iri weekly news update - w/c 29th august 2017

IRI Weekly News updateYour window on the latest trends in Packaged Groceries

Stephen Hall

Friday 1st September

Copyright © 2017 Information Resources, Inc. (IRI). Confidential and Proprietary. 2

Retailer News:• Tesco gains ground in Ireland but SuperValu remains on top• Ocado has added an Alexa ‘skill’ for Amazon Echo • McColl’s Q3 revenues up 31% following completion of 298 stores• Simply Fresh set to expand the ‘Little Fresh’ format

Category News:• Co-op becomes latest retailer to cover cost of VAT on sanitary products• Emma Bunton’s Kit & Kin secures Ocado listing• P&G to disclose all of its fragrance ingredients by 2019 • 31st State: The new skin care brand catering for teenage boys

Other News:• Food inflation creeps higher, whilst non-food deflation slows• Consumer confidence shows surprise improvement• Discount retailers set to grab a further £9bn of consumer spend by 2022• Asda’s Income Tracker shows families’ spending power returned to growth in July

Weekly News Summary – 29th August 2017


Retailer News


Tesco Gains Ground In Ireland But SuperValu Remains On Top

Latest grocery market share figures from Kantar Worldpanel in Ireland, for the 12 weeks ending 13 August 2017, show that despite strong sales growth of 3.4% by Tesco, SuperValu has retained its position as Ireland’s largest grocery retailer.David Berry, director at Kantar Worldpanel, said: “A year-on-year sales growth of 0.4% was enough for SuperValu to hold onto the top spot in the face of a strong challenge from Tesco. SuperValu has improved the number of items sold per trip but has done so at a lower price point and now holds a 22.2% share of the grocery market, down 0.3 percentage points on last year.

“This is the fourth consecutive period of growth for Tesco, which is a clear indication that it’s achieved a turnaround in performance. This is also only the second time since July 2014 that Tesco has posted a year-on-year increase in market share.”

The overall grocery market saw growth of 2.2%, despite deflation holding steady at 0.5% for the second month in a row.In third place behind SuperValu and Tesco, Dunnes Stores maintained its market share at 21.1%, with sales increasing by 2.0% in comparison with last year.

Berry commented: “There are some interesting dynamics boosting Dunnes’ performance this period. The number of households shopping with the retailer has fallen from 64% to 59% – that’s a reduction of 68,000 in absolute terms. However, this decline in footfall is cancelled out by a healthy improvement in how much shoppers are spending. The average Dunnes basket now includes an additional item and is worth an extra €2, suggesting that it’s performing well in the larger ‘main’ shop of the week and less so among smaller top-up trips. If Dunnes can encourage some of its lapsed shoppers to return to the store then it could be seeing a healthy increase in sales growth and market share.”

Meanwhile, Lidl continued to perform ahead of the market, with sales growth of 2.7% ensuring the retailer could achieve a market share ahead of 12.0% for a second period.

Aldi was tied with Tesco for the title of fastest growing retailer this period. Its sales growth of 3.4% has improved its market share to 11.5%, matching the record level it first saw in March of this year.

Source: NamNews 29th August 2017


Ocado has added an Alexa ‘skill’ for Amazon Echo

Ocado is the first UK supermarket to launch an app or ‘skill’ as Amazon calls it, for Amazon Alexa devices.

Using the Ocado skillUsing the Ocado skill, shoppers will be able to add items to an existing basket, find out which products are in season and get inspiration for how best to use them in recipes, check if a product is already in their basket, and track an order. The skill does not enable shoppers to create a new order.

The new Alexa skill adds to Ocado’s various digital paths to purchase including its mobile apps, Apple Watch app, tablet apps and online website.

Lawrence Hene, Ocado commercial director, said: “Grocery shopping should be quick, easy and convenient. Using voice technology, we’ve made it even easier by developing our new app that will enable our customers to add to their Ocadobaskets without lifting a finger.”

Shoppers are open to ‘conversational commerce’This is an advantageous move for Ocado as more shoppers are showing interest in voice-activated technology to make their food and grocery purchases from home. Three in 10 (28%) shoppers claim to be interested in using a voice-activated device at home to add food or grocery items to their online in the future, according to our ShopperVistaresearch.

Today, our research shows the online grocery market is worth £10.4bn and in the last month, some 41% of all British shoppers say they have bought some of their food and groceries online.

Source: IGD 30TH August 2017


McColl’s Q3: revenues up 31% following completion of 298 stores

Total revenue up 31.1% for the quarter and 15.8% for the year to date, following the completed integration of the 298 acquired stores from Co-op.

Second consecutive quarter of positive LFL growthIn Q3 like-for-like (LFL) sales are up 0.7% in its convenience stores and 0.3% at its newsagents, which marks the second consecutive quarter of positive LFL growth. Total LFL for the year to date is up 0.4%, driven by growth in key grocery categories including fresh and chilled.

