Grocery Insights January 2013

7/29/2019 Grocery Insights January 2013

1/7CPM UK Insight & Planning Prepared By: Mark Berry

GROCERY INSIGHT UPDATE JANUARY 2013

Festive market shares provide Christmas overview

Kantar has issued a special six-week Christmas release of its Worldpanel market share data. Offering specific

detail on relative performances in the grocery sector in the key festive trading period, this provides a useful

counterpoint to corporate statements. The figures issued for the period to 6th January 2013 shows market

growth accelerated modestly to 3.8%, though the fortunes of retailers shows some significant variation

around this.

Retailer

6 weeks to 08

January 2012

(% share)

6 weeks to 06

January 2013

(% share)

Sales

growth

(Y-o-Y %)

Tesco 30 30 3.9

Asda 17.9 17.8 2.1

Sainsbury's 17.1 17.1 3.9

Morrisons 12.5 11.9 -1

The Co-operative 6.3 6.1 0.7

Waitrose 4.8 4.9 8.6

Aldi 2.6 3.2 30.5

Lidl 2.5 2.7 11.2

Iceland 2.2 2.3 9

Farm Foods 0.5 0.4 -14.3

Other multiples 1.8 1.8 1

Total symbols & independents 1.8 1.9 4.6

Source: Kantar WorldPanel

Tesco and Sainsbury's neck and neck on +3.9%

The Kantar figures show that both Tesco and Sainsbury's successfully traded slightly ahead of the

market. This confirms the widely reported improvement in Tesco's performance over Christmas,

representing the first time it has been above the market growth average for some time. Both

retailers sustained identical shares versus last year, with Tesco on 30% and Sainsbury's on 17.1%.

Morrisons and Asda falling behind

Despite the uptick in the market, Morrisons slowed further during the Christmas period, seeing its

sales slip by 1.0%, and shedding over half a percentage point of share, falling to 11.9% of the festive

market. Asda too lost a fraction of share, with 2.1% growth, which while solidly positive, was notably

below the average.

Premium and discount full of Christmas cheer

With many shoppers traditionally willing to trade up for the holiday celebrations, Waitrose tend to

trade strongly at Christmas, and 2012 was no exception, as the premium retailer accelerated to

+8.6% in the six weeks. Meantime discounters such as Lidl and Aldi sustained strong growth trends

(Aldi with a stratospheric +30.5%) and value focused frozen food specialist Iceland also saw a

significant uplift, indicating the drive to save money also remains a key priority in the UK market.(Source: IGD)



Setting the New Year agenda

With the festive season now behind us retailers are keen to move the agenda on for the New Year

with a raft of activity centring on healthy eating ranges. (Source: IGD)

Sainsbury's: highlighting value and fresh credentials

Sainsbury's brings together value and healthy eating with its "5 a day the basics way" initiative in

which it highlights low cost healthy products from its entry level own brand range. A selection of

healthy eating products is also promoted under the "Kick Start your New Year" banner including

brands such as Actimel, Good 4U, and Flora Pro Activ, with Walkers Sun Bites and Weight

Watchers featured separately.

Asda: encouraging healthier lifestyles

Asda draws on products from both its 'Chosen by You' and 'Good for You' own brand ranges as well

as key brands such as Special K through its promotional features. It also expands the healthy

lifestyle theme by highlighting smoking cessation, fitness and health & beauty products.

Tesco: providing convenience and inspiration

Tesco has segmented its healthy eating offer by meal times on its website to make it easier for

shoppers to find relevant products, building on the approach taken in its recently launched Easy

Entertaining website. In addition to the meal occasions, Tesco also features low fat treats, cook

from scratch and fitness products within the New You 2013 section of its website and further

supports the healthy lifestyle push with recipe ideas on its Real Food website.

Morrisons: focus on everyday favourites

At Morrisons, the promotional focus returns to everyday items with press advertising focusing on

popular brands with a variety of half price / better than half price brands and 1 fresh producepacks. Morrisons is also well placed to attract health conscious shoppers with its new look fresh

format stores and NuMe own brand.

Waitrose: LOVE Life key to healthy eating focus

Having traded very strongly over Christmas and up to the New Year, Waitrose is aiming to capture

the mood for healthy eating with a 'three for two' promotion on selected items from its LOVE Life

range. The initiative should help refresh interest in the brightly packaged healthy eating brand thatthe retailer launched 18 months ago and has since supported with the 'Love Life you count' calorie

controlled sub brand.



TESCO INSIGHT UPDATE

Tesco records improving picture in UK

Nine months into implementing the six-part plan but a lot more still to do...

London 2012 British weightlifting record holder, Zoe Smith, cut the ribbon to open the new Tesco Extra store in

Woolwich on Monday.

