Tuesday 14 November 2023

Avon To Open First Physical Stores

Avon, the cosmetics and personal care brand which has traditionally been sold via a direct-selling model, is set to open its first-ever physical stores in the UK.

The 137-year-old brand has previously relied on an army of door-to-door sales reps to demonstrate and sell its products. However, the pandemic accelerated Avon’s shift to online sales.

The company is now planning to roll out a bricks & mortar format in the UK, Brazil and South Africa. It already has 63 stores in Turkey, growing rapidly over the last three years.

Avon’s Chief Executive Angela Cretu described the move as an “exciting new chapter” for the brand, with it looking to follow women “wherever they spend their time”. She added: “Women like to touch and experience the product and have that joy of seeing all the colours available.”

The first stores in the UK are expected to open over the next couple of months in “neighbourhood communities” rather than on traditional high street locations. They will be “mini beauty boutiques” run by sales representatives as franchises. The stores will feature about 150 products, with the full range available through the sales representative.

Retail analyst Natalie Berg noted that the Avon brand remained “a little dated” but suggested that the opening of physical stores could be beneficial for the company.

“You can’t overestimate the power of human touch and the community you get in a physical store environment,” she said, adding that this was particularly true for beauty products.

Berg stated that Avon would need to get its in-store technology right in order to compete with leading brands that have invested heavily in virtual and augmented reality. However, she said that local stores could have a “halo effect” by helping customers find products they later continue buying from sales reps and online.

Avon made its debut on UK high streets last month via a partnership with Superdrug. The health & beauty retailer is stocking over 150 of Avon’s make-up, skincare and fragrance products in 100 stores, with additional items available online. From 27 November, the partnership will be expanded to hundreds more stores with plans to eventually make Avon products available through Superdrug’s entire chain of almost 800 outlets.

Avon was acquired in 2019 by Natura &Co, the Brazilian beauty group that also owns The Body Shop.

NamNews Implications:

  • If Avon can continue their consumer-product ‘intimacy’ instore…
  • …they will represent something different in cosmetic selling.
  • ‘Avon local stores could have a “halo effect” by helping customers find products they later continue buying from sales reps and online’
  • Fingers crossed…
hashtagDirectToConsumer hashtagAvon hashtagCosmetics

Thursday 14 September 2023

Lidl GB Swings To Annual Loss Amid Battle To Keep Prices Down

Lidl has revealed that its business in Britain swung to a loss in its last financial year after battling to keep prices low in the face of rising costs “across the board”.Over the 52 weeks to 28 February 2023, the discounter posted a pre-tax loss of £75.9m against a profit of £41.1m the previous year. Underlying earnings (EBIT) fell from £79m to £28.5m.

Lidl noted that it had invested over £100m in keeping down during the cost of living crisis, helping it attract an additional 1.4 million shoppers. Its market share during the period increased from 6.1% to 7.1% – the fastest growth experienced by the discounter in the past five years.

The company opened 50 new stores during the year and invested heavily in staff pay and expanding its distribution network. This included building Lidl’s largest Regional Distribution Centre (RDC) in the world, which officially opened in Luton earlier this month following a £300m investment.

“We’ve always had a clear commitment to offer the best value to our customers, and that is a promise we will always keep, even in uncertain economic times,” said Ryan McDonnell, CEO of Lidl GB.

“Alongside preserving this price promise, rewarding our people and maintaining long-term relationships with our suppliers will always be a priority. As a privately-owned business, we have the ability to make decisions that we know will have immediate benefits for our people, customers and suppliers and long-term benefits for our business.”

He went on to say: “The entire retail market has seen inflation, and we are no exception. However, for us, what is important is that our price gap to the traditional supermarkets is as strong as it has ever been. We’ve invested in keeping our prices low for customers in what has been a very challenging year for most and, with many more customers flooding through our doors each day, our ambition is to ensure that every single household has access to high quality, affordable food at their local Lidl store.”

Next year will mark 30 years of Lidl in Britain, with the business now operating over 960 sites and 14 distribution centres. McDonnell stated that there was “no ceiling on our ambitions for the next 30 as we see the potential for hundreds of new stores”.