A significant quarter for McColl’sThis is a significant quarter for McColl’s with the successful integration of the acquired Co-op stores, which was completed in mid-July. The stores are performing well; LFL performance in recently acquired and converted stores up 2.6% in Q3. The £117m acquisition deal has proven to be a success so far.McColl’s is also making good progress with its convenience store refresh trial. Customer feedback has been positive and the early performance has been “very strong” with significant sales uplifts, Chief Executive, Jonathan Miller, said.

Confident in the new Morrisons partnershipMcColl’s agreed a new wholesale supply partnership with Morrisons earlier this month, which sees Morrisons relaunch its Safeway brand within McColl’s stores. The long-term partnership, agreed following a competitive tender process, is expected to further McColl’s growth by enhancing the retailer’s fresh food credentials.

Jonathan Miller, said: “We’re delighted to have secured Morrisons as our long-term wholesale supply partner, and with recent research confirming that the Safeway brand resonates with over two-thirds of shoppers we are excited to be relaunching it with McColl’s stores.”

Continue to look for opportunitiesJonathan Miller said the group continues to look for opportunities to further enhance organic growth in the fast-growing convenience channel, forecast to grow by 17.8% to 2022.

Source: IGD 31st August 2017


Simply Fresh set to expand the ‘Little Fresh’ format

Simply Fresh is set to expand its new ‘foodvenience’ small format fascia, called ‘Little Fresh’.

Small format less than 1,000 sq. ft.The ‘Little Fresh’ small format stores are less than 1,000 sq. ft. in size, with some as small as 200 sq. ft. Simply Fresh has launched three company-owned Little Fresh stores to date, with at least seven more planned for the next few months.

‘Foodvenience’The Little Fresh format capitalises on the food for now mission and appeals to millennials, who carry out more shopping trips in smaller format stores than older generations. Shoppers are increasingly time-poor due to busy lifestyles; mission-based formats such as Little Fresh provide the ultimate convenience.

Managing director, Kash Khera, said the new format was inspired by a visit to Hong Kong, where high-profit small stores are abundant.

Source: IGD 1st September 2017


Category News


Co-op Becomes Latest Retailer To Cover Cost Of VAT On Sanitary Products

The Co-op has followed Tesco and Waitrose in cutting the cost of women’s sanitary products to cover the so-called ‘tampon tax’.

The 5% VAT reduction on all 71 own label and branded sanitary products sold by the Co-op will come into effect today ahead of Government proposals to remove the tax.

Andy Phelps, Director of Trading, Co-op, said: “As a community retailer we feel it’s important to do right by our customers. That’s why we are covering the cost of the five per cent VAT on sanitary products for women who shop with us.”



Emma Bunton’s Kit & Kin Secures Ocado Listing

Kit & Kin, the award-winning eco-friendly family brand co-founded by Emma Bunton, is now available via Ocado in the UK.

Available online from Ocado will be the debut range of premium performance biodegradable nappies, which are dermatologically tested and approved, and developed to break down and biodegrade within 3-6 years. Ocado will also offer parents Kit & Kin’s full range of vegan-friendly (excl. magic salve & breast balm), hypoallergenic and certified natural skincare range for mother and baby.

Kit & Kin, co-founded by the former Spice Girl and her business partner Christopher Money, aims to provide parents with a simple, sustainable and cost-effective solution to choosing every day family essentials. It supports conservation charity the World Land Trust, and is committed to producing 100% cruelty-free products as a member of PETA.

Steph Matthews, Buying Manager – Babycare at Ocado, said: “We are really excited to be the first UK grocer to list the range of Kit & Kin nappies and skincare … There isn’t a huge range of brands available on the market, so it was great to see a new brand of nappies that has launched in the UK, with the added benefit that the nappies are eco-friendly!”

Bunton noted: “The response to Kit & Kin since we launched in March has been amazing and I love that we have created an offering families really needed. To have a leading retailer like Ocado supporting us is brilliant and we can’t wait to find out what their customers think of our products – we’re sure they will love it as much as we do!”



P&G to disclose all of its fragrance ingredients by 2019

P&G has announced it will disclose all of its fragrance ingredients used across its entire product portfolio down to 0.01% inthe US and Canada by the end of 2019.

The company said it is taking the step in response to consumers’ growing interest in product ingredient transparency.While P&G already shares its fragrance ingredients, this new level of detail is a first for the company.

The decision follows Unilever’s ingredient transparency initiative announced in February this year, which will similarly see fragrance ingredients down to 0.01% listed by the end of 2018.