In the UK sales over Christmas increased by 4.3% (inc. VAT, exc. fuel), with LFL sales growing at

Tesco's fastest rate for three years, up 1.8% (exc. VAT, exc. fuel). In comparison to its difficult

Christmas trading period last year, when LFLs declined 2.3%, a strong turnaround inperformance is clearly evident. Tesco attributes much of its success to its plan, put in place last

April, to invest 1bn into UK operations. The results of this plan are now coming through with

key drivers of growth over Christmas including:

Commenting on the Christmas trading period, Philip Clarke, said, The Group performed broadly

in-line with our expectations through the Christmas period, with an improved performance in the

UK and maintained trends elsewhere as we continue to experience tough trading conditions -

particularly in Central Europe. I am pleased with our performance over the important Christmas

and New Year period in the UK, which reflects the progress we are making in improving our offer

for customers. This performance was driven by a further improvement in our food business in-

store and a strong contribution from online, which included our biggest ever week for internet

sales, a successful first Christmas for Grocery Click & Collect and a better performance for Tesco

Direct, our online general merchandise business. We are just nine months into theimplementation of our six-part plan, which is about Building a Better Tesco in the UK for the long-

term. Whilst our seasonal performance is encouraging, there is a lot more to do and the team is

focused on deliverin further im rovements for customers in 2013.' Source: IGD

Food performed much more strongly than last

year and showed continued improvement from

Q3.

Finest and Everyday Value private label

outperformed the business, with

customers responding well to both the

re-launched entry tier range and

improved seasonal ranges.

General merchandise and clothing

performed better than in the previous

quarter both in-store and online,

although general merchandise still

dragged on overall performance.

Strong online food performance with sales up

18%, including over 500k orders in the week

before Christmas when 5% of customers chose

to use one of the 140+ drive-through Click &

Collect locations which have been introduced in

the last year.

Tesco Direct sales were up by more than 16%,

with Click & Collect for non-food items also

proving popular, boosted by the 600+ Express

stores to now offer the facility.

New stores that opened performed well

but contributed slightly less to growth

than previous years, reflecting Tesco's

reduced new space opening programme.



ASDA INSIGHT UPDATE

Asda yet to release their Christmas trading review

Asda supermarkets to help smokers quit

Asda Rugby helps smokers to quit

Asda mulls opening collection points in train stations

Details to follow when available..

Asda have teamed up with the Scottish government to help smokers kick the habit. Health

teams will visit in-store pharmacies at seven Asda supermarkets across Scotland to advise

shoppers who want to quit. Asda said the money saved on breaking a 20-a-day habit could

feed a family of four for a week.

Last year, another supermarket chain - Sainsbury's - stopped selling tobacco products at 10of its shops.

The move was in response to the Scottish government's health levy, which adds a

supplementary charge on business rates paid by large stores selling cigarettes and alcohol.

(Source: Retail Week)

Asda is considering opening click-and-collect hubs in train stations and will launch same day

delivery as the grocer looks to tap into the commuter market for online shopping.

Customers could be able to pick up Asda shopping ordered online in train stations and park-

and-ride car parks as the grocer looks to increase its reach from its traditional out-of-town

large format stores to access busy shoppers heading to and from work.

Asda is also looking to move to same day delivery of online orders in 2013. The grocer

currently allows shoppers to order before 11pm online to collect from 7am the next day.

(Source: BBC News)
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SAINSBURYS INSIGHT UPDATE

Sainsbury's reports encouraging Christmas trading

Record build up to Christmas

Strong quarter for own brand

Nectar points help customer budgets stretch further

A multichannel Christmas

Customers respond to non-food investment

Outlook remains challenging

Sainsbury's has released an upbeat third quarter trading statement with own brand and

multichannel investments contributing strongly to Christmas trading. (Source: IGD)

LFL sales excluding fuel inc. VAT were up 0.9% while total sales were up by 3.3% for the 14

weeks to 5 January 2013. The week before Christmas was Sainsbury's strongest ever with 27m

customer transactions and the retailer recorded its best ever Christmas Eve sales of over 100m

delivered with high levels of availability and customer service.

Investment in own brand underpinned Sainsbury's solid performance. Own brand sales grew at

three time the rate of brands with over 3,000 new or improved products available this

Christmas. The by Sainsbury's own brand delivered almost 5% growth, reflecting investment the

retailer has made in improving the quality of its core mid-tier own brand.

Besides turning to own brand to contain the cost of Christmas, many customers redeemed

Nectar points to make their budgets stretch further with 110m of Nectar points redeemed

during the quarter.

Online and convenience both contributed strongly to headline growth. Convenience grew by

17%, helped by the opening of 19 stores during the quarter and more customers taking

advantage of click & collect which helped online sales to grow by more than 15%.

