iri's weekly news update - w/c 7th august 2017

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

Stephen Hall

Friday 11th August

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

Retailer News:• A.S. Watson H1: flat revenue continues• Applegreen expands UK presence on key arterial routes • Tesco to stop selling 5p bags altogether• The Fragrance Shop enjoys a 5% sales increase• Retailer summer activation round-up • Iceland extends deal with vlogging site ChannelMom.com• Morrisons pledges to drop fake farm brands

Category News:• Arla in new £3m campaign for Cravendale• Revlon reports a Q2 net loss• Radox extends Superhero Kids range• Superdrug to exclusively stock body design weight-management range

Other News:• Consumer spending fell again in July – Visa• Food drives UK retail sales in July• Majority of shoppers make unexpected purchases at Discounters

Weekly News Summary – 7th August 2017


Retailer News


A.S. Watson H1: flat revenue continues

A.S. Watson gas reported a flat revenue of HKD73.6bn (US$9.4bn) and 2% decline in operating profit to HKD5.2bn (US$664mn) for its fiscal first half compared to last year.

Results impacted by currency fluctuationsA.S. Watson's revenue has remained flat in the six months to 30th June, with results impacted by adverse foreign-currency exchange similar to results posted for FY2016. In local currencies, however, sales grew by 3% comparable to the same period lastyear.

Health & Beauty segment grew 7% in local currenciesThe Health & Beauty segment saw solid growth with revenue growing by 7% on a constant-currency basis. Trading conditions in general improved in Asia, with improvements observed in China, but trading in Hong Kong continued to be difficult with tourist numbers falling and increased pressure on rental and wage costs.

Network expansion to continueTwo months ago, A.S. Watson Group announced their plans to open 1,400 stores across the world this year to improve overall profits. New stores will be focused in their Health & Beauty segment, the group's strongest performing sector. 500 new stores are expected to open in China, a further 50 in Hong Kong and 55 in Thailand. Increasing their network in Turkey and emerging marketsin Eastern Europe are also being considered.

A.S Watsons has confirmed that its presence in UK will also be expanded via opening 30 more Superdrug stores, 45 Savers outlets and 13 The Perfume Shop stores.

Source: IGD 7th August 2017


Applegreen expands UK presence on key arterial routes

Irish-owned forecourt operator Applegreen has announced the purchased of the majority of sites from the Bedfordshire-based Carsley Group. The £21m acquisition consists of six services areas and one filling station. The service area sites are located primarily along the A1 (M) London-Edinburgh east coast route. Five of the stores operate under the Londis banner and two trade as Spar. All operate under the BP banner for fuel.

High quality assetsCommenting on the acquisition, Applegreen CEO said, Bob Etchingham said "This transaction will accelerate our strategy to establish a major service area presence in the UK market, complementing our strong position in Ireland and growing footprint in the United States. The service area sites we are acquiring are well located on very busy roads with a number situated on the A1 which is a major arterial route. The assets being acquired provide a set of large and strategically important sites that can accelerate Applegreen's growth in this key marketplace. This acquisition demonstrates our commitment to enhancing our existing estate in the UK and leveraging our expertise in operating high quality service areas offerings with a strong food-to-go focus for the benefit of our customers."

An ambitious operatorEstablished in 1992, Applegreen is now a major petrol forecourt retailer, with 155 sites across the Republic of Ireland and a growing presence in the UK and North-Eastern United States. In calendar 2016, revenues grew 9% to €1.2bn and adjusted EBITDA by 14% to €32.0m *(on a constant currency basis) as it expanded its operations. Key to its success has been the development of a food and beverage offer that combines own and international brands, and is tailored to location, time of day and customer demographics. A commitment to low fuel prices underpins the proposition.



Tesco to stop selling 5p bags altogether

Tesco is set to do away with 5p single-use carrier bags all together after a successful 10-week trial in Aberdeen, Norwich and Dundee.

From August 28, the UK’s largest retailer will replace the single use plastic bags with 10p Bags for Life made from 94 per cent recycled plastic.

It found during its recent trial that removing the choice to buy single use carrier bags helps “significantly reduce the number of bags sold”.

The Bags for Life will be replaced if they are damaged and the proceeds from the sales will be put towards community projects across the country.

The news comes after the Department for Environment Food and Rural Affairs revealed that Tesco customers use more than twice that of Asda and Sainsbury’s customers put together in a year.

Despite this, Tesco has sold 1.5 billion fewer plastic bags since the introduction of the bag charge in 2015.

