Asda’s CEO Steps Down Earlier Than Expected

Trevor Strain, Morrisons’ Chief Operating Officer, Steve Murrells, the boss of the Co-op, Jason Tarry, CEO of Tesco UK & Ireland, Stuart Machin, head of Food at M&S, Ronny Gottschlich, a former boss of Lidl, and Anthony Hemmerdinger, Asda’s COO, have been named by industry watchers as potential candidates to take over from Burnley.

NamNews Implications:

• With six potential candidates, NAMs will need further clarity…
• …in order to muse re impact of a replacement on Asda policy.
• Meanwhile, anticipate more influence from the owners…

#Succession #AsdaFuture

The Hut Group Makes Another Acquisition

E-commerce giant The Hut Group (THG) has continued its acquisition spree by buying online retailer Cult Beauty for £275m.

Launched in 2008, London-headquartered Cult Beauty sells around 300 brands across skincare, haircare and cosmetics, including Charlotte Tilbury, Drunk Elephant, and Huda Beauty.

NamNews Implications:

• In the infinite space of online…
• …this is a no-brainer addition to THG will add scale benefits inc cost efficiencies, minimum.
• And at growth rates of 38% and 41%…
• …you have to have a good reason for not being on board.

#

OnlineCosmetics #beauty #skincare

Doritos Unveils Latest On-Pack Promotion

PepsiCo’s Doritos brand is launching a new on-pack promotion that offers shoppers the chance to win a grand prize of £20,000. There is also an additional opportunity for consumers to win £200 every day.

NamNews Implications:

• A versatile brand…
• …combined with creative consumer engagement…
• …and potential financial reward.
• A no-brainer…

#ConsumerEngagement #Promotions

PepsiCo Selling Juice Brands To Private Equity Firm

PepsiCo has entered into an agreement with PAI Partners (PAI) to sell a 61% majority stake at $3.3bn in its Tropicana, Naked and other select juice brands across North America, and an irrevocable option for certain juice businesses in Europe.

NamNews Implications:

• Rivals should anticipate two changes resulting from this move…
• A different focus on the selling of the juice brands to release potential
• A more intensive focus on PepsiCo’s current portfolio of diverse offerings
• Including growing their portfolio of healthier snacks, zero-calorie beverages, and products like SodaStream.
• Watch these places…

‘Perfect Storm’ Gripping Food Sector With Shortages Now Inevitable, Says 2 Sisters Founder

The founder of one of Britain’s biggest food producers has claimed that supermarket shelves in the UK will be bare and panic buying will intensify unless critical issues currently threatening food supplies are solved promptly.

NamNews Implications:

• ‘Perfect storm’ of causes will have a ‘perfect storm’ of effects:
• Labour shortages = increased labour costs
• Ingredients shortages = increased costs
• Energy demands = increased costs
• Bureaucracy increases = increased costs
• Stockpiling increases = increased costs
• Do you really think all will be contained within official ‘inflationary adjustments.
• i.e. Budget for more than a 5% shelf-price increase, at least...   
• Your category, your call…

#Inflation #LabourShortage #IngredientsInflation #BrexitInflation #StockPiling

Supermarkets Benefit From Weather, Sport, And Staycations But Headwinds On The Horizon

Over the four weeks ending 17 July, total till sales edged down only 1.3% versus the same bumper period in 2020 when demand was being boosted by the effects of the pandemic. This was an improvement on the 2.4% fall in June and 2.7% decline in May when hospitality venues first reopened.

NamNews Implications:

• As always, the key is to compare your sales by sector and category.
• Meanwhile, in terms of potential headwinds (increased hospitality diluting retail, emergence of the super-savvy consumer reining spend)
• It may be worth factoring in a hefty dose of inflation…

#Inflation

The JTF Mega Discount Warehouse Chain Collapses After Lockdown Impact

Trade magazine The Grocer reported that the variety discounter has now closed all of its 12 outlets located on retail parks in the Midlands and north of England. The business employed around 500 staff.

The warehouse and online business sold a wide range of products including food & drink, health & beauty, garden, and DIY products. Customers had to sign up to JFT’s free membership scheme to shop in the stores.

NamNews Implications:

• Sometimes you have advance warning, sometimes not…
• But bankruptcies happen slowly and then very fast.
• Therefore crucial that NAMs monitor the latest annual reports…
• …for early signs of trouble.
• And complete ‘If a customer goes bust’ exercises, regularly.
• What incremental sales are required to generate the sales owed by the customer from Net Profits?
• i.e. Divide the current amount owed to you by the customer by your net margin, and multiply by 100...

#Bankruptcy #SalesImpact

First Fall In Online Grocery Sales; Tesco, Sainsbury’s And Discounters Make Market Share Gains

Latest data from Kantar shows demand for take-home groceries has continued to ease from last year’s records highs, with sales down 5.1% year-on-year during the 12 weeks to 11 July as more normal trading conditions returned and less shopping was done online. However, sales are still elevated compared with pre-pandemic times and shoppers spent £3bn more on groceries than they did during the same period in 2019.

NamNews Implications:

• For many consumers, 17 months was a sufficient period for online grocery to become a habit…
• …providing retailers maintain fulfilment fees, and preserve availability levels ‘on virtual shelf’.
• As always, the two-year comparisons reveal the most…
• …and meanwhile, those pesky discounters.