Kathy Fish, Chief Technology Officer at P&G, said: “Our goal is to give people information that is clear, reliable and accessible. This is another step in our sustainability journey toward enabling consumers to make informed choices.“We want people to feel great about putting our products in their shopping baskets. We’re providing more information about fragrance ingredients because we believe this will build even greater trust in the quality and safety of all of our products.”

P&G will first focus on its beauty care, home and fabric products, before publishing information on other categories and regions in due course.

Environmental Working Group President Ken Cook said: “EWG applauds Procter & Gamble’s groundbreaking decision to dramatically improve transparency about its fragrance ingredients across all of its brands.”

He added: “EWG has long considered transparency a major driving force in consumer product markets.”



31st State: The new skin care brand catering for teenage boys

A new skin care range designed for teenage boys has launched in the UK.

31st State was created to help soothe and clear red, irritated and spot-prone skin with formulas that are free from ingredients such as parabens, synthetic colours and microbeads.

Founded by London-based Stephanie Capuano, a mother of two boys, the brand takes inspiration from California, where Capuano was born.

“31st State was inspired by the beaches, deserts and forests of California. Where life just seems a little less complicated, a clean and effortless existence,” she said.

“A sense of not trying too hard that seems to come naturally to the guys who live there. We wanted to deliver that simplicity and possibility to guys everywhere.”

The 7-sku range includes: 2in1 Hair and Body Wash, Roll on Deodorant, Foaming Face Wash, Overnight Clearing Pads, Spot Control Gel, Easy Hold Styling Gel and Style and Shape Putty.

“Everyone struggles with bad skin or hair at some point so we created something that not only takes inspiration from nature but also use ingredients that really work,” she added.

“We want to help guys feel and look their best, so they can go out there and do their thing with one less element to worry about.”

Source: Cosmetics Business 31st August 2017


Other News


Food Inflation Creeps Higher, Whilst Non-Food Deflation Slows

Food inflation continued on its upward trajectory last month, although the overall figure was kept in check by lower priced fresh produce sourced in the UK.

The data from the BRC–Nielsen Shop Price Index showed that overall deflation was 0.3% in August, thanks to continued fierce competition between non-food retailers. However, this was a slight deceleration from the 0.4% fall in July and the shallowest deflation rate since November 2013, highlighting the mounting pressure on retailers to raise prices as the cost of imported goods rise as result of the fall in the value of Sterling.

Food inflation rose by 1.3% in August on the same month last year, a slight increase on July, when the figure stood at 1.2%. Prices of ambient food accelerated to 1.9%, its highest rate since December 2013 and up on July’s figures of 1.6%.

However, fresh food inflation slowed for the second month in a row, to 0.8%, from 1% in July. The BRC said that the seasonal availability of fruit and vegetables from UK suppliers is helping shield shoppers from the impact of higher import prices. However, it warned that as winter approaches and supermarkets dependence shifts to imported goods, that will change.

Meanwhile, the deflation rate for non-food products was 1.3%, the slowest rate recorded since April 2013 and adding to evidence that a long run of falling prices is coming to an end. Electronics posted the slowest rate of deflation on record (the SPI started in 2006).

Helen Dickinson, Chief Executive of the BRC, commented: “The reality is that with protection from hedging policies coming to an end, non-food retailers are running out of options for protecting shoppers from the significant increases in the price of imported goods since the EU referendum in June last year. We expect non-food prices to continue trending towards year on year inflation.”

She added that rising prices would put “an increasing strain on already stretched family budgets” and called on the government to put households at the top of its agenda as it enters into negotiations on the UK’s future trading relationship with the EU. “It should do all it can to avoid a situation where further tariffs and administrative costs lead to price increases on top of those already being faced by consumers,” said Dickinson.



Consumer Confidence Shows Surprise Improvement

Despite mounting economic concerns surrounding the impact of Brexit, UK consumer confidence surprisingly improved in August.

Whilst analysts had been expecting a fall, GfK’s consumer confidence index increased from -12 in July to -10 in August, with people saying they felt a little more confident about the general economic situation and their personal finances.

The measure for the forecast for personal finances over the next 12 months rose by three points to 5, while the measure for expectations for the general economic situation over the same period increased by one point to -27.

Meanwhile, the major purchase index rose by one point to 0, although this was seven points lower than the same month last year.

Joe Staton, head of market dynamics at GfK, commented: “These figures must be seen against the backdrop of better news on inflation, public finances, jobs and growth prospects as the UK economy displays some signs of stability after a volatile start to the year. However, the index has a lot of ground to regain to get back to black. So is this month’s rise significant? Or could we simply be witnessing a dead-cat-bounce over the dog-days of summer?”

Source: NamNews 31st August 2017


Discount Retailers Set To Grab A Further £9bn Of Consumer Spend By 2022

The UK discount retail market is forecast to grow by more than 36% over the next five years, reaching a total value of £32.5bn by 2022, driven by consumers seeking out bargains as inflation squeezes their disposable income.

