Thursday 7 September 2023

Aldi Opens 1,000th UK Store With Plans For 500 More

 


Aldi has today opened its 1,000th store in the UK, nearly 33 years after opening its first in Stechford, Birmingham.

Announcing the opening of the milestone outlet in Woking, Surrey, the discounter committed to a new long-term target of 1,500 stores in the UK, with a pledge to invest billions of pounds in the economy.

Aldi is now the country’s fourth biggest grocery retailer, with one in every ten pounds spent in UK supermarkets going through its tills. It is also the fastest-growing supermarket, with its low-price mantra helping it attract even more customers during the cost of living crisis.

Aldi is on track to open another 20 new stores before the end of the year as part of a £1.3bn two-year investment plan.
The retailer stated that it was on the hunt for more locations across the UK to support its bid to open another 500 stores to reach its target of 1,500.

Aldi UK and Ireland CEO, Giles Hurley, commented: “Opening our 1,000th store is a huge milestone and wouldn’t have been possible without the hard work and dedication of our 40,000 incredible colleagues.

“Our popularity is growing, and there is huge demand for people to have an Aldi store near to them to increase shoppers’ access to our unbeatable prices.

“The next phase of our expansion will involve another 500 new stores over the coming years. It is a long-term target and is not a ceiling to our ambition to have an Aldi store close to everyone in the UK.”

NamNews Implications:
  • About time to include Aldi in your major customer portfolio, somehow…?
  • (Just assume a 50% increase in store numbers adds an equivalent amount to their UK market share)
  • Need any more inducement?
#AldiShare #AldiGrowth #DiscounterValue

Monday 19 June 2023

Tesco Admits To ‘Tension’ With Suppliers


After it was revealed last week that Tesco had slipped down GSCOP compliance ranking, the retailer’s Chief Executive has blamed its fall on “fighting the fight” for consumers against inflation.

After posting robust first-quarter results on Friday, Ken Murphy is quoted by trade publication The Grocer as saying there was an “inevitable tension” with suppliers trying to get through cost price increase (CPI) requests and Tesco seeking to keep prices down.

Last week’s compliance ranking published by the Groceries Code Adjudicator (GCA) showed Tesco had fallen from second place to sixth. This was despite the cut-off for the survey coming before Tesco’s call on suppliers to start paying fulfilment fees for using its online and Booker wholesale services. The report by The Grocer noted that this recent move could result in Tesco falling even further down the table next year.

Murphy highlighted that the latest GCA ranking was “very, very tight,” adding: “We are only talking about a percentage point of two in the difference, and I’m really pleased that more than 95% of suppliers recognise we are compliant with the code.

“However, there is an inevitable tension between retailers and suppliers over the passing on of costs and how we fight the fight for customers.”

Meanwhile, Murphy offered further reasoning for its upcoming range reset programme, ‘Fit for Change’. This was announced last month and is set to be the biggest range review since predecessor Dave Lewis’s ‘Project Reset’.

Murphy told The Grocer: “We have seen a giant leap in the technology to enable us to predict what customers will buy and where. This review is all about making sure we combine minimising the cost of servicing those customers with making sure we optimise the range so our customers have enough of the product they want to find.”

NamNews Implications:
  • Consumers, retailers and suppliers are coping with Lockdown fallout.
  • The most fundamental and unprecedented business challenges, ever…
  • In principle, each member of the supply chain will try to isolate costs that can be passed to other parts of that supply chain.
  • (The Tesco fulfilment charge being just one example…)
  • Suppliers need to quantify the financial impact of every part of their supplier-retailer relationship…
  • …and negotiate like-with-like re the impact on respective P&Ls.
#CPIs #Costs #SupplierRetailerRelationships

Monday 5 June 2023

"But I always do my Tesco Clubcard shopping on Saturday afternoon!"

A New Norm Shopping Behavioural Insight, from the NamNews Team!

Tesco, Hove - 03.06.2023 - 1430


Retail Shrink in the New Norm...

 


‘Petty’ theft by shoppers, increasingly out of real need, raises the issue of how the crime and criminal are tackled.

In other words, traditionally the thieving shopper was apprehended and charged with theft…

However, the New Norm adds another dimension, the moral issue of adding to a cash-strapped shopper’s burden by the shame of arrest, coupled with the stigma for a leading retailer of prosecuting its customers vs. the growing problem of appearing to be soft on crime, all the subject of tabloid headlines on a slow news day.

Only yesterday in my local Co-op, I witnessed a shopper under observation by the checkout operator and a security guard as he pretended to self-check a small bag of groceries…

[NamNews readers will not need reminding that to fully appreciate the combined pressure on a retailer, think about the cost in incremental sales when a shopper steals a £3.50 tin of beans from a retailer on a 3% Net Margin, the retailer needs to make incremental sales of £116.67 to recover the loss…]

Like a formation dance-move, the Security Guard moved close to the shopper, murmured quietly in his ear, took the shopping bag as the shopper grimaced and quietly left the store, all without missing a beat...

A pointer for retailers everywhere !

#Shrink #Theft #Poverty #CashStrappedConsumers

Tuesday 23 May 2023

Proposed Contract Change To Hit Pay Of Asda Staff

Around 7,000 Asda workers are facing a potential cut in their pay as the debt-laden supermarket group seeks further cost savings.

The company is consulting with staff at 39 stores outside the M25 but near the capital about losing their 60 pence per hour ‘location supplement’ to bring their pay in line with its other stores around the country.

Asda’s owners, the Issa brothers and private equity firm TDR Capital, have been looking to make savings across the business after the cost of servicing the debt on their £7bn acquisition soared as interest rates rose. They are reportedly working on plans to merge the supermarket with their petrol forecourts business EG Group in a move designed to reduce their joint debt burden.