The total number of plastic bags being used also dropped 83 per cent after the charge was introduced.

The retailer will also be removing single use wine carriers and the price of its “Carry me bottle bag” will be reduced by more than half.

Single use bags will still be available for online orders, but 57 per cent of online customers already reportedly opt for bagless delivery.

“The number of bags being bought by our customers has already reduced dramatically,” Tesco UK boss Matt Davies said.“Today’s move will help our customers use even fewer bags but ensure that those sold in our stores continue to fund thousands of community projects across the country chosen by customers.

“It’s the right thing to do for the environment and for local communities.”

Source: Retail Gazette 7th August 2017


The Fragrance Shop enjoys a 5% sales increase

The Fragrance Shop has revealed a trading year sales increase of 5%.

The British independent fragrance retailer said total consolidated net sales rose to £112m due to luxury fragrances. It noted that fragrances such as Dior Sauvage helped drive sales.

The Fragrance Shop also boasted the strong growth was supported by its e-commerce business, as online sales grew by 34%.

According to the Manchester-based perfume specialist, it is on track to open its 200th store as well as debut a concession store format partnership with department store House of Fraser across 28 sites.

“We will also unveil our new ‘scentaddict’ subscription service, currently in BETA testing, which will allow customers to try luxury scents monthly with no commitment,” said Sanjay Vadera, CEO of The Fragrance Shop.

“Early indications have shown us that new launches will perform positively for us in 2018, such as Missguided’s debut scent Babe Power, which has been the fastest selling debut female fragrance this year.”

Source: Cosmetics Business 8th August 2017


Retailer summer activation round-up

From Waitrose's first Summer Festival to Sainsbury's sunset billboards, grocers are helping customers celebrate the best of the season and bringing their brands to life in-store and beyond.

Waitrose launches first Summer FestivalWaitrose is hosting its first Summer Festival at its Leckford Estate, a 4,000 acre estate originally owned by the John Lewis Partnership's founder.

The event is centred on two topics that Waitrose customers are passionate about: food and gardening. The three day programme showcases Waitrose's food and drink through pop-up bars and kitchens, masterclasses and demonstrations. The festival will give visitors chance to meet food experts, from celebrity chefs to producers.

Tesco "Bursting with Pride"Tesco was once again an official sponsor at London's annual Pride event: 300 colleagues took part in the parade, and 13 stores along the route getting into the Pride party spirit, including fundraising for LGBT charities.As well as being part of the party atmosphere, Tesco's involvement in Pride promotes the brand values of diversity and inclusion.

M&S brings 'Spirit of Summer' to life through pop-upsIn Leeds, M&S is celebrating its new Mediterranean-inspired summer food range with a pop-up tasting experience. Featuring samples, live music and stylish surroundings, the experience will reach 50,000 customers.

Earlier in the summer, M&S partnered with lifestyle magazine Stylist to host film screenings in outdoor locations across the UK.These provided the setting for visitors to relax and enjoy Spirit of Summer food and drink.

Focusing on the experiential chimes well with M&S's "Spend it well" campaign, inspiring customers to make the most of life's pleasures.

Sainsbury's encourages commuters to enjoy summer's longer eveningsFor two weeks in July Sainsbury's helped commuters countdown to sunset via digital screens installed in London Waterloo and Edinburgh Waverley train stations. The campaign built on the nation's love of summer's longer evenings: YouGov research shows 83% of people believe that longer evenings make them feel that summer has arrived. Longer evenings also present the opportunity for a weeknight barbecue, tying in with Sainsbury's "Living Well" brand message.



Iceland extends deal with vlogging site ChannelMom.com

In the wake of two successful trial phases, frozen food specialist Iceland has signed a further 12-month partnership deal with fast-growing video parenting website ChannelMum.com. Supporting Iceland's ongoing 'Power of Frozen' marketing campaign, this next phase of ChannelMum activity will comprise 54 vlogger-created videos plus an additional 50 shorter-form videos for Facebook and Instagram.

Trial partnership outperformed viewer engagement metricsRunning to April 2017, the initial phases of ChannelMum activity saw a mix of 129 'hero' and vlogger videos broadcast on the website, hosted on a dedicated 'Power of Frozen' section. On both YouTube and Facebook the retention rate of viewers of this content was well above industry averages, with videos addressing a range of relevant topics from recipes and money-saving advice, to healthy eating and general brand perception. In the first three months of the campaign the each was almost four million.

