iri's weekly fmcg news update - w/c 16th january 2017

IRI Weekly News update Your window on the latest trends in Packaged Groceries

Stephen Hall

Friday 20th January

Copyright © 2015 Information Resources, Inc. (IRI). Confidential and

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• Record Christmas for Irish grocery market with Supervalu regaining No.1 position and Tesco continuing to improve

• Greggs announces strong Q4 results • PEP&CO expands in Poundland stores • Cold weather and fresh produce sales drive growth at

Waitrose • Tesco introduces "slow lane" pilot • Waitrose becomes latest retailer to trial FareShare

FoodCloud • New membership scheme helps drive strong Q4 trading

at Co-op • Pets at Home third quarter performance boosted by

strong growth from vet practices • Iceland launches interactive Facebook Live campaign • Tesco to deliver in an hour • Sainsbury's goes 'food dancing' in new ad campaign • Location key to store selection, study finds • Aldi and Lidl top YouGov BrandIndex rankings • Christmas shoppers keep station retailers on track

Weekly News Summary: 16th January 2017


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Record Christmas For Irish Grocery Market With Supervalu Regaining No.1 Position And Tesco Continuing To Improve The latest supermarket share figures from Kantar Worldpanel in Ireland for the 12 weeks ending 1 January 2017, reveal that shoppers spent an additional €92m this Christmas period – 3.8% more than last year. With Christmas Day falling on a Sunday this year, shoppers had two extra days to tick off all the items on their Christmas shopping lists. Having the whole week to prepare meant that the average household in Ireland spent €193 on the big day, €35 more than last year. David Berry, director at Kantar Worldpanel, explained: “After a turbulent 2016, shoppers really chose to treat themselves this Christmas. Always popular over the festive period, biscuits and chocolates did even better than usual. Irish families spent 9% more on seasonal confectionery than last year, making sure they had plenty of sweet treats to keep them going over the festive period. More were in the mood for a Christmas tipple too, with alcohol experiencing double-digit growth. This was partially down to more multi-buy promotions in stores tempting shoppers to up their spend. “As in previous years, 2016 was defined by fierce competition for the grocery market with Ireland’s three biggest supermarkets vying for the top spot all year long. With shoppers willing to fork out more over Christmas, it’s a vital time of year for grocers – an opportunity to pull away from the competition. Whether that’s via a heart-warming Christmas ad or the best premium own-label offers for the big day, we’ve seen retailers going all out to persuade the Irish public to shop with them this festive season.” Meanwhile, Supervalu regained the outright crown as Ireland’s leading grocer, after Dunnes Stores had drawn level the previous month. Supervalu has held the no.1 position for 10 out of the past 12 periods. Despite a return to second place, Dunnes Stores continued to perform well. Sales for the Christmas period were almost 5% higher than in 2015 and the average spend per trip reached a new high of €41.60, significantly ahead of any other retailer. Tesco continued to improve its performance, with sales growing by 1.3% over the final quarter – up from the 1.2% growth the grocer saw in the 12 weeks to 4 December 2016. Premium own label was a particular bright spot for the retailer, with its Tesco Finest range experiencing strong growth over the festive period. Elsewhere, Aldi posted the strongest growth of all Irish supermarkets with sales up by 5.3%. The retailer managed to attract 37,000 new shoppers this Christmas, boosting its market share to 10.5%. Lidl also recorded positive results, with festive sales 2.3% higher than in 2015. Source: NamNews 16th January 2017

http://www.kamcity.com/namnews/uk-and-ireland/supermarkets/supervalu-and-dunnes-share-the-crown-of-irelands-largest-grocer/


