Suppliers Seeking Support To Push Through Price Increases In Coming Weeks

Higher supply chain costs are expected to drive up prices in supermarkets by at least 5% in the coming weeks, with more increases to follow.

NamNews Implications:

• Time to take a 5% increase for granted...?
• Perhaps some what-ifs re 10% increases in your category might be of benefit?
• More importantly, it is essential to place these inevitable increases within a realistic context of:
• Shell-shocked consumers emerging from the trauma of 18 month lockdown
• To face the uncertainties of job security
• Increased taxation vs lower public services
• A super-savvy consumer better able to calculate ingredient cost in foods
• More determined to demand demonstrable value for money
• At the very least, this will result in a reduction in demand for products that do not have a clear competitive edge over alternatives available
• Welcome to the new norm of consumer demand...

#Inflation #PriceIncreases #ConsumerDemand

The Just-in-Time to Just-in-Case transition, a retro step?

Just-in-Time = little/no buffer stock, lower cost. 

Just-in-Case = buffer stock = higher cost = inflation...

Tesco Warns Of Christmas Panic Buying Worse Than During Pandemic

The concerns were raised by Andrew Woolfenden, Tesco’s distribution and fulfilment director, during a meeting of the government’s new food and drink taskforce last week. He suggested that the issue of empty shelves could be worse than that caused by the consumer stockpiling which took place during the first Covid-19 lockdown last year.

NamNews Implications:

• The government still don’t get it:
• “We are closely monitoring labour supply and working with sector leaders to understand how we can best ease particular pinch points.”
• Industry leaders have been telling the government for weeks that the solution lies in temporarily making it easier to bring in workers from abroad to ease the crisis.
• Watch this space…(and minimise breath-holding…)

#PanicBuying #ChristmasShortages #DriverShortages

Lidl Outperforms Rivals In Northern Ireland With Sales Up 25% Over Two Years

Tesco retained its crown as Northern Ireland’s largest grocer with a 3.2% increase in sales as customers bought 5.3% more products while in store. Sainsbury’s grew by 1.9% as shoppers visited the retailer four more times than they did the previous year, whilst Asda’s sales rose by 2.5% as shoppers made additional trips to its stores and added extra items to their baskets.

NamNews Implications:

• Results appear to indicate that suppliers and retailers that are prepared to overcome supply-chain issues in NI can benefit from increased demand…
• While others 'wait & see’….
• Meanwhile, given that Lidl have no Aldi competition in NI, their NI and UK share is the same...
• . ..begging the question: Why are Aldi not in NI, given their success in ROI?
• The exit-clock ticking for Asda?

#Lidl #TescoNI #AldiNI? #AsdaNI

Morrisons Targeting Hospitality Sector With New Wholesale Partnership

The supermarket group has signed a deal (supplying products to pubs, restaurants, and hotels as part of a drive to rapidly expand its wholesale division) with Starstock, an online portal that enables foodservice businesses to order directly from suppliers. 

The move means that hospitality firms will be able to buy products produced by Morrisons to use in their kitchens. Starstock already has partnerships with brand manufacturers including Asahi, Coca-Cola and Britvic.

NamNews Implications:

• The first of many likely innovations when Morrisons moves into private equity ownership.
• Freedom to experiment in ways that a traditional Morrisons could not.
• With EBITDA improvement the key criterion.
• See ‘The Implications of Private Equity Takeover of a Mult’

#Morrisons #foodservicedistribution #FoodService

Sainsbury’s To Offer Tailored Discounts Via Nectar Scheme

From next Wednesday, members of its Nectar loyalty scheme will have access to exclusive discount prices for their favourite products via the Nectar app. Shoppers will be able to view their personal My Nectar Prices discounts and redeem them in store by checking out through Sainsbury’s self-scanning service, SmartShop, either with handsets or on their smartphones.

NamNews Implications:

• Personalisation of discounts will be a first, for a while…
• …given anything successful in retail is invariably copied.
• So, anticipate tweaking by other mults until a dynamic equilibrium is achieved.
• Best for suppliers to propose initiates that optimise this new reality…
• Ahead of your rivals…

 #Personalise #DiscountsPersonalised

Owners Of Asda Considering $15bn Sale Of Forecourt empire EG Group

According to Bloomberg, the Blackburn-based company is working with various banks including Rothschild, Goldman Sachs, Morgan Stanley and Barclays to consider its options, which also include a stock market listing.

TDR Capital-backed EG Group, founded in 2001 by Issa brothers, has grown by acquisitions to approx. 6,000 forecourt sites in the UK, US, France, Italy, the Netherlands, and Australia.

NamNews Implications:

• A fast-moving post-Lockdown world, full of surprises, or what?
• (and given that 2020 counts as a decade, we should all be more expert in optimising change…)
• This would be an expensive way of testing the potential value of the Group…
• …so we at NamNews are treating this as a real offer.
• In which case, what-ifs all round…
• Especially if a victorious 7-11 brings their hyper-efficient retailing into play.
• Difficult to ignore this space!!!

#ReSell #EGAsdaGroup #ExitStrategy

Tesco Is A Better Target For Private Equity Firms

Financial advisory firm Bernstein suggested in The Grocer that Tesco was the “most attractive” of the UK food retailers for private equity investors. “The turnaround is complete, the business is simplified, diversified and dominant, and the next five years are set to be a story of consistent, strong execution and returning to shareholders.”

Tesco’s market cap is nearly £20bn, with an enterprise value of £32bn when debt is added, making for the biggest potential acquisition in the UK.

NamNews Implications:

• From a NAMs-eye-view, the possibility of a company being in play means a distraction for management.
• (The price paid in a takeover determines the degree of Sale & Leaseback and pressure on financial performance)
• A private equity buyer means a five-year exit strategy via re-flotation, even more emphasis on financial performance.
• Therein the opportunity for suppliers:
• Propose initiatives that demonstrate a direct impact on Tesco’s bottom line…
• …and will look good to bidders.

#TescoBid #MultsConsolidation