Sales At Owner Of Lidl Hit €175bn

Schwarz Group, the German firm that owns the Lidl and Kaufland chains, saw its revenue increase 4.9% to €175.4bn during its financial year to 29 February 2025.

Despite the “tense global economic situation”, the group created approximately 20,000 new jobs after expanding its network of stores by around 300 to approximately 14,200.

Lidl, which has been the fastest-growing supermarket in the UK over the last year, increased its store revenue by 5.3% to €132.1bn. At Kaufland, revenue rose 2.9% to €35.2bn. The group’s total online revenue was unchanged at €1.7bn.

Meanwhile, the Schwarz Group’s manufacturing operation supplied goods worth around €4.6bn, primarily to Lidl and Kaufland stores, reflecting an increase of 9.5% compared with the previous year.

Despite the volatile economic situation, the group increased its investment programme by 7.5% to €8.6bn in the fiscal year, €3.3bn of which was spent in Germany. This funded store expansion, the development of its warehouse network, and more capacity in its European data centres.

For the current year, Schwarz Group stated that it would be investing around €9.6bn, €3.7bn of which will be in Germany.

“The successful 2024 fiscal year for the companies of Schwarz Group is primarily based on the tireless efforts and outstanding commitment of our employees. Together, we are shaping the future of our group and working on innovative solutions for the challenges of tomorrow,” said Gerd Chrzanowski, General Partner Schwarz Group.

“This has enabled us to grow sustainably together in all divisions, even in a time of global uncertainty, and to continue investing in Germany as an economic hub and in a digitally sovereign Europe.”

NamNews Implications:

• For context, Tesco’s global sales are €78bn. vs Schwarz Group €175.4bn. 
• i.e. Schwarz Group have the option of subsidising growth in local markets...
• And given Lidl has been the fastest-growing supermarket in the UK over the last year…
• …despite this being a time of unprecedented global uncertainty…
• …time to try finding ways of working with Lidl?

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Asda Planning Sale & Leaseback Of Stores To Raise Cash

Asda is hoping to raise around £400m from the sale & leaseback of 20 of its supermarkets to fund its turnaround plan.

According to property-focused publication Green Street News, the struggling retailer has appointed real estate adviser Eastdil Secured to seek out buyers.

Sale & leaseback deals are popular among major supermarkets as a means of raising capital to shore up their balance sheets, with Sainsbury’s and Morrisons completing deals in the last few years.

An Asda spokesperson said: “Sale & leasebacks have been a feature of the retail industry for many years.

“While maintaining a strong freehold base remains central to Asda’s property strategy, we will consider suitable opportunities to unlock value from our property portfolio as part of our material programme of investment into the business.”

Allan Leighton, who returned to Asda at the end of last year as Chairman, has pledged to turn around the group’s fortunes by cutting prices, improving product availability, and refreshing tired stores. Analysts have estimated that the plans will cost close to £900m over the next three years.

Back in March, Leighton warned that the investment drive would “materially reduce our profitability this year” but said he had “a pretty significant war chest” to tackle several years of weak trading at the supermarket.

However, with debts of £3.8bn left over from the takeover by TDR Capital and the Issa brothers in 2021, it has been suggested that Asda has limited firepower for a prolonged price war with its rivals.

NamNews Implications:

• Can be a good source of cash…
• …to cover the cost of turnaround plans (£900m).
• So sale & leaseback process will continue until that point is reached, at least.
• But the business patently then has to cover the cost of rent that it previously owned..
• ...thereby diluting the bottom line...
• It ain’t over yet…

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Turnaround Plan Yielding Results At Holland & Barrett

Investment in its stores and product offer has helped drive up sales at Holland & Barrett by 10% in the second year of its turnaround strategy.

Over the 12 months to 30 September 2024, the health & wellness retailer saw its revenue increase from £806.1m to £884.5m after customer numbers rose by 9% to an all-time high.

Sales volumes across the group grew by 5%.