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Greggs announces strong Q4 results A strong Christmas performance driven by food-on-the-go growth helped Greggs deliver positive fourth quarter results. Robust Q4 Trading Like-for-like sales grew 6.4% in the final three months of 2016, marking the 13th consecutive quarter of like-for-like sales growth for Greggs and an acceleration from the 2.8% of Q3. Across the 52-weeks ending 31 December 2016, company-managed shop like-for-like sales grew 4.2%, and total sales increased 7.0%. Further progress in food-on-the-go and Balanced Choices range Greggs outlined the growing strength of it's 'food-on-the-go' strategy as the main driver of sales growth. Within this, its Balanced Choice range and new hot food products proved notably popular, while seasonal favourites, including the Festive Bake and mince pies, also performed well. Greggs will introduce Green Tea and Vanilla Latte to the hot drinks menu in 2017, strengthening key potential growth areas of breakfast, tea, and health in 'food-on-the-go'. Estate expansion supporting food-on-the-go strength In 2016, Greggs expanded its portfolio to 1,764 stores, opening 145 stores and closing 79 in the year. As part of growing Greggs as a modern food-on-the-go brand, 208 existing shops were converted to the new 'bakery food-on-the-go' format. At the same time franchise is becoming more important: 56 franchised units opened in the year, bringing the total to 157. This estate transformation is set to continue, while early steps are being taken in the roll-out of the delivery service in London, which currently operates in Cheapside and Eastcheap, for orders over £20. Cautious about 2017, but medium term confidence Despite anticipating 2016 full year results to be slightly ahead of expectations, Greggs has outlined apprehensions for 2017. Political turbulence, including the impacts of Brexit, is expected to heighten uncertainty in the trading environment, with increased pressure on real income growth. Stating that expected industry-wide cost pressures in 2017 are likely to impact on margins in the short term, Greggs expressed confidence in its medium term outlook. Source: IGD 17th January 2017


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PEP&CO expands in Poundland stores

Growing discount clothing retailer PEP&CO has announced plans to expand within Poundland. 50 new shop-in-shops Following a trial last year, PEP&CO's owner Pepkor UK has decided to roll out more PEP&CO shops within large Poundland stores. This move will see 50 Poundland stores introduce the clothing concession within the next 100 days. This will almost double PEP&CO's UK presence from its current c.60 stores. Bringing the brand to new areas PEP&CO has revealed that the majority of these 50 Poundland stores will be in towns where the clothing brand is not currently present. The company has 28 locations confirmed, with UK regions including Northern Ireland, West Yorkshire, North Wales, East Anglia and London. Speaking about the move, managing director Adrian Mountford has said: 'By bringing Pep & Co to the largest Poundland stores we’re giving people access to the brand much more rapidly than we could on our own.‘ Steinhoff connection drives collaboration It seems that the link with South African conglomerate Steinhoff has enabled this in-store collaboration to happen, with both value retailers playing off each other to create a stronger discount proposition that will create a point of difference within the variety discount channel. No other player sells a complete clothing range, however B&M and Poundstretcher have both branched out to become destinations with garden centres and pet stores respectively. With value clothing retailers such as Primark being so popular and the UK having long sold clothing in supermarkets, this move by PEP&CO could have the potential to drive footfall and sales to Poundland as the discounters continues to find its feet following the 99p Stores takeover and Steinhoff acquisition. Source: IGD 17th January 2017


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Cold Weather And Fresh Produce Sales Drive Growth At Waitrose

Waitrose has revealed that its total sales rose by 2.7% to £122.5m in the weak to 14 January. The chain said that cold weather had led to a spike demand from ranges such as hot drinks, ready meals and soups, whilst consumer’s January health kicks boosted demand for fresh produce. Waitrose added that low alcohol and alcohol-free wines were proving popular as its customer’s looked to minimise their alcohol intake at the start of the year. However, wine sales still rose 5%, whilst gin sales climbed by 17%. Overall, sales in the ambient category were up 3%, whilst sales in Chilled, Fruit, Vegetables & Horticulture, and Bakery increased 2.4%. The Meat, Fish, Frozen & Dairy category saw sales rise 2.3%, whilst Home & Leisure was down 1%. At sister chain John Lewis, sales rose 3.7% in the final week of its clearance event. The strongest performing department was electricals with a 6.9% uplift. Fashion sales dipped 0.1%, whilst home sales rose 3.8%. Source: NamNews 18th January 2017


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Tesco introduces "slow lane" pilot

A Tesco store in Scotland has introduced a “relaxed lane” aimed at creating a less stressful checkout line for less able customers. In conjuction with Alzheimer Scotland, the initiative sees staff at the Forres site trained to identify special needs customers and operate at a more suitable speed. The pilot scheme currently operates on Tuesday and Wednesday mornings. "We want them to be confident they can shop at their own pace,” Forres Tesco employee Kerry Speed told the BBC. "It was highlighted to me that people living with dementia can feel under pressure when they reach the checkout, and it struck me that this could be true for others as well. "Early feedback from customers has been very positive. Although it's a simple gesture, we hope this will make a difference." Source: Retail Gazette 18th January 2017


