Disappointing Quarter Amazon; Facing Soaring Costs

 Amazon reported a big fall in profits yesterday and highlighted that it was facing billions of dollars in extra costs to manage supply chain and labour shortage challenges over the key festive period.

After benefitting from the surge in online shopping during the pandemic, Amazon’s third-quarter results disappointed Wall Street. Net income fell by 50% to $3.16bn on total revenues up only 15% to $110.8bn – the company’s slowest rate of growth since 2015.

NamNews Implications:

• Fortunately for Amazon, they have not even started to use accumulated muscle…
• Meanwhile, to maintain its consumer-centric reputation they will have to absorb costs:
• labour rates
• supply chain bumps
• But there are limits, even for Amazon.
• i.e. suppliers will feel the pain before consumers…

#AmazonSlows #ProfitSqueeze

Coca-Cola Trialling New Refillable Concept

Coca‑Cola Europacific Partners (CCEP) has started trialling a new refillable, on-the-go soft drinks solution.

The pilot is taking place in Stockholm, Sweden, at a PBX convenience store in collaboration with GLACIAL beverage containers.

The concept allows consumers to buy or bring their own drinks containers to fill, choosing from more than 60 flavours, including the Coca-Cola, Fanta, Sprite, FuzeTea and Smartwater brands.

NamNews Implications:

• In effect, moving dispensers from behind the bar to the front…
• i.e. from on to off-trade…
• ‘Simple’ and neat…
• “Now why didn’t I think of that…?”

#Refillables #Creativity

Iceland Giving Away Free Food

Iceland Foods has rolled out a new scheme called ‘Free on Last Day of Life’ as part of its efforts to reduce food waste. The initiative will see online shoppers offered free products when the last day of shelf life has been reached and no other stock is available.

Traditionally, food items delivered by Iceland has a minimum shelf life of at least two days. However, products close to expiry will now be given away to prevent them being wasted.

NamNews Implications:

• ‘…we to have find an innovative way to combat (food waste)…’ - says it all, for most retailers.
• But what makes Iceland different is the imaginative way they package the idea…
• Their ‘Free on Last Day of Life scheme’ not only helps reduce food waste but also supports our customers.
• (in a way that also grabs headlines….)
• Watch this space…

#FoodWaste #Innovation #Creativity

Unilever Warns Of More Price Rises To Counter Increasing Costs

Alongside its third-quarter results today, Unilever became the latest consumer goods manufacturer to warn that more price rises were on the cards as it battles spiralling input cost inflation.

Over the three months to 30 September, the group’s underlying sales rose a slightly better-than-expected 2.5% to €13.5bn. This was driven by an average price increase of 4.1% across its product range which counteracted a 1.5% fall in volumes.

NamNews Implications:

• P&G, Colgate-Palmolive, General Mills, Kimberly-Clark, Nestlé, PepsiCo and now Unilever…
• Price rises are coming.
• The only issue is whether average increases of 4.1% for Unilever…
• …are anything like enough?
• i.e. can we anticipate even steeper hikes to come?
• Meanwhile, rivals in Unilever’s categories might benefit from a line by line comparison with Unilever brands and geographies…?

#PriceInflation #SupplyChainInflation

EG Group Pulls Out Of £750m Deal To Buy Asda’s Petrol Stations

After agreeing to buy Asda, Mohsin and Zuber Issa, the founders of EG, and their private equity backers TDR Capital, announced plans in February to finance the acquisition in part by selling the supermarket’s petrol stations to their own forecourts business for £750m.

Asda will retain the petrol forecourts business and the associated revenue and profits. However, the £750m expected from the deal will now come from £500m of debt and £250m of its own cash.

NamNews Implications:

• £500m extra debt means sweating Asda more…
• Apart from pressures on costs of goods and shelf price increases.
• Fingers crossed re the £1bn sale of Asda distribution assets.

#PrivateEquity #Asda #RetailDebt

Grocery Sales Down, Prices Up; Tesco Outperforms Market

Take-home grocery sales fell by 1.2% over the 12 weeks to 3 October, partly because the reduced availability of petrol led to shoppers limiting the number of trips they made to supermarkets.

Despite the dip, the data from Kantar shows sales remain 8.1% higher than they were before the pandemic and every retailer recorded better sales compared with the same period in 2019.

NamNews Implications:

• Key for suppliers to compare their sales with anticipatory Christmas shopping by cautious shoppers.
• Despite relatively little share movement, worth comparing the detail re your business…
• NB. the discounters are still an issue for Big Retail, despite counteracting moves by the mults…

#LockdownResults #MultsShares

Tesco Posts Impressive Results After Defying Supply Chain Disruption, But Challenges Ahead

Tesco raised its full-year profit forecast today after reduced costs related to the pandemic and its strong supply chain helped it deliver better-than-expected first-half results.

Tesco saw its like-for-like sales in the UK climb 1.2% over the 26 weeks to 28 August. This followed a 0.5% rise in the first quarter, accelerating to 2% in the second as comparatives softened due to the easing of Covid restrictions in the summer last year.

NamNews Implications:

• ‘UK’s biggest player was able to leverage its supplier relationships and distribution capability to maintain good levels of product availability…
• …events such as Euro 2020 and staycations helped.’
• The key for suppliers is to compare their Tesco performance by format, geography and category.
• Rest assured that Tesco’s ‘bumps in the road’ will be less than those of rivals.
• After all, every little helps… (to ward off PE predators…)

#PrivateEquity #SupplyShortages #Christmas

HFSS Restrictions Offer Opportunities In Convenience Channel

Despite millions of pounds being at risk from the upcoming HFSS restrictions, new analysis highlights some opportunities for retailers and brands in the convenience channel.

The UK Government will introduce new rules for high fat, sugar and salt (HFSS) products in October 2022. They will restrict the advertising of HFSS brands, volume promotions, and the display of HFSS products in-store.

NamNews Implications:

• Stores smaller than 2,000 sq. ft. are an obvious opportunity for some suppliers.
• However, many of whom cannot afford to drill down to that level of coverage, post-Lockdown.
• Making it key to enhance supplier-wholesaler relationships…
• Fast…
• Meanwhile, for stores above 2,000 sq. ft., see the detail of the IRI analysis…

#HFSS #PromoRestrictions