The GMB union claimed that those that do not agree to the pay change will have the new contract imposed on them and could be dismissed if they refuse to sign. The union, which represents many of the supermarket’s workers, stated that the proposed pay cut was “classic private equity slash and burn tactics” ahead of the potential £11bn merger with EG.

Nadine Houghton, GMB organiser, said: “Cutting the pay of 7,000 low-paid retail workers during a cost of living crisis is inexcusable.”

She also called on the government to block Asda’s proposed tie-up with EG, stating that it would be “bad for workers, bad for consumers and bad for the high street”.

Houghton added: “These slash and burn tactics, along with food and fuel price increases, will only ramp up if the merger goes ahead.”

In response, Asda stressed that no final decision had been made on the pay cut for the 7,000 staff, but it was considering making the change as none of its rivals paid a similar supplement in those areas.

A spokesperson said: “We are holding a collective consultation in a small number of stores outside the M25 where colleagues are currently paid a legacy location supplement.

“This supplement is out of line with the wider retail market and has created an anomaly where some Asda colleagues in stores that are close together are paid different rates. As part of this consultation, we are discussing a compensatory payment for colleagues in return for the removal of this location supplement, if the proposal goes ahead.”

NamNews Implications:
  • There could will be troubles ahead…
  • Especially given the assumption that an unanticipated rise in interest rates from 1% to 4.5%+…
  • …should be funded via workforce wages.
  • Although this is a different business model, the JLP reduction/non-payment of bonus will be a big demotivator.
  • …at least!

#Interest #DebtBurden #Inflation

Every little bit of availability helps…

Every little bit of availability helps…

(Tesco, Hove 1347 - Saturday 20/5/2023)


#Availability #SupplyChain #OOS


Leading Mayonnaise Brand Adopts Shrinkflation To Offset Higher Input Costs

Unilever’s Hellmann’s mayonnaise line has become the latest brand to adopt the shrinkflation tactic to counter increased production costs.

According to trade publication The Grocer, Tesco has stopped selling 800g jars of Hellmann’s Real and Light mayonnaise that used to sell for £3.60. This has been replaced with a smaller 600g variant with a higher shelf price of £3.75.

The report noted that the move means the leading mayonnaise brand is now 37.8% more expensive per 100g than it was previously when sold in 800g jars.

A spokesperson for Unilever is quoted by The Grocer saying: “Our Hellmann’s Real Mayonnaise jars are available in four sizes to suit varying shopper preferences and needs. This includes our 600g jar, which is available alongside our 800g, 400g and 200g jars.

“Although we are currently experiencing significant increases in input costs, including the costs of the quality ingredients used to make Hellmann’s mayonnaise, we will always try to absorb as much of the cost pressure ourselves and look for savings within our own business before passing on pricing to consumers.”

NamNews Implications:
  • Presumably, the price increases are being applied, pro rata across all sizes…
  • i.e. the loyal Hellmann’s user is being asked to take a 38.7% price increase…
  • …and has the options of switching to an alternative brand, an own label or a discounter.
  • (interesting to assess the cost of retrieval for those that vote with their feet…)
#Shrinkflation #PriceIncrease #CostOfLiving

Grocery Inflation Inches Lower

Despite recent suggestions that cost pressures are easing, latest Kantar data confirms that grocery price inflation remains exceptionally high.

However, it did fall for the second month in a row, inching down from 17.3% to 17.2% for the four weeks to 14 May. Take-home grocery sales rose by 10.8% on the same period as last year, with the discounters continuing to outperform the traditional Big Four supermarkets.

Fraser McKevitt, head of retail and consumer insight at Kantar: “The drop in grocery price inflation, which is down by 0.1 percentage points on last month’s figure, is without doubt welcome news for shoppers but it is still incredibly high – 17.2% is the third fastest rate of grocery inflation we’ve seen since 2008, an extra £833 to annual grocery bills”.

Savvy shoppers are choosing more own-label goods, growing by 15.2% this month, compared to 8.3% for branded. But the brand premium gap is narrowing in most stores via loyalty discounts.

McKevitt continued: “In the fierce contest for market share, eyes have been on the dairy aisle in particular, where the average cost of four pints of milk has come down by 8 pence since last month. Prices are still much higher than they were 12 months ago, at £1.60 currently versus £1.30 last year, but retailers know just how important it is to offer even small savings on staple products like milk to get customers through the door.”

Waitrose benefited from a substantial uplift in the week of the coronation, with sales up 4.8% over the 12 wks, its highest growth since April 2021.

Aldi was the fastest-growing this month, with sales increasing 24.0%. Lidl’s sales rose 23.2%, and together accounted for 17.8% of the market.

Asda won back market share to 13.9% after sales grew 10.6%. Sales were boosted by its Just Essentials range, with nearly two in five Asda baskets containing at least one of these value items this May.

Morrisons recorded a third consecutive period of sales growth, although the increase was more muted versus others at just 0.6%. The grocer relaunched its ‘More Reasons to Shop’ strapline yesterday as part of its efforts to win back shoppers.

Sales increased by 8.9% at Tesco, with growth across its convenience stores, large format supermarket and online channels. Sainsbury’s sales rose by 10.5%, and it held market share steady at 14.8%.

NamNews Implications:

  • Inflation of 17.2% is still off-putting for brands…
  •  …but encouraging for own-label and the discounters.
  • i.e. Aldi & Lidl combined share of 17.8%…
  • …and growing at 24%.
  • And own-label growing a 2x the rate of brands.
  • These stats raise two essential questions for branded suppliers:
  • How to safely optimise own-label potential?
  • How to find ways of optimising Aldi & Lidl traffic?
  • These two options are becoming too big to ignore.
  • On any count…
#MarketShare #Discounters #OwnLabel