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Waitrose Becomes Latest Retailer To Trial FareShare FoodCloud

Waitrose is strengthening its commitment to reducing food waste by launching a trial with FareShare FoodCloud this month. Waitrose is the second retailer to sign up to the programme, which was developed in collaboration with Tesco in 2015, and has proved highly successful in helping distribute meals to people in need. The FareShare FoodCloud programme enables branches of Tesco, and now Waitrose, to inform local charities of surplus food which is available for collection. Stores input details of available food into the FoodCloud app, and connected charities receive a text alert to which they can reply, confirming that they are able to collect the items mentioned. Initially, there will be a trial in 25 Waitrose branches, and if successful, the scheme will then be expanded over 12 months to all group’s stores throughout the UK . As well as working with the FareShare FoodCloud programme, Waitrose is increasing its commitment to minimising surplus food, by providing training for all its staff on food waste reduction. Lindsay Boswell, FareShare UK CEO, said: “We are excited to be starting the year with an expansion to our store-level programme that enables forward thinking retailers like Waitrose to redistribute surplus food quickly to charities in their local community. Waitrose is demonstrating real commitment to tackling surplus food waste and I invite other retailers to follow their lead and find out how FareShare FoodCloud programme could work to benefit their business and local communities.” Source: NamNews 19th January 2017

http://www.kamcity.com/namnews/uk-and-ireland/supermarkets/tesco-highlights-success-of-food-surplus-redistribution-initiative/

http://www.fareshare.org.uk/


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New Membership Scheme Helps Drive Strong Q4 Trading At Co-op

The Co-op continued on its recovery path during the fourth quarter of last year, bolstered by the success of its new membership scheme. In the period from 21 September to 31 December, like-for-like sales across its core convenience estate increased by 4% year-on-year, with total food like-for-like sales up 3.4%. Earlier this month, the society revealed strong Christmas trading figures with overall like-for-like sales up 3.5% during the three weeks to 31 December. The Co-op hailed the positive impact of its new membership scheme which launched last September and gives shoppers a 5% reward on purchases of own brand Co-op products and services, with a further 1% directly benefiting local causes. The society had hoped the scheme would help it sign up 1m further members by the end of 2018. However, the scheme’s success has already led to 400,000 new members joining in the four months since launch, prompted the Co-op to accelerate its recruitment plans. The target for 1m new members has now been brought forward to the end of 2017. It currently has 4.1m active members. Rufus Olins, Chief Membership Officer at the Co-op, said: “The Co-op is back and our members and our communities are once again at the heart of all we do. In looking to grow our membership significantly in 2017, we are in affect looking to grow the Co-op economy, and the very positive impact it can have in communities throughout the UK.” As part of its recruitment drive this year, the Co-op has teamed up with British film director Shane Meadows, best known for the Bafta award winning feature film and TV series ‘This is England’. He has created a series of short films to be shown in cinemas that illustrate the Co-op’s support for local causes. Source: NamNews 19th January 2017

http://www.kamcity.com/namnews/uk-and-ireland/convenience/strong-christmas-for-co-op-food/


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Pets at Home third quarter performance boosted by strong growth from vet practices

In the 12 weeks to 5 January group like-for-like revenue growth was 0.1% as continued growth in the veterinary services business was offset by more subdued trading across its merchandise business. Merchandise revenues were flat at £177.4 million while services revenues climbed by 47.8% to £26.3 million. In a statement the company said its profit outlook for the full year remains in line with market expectations. Ian Kellett, Pets at Home chief executive, said: "Vet services yet again performed strongly this quarter, where our strategy of providing a quality service to clients across both primary opinion and specialist referral centres is delivering results, and is a platform for continuing strong growth. “In merchandise, whilst overall sales were softer than anticipated, online grew strongly, reflecting the momentum gained from our investments in seamless shopping. “We saw a good performance in our Christmas range, where customers are responding to innovative products at great value for money, which we will reflect in new range launches later this year. We will also focus on delivering best value, starting with a very clear message to customers about the benefits of our high quality, UK produced private label foods, where we will be leveraging our competitive advantage.” The company said its new store and services rollout is on track after it opened two superstores, six vet practices and 11 grooming salons in the period. By the end of the full year, Pets at Home aims to have opened 15-20 superstores, 45-55 veterinary practices and 50-60 grooming salons. The company said integration of its new veterinary specialist referral hospitals is progressing well, with best practice and cost benefits already being realised across the business. Kellet added: “With a quarter to go, our profit outlook for the year remains in line with expectations, reflecting both the continued investment in our customer offer and ongoing efficiency initiatives. Our focus on becoming more specialist, and doing the right thing for our customers, remains at the forefront of our strategy.” Source: Retail Bulletin 19th January 2017


