iri's weekly news update - w/c 11th september 2017

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

Stephen Hall

Friday 15th September

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

Retailer News:• Co-op teams up with Parkrun• Applegreen reports jump in half year profits and sales• Costcutter launches its biggest ever Freshers Week campaign• Promotions drive up sales at Waitrose in latest week• Lush Cosmetics to move into publishing breaking news• Morrisons delivers strong H1 sales and profit growth• Booker growth slows in Q2• Waitrose delivers solid H1 sales

Category News:• boohoo takes on Asos with new own-brand beauty collection• Tyrrells invests £2.5m in first ever TV campaign• Professor Scrubbington’s secures Boots listings• Tortilla Wraps, Halloumi and Cambozola cheese now everyday essentials, says

Waitrose

Other News:• Staycation-ing Brits and foreign tourists drive up high street sales• ‘Consumer confidence dipping’ as high street sales fall again• Cash is king for British consumers, finds Mintel• Boots has been named the most visible online beauty retailer

Weekly News Summary – 11th September 2017


Retailer News


Co-op teams up with Parkrun

The retailer said it will be offering healthy, affordable recipe ideas and food inspiration to participants for meals that are simple to prepare. It will also be attending Parkrun events to distribute healthy food products.

When it launched the partnership at the weekend, Co-op joined forces with the British Para Athletics Team to celebrate their success at the recent World Para Athletics Championships by inviting some of the medallists back to their own communities to attend a Parkrun.

Eight Parkruns participated in the partnership launch where runners had the opportunity to engage with the athletes. Locations included Glasgow, Edinburgh, Newcastle, Cardiff and London.

Amanda Jennings, marketing communications director at Co-op, said: “We are delighted to partner with Parkrun. As a retailer focused on providing for the community you only have to see a Parkrun to appreciate that this partnership is the perfect match.

“At Co-op we are proud to champion a different way of doing business and we understand the communities we operate in. As like-minded organisations working together we share the passion of supporting and building links within the community and encouraging the nation to adopt a healthier lifestyle.”

Source: Retail Bulletin 11th September 2017


Applegreen Reports Jump In Half Year Profits And Sales

Applegreen, the forecourt retailer with operations in Ireland, the UK and the US, has revealed that its adjusted EBITDA jumped by 28% to €16.6m in the six months ended 30 June 2017, on revenues up 21% to €672.5m.

The strong performance was underpinned by favourable fuel margins, strong like-for-like growth in non-fuel revenues and margins, together with continued expansion of its estate.

Applegreen’s estate had grown by 32 sites to 275 sites by the end of the period, with 17 new food outlets also opened.In the Republic of Ireland, revenue increased by 15.4% and gross profit rose 16.4%. Like-for-like food and store sales increased by 6.4% and related gross profit grew by 10.6%.

Meanwhile, revenue in the UK jumped 23.6% and gross profit by 22.7%, largely due to the continued expansion of its estate. Combined food and store sales and gross profit rose by 11.8% and 16.5% respectively. On a like-for-like constant currency basis, non-fuel sales were 0.8% ahead of the same period last year, while related gross profit grew by 4%, reflecting good growth in food.

Commenting on the results, CEO Bob Etchingham said: “We now have a good platform for growth in each of our three markets and are well positioned for the seasonally important second half of the year. Overall, we remain confident in the prospects for the business in 2017.”

Source: NamNews 12th September 2017


Costcutter Launches Its Biggest Ever Freshers Week Campaign

Costcutter is hoping to capitalise on the 600,000 new students starting university this week with its biggest ever FreshersWeek campaign.

The five week campaign launched at Northumbria University today and will be rolled out across 15 additional Costcutterconvenience stores located at universities across the UK throughout September and October – including Northumbria, Coventry, Middlesex, Oxford Brookes, Salford, Manchester, Warwick, Lincoln, Sheffield, Nottingham, Brunel, Birmingham, Southampton, Keele, Huddersfield and Roehampton.

The campaign will see over 5,000 reusable cotton goody bags offered to new students. Each bag will be filled with products ranging from soft drinks and deodorants to recipe cards and vouchers.

In addition, the retailer has partnered with brands including Yazoo, Rustlers, Red Bull, Carabao, Warburtons, Bobbys, Grenade, Petty Wood and Tchibo as well as events companies, to organise a series of in-store activities, ranging from supplier sample days, mini golf and giant colouring walls.

“Our main objective was to drive shoppers into store, generate positive engagement opportunities and create in-store theatre and thanks to our supplier partnerships, this has become our biggest Freshers Week campaign to date,” said Michael Hooley, Head of Promotional Marketing, Costcutter Supermarkets Group.

“The campaign is part of our ongoing commitment to help our campus based retailers drive sales. Freshers Week is a key trading period, with student intakes ranging from 500 to 8,000 per university, our aim has been to attract and interact with students at the start of their university lives, encourage repeat custom and showcase the Costcutter Supermarket Group’s offering.”



Promotions Drive Up Sales At Waitrose

Waitrose has revealed that its total sales in the week to 9 September climbed 6.4%, driven by its ‘Half Price Event’ and a 25% off promotion on wine.

