&page=5&tbnh=158&tbnw=264&ndsp=35&ved=1t:429,r:30,s:100,i:94http://www.google.co.uk/imgres?q=one+stop+shop&start=130&um=1&hl=en&biw=1440&bih=697&tbm=isch&tbnid=hyk5VJy9d_1UPM:&imgrefurl=http://www.chroniclelive.co.uk/news/north-east-news/robbers-hunted-after-raid-hazlerigg-1408132&docid=VPyJlaQ1R00_EM&imgurl=http://i2.chroniclelive.co.uk/incoming/article1384236.ece/ALTERNATES/s615/the-one-stop-shop-in-hazlerigg-139821787-1384236.jpg&w=615&h=409&ei=aa5eUdqRNILw0gX0t4D4Bg&zoom=1&iact=hc&vpx=14&vpy=376&dur=141&hovh=183&hovw=275&tx=183&ty=108&page=5&tbnh=158&tbnw=264&ndsp=35&ved=1t:429,r:30,s:100,i:94http://www.google.co.uk/imgres?q=one+stop+shop&start=130&um=1&hl=en&biw=1440&bih=697&tbm=isch&tbnid=hyk5VJy9d_1UPM:&imgrefurl=http://www.chroniclelive.co.uk/news/north-east-news/robbers-hunted-after-raid-hazlerigg-1408132&docid=VPyJlaQ1R00_EM&imgurl=http://i2.chroniclelive.co.uk/incoming/article1384236.ece/ALTERNATES/s615/the-one-stop-shop-in-hazlerigg-139821787-1384236.jpg&w=615&h=409&ei=aa5eUdqRNILw0gX0t4D4Bg&zoom=1&iact=hc&vpx=14&vpy=376&dur=141&hovh=183&hovw=275&tx=183&ty=108&page=5&tbnh=158&tbnw=264&ndsp=35&ved=1t:429,r:30,s:100,i:94http://www.google.co.uk/imgres?q=one+stop+shop&start=130&um=1&hl=en&biw=1440&bih=697&tbm=isch&tbnid=hyk5VJy9d_1UPM:&imgrefurl=http://www.chroniclelive.co.uk/news/north-east-news/robbers-hunted-after-raid-hazlerigg-1408132&docid=VPyJlaQ1R00_EM&imgurl=http://i2.chroniclelive.co.uk/incoming/article1384236.ece/ALTERNATES/s615/the-one-stop-shop-in-hazlerigg-139821787-1384236.jpg&w=615&h=409&ei=aa5eUdqRNILw0gX0t4D4Bg&zoom=1&iact=hc&vpx=14&vpy=376&dur=141&hovh=183&hovw=275&tx=183&ty=108&page=5&tbnh=158&tbnw=264&ndsp=35&ved=1t:429,r:30,s:100,i:94http://www.google.co.uk/imgres?q=one+stop+shop&start=130&um=1&hl=en&biw=1440&bih=697&tbm=isch&tbnid=hyk5VJy9d_1UPM:&imgrefurl=http://www.chroniclelive.co.uk/news/north-east-news/robbers-hunted-after-raid-hazlerigg-1408132&docid=VPyJlaQ1R00_EM&imgurl=http://i2.chroniclelive.co.uk/incoming/article1384236.ece/ALTERNATES/s615/the-one-stop-shop-in-hazlerigg-139821787-1384236.jpg&w=615&h=409&ei=aa5eUdqRNILw0gX0t4D4Bg&zoom=1&iact=hc&vpx=14&vpy=376&dur=141&hovh=183&hovw=275&tx=183&ty=108&page=5&tbnh=158&tbnw=264&ndsp=35&ved=1t:429,r:30,s:100,i:94



ASDA INSIGHT UPDATE

Asda launches ad campaign supporting Price Lock

Asda welfare cards to be given to Birmingham's poor

Asda expands online delivery capability

The Price Lock promotion is being run by Asda on a range of basic products such as bread and milk. It

promises to keep the price of such products consistently low for a minimum of 12 weeks, where it claimsthat the prices of its rivals fluctuate more frequently. Asda has invested 100m in the last seven months to

maintain the low price of staple goods.

Asda's advertising campaign comes just a week after Tesco launched its Price Promise, and is part of a

growing number of price matching initiatives being used across the industry. (Source: IGD)

Asda has expanded its fleet with the purchase of 250 new home delivery trucks. These new trucks

increase Asdas total home shopping fleet to over 1,600. (Source: IGD)

Asda has joined the UK's biggest local authority to provide emergency welfare to some of the country's

poorest people.

Birmingham council, which represents around 1 million people, said that from 1 April Monday it would

give out crisis welfare payments in the form of prepaid cards that could be redeemed only in Asda

supermarkets.

The Labour authority said the cards which Asda said were similar to their gift cards would restrict

spending to a list of predetermined goods, which would exclude tobacco, alcohol, phone-relatedexpenditure and fuel. (Source: Retail Week)



SAINSBURYS INSIGHT UPDATE

Sainsbury's reports impressive Q4 trading

Sainsbury's to boost convenience in London and the South East

Sainsbury's and Tesco urged to stub out cigarette displays in smaller

Sainsbury's has announced it is planning to open 50 new convenience stores in London and the South

East by early 2014.