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Iceland launches interactive Facebook Live campaign

Devised by independent media agency the7stars and social distribution company Jungle Creations, the campaign also looks to highlight the UK's food waste problem. The campaign was launched with a competition featuring an ice statue containing £700 worth of notes being broadcast live via Viral Thread, Food Envy and Twisted Facebook site. Viewers are asked to guess how long it would take the sculpture to melt for a chance to win the hidden money. Andy Thompson, social manager at Iceland, said: “We’re really excited about getting the public involved in our new campaign. Our continued #PowerofFrozen activity has always been about re-educating customers to the value and quality of frozen food, and by involving them in the campaign we hope to reach existing customers as well as new consumers who don’t currently shop frozen.” As fish is one of the main foods that benefits from being sold as frozen, the campaign also includes a host dressed as a fisherman being directed by the public in real-time. Directions from viewers are projected onto the wall behind the host, adding an interactive element to the campaign. Isobel Mooney, digital account lead at the7stars, said: “We wanted to use an entertaining set up to show the general public that by using frozen food over fresh it’s not only better for the environment but also for your budgets. The campaign drives a positive message through championing interactive advertising at its best.” Source: Retail Bulletin 19th January 2017


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Tesco to deliver in an hour

Convibo, the online start up, will be delivering Tesco products within the hour to customers in London. Introducing Convibo Convibo launched last March and offers same day delivery and deliveries within the hour, with no minimum order size. Convibo currently works with Waitrose, Marks and Spencer and Whole Foods delivering to Fulham, Kensington, Chelsea and most of Paddington. Deliveries are available from Monday to Saturday from 9am - 11pm and the delivery charge is £4.99. To further cover operational costs, Convibo's product prices can vary to store but the markup is no higher than 15%. Tesco and Convibo The collaboration meets customers' increasing demands for same day and within the hour deliveries and competes with Amazon Prime Now and Sainsbury's Chop Chop. It potentially allows Tesco to understand the size of the opportunity whilst not incurring significant costs. Whilst for Convibo, it has expanded its range of products available and potentially broadened its customer base. Source: IGD 19th January 2017


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Sainsbury's goes 'food dancing' in new ad campaign

Sainsbury's has broken with precedent and launched an edgy new ad campaign, in a bid to connect younger and urban shoppers with its Live Well for Less ethos. First campaign from new agency The campaign is the first output from newly selected ad agency Wieden+Kennedy which has taken over the account from Sainsbury's long standing agency BBDO. Over the years BBDO has created many ads that have successfully communicated Sainsbury's focus on quality food to engage with its core middle class family shoppers, including including its big budget Christmas animations, Mog's Christmas Calamity and the Wallace & Gromit style "Greatest Gift". The new ad is strikingly different. Fast paced and shot with hand held cameras it cuts between real life food lovers dancing in their kitchens as they prepare dishes. Fun in the kitchen Commenting on the new ad Mark Given, director of marketing, planning and propositions at Sainsbury's said “The excitement and energy created by our #fooddancing film is the perfect antidote to how our customers tell us they feel in January. Why should one month of the year have less opportunity to live well than any other? Having fun in the kitchen is a big part of living well. Whether you are whipping up your signature dish or just having a cheese sandwich, making something to eat is a joy. So let’s celebrate it.” Engaging with younger shoppers The ad will appear on TV, but the background track "Food Dancing (Yum Yum Yum)" will be available as a download and also has its own music video. The campaign also aims to build customer engagement via social media by encouraging customers to post their own videos on Twitter using the #fooddancing hashtag. Fun in the kitchen Commenting on the new ad Mark Given, director of marketing, planning and propositions at Sainsbury's said “The excitement and energy created by our #fooddancing film is the perfect antidote to how our customers tell us they feel in January. Why should one month of the year have less opportunity to live well than any other? Having fun in the kitchen is a big part of living well. Whether you are whipping up your signature dish or just having a cheese sandwich, making something to eat is a joy. So let’s celebrate it.” Source: IGD 19th January 2017


