Lidl GB Returns To Profit; Sets New Store Target

Latest accounts for the year to 28 February 2021 show Lidl GB recorded a pre-tax profit of £9.8m, compared to a loss of £25.2m in the previous 12 months when it invested heavily in store openings, recruitment, and its supply chain.

Lidl’s total sales rose 12% to £7.7bn, boosted by 55 new openings and raised demand for food & drink in supermarkets during the pandemic.

NamNews Implications:

• NPBT 0.1% is still very slender, but on the right side of breakeven.
• And these discounters have more experience of excelling on slender margins than most…
• And Lidl continuing to invest during loss-making lockdown…
• …shows they are still a threat to the UK mults.
• Meanwhile, Brexit caused ‘an increase in administration for importing and exporting goods in and out of the UK’
• ‘Our stores in Serbia and Switzerland are very used to dealing with these issues’…
• …referring to countries that are outside the EU but do much of their trade with the bloc.
• i.e. All showing Lidl are still a threat to the UK mults.

#DiscounterThreat #DiscountersProfitable

A major first: Aldi Reveals Its Sales And Profits In Ireland For The First Time

The discounter, which has a 12.7% share of the country’s grocery market, usually wraps its Irish figures into accounts filed for its UK business. However, in an extensive interview with The Irish Times, the Managing Director of Aldi Ireland, Niall O’Connor, revealed for the first time its local revenues and profits.

Aldi Ireland’s pre-tax profit margin was 3.6% last year, compared to 2.1% for Aldi UK.

NamNews Implications:

• A breakthrough NamNews item…a precedent for all.
• Astonishing that Aldi have lifted the lid…
• Hopefully this means other retailers will follow?
• (Especially given the paragraph above on Financial sunlight…
• …meaning retailers with UK registered HQs have to divulge Irish profits).
• If Tesco and M&S go it will be difficult for the others not to…

#RetailMarginsIreland #EUDisclosureRules

Niall O’Connor, Group Managing Director at Aldi Ireland. Photograph: Alan Betson

Unilever Sells Tea Business To Private Equity Firm

CVC Capital Partners is buying the bulk of Unilever’s tea division for €4.5bn after beating off competition from rival private equity groups in an auction.

The business being sold is called ekaterra, which controls a portfolio of 34 tea brands, including Lipton, PG Tips, Pukka Herbs, T2, and TAZO, that generated revenues of €2bn in 2020. It employs around 20,000 people worldwide with 11 production factories in four continents and tea estates in three countries

NamNews Implications:

• NamNews readers are familiar with the PE playbook…
• Rivals can anticipate a new kind of competition in the brands sold off.

#TeaCategory

A weekend warning from the NamNews Team!

#hospitality #lockdown

Amazon’s Just Walk Out Tech ‘Makes Every Other Grocery Store Obsolete’

Amazon's Just Walk Out technology removes the need for cashiers and significantly increases the speed at which customers can shop and exit the store. More importantly, it saves Amazon millions of dollars in labour costs annually in every store, providing a significant competitive advantage. 

“Between 2027 and 2030, Amazon has the potential to sell more groceries than Kroger. Between 2030 and 2035, it has the potential to sell more groceries than Walmart".

NamNews Implications:

• A pointer for all retailers?
• And if Amazon also supply the technology…
• Watch this space…

#Inovation #WalkOutTech

Dunnes Takes Lead In Irish Grocery Market As Shoppers Prepare For Christmas

Latest figures from Kantar show grocery sales in Ireland fell by 4.8% year-on-year over the 12 weeks to 31 October as more normal trading conditions returned to the market. However, growth is still strong compared with pre-pandemic levels and sales were up 8.9% versus the equivalent period in 2019.

Emer Healy, retail analyst at Kantar, commented: “October brought the full easing of Covid-19 restrictions as well as a well-timed bank holiday weekend and shoppers have been making the most of newfound freedoms. Dining out is firmly back on the table, bringing a welcome boost to the hospitality sector as friends and families returned to bars and restaurants. With fewer meals eaten around the kitchen table, we’ve seen supermarket sales drop by 8.4% in the latest four weeks. Irish shoppers spent €86.1m less on groceries this month compared with the equivalent period last year when the nation was in lockdown.”