General merchandise was another highlight for Sainsbury's with sales growing faster than food.Clothing achieved growth of over 10%, cookware almost 19% and small electricals over 24%

reflecting the inclusion of a stronger non-food offer at more stores and expansion online.

Commenting on expectations for 2013, CEO Justin King said: "We expect the challenging

economic backdrop to persist, with customers looking to re-balance their household budget

after the festivities and so spending cautiously in the first few months of 2013. By continuing to

help our customers to Live Well for Less through our on-going commitment to great food,Brand Match, competitive pricing and targeted promotions via Nectar and coupon-at-till we are

positioned to perform well over the next quarter."



MORRISONS INSIGHT UPDATE

Morrisons reports 'disappointing' Christmas trading

Budget consciousness and couponing impact trading

Focus on promotions and communicating strengths better

Too early for investment in fast growth channels to feed through

High service standards maintained

"A strong business with significant opportunities"

In its Christmas trading statement for the six weeks to 30 December, Morrisons has reported a

decline in LFL and total ex fuel sales. (Source: IGD)

Over the period LFL sales (ex fuel, ex VAT) declined by 2.5% and total sales were down by 0.9%

which Morrisons attributes to a very challenging trading environment in which shoppers were

highly budget conscious and responsive to the vouchering activity. While Morrisons now has its

own coupon at till system, questions may be asked about the effectiveness of its Christmas Saver

scheme which required shopper loyalty throughout the Christmas trading period when more

instant savings were on offer at rivals.

The disappointing figures follow lower than anticipated results for Q3 (13 week to 28 October),

when LFL sales were down by 2.1%. Following those results Morrisons announced that it would

take action to communicate more impactful promotions and communicate its points of

difference better, trading priorities it has reiterated again today.

Morrisons performance has also been held back by its limited participation in fast growth

channels, particularly online and convenience. Here Morrisons is committed to major

investments with 20 M Local stores scheduled to have opened by the end of this month and

Morrisons new Wine Cellar website providing it with experience and technical knowhow for a

wider online rollout.

While the top line fell short of expectations, Morrisons delivered high levels of availability and

service standards throughout the Christmas period, reflecting its investment in the supply chain

and well-motivated collea ues.

Commenting on Morrisons Christmas trading, CEO Dalton Philips said; "In a difficult market our

sales performance was lower than anticipated, but we have a strong business and significantopportunities to advance our strategy, as we accelerate our multi-channel offer".



SO WHAT SHOULD WE DO?

With details of the Christmas trading period now available we can see that Sainsburys and Tescoperformed well whereas Morrisons struggled. Waitrose, sitting at the premium end of the market

had an excellence Christmas as did the discounters Aldi & Lidl who continue to show positive growth.

All call file reviews should consider market share movements and reflect any trends in the mix of

stores selected.

In terms of next year, retailers own brand appears high on the agenda. This increase in own labelproducts represents a growing challenge to our clients both in terms of potential erosion of profits

and loss of space. What can the field teams do to maximise the in store presence of the products we

represent ahead of own label? Our clients need to ensure that their key skus are included in head

office store planograms and we need to work with category managers to reinforce the message that

brands drive overall category sales. We need to be winning the battle for space in store for our

clients.

On-line sales performed very well over the holiday period and will continue to grow. This may meanthat stores become more affected by online activity. Field teams should continue to monitor this for

resulting availability challenges. Ask Clients which products in their portfolio have a higher propensity

to be involved in online shopping and assess whether a specific action plan is required to monitor and

ensure excellent availability of those SKUs. Is there an opportunity for us to work with Clients to

monitor and audit their on-line offering?

The Click & Collect option appears to be gathering pace and we can expect to see more stores offeringthis and more collection points becoming available during the year. Our Field teams should observe

where the pick-up points are in store in case there is an opportunity to site incremental displays thus

targeting customers when they come to collect their goods.

The Christmas results continue to demonstrate that the smaller format, convenience stores aredelivering excellent results. Tesco, Sainsburys and Morrisons all plan to open more of these stores

during 2013. We need to evaluate how these stores are performing in relation to mainstream grocery

outlets and whether there is sufficient sales potential to include Convenience stores into the field

team call files.

With this expansion from the Grocers come the increase in competition with the local Symbols and

Independent stores. These independent businesses are going to be facing increased competition and

are likely to suffer a sales dip from the inevitable decreased footfall. Can we help them to defend

their position against the Multiples? Regular and frequent call file reviews highlighting these stores

will become increasingly important as it may become necessary to remove them should their sales

plummet.

The decision by Sainsburys to cease selling tobacco products in ten of their stores in Scotlandpotentially creates opportunities for surrounding stores. It is quite conceivable that these displaced

smokers will go elsewhere to purchase their tobacco products including the local convenience stores.

Our Field teams should monitor the impact of this change and potential movement of footfall with

regular call file reviews.

Documents

Grocery Insights January 2013