This is according to a new report from analysts at GlobalData – titled ‘UK Discounters 2017-2022’ – which reveals that discount retailers could gain an extra £9bn slice of the total retail market as such stores become an even more appealing destination for cash-strapped shoppers. This will be good news for Aldi, Lidl and B&M Bargains, which dominate the channel, with a combined share of over 70% of the discount retail market. DIY & gardening, health & beauty and homewares are expected to deliver the strongest category growth.

GlobalData’s research shows that 89.4% of the UK population have shopped at a discounter in the last 12 months with food & grocery (F&G), non-discretionary household goods and health & beauty (H&B) the most popular product categories with shoppers.

Molly Johnson-Jones, Senior Food & Grocery analyst from GlobalData Retail commented: “Our report findings confirm that discounters have done an exceptional job in gaining market share of frequently purchased items by changing the perception of discounter own label products in F&G while at the same time undercutting mainstream retailers on branded items in H&B and household. This combined approach has proven to be very disruptive in the market and has contributed to their success.’’

Food & grocery is the sector with the highest market value, worth £15.7bn in 2017. GlobalData expects this to grow to £21.8bn by 2022 – taking away another £6bn from the mainstream grocers. The analyst said that as perception and trust in own label has been earned by the discounters in groceries, this is the sector which the mainstream retailers should be the most concerned about as the barriers to entry have already been overcome.

Johnson-Jones explained: “Food & grocery has enjoyed strong growth over the past decade as even when incomes have been more pressured by inflation and lower real wage growth, people still need to buy the same amount of food. The F&G discounters have taken advantage of this by extending their range to cater for all consumer needs and growing their premium and fresh ranges to ensure that they can be a one-stop-shop for the weekly shop.”

Meanwhile, DIY & gardening and homewares are forecast to grow 46.6% and 42.6% respectively for the period 2017-2022, as discount retailers gain market share from mainstream DIY retailers by offering consumers lower cost solutions for household maintenance and upgrades. Indeed the roll-out of larger out-of-town store formats has facilitated broader ranges, providing them with more authority in the home sectors.

GlobalData believes that consumers are likely to perform fewer and smaller upgrades on their homes during the forecast period due to declining disposable income. This will benefit discount retailer’s homewares sales as they continue to improve their shopper appeal by increasing their range and incorporating greater trend influence – while ensuring affordability which is crucial for driving impulse and gifting purchases.

Johnson-Jones added: “The discounters have expanded their range in the DIY & gardening market at a time when consumers are seeking reduced cost solutions for doing up their homes and gardens – B&M will particularly outperform in this area as it adds garden centres to its retail estate over the next few years.”

Source: NamNews 1st September 2017


Asda’s Income Tracker Shows Families’ Spending Power Returned To Growth In July

Amid concerns that rising inflation and subdued wage growth is putting a squeeze on consumer’s spending, Asda’s latest Income Tracker suggests that families’ discretionary income actually increased last month.

The data shows that UK households had £199 of discretionary income available per week, which is up 0.5% from the same month in 2016. This is the first growth in spending power for 4 months, although the data shows that elderly households are being hit harder due to slower income growth and higher electricity prices.

Despite the overall improvement, Asda’s pulse of the nation research shows that consumers are still feeling pessimistic about the economy. The latest insight shows that only 6% of the customers asked felt their spending power would increase over the next month, whilst over 50% believed it would fall.

This month, the cost of essential items increased by 2.2% for families across the UK, down slightly from the 2.3% reported in May. One of the main contributors was the continued increase in electricity prices for households, which inflated the most out of anyessential item year-on-year.

Over two thirds of customers felt that the cost of electricity bills at home will increase over the next month, whereas only 3% believe they will see a reduction in their monthly bill. 76% of those questioned think their cost of living will continue to rise going into August.

Looking at the contribution to the headline inflation rate, the cost of transport continues to have the largest impact on inflation in July. Costs for transportation are up 3% on the same month last year and this increase continues to impact families spending power as the cost of living increases.

However, in July, fuel prices steadied compared to the double digit growth in the first half of the year, as consumers see just a 2% price increase at the pumps.

Kay Neufeld, Senior Economist at Cebr, which compiles the data, said: “After three months of falls in the Asda Income Tracker, the latest data provides welcome relief for households across the UK. Inflation remained unchanged in July as falling fuel prices offset some of the cost increases seen in other categories.

“However, it would be too soon to announce the end of the squeeze on households. Fast rising prices for food, clothing and electricity put family budgets under pressure – this is especially true for older households who dedicate a larger share of their expenses to essential spending and utilities.”

Source: NamNews 1st September 2017

IRI Weekly News updateYour window on the latest trends in Packaged Groceries

Stephen Hall

Friday 1st September