NamNews Implications:

• Aldi and Lidl with a combined market share of 25.4% vs mults average of 22%…
• …and growing at an average 12.5% vs pre-Lockdown.
• Shows that the discounters remain a threat…
• …especially with high inflationary pressures in the pipeline.

#IrelandDiscounters #PostLockdown

Johnson & Johnson To Split In Two

One will operate its Consumer Health division and the other will focus on its Pharmaceutical and Medical Devices units.

The move will see the company separate its Consumer Health business into a new publicly-traded company, controlling brands such as Neutrogena, Aveeno, Tylenol, Listerine, Johnson’s, and Band-Aid.

The Consumer Health business is expected to generate revenue of approximately $15bn this year and, following the planned separation, the new company would generate sales in over 100 countries.

NamNews Implications:

• This move will endow each company with promotional flexibility
• …without compromising the other.
• Rivals need to anticipate even more focused initiatives from the separated companies.

#PostLockdownSplits #NewNorm

Tesco Bucks Market Decline; Grocery Inflation On The Rise

Latest figures from Kantar show take home grocery sales fell by 1.9% over the 12 weeks to 31 October, although they are still 7.3% higher than pre-pandemic levels in 2019.

NamNews Implications:

• “Already, (worried?) households visit an average of 3.3 supermarkets per month in order to find the best value for money.”
• Customers are also getting ahead on shopping for the big day itself.
• i.e. Frozen poultry sales are 27% higher year-on-year…
• With their sales rising by 0.3% over the 12 weeks, Tesco was the only retailer to achieve YoY growth!
• But note Lidl’s 12.5% increase on 2019….
• …and Ocado + 36.7% on 2019.

#GroceryMarketShares #RisersFallers #Discounters #Online

Supermarket Buyers Using Delay Tactics To Thwart Supplier Cost Price Increases

According to a report by trade publication The Grocer, retailers are asking suppliers for increasingly complex cost breakdowns for individual ingredients, packaging, storage, transportation, as well as manufacturing and labour overheads and profit margins to justify any price increases.

The report highlighted that signoff processes are also lengthening and often requires a level of detail only an ‘open book’ supplier would be expected to share.

NamNews Implications:

• Because of the relative size and importance of a major customer…
• …NAMs may not take the risk of ‘getting mad’.
• But for sure these buyer tactics will encourage NAMs to ‘get even’.
• And in unprecedented market conditions…
• …there are many ways of getting even.
• (better still, suppliers, why not focus on optimising your good customer relationships?)

#CostPriceIncreases #DirtyTricksNegotiation

Tesco Slips Down Price Ranking

Despite moves to improve its competitiveness, particularly against the discounters, a price ranking has found Tesco to be one of the most expensive supermarkets in the country.

The analysis by consumer watchdog Which? compared the prices for a basket of 23 everyday items throughout October, both own label and branded.

With a total of £28.64, Britain’s largest grocery retailer came in sixth place – third from the bottom and only ahead of Ocado (£29.95) and Waitrose (£33.81).

Aldi remained the cheapest overall, at £24.24, just ahead of Lidl on £24.97. Asda was third and the cheapest big four supermarket, with the basket costing £25.94. It was followed by Sainsbury’s (£27.71) and Morrisons (£28.31).

Which? also carried out a more extensive survey covering 77 items. This included more branded items, and so Aldi and Lidl were excluded.

Tesco also had a poor showing in this analysis, coming second from bottom as shown below:

NamNews Implications:

• Given upcoming pressures on consumer disposable income…
• Aldi’s 15% price advantage over Tesco has to make a difference.
• And even on a branded-only basis, Asda has an 8.6% advantage over Tesco.
• Add a large dose of inflation…
• …and budget for an escalation of retail price war?
• (Tesco is not going sit on the sidelines while Aldi capitalises on this price advantage in the coming inflationary Winter...)

#PriceWar #Inflation #PriceCompetition