Last week, Aldi opened its 1,000th store in the UK and outlined plans to open 500 more.

NamNews Implications:
  • A key issue has to be the extent to which Lidl operations in other countries are prepared to fund UK losses at their expense…
  • That said, discounters in the UK are on a roll and global Lidl may be prepared to trade off share growth vs. local discontent.
  • i.e. Lidl has to fuel available growth…
  • …and according to their management, this investment will continue.
  • i.e. there was “no ceiling on our ambitions for the next 30 as we see the potential for hundreds of new stores”.
  • Address your Lidl strategies accordingly…
#Discounters #Aldi #Lidl #Share

Thursday 7 September 2023

Aldi Opens 1,000th UK Store With Plans For 500 More


Aldi has today opened its 1,000th store in the UK, nearly 33 years after opening its first in Stechford, Birmingham.

Announcing the opening of the milestone outlet in Woking, Surrey, the discounter committed to a new long-term target of 1,500 stores in the UK, with a pledge to invest billions of pounds in the economy.

Aldi is now the country’s fourth biggest grocery retailer, with one in every ten pounds spent in UK supermarkets going through its tills. It is also the fastest-growing supermarket, with its low-price mantra helping it attract even more customers during the cost of living crisis.

Aldi is on track to open another 20 new stores before the end of the year as part of a £1.3bn two-year investment plan.
The retailer stated that it was on the hunt for more locations across the UK to support its bid to open another 500 stores to reach its target of 1,500.

Aldi UK and Ireland CEO, Giles Hurley, commented: “Opening our 1,000th store is a huge milestone and wouldn’t have been possible without the hard work and dedication of our 40,000 incredible colleagues.

“Our popularity is growing, and there is huge demand for people to have an Aldi store near to them to increase shoppers’ access to our unbeatable prices.

“The next phase of our expansion will involve another 500 new stores over the coming years. It is a long-term target and is not a ceiling to our ambition to have an Aldi store close to everyone in the UK.”

NamNews Implications:
  • About time to include Aldi in your major customer portfolio, somehow…?
  • (Just assume a 50% increase in store numbers adds an equivalent amount to their UK market share)
  • Need any more inducement?
#AldiShare #AldiGrowth #DiscounterValue

Monday 19 June 2023

Tesco Admits To ‘Tension’ With Suppliers

After it was revealed last week that Tesco had slipped down GSCOP compliance ranking, the retailer’s Chief Executive has blamed its fall on “fighting the fight” for consumers against inflation.

After posting robust first-quarter results on Friday, Ken Murphy is quoted by trade publication The Grocer as saying there was an “inevitable tension” with suppliers trying to get through cost price increase (CPI) requests and Tesco seeking to keep prices down.

Last week’s compliance ranking published by the Groceries Code Adjudicator (GCA) showed Tesco had fallen from second place to sixth. This was despite the cut-off for the survey coming before Tesco’s call on suppliers to start paying fulfilment fees for using its online and Booker wholesale services. The report by The Grocer noted that this recent move could result in Tesco falling even further down the table next year.

Murphy highlighted that the latest GCA ranking was “very, very tight,” adding: “We are only talking about a percentage point of two in the difference, and I’m really pleased that more than 95% of suppliers recognise we are compliant with the code.

“However, there is an inevitable tension between retailers and suppliers over the passing on of costs and how we fight the fight for customers.”

Meanwhile, Murphy offered further reasoning for its upcoming range reset programme, ‘Fit for Change’. This was announced last month and is set to be the biggest range review since predecessor Dave Lewis’s ‘Project Reset’.

Murphy told The Grocer: “We have seen a giant leap in the technology to enable us to predict what customers will buy and where. This review is all about making sure we combine minimising the cost of servicing those customers with making sure we optimise the range so our customers have enough of the product they want to find.”