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Location key to store selection, study finds

A new study by TCC Global has revealed that location, not price, is the key driver of grocery store selection in the UK. The study found that a store being either in close proximity to the shopper or easy to get to was the main driver for around half (48%) of the shoppers polled, compared to 34% who based their choice on low everyday prices. Low everyday prices ranked behind proximity, selection and habit as a key driver The study found that only 3% of all shopping trips involved getting to a supermarket less conveniently situated than another, although the discounters fared slightly better, with 4% of Lidl shoppers going out of their way to shop there and 5% of Aldi shoppers forsaking convenience in exchange for low prices. Bryan Roberts, TCC global insights director, said: “Simply put, it is generally difficult to convince a shopper to travel past one retailer to get to another. “For this to happen, the nearest store needs to be sufficiently bad, or the alternative store needs to be sufficiently compelling (usually in terms of quality, experience or price), for the shopper to sacrifice their time and forsake geographic convenience.” Commenting on the report, Theo Theodorou, of xAd EMEA said: “In the competition for shoppers, many supermarkets are offering aggressive price-cutting deals. However, as we have seen from the latest report from TCC, price is not a deal-breaker here – it’s location that consumers attribute as higher the indicator of their purchase intent. “In order to stand out and drive footfall, grocery stores need to wake up to the power of location marketing. “By utilising location, every brand experience is contextual and consistent. After all – why would I want an ad for one supermarket miles away if there is one offering similar products around the corner?” Source: Talking Retail 19th January 2017

http://www.tccglobal.com/en/blog/article/uk-shopper-loyalty-study

http://en-gb.xad.com/


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Aldi and Lidl top YouGov BrandIndex rankings

Aldi and Lidl have taken the top two positions on YouGov BrandIndex’s list of the UK’s top brands for the third year running. The BrandIndex Buzz score measures whether consumers have heard anything positive or negative about the brand, with annual rankings compiled using Buzz scores from across all 52 weeks of last year. Aldi took the top spot with an average Buzz score of 16.8, with Lidl following closely behind on 13.4. Marks and Spencer also made the top ten with a Buzz score of 9.8, while Tesco topped the list of ‘most improved brands’, after its Buzz score jumped 12.2 points on the previous year. Morrisons also made the list in fourth position, with a 5.7 points improvement. Commenting on the findings, YouGov’s Michael Stacey said: “It no longer seems valid to label Aldi and Lidl as ‘budget supermarkets’. With so many competitors following their lead in various ways and they themselves pushing higher-end goods, both are now firmly part of the mainstream. “The slight decline in both brands’ Buzz scores is indicative of this – being a challenger often makes it easier to grab people’s attention in a way it is harder to do once you are firmly established. However, the fact they are still way out in front of the rankings suggests that their messages are still making waves among the masses.” YouGov said Tesco’s improvement highlighted a “return to form” for the retail giant after a testing few years, adding that supermarket brands were reacting well to the discounter challenges after a period of having their market share threatened. Source: Talking Retail 19th January 2017


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Christmas shoppers keep station retailers on track

Its figures show that from 19 November to 24 December, the number of people visiting Network Rail's stations grew by just under 10% to 106 million. Almost one in three station visitors entered a retail outlet and the increase in station retail purchases equated to total sales of over £83 million during the period. Food and drink outlets performed particularly well, with the top five outlets in stations recording an average of 50% sales growth. Retail outlets, driven by gift purchases, also put in a strong performance with growth of 24%. Station supermarket sales remained buoyant, rising by 4% over the festive period. Christmas sales increased most at Edinburgh Waverley station with an uplift of 41%. This was followed by Birmingham New Street and Leeds. The top performing stations in London were Paddington, King's Cross and Euston. The festive sales surge was also boosted by store openings by The Bookshop by WH Smith and HEMA at Euston, as well as Urban Decay at King’s Cross and James Martin Kitchen at Manchester Piccadilly. David Biggs, Network Rail’s managing director of property, said: “The quality and diversity of gifts, food and beverage options now available to station users is a direct result of station investment. "Our major retail developments and strategy to bring in new and exciting retailers is helping us achieve our long term goal of improving the station experience for our customers, while crucially generating vital funds to reinvest back into the railway.” Source: Retail Bulletin 20th January 2017

IRI Weekly News update Your window on the latest trends in Packaged Groceries

Stephen Hall

Friday 20th January