Gross profit improved from £475.7m to £524.2m after a £96.3m investment programme helped accelerate its digital transformation and overhaul its UK distribution centre and global production facility. Meanwhile, pre-tax losses narrowed to £61.8m from £73m.

Holland & Barrett’s ‘transformation strategy’ aims to meet the growing demand in the wellness and preventative health space.

In the year, it opened 36 new stores and overhauled 320 existing sites, launched new partnerships and concessions in the UK, Ireland, Netherlands and Belgium.

It also expanded its own-label range (+ 400 products, total to over 1,000 new lines in two years, including a revamped food range, which saw a 34% increase in sales in 2024.

Alex Gourlay, Executive Chair of Holland & Barrett, said: “This has been a landmark year for our business – one defined by purpose, transformation and a significant investment in the future of this 150-year-old business.

“With societal shifts towards prevention, testing and self-care, and insufficient public health care provision due to constraints on national health systems, there is an increasing unmet need which Holland & Barrett was well positioned to serve.

It is with great pride, that we have taken the bold steps necessary to meet the evolving needs of our customers, accelerating our transformation journey and laying a strong foundation for long-term growth.”

The company revealed that it has seen last year’s strong growth carry into the first half of its current financial year, with sales and gross profit both up 8% and customer numbers continuing to grow.

Gourlay added: “Our retail performance continues to outperform the UK and Netherlands high streets and compares strongly against other European countries. We are energised by the momentum we’ve built and excited for the opportunities ahead.”

Meanwhile, he told The Times that the use of weight-loss drugs such as Ozempic and Mounjaro is helping drive sales at Holland & Barrett. Gourlay revealed that the chain was “reformulating” its range to cater to customers using the appetite-suppressing treatments, which can see people switch to healthier options.

NamNews Implications:

• Customer numbers rose by 9% to an all-time high.
• Sales volumes across the group grew by 5%.
• i.e. real growth…
• Meanwhile, Holland & Barrett’s ‘transformation strategy’ aims to meet the growing demand in the wellness and preventative health space.
• i.e. If you want in, be seen to align with these aims…
• …and deliver real numbers.
• Simples!

Morrisons Sponsoring Clarkson’s Farm

Series four of Amazon Prime Video's popular show Clarkson’s Farm will debut next Friday (23rd), with Morrisons as its exclusive sponsor.

Each episode aired in the UK will feature one 10-second ident from the supermarket, which is the only pre-show advert and connects the brand to the series – “Clarkson’s Farm, brought to you by Morrisons”. A 30-second advert from Morrisons’ new advertising campaign will then open the first break.

The 10-second idents feature farmyard animals, including sheep and cows playfully mimicking in-store tannoy announcements. The humorous 30s adverts then continue to highlight Morrisons’ fresh, quality British-farmed food.

Created with Leo Burnett UK, they show customers sourcing their shopping in their natural, challenging conditions, such as out at sea or in a wet and muddy field.

The adverts then cut to the customers buying the produce in-store from Morrisons with ease.

The sponsorship deal aims to highlight Morrisons’ position as British farming’s biggest direct supermarket customer and the fresh produce available to its customers.

Alex Rogerson, Customer & Trade Planning Director at Morrisons, said: “From field to fork, acres to aisles and tractors to trolleys – this sponsorship is a celebration of the quality of great British-farmed food, the journey it takes and the farmers who make it possible.

Morrisons works directly with British farmers and growers all year round, and we pride ourselves on our great quality, fresh food as a result.”

Krishan Patel, Director, Agency UK & EMEA BD, Amazon Ads, added: “We’re delighted to welcome back Clarkson’s Farm on Prime Video with one of the UK’s major supermarkets, Morrisons, as the exclusive sponsor.

It’s a great example of how we are helping brands, like Morrisons, connect with millions of viewers and build brand loyalty alongside one of Prime Video’s biggest and most-loved shows.”