#KantarShares #OnlineGroceryShares

PepsiCo Planning Price Increases

PepsiCo, along with Coca-Cola, Nestlé, P&G, and Kimberly-Clark, have issued similar warnings in recent months due to a host of factors, including disruptions in global supply chains and rising demand that has pushed up raw-material prices.

The move to raise prices will also be used to offset higher advertising and marketing costs, which rose 30% in the period as the company looked to take advantage of a reopening of the US economy.

NamNews Implications:

• Despite government reassurances, anyone in supply and retail knowns that significant costs increases have been building within supply chains.
• These cannot be absorbed and so will result in shelf price increases...
• ...and strong brands will be able to sustain demand.
• In terms of sizes of price increases, this will depend on moves by significant players in each category.
• We would anticipate double-figure rather than single figure % increases...

#priceIncreases #PoundInPocketInflation

Secret Visa Talks Taking Place To End Lorry Driver Shortage Crisis

A shortfall of up to 100,000 lorry drivers in the UK has partly been caused by an exodus of EU workers in the wake of Brexit and the pandemic. Covid-19 restrictions have also impacted the training and tests of new drivers, whilst costs are rising due to changes to taxation rules for self-employed drivers.

One person with knowledge of the discussions told the newspaper: “Everyone involved is sworn to secrecy as the Home Office is taking a very hard line. The Home Office has the final decision on this and the DfT knows it has a very tough sell, so need the very best evidence.”

NamNews Implications:

• Very practical advice from the government: ‘invest in local driving talent’
• (in retrospect?)
• Post chaos: ‘we were only following procedure’

#SupplyChain #LorryDriverShortage

Amazon Hires Tesco Veteran To Run Bricks & Mortar Stores

Tony Hoggett started his career at Tesco as a 16-year-old trolley boy. Over three decades he rose to become CEO Asia and then Group Chief Operating Officer, before starting his latest role in April this year as Group Chief Strategy & Innovation Officer.

NamNews Implications:

• Amazon can afford to populate their retail operation with best in class…
•  …and this is but one example.
• With a Morrisons takeover merely a dip into petty cash…
• Best conduct a what-if re Hoggett running an Amazon-Morrisons combo...
• ...and check how that fits your current trade strategies...

#AmazonMorrisons #GroceryTradeDisruption

Superdrug Takes Big Hit From Pandemic

Over the 12 months to 26 December 2020, revenues at the health and beauty retailer slid 14.8% to £1.11bn, with the group blaming the big drop in footfall on high streets around the UK.

NamNews Implications:

• Key with recognition of the importance of online is the fact that many rivals reached this conclusion a year ago.
• And know that online fulfilment cost reduces overall margin.
• Retail recovery will involve breaking the grocery ‘single trip’ habit * i.e. shoppers combining their ‘chemist’ trip with grocery trip for convenience…

#LockdownHealthBeauty

Tesco Hikes Transport Costs For Suppliers

According to trade publication The Grocer, the extra charges will apply to Tesco’s primary distribution rates, a service run by the retailer that brokers third-party hauliers to collect goods from supplier depots and transport them to its distribution centres.

Tesco is reported to have told suppliers that it will apply an additional 14% surcharge on primary distribution rates from next month until the end of the year.

NamNews Implications:

• Puts official inflation figures of 2-4% in perspective…
• We need to think ‘pound-in-your-pocket' inflation.
• i.e. suppliers and retailers now need to factor real supply chain cost-increases into pricing.
• Negotiation will simply determine who takes the hit first…

#Inflation #PriceIncreases #LockdownConsequences

Sales Growth Slows At Sainsbury’s; CEO Focused On Strategy Amid Takeover Activity

Including both the Sainsbury’s and Argos chains, the group’s like-for-like sales (excl. fuel) rose only 1.6% in the 16 weeks to 26 June compared to a rise of 11.3% in the previous quarter. However, the figure was better than analyst’s forecast of a 1.7% fall. This prompted Sainsbury’s to raise its annual underlying profit guidance from £620m to “at least £660m”, up from £356m last year when the business faced significant costs related to operating during the pandemic.

NamNews Implications:

• Sales growth slowing, yet up on 2019.
• But is it fast enough to remain independent?
• Bound to be a distraction for management…
• Especially with Asda under new ownership, Morrisons under takeover-scrutiny.
• Best for suppliers to anticipate takeover, by harmonising any major Prices & Terms at disparities, at least…More: https://lnkd.in/ePK6gGN

#PricesTermsDifferences #Takeover

Morrisons Facing Bidding War After Accepting Fortress-Led Offer Worth £6.3bn

Another private equity group, Apollo Global Management, is among the potential counter-bidders circling Morrisons.

NamNews Implications:

• Despite promises re future action…
• …a bidding war will result in a higher takeover price.
• Meaning that the purchaser will need to cover the additional cost.
• (and justify the level of investment…)
• It can be assumed that Morrisons are running a very tight operation (i.e. little scope for internal cost reduction)
• Therefore remaining options will then be:
• Sale & leaseback of the 85% owned retail estate (resulting in lower net margins because of having to pay rent for stores).
• Downward pressure on supplier prices.
• Or a mix of both…?