Andy Thompson, Head of Social, Iceland, commented:"The campaign returned outstanding results and exceeded all expectations. Most importantly, approval ratings for the store amongst mums jumped from 10% to 80% after viewing the videos created by ChannelMum vloggers. The most rewarding part of this campaign was watching the vloggers' perception of Iceland change right there in front of us - it was powerful to see."



Morrisons pledges to drop fake farm brands

Morrisons has vowed not to adopt brands which use the names of fake farms to sell goods to shoppers, in a move to support real farmers across the UK.

Following a survey carried out by the retailer which revealed 70 per cent of people objected to the use of fake farm brands, Morrisons pledged to drop any products which use fictitious farms or place names on any branding or packaging.The row was reignited in April after rival grocer Asda rebranded its Smart Price food range as Farm Stores.

The matter was first brought to the spotlight in 2016 when Tesco launched seven brands with British sounding but fake names, including Woodside Farms and Boswell Farms, despite importing a portion of the goods from overseas.The National Farmers Union and the Soil Association subsequently condemned the use of fake farm brands as both misleading to consumers and insulting to British farmers.

“Many hard-pressed customers, trying to do their shopping in a hurry, are likely to be misled into thinking they’re buying a product from a specific British farm when they are not,” Soil Association policy director Peter Melchett said.

Morrisons already dropped a brand called Hemsley’s over a year ago, which ripped off the name of a real town in North Yorkshire called Helmsley.

The retailer’s survey also found that 46 per cent of respondents had never met a farmer, and a further 52 per cent didn’t know how their food was grown.

In light of this, Morrisons is encouraging shoppers to visit stores to meet real farmers who will explain the benefits of UK grown food.

“Supermarket customers are sometimes presented with misleading images of farmers on their food,” Morrisons head of British livestock Joe Mannion said.

“We believe that by meeting our real farmers, customers will see and value that we know where our food comes from.”

Source: Retail Gazette 10th August 2017


Category News


Arla In New £3m Campaign For Cravendale

Arla has launched a new £3m advertising campaign for its Cravendal brand, which aims to showcase the drink’s “fresh tasting qualities”.

The new ‘Moonicow’ campaign will play on the theme of local myths and legends, and features a mockumentary-style advert.

The campaign will run throughout August on TV, VoD and social media with support from key celebrities and food bloggers, including Fred Sirieix from Channel 4’s First Dates.

Source: NamNews 7th August 2017


Revlon reports a Q2 net loss

Revlon has reported a Q2 net loss of $36.5m, after reporting a profit in the same period in 2016.

The cosmetics giant revealed revenue of $645.7 million in the period.

Revlon President and CEO, Fabian Garcia, said: “While our financial performance and sales results in the US remained soft in a challenging retail environment, we are encouraged by the global growth of our iconic Revlon and Elizabeth Arden brands, our international sales which remain robust and the key strategic initiatives that we have implemented during the quarter, which we expect will drive sequential improvements in company performance.”

Revlon noted it has focused on global expansion in the last quarter as well as its digital communications, engagement and e-commerce capabilities.

“During the quarter we continued to take measures to enhance our digital capabilities and competitiveness, strengthened our brands and their global distribution and further refined our long-term strategy for profitable growth,” Garcia added.

Source: Cosmetics Business 7th August 2017


Radox extends Superhero Kids range

Radox is adding Spiderman Handwash and Bath & Body Wash to its kids range this summer.

The launch is in conjunction with the release of the new Spiderman Homecoming film.

Georgia Wallis, brand manager for Radox, said: “We are incredibly excited to add Spiderman to our kids range just in time for the launch of the highly anticipated Spiderman Homecoming movie. By adding another recognisable and much-loved superhero to the range, we can appeal to an even wider audience.”

Radox Liquid Handwash 250ml retails at £1.99 and Radox Bath & Body Wash 400ml retails at £2.79

Source: Talking Retail 9th August 2017


Superdrug To Exclusively Stock Body Design Weight-Management Range

Superdrug will become the exclusive stockist of Body Design, a range of weight-management products launched this month in the UK.

Body Design is aimed at those “wanting to shed a few pounds, either to feel that bit more confident in their day-to-day life, or to slim-down ahead of an important event.” The range has been approved by NHS dietician Nicola Whitehead and personal trainer Mark Grice.

The brand currently offers two Meal Replacement Shakes – Ice, Ice Baby (vanilla ice cream) and Piece of Cake (chocolate brownie) – in boxes containing 4x55g sachets (RRP £7.99). It also includes snack line Protein Crunchers – Milk Chocolate, and White Chocolate – which contain less than 100 calories (23g/ £1.39). And finally, it offers Weight Loss Tablets (120 capsules/ RRP £21.99).