NamNews Implications:

• Morrisons demonstrating their role of doing the heavy lifting in terms of food sourcing, humorously…
• Should resonate with customers battling with the realities of the UK economy
• (i.e. a clear test of the risk in using humour in trying circumstances…
• ...but if/when it works, Morrisons’ courage will be rewarded)
• Hats off to them…
• BTW, a ‘buy British’ campaign that also implies that Morrisons will not be an easy opportunity for US beef…

Waitrose Latest Retailer To Reaffirm Commitment To British Farming Following Trade Deals

In the wake of the UK signing trade deals with the US and India, Waitrose has stated that it won’t compromise on animal welfare or its support for British farming.

Aldi made a similar pledge yesterday, whilst Tesco’s CEO said early this week that it has no plans to source American beef.

Waitrose head of agriculture, aquaculture and fisheries, Jake Pickering, said the retailer stands “shoulder to shoulder” with British farmers and will continue to champion high welfare and provenance across its supply chains.

“We want to reassure Waitrose customers that we will never compromise on our number one animal welfare standards or our long-standing commitment to British farming,” he said.

“All of our own-brand fresh beef, lamb, chicken, pork, eggs and fresh milk are sourced from British farmers to high welfare standards – and we have raised the bar for customers with the Better Chicken Commitment and introduction of our new welfare labelling.”

UK rules currently prohibit imports such as chlorinated chicken and hormone-treated beef, which are commonplace in some markets.

However, the British farming industry has raised concerns that current regulations could be watered down in future trade negotiations.

NamNews Implications:

• As Tesco, Aldi and now Waitrose plan to resist the appeal of US beef.
• The implications of this stance deserve special mention:
• ‘with little difference between the prices of British-produced beef and US beef that does meet UK standards’…
• …it is unlikely that US Beef will find a UK market.
• In which case, much depends on the UK government’s determination to resist any attempts to compromise quality standards, under US pressure.
• Watch this space…

Tesco Aiming To Get Market Share Back To 30% With Help Of Brands

Tesco has told suppliers that it wants to control 30% of the grocery market in the UK, a position it last held in 2012.

Latest data from Kantar shows that the market share of the UK’s leading supermarket chain currently stands at 27.8%, having made significant gains over the last year.

According to trade magazine The Grocer, the group’s Chief Commercial Officer, Ashwin Prasad, told delegates at the Tesco Business Update event hosted by IGD on Tuesday that it was focused on capitalising on its appeal to brands as the retailer most likely to bring about growth.

Declaring ‘To Grow Faster’ as the mission statement for Tesco, he told suppliers at the event that it could beat the offer of any of its rivals on value and quality, service and availability, and was the best vehicle for them to achieve gains.

Prasad added: “We want to grow with our suppliers and deliver against our priorities: ensuring we’re number one for value and quality; being their number one innovation partner; offering the best retail media platform; and delivering the best service and availability to our customers.

“We’re encouraging our suppliers to work with us and make us their primary partner to deliver growth.”

Speaking to The Grocer about the retailer’s strategy, Ged Futter, founder of The Retail Mind, said: “Tesco is confident it can return to a 30% share because it’s winning customers and knows what it’s doing is working.

“They don’t need to reinvent the wheel either. I think the main targets for Tesco’s share growth will be Asda and Morrisons. They are the easy targets because they’ve got more branded stuff.

“Aldi Price Match is all about own label, it isn’t about brands. That’s working, what they need to unlock is investment from the brands.”

NamNews Implications:

• ‘Focused on capitalising on its appeal to brands as the retailer most likely to bring about growth’
• i.e. likely to keep own label and brands at appropriate levels to optimise potential Retail Media revenues.
• Tesco priorities:
• Ensuring we’re number one for value and quality
• Being their number one innovation partner
• Offering the best retail media platform
• Delivering the best service and availability to our customers’
• i.e. Demonstrate how your brands fit with these priorities to optimise your brand opportunities.
• And as Ged Futter implies, your Tesco growth will be at the expense of Asda and Morrisons.
• BTW, worth keeping in mind that delegates at the IGD Tesco Business Update event had personal access to these insights two days ahead of non-delegates…?