Convenience at Sainsbury's is growing at 18% year on year which highlights the importance of the

channel in the retailer's strategy. So far this financial year the retailer has opened 87 convenience

stores, taking the total number of stores in its estate to 523. All of the new convenience stores

announced will be supported by a new state of the art distribution centre at Thameside which will be

dedicated to convenience.

Simon Twigger, Sainsbury's Convenience Director commented "Our convenience business is going

from strength to strength as customers continue to enjoy the benefits of regular top up shopping and

the ability to walk to a local store. The new 'Locals' will be located on high streets and in the heart of

communities, rovidin access to health , ualit food at fair rices. Source: IGD

Sainsbury's has revealed very strong Q4 trading for the 10 weeks to 16 March 2013, lifted by strong

seasonal events (such as Mother's Day, Valentine's Day and support for Comic Relief), and a positive

customer response to investments in own brand, multichannel and general merchandise.

Key results at a glance

Total sales up 6.3% (excluding fuel, inc. VAT) in Q4, making it the strongest quarter of FY 2012/13

LFL sales up 3.6% (excluding fuel), including a 0.5% contribution from store extensions in Q4

Full year LFL up1.8% (excluding fuel)

Weekly customer transactions up by over 800,000

Annual ross s ace rowth tar et of 5% achieve Source: IGD

Health campaigners condemn supermarkets for exploiting concession meant to help small businesses

cope with costs.

Tesco and Sainsbury's are under fire from health campaigners for displaying cigarettes in their

convenience stores, even though they can afford to cover them up as they are already required to

do by law in their supermarkets.

Large supermarkets were forced to cover up tobacco products from April last year under the Health

Act 2009. Smaller outlets were given until April 2015 to make the change, partly because of the costs

involved for the thousands of small independent shopkeepers. (Source: The Guardian)



MORRISONS INSIGHT UPDATE

Morrisons online launch set for 2014

LFL sales fall as Morrisons invests for long term success

Morrisons relaunches Payday Bonus

Following encouraging shopper uptake to its initial Payday Bonus loyalty mechanic earlier in the year,

Morrisons has launched a new Payday Bonus for April.

Each time shoppers spend at least 35 over the next three weeks they will receive a Payday bonus coupon.

When a shopper has three coupons from different weeks they will be able to claim a 10 refund off a 35+

shop in the week of April 22-28th at the checkout. The move clearly targets those customers on tight

budgets that struggle with budgeting towards the end of the month - a group that has grown over recent

years. Creating more compelling marketing messages is a key part of Morrisons strategy and the move

demonstrates the retailer's drive to deliver on "Value is forever", one of its six convictions. (Source: IGD)

Having gained experience of online through Kiddicare and its investment in New York based Fresh Direct,

Morrisons has confirmed that it will launch an online food offer in 2014, building on the non-food site

launches such as Morrisons Cellar and its recent tie up with Lakeland. While Morrisons may be entering

the online arena after its main rivals it believes capturing its strengths in fresh foods, craft skills and vertical

integration will enable it to deliver a distinctive online offer.

Morrisons announced that it is negotiations with Ocado on a licensing deal for intellectual property and

operating knowledge further demonstrates its desire to build a compelling online business. (Source: IGD)

Morrisons has announced a fall in LFL sales and lower underlying profits in a challenging year for the

retailer as it looks to online and convenience to deliver faster growth.

Headline numbers from 2012/13

Turnover up 3% to 18.1bn

LFL sales (ex VAT, ex fuel) down 2.1%

Underlying profit before tax down 4% to 901m (Source: IGD)



SO WHAT SHOULD WE DO?

The race for convenience format stores is well and truly on, particularly in London and the South East.Sainsburys plan to open 50 new C stores in the region by the end of the year, Waitrose has

announced its intention to open 10 stores in the capital during 2013, while Morrisons expects to

operate 100 convenience stores within a year, many of which will be located in the South East. Added

to this, Aldi opened its first convenience store in Kilburn, London this month with more to follow.

Competition for appropriate sites in the region is therefore set to intensify as retailers look to build

their convenience networks. We need to ensure that we capture details of store changes and hold

regular call file reviews to monitor the impact as there may be potential opportunities in some of

these smaller format stores.

Tesco appear to be developing some of their larger format stores to become family shoppingdestinations as highlighted by their recent acquisitions of Giraffe restaurants. Whilst this should

increase both footfall and overall customer spend, we do need to understand where the additional

space has been found in store to accommodate the new restaurants? We need to protect our clients

share of space wherever possible.

Asdas tie in with Birmingham Council for the provision of welfare cards is an interesting initiative. Doour clients have any products in the predetermined goods lists, if so there maybe opportunities here

coupled with possible availability challenges? If this initiative proves to be successful it could

potentially be rolled out to other Councils in the future, is there anything we could do to help our

clients to have their products included in the lists?

Morrisons continue to target the growing group of customers on a tight budget with the launch oftheir second Payday Bonus loyalty mechanic. The first had encouraging results so we need to ensure

that we have a presence in the stores that are likely to have a shopper uptake to help support

promotions and avoid availability issues etc. The Payday availability effect, whilst growing, is quite

likely to have an impact on other retailers and not just to Morrisons.

Evidence from Tesco suggests that their Connect real time forecast data web portal may help toimprove levels of in-store availability. If other retailers adopt similar tools and systems it may well be

that our Field teams will have more time in store to focus on other profitable interventions and less

on availability issues.

grocery sector insights april 2013

Documents