NamNews Implications:
  • Consumers, retailers and suppliers are coping with Lockdown fallout.
  • The most fundamental and unprecedented business challenges, ever…
  • In principle, each member of the supply chain will try to isolate costs that can be passed to other parts of that supply chain.
  • (The Tesco fulfilment charge being just one example…)
  • Suppliers need to quantify the financial impact of every part of their supplier-retailer relationship…
  • …and negotiate like-with-like re the impact on respective P&Ls.
#CPIs #Costs #SupplierRetailerRelationships

Monday 5 June 2023

"But I always do my Tesco Clubcard shopping on Saturday afternoon!"

A New Norm Shopping Behavioural Insight, from the NamNews Team!

Tesco, Hove - 03.06.2023 - 1430

Retail Shrink in the New Norm...


‘Petty’ theft by shoppers, increasingly out of real need, raises the issue of how the crime and criminal are tackled.

In other words, traditionally the thieving shopper was apprehended and charged with theft…

However, the New Norm adds another dimension, the moral issue of adding to a cash-strapped shopper’s burden by the shame of arrest, coupled with the stigma for a leading retailer of prosecuting its customers vs. the growing problem of appearing to be soft on crime, all the subject of tabloid headlines on a slow news day.

Only yesterday in my local Co-op, I witnessed a shopper under observation by the checkout operator and a security guard as he pretended to self-check a small bag of groceries…

[NamNews readers will not need reminding that to fully appreciate the combined pressure on a retailer, think about the cost in incremental sales when a shopper steals a £3.50 tin of beans from a retailer on a 3% Net Margin, the retailer needs to make incremental sales of £116.67 to recover the loss…]

Like a formation dance-move, the Security Guard moved close to the shopper, murmured quietly in his ear, took the shopping bag as the shopper grimaced and quietly left the store, all without missing a beat...

A pointer for retailers everywhere !

#Shrink #Theft #Poverty #CashStrappedConsumers

Tuesday 23 May 2023

Proposed Contract Change To Hit Pay Of Asda Staff

Around 7,000 Asda workers are facing a potential cut in their pay as the debt-laden supermarket group seeks further cost savings.

The company is consulting with staff at 39 stores outside the M25 but near the capital about losing their 60 pence per hour ‘location supplement’ to bring their pay in line with its other stores around the country.

Asda’s owners, the Issa brothers and private equity firm TDR Capital, have been looking to make savings across the business after the cost of servicing the debt on their £7bn acquisition soared as interest rates rose. They are reportedly working on plans to merge the supermarket with their petrol forecourts business EG Group in a move designed to reduce their joint debt burden.

The GMB union claimed that those that do not agree to the pay change will have the new contract imposed on them and could be dismissed if they refuse to sign. The union, which represents many of the supermarket’s workers, stated that the proposed pay cut was “classic private equity slash and burn tactics” ahead of the potential £11bn merger with EG.

Nadine Houghton, GMB organiser, said: “Cutting the pay of 7,000 low-paid retail workers during a cost of living crisis is inexcusable.”

She also called on the government to block Asda’s proposed tie-up with EG, stating that it would be “bad for workers, bad for consumers and bad for the high street”.

Houghton added: “These slash and burn tactics, along with food and fuel price increases, will only ramp up if the merger goes ahead.”

In response, Asda stressed that no final decision had been made on the pay cut for the 7,000 staff, but it was considering making the change as none of its rivals paid a similar supplement in those areas.

A spokesperson said: “We are holding a collective consultation in a small number of stores outside the M25 where colleagues are currently paid a legacy location supplement.

“This supplement is out of line with the wider retail market and has created an anomaly where some Asda colleagues in stores that are close together are paid different rates. As part of this consultation, we are discussing a compensatory payment for colleagues in return for the removal of this location supplement, if the proposal goes ahead.”

NamNews Implications:
  • There could will be troubles ahead…
  • Especially given the assumption that an unanticipated rise in interest rates from 1% to 4.5%+…
  • …should be funded via workforce wages.
  • Although this is a different business model, the JLP reduction/non-payment of bonus will be a big demotivator.
  • …at least!

#Interest #DebtBurden #Inflation

Every little bit of availability helps…

Every little bit of availability helps…

(Tesco, Hove 1347 - Saturday 20/5/2023)

#Availability #SupplyChain #OOS