Other News


Consumer Spending Fell Again In July – Visa

Consumer spending across the UK fell in July, the third straight month it has done so, according to new figures from Visa. The three-month streak is the longest such in more than four years.

The report, compiled by IHS Markit, found that spending was down 0.8% year-on-year, accelerating from the 0.2% decline in June. Spending on food & drink was down 0.5% on the year, household goods recorded a 4% drop, while apparel & footwear saw sales fall by 5.2%. However, spending at hotels, restaurants and bars rose 6% year-on-year.

Visa UK & Ireland said the figures underlined the impact households are feeling from rising prices and stagnant wage growth. It added that the increased spending at hotels and restaurants indicated “an early surge in summer staycations, as the weak pound made holidaying at home more attractive.”



Food drives UK retail sales in July

The latest release from the monthly British Retail Consortium Retail Sales Monitor (BRC-RSM) shows that UK retail sales grew by 1.4% in July, a slowdown on +2.0% seen in June. However, the overall picture disguises the underlying divergent fortunes of the food and non-food sectors. Once again non-food found itself in negative territory, while solid growth in food was enough to offset this to keep UK retail moving forward.

Three-month food volume growth at 2.0%Three-month value growth in food, covering May-July, was +3.4%, compared to non-food on -0.4%. This period, now free of any distortions of Easter timing, offers a clearer picture of the underlying growth in the UK market. And adjusted for food price inflation, as measured by the BRC-Nielsen Shop Price Index, the figures show volume growth in food at 2.0%.

Online growth in non-food offsets -2.6% in storeGrowth in online non-food sales remained strong in July, up by 8.3% in the month. Though weaker than June, when online growth stood at 10.1%, July's figure was level with the current 12-month average. However, success online is clearly cannibalising in-store sales for non-food, which fell by 2.6%, leaving overall non-food sales down.

Joanne Denney-Finch, Chief Executive, IGD commented:"After June's heatwave, retail sales growth cooled a little in July as the weather became more unsettled and food inflation eased slightly. However, the underlying sales trend remained positive with continuing year-on-year growth. From our ShopperVista research, four out of five shoppers (78%) expect food prices to keep rising over the next year. If Sterling remains generally stable and cost pressures ebb away this may not be the case, although in such variable economic conditions it could still go either way."



Majority Of Shoppers Make Unexpected Purchases At Discounters

A new survey by retail consultancy Newton has found that the majority of UK shoppers end up buying something unusual at a discounter.

The research, which surveyed 2,000 UK consumers, found that Brits are particularly enthusiastic about shopping for their groceries in the discount supermarkets. While 75% said they had bought something unexpected at such shops, two-thirds of them also recommended these items to friends and family. Further, 20% said that it is these unusual items that encourage them to head into the store and one of the main reasons why they shop at these specific supermarkets.

When asked what was the most bizarre and exciting item they had purchased, the majority of respondents claimed that they had predominantly purchased tools (over 18%) and kitchen gadgets (17.2%) at the discount retailers alongside their weekly shop. Whilst many of the multiples also sell these items, consumers seemed particularly delighted when they saw these products in the discount stores at a bargain price and therefore purchased them on the spot to avoid disappointment.

Paul Harvey, head of grocery at Newton, noted: “The continued trend of consumers opting to shop at discount retailers shows no sign of slowing and, as a result, the multiples are likely to continue to be hardest hit. Our in-depth study ‘Beating the Discounters’ challenges the multiples’ persistent focus on price as being the biggest driver behind their loss in market share and offers various ways that the multiples can fight back.

This additional consumer research further highlights that price isn’t the only reason why the discounters are doing so well. Customers feel proud to recall the surprise bargain they found at a discounter and are motivated to tell their friends a story about their positive shopping experience.

Multiples have to look at bolder tactics to make consumers feel passionate about their shopping experience and draw people back through their doors.”

Newton’s report recommends that the multiples should consider ‘8 steps to success’ to regain market share from the discounters, including – creating just two tiers of products where possible (a mid-tier and a high tier); increasing the perception of the mid-tier so customers feel passionate about these products; and matching price on the 1,500 SKU’s comparable to the discounters to become competitive.


https://www.newtoneurope.com/news-knowledge/thought-leadership


Quarterly LFLs

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4

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Asda M&S Morrisons Sainsbury's Tesco

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Source: IGD

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

Stephen Hall

Friday 11th August