Kirkland vs. Coca-Cola ... Is private label winning?

by Chace Binnie

At first glance, it looks Kirkland is winning, but I wanted to dig deeper into this.

Revenue is only one metric, so I thought: What if they are both winning at different games?

Where Kirkland is winning:

• They keep the product line simple
• Every product gets shelf space in Costco
• They don’t advertise... they let Costco’s reputation do the work
• It’s efficient to run, with strong margins and low overhead
• Shoppers trust it because it’s consistent, high quality, and good value

Why Coca-Cola is still doing well:

• You can buy it literally everywhere... restaurants, stores, stadiums
• The brand is iconic and instantly recognizable
• They dominate the beverage aisle with multiple popular products
• They’re constantly launching new flavors and formats to stay fresh
• Their marketing connects emotionally... it's more than a drink, it’s a feeling

So which one is winning? Again, it depends on how you look at it.

Jean-Marc François gave his take on CPG's current struggle against private label:
“They’re chasing growth through fragmentation,” Jean-Marc said.

“...in the process, they’re diluting their brand equity.”

Credit to Jean-Marc for this chart of the Top 10 global CPG brands.

Tesco’s CEO Says Retail Conditions Have Rarely Been As Tough; Not Planning To Stock US Beef

Tesco CEO Ken Murphy warns that retail trading conditions have “rarely been as tough” (rising costs, red tape, supply chain disruptions, a weak economy).

Speaking at the World Retail Congress in London this week, he pointed to mounting pressures from rising labour costs, as well as increased regulation in areas such as packaging.

The Labour Government has heaped billions of extra costs on retailers via increased National Insurance Contributions, an above-inflation hike in the minimum wage, and higher business rates i.e. warnings of shop closures, job losses.

Murphy: “Things have rarely been as tough for retail as they are today”, highlighting global supply chain disruptions ( via military conflict, trade wars, climate crisis).

Murphy warned: “There is geopolitical instability from the Ukraine to the Red Sea, which will continue to disrupt our supply chains and markets.”
Trump tariffs uncertainties risk upending existing supply chains.

He also highlighted that farmers in its UK supply chain are “under unprecedented strain”.

Meanwhile, days after the UK and US announced a limited trade deal, Murphy revealed that Tesco has no plans to source American beef.
The deal gave US farmers a quota of 13,000 metric tonnes for beef, which meets UK standards, with UK farmers having the same quota for sales into the US.

Speaking to Reuters on the sidelines of the World Retail Congress, Murphy said: “We source 100% Irish and British beef in Tesco and for the foreseeable future that policy will be the same, we’re not planning to change it.”

Last week, US Secretary of Agriculture Brooke Rollins hailed American beef as “the safest, the best quality and the crown jewel of American agriculture” and predicted the trade deal would “exponentially increase” US beef exports to Britain.

However, with little difference between the prices of British-produced beef and US beef that does meet UK standards, industry commentators have suggested that the US product could struggle to find retail buyers in the UK.

NamNews Implications:

• ‘Retail Conditions Have Rarely Been As Tough’ – agreed 100%+!
• “But when the going gets tough, the tough get going”, as we used to say (!)
• Real opportunities for those who act while rivals await evidence of a return to normal.
• Tesco have made clear their strategy in optimising real market conditions…
• …and in fact keeping up with Tesco will be a challenge for suppliers.
• Meanwhile, Tesco's US beef position is significant: (in our opinion)
• ‘with little difference between the prices of British-produced beef and US beef that does meet UK standards’…
• …it is unlikely that US Beef will find a UK market.
• In which case, much depends on the UK government’s determination to resist any attempts to compromise quality standards, under US pressure.
• Watch this space…

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