The chain also benefitted for parents buying lunchbox foods as children went back to school. Meanwhile, consumers started to buy foods usually associated with autumn. Hot pie sales jumped 28% and sales of service counter roasting beef increased by 26%, helped by the half price event. Root vegetable sales grew by more than 7%, whilst soup sales jumped 34%.

Overall, sales in the ambient category rose 11%, whilst sales in Chilled, Fruit, Vegetables & Horticulture, and Bakery increased 1.7%. The Meat, Fish, Frozen & Dairy category saw sales rise 2.1%, whilst Home & General Merchandise was up 1.2%.

Meanwhile, sister chain John Lewis recovered from a sales fall the week before with revenues up 3.5%. This was driven by fashion sales which rose 9.8%, whilst its electronics and home technology department saw sales increase 2.8%. Home sales were down 1.9%.



Lush Cosmetics to move into publishing breaking news

Lush Cosmetics has revealed plans to make news publishing a business priority.

The UK-based company says it aims to 'set the news agenda', acting as a newswire for the public and members of the press.

It plans to use an online channel, called Lush Times, as a platform to publish breaking stories related to current affairs, human rights, animal welfare, the environment and conservation.

A team of in-house journalists will research and write content.

Lush Times is already live, however, the website will soon be relaunched as part of a wider move for Lush to separate into 'channels'.

The idea is the brainchild of Lush's Chief Digital Officer Jack Constantine, the son of co-founder Mark Constantine.Lush Times is also the name of Lush's free print product catalog, which has been printed and distributed through its stores – and more recently online – for more than a decade.

Source: Cosmetics Business 13th September 2017


Morrisons delivers strong H1 sales and profit growth

The UK's fourth largest retailer, Morrisons, has delivered an impressive set of first half results, with group LFL reaching 3.0% and a 12.7% gain in underlying profit before tax.

Robust sales growthMorrisons has now achieved seven consecutive quarters of LFL sales increases, with this growth against more demanding comparatives than previously. In the first half, ex fuel group LFL sales rose by 3.0%, with supermarkets contributing 2.1%, online 0.4% and its new wholesale business 0.5%, as it continued to execute its 'Fix, Rebuild and Grow' strategy. While the higher growth reflects some inflation from rising imported food prices, volumes remained positive. Total turnover excluding fuel rose by 2.6% to £6.57bn.

Focus on valueAs a value focused retailer, Morrisons continues to prioritise making its prices more competitive and is helped by its unique vertically integrated supply chain. Price Crunch remains the key mechanic for communicating price commitments but investments in private label have also helped to promote competitiveness. Morrisons will have nearly a thousand 'Best' products by year end and during the half introduced a new Eat Smart healthy eating range and extended Nutmeg brand into new categories.

Improving the in-store experienceBy the end of the year, Morrisons will have updated almost half of its stores through the Fresh Look programme putting it well on track to renew its entire estate within five years. The store refurbishments are helping to lift customer satisfaction scores which rose 5% during H1 and are now up 12% since the start of 2015/16. Fresh Look also involves considerable tailoring of the store format to local customer preferences, which when linked to insight from Morrisons More Card, is helping Morrisons to defend its market position against the nationally uniform offer of the discounters.

Developing onlineDuring the half Morrisons launched a store pick solution in North East England, broadening online access to households beyond the reach of its fulfilment centres, and this service will be expanded to further catchments in due course. Morrisons has also started to offer thousands of general merchandise products for next day delivery with customers' grocery orders.

Expanding wholesale towards £1bn targetMorrisons new agreement with McColl's marks a major step towards achieving its goal of £1bn of wholesale supply sales. Morrisons will start supplying McColl's 1,300 convenience shops and 350 newsagents in January 2018 with McColl's also benefiting from one year exclusive access to the relaunched Safeway private label brand. In other wholesale activities, Morrisons continues to grow its Morrisons at Amazon offer to more London postcodes, and a further 23 Rontec owned and operated Morrisons Daily forecourts were opened taking the total so far to 33.

Source: IGD 14th September 2017


Booker growth slows in Q2

Leading UK food and grocery wholesaler, Booker, has announced its trading update for the 12 weeks to 8 September, revealing sales up 1.1% over the period. This follows a stronger Q1 when growth of 4.0% was underpinned by good weather and favourable Easter timing.

Despite decent summer and inflationTraditionally a business strongly influenced by good summer weather, Booker's performance in the June to September in 2017 perhaps looks weaker than might be expected. Though summer 2017 was wetter than average, there were a number of hot spells to provide boosts to key categories like soft and licensed drinks (and even tobacco), and providing opportunities for customers in both retail and catering customer groups.

Sharp divergence in tobacco vs non-tobacco trendStill a substantial category for Booker, tobacco sales continued as a major negative drag on performance in Q2, with the decline in these products deepening to -9.7% in the period, from -8.2% previously. Non-tobacco, however, continued strongly positive up 5.8%, though this too was notably slower than the +9.4% seen in Q1.

Charles Wilson, Chief Executive, Booker commented:"Booker Group continues to make good progress, with like-for-like non-tobacco sales up 6.0%. Our plans to Focus, Drive and Broaden Booker Group are on track. The competition review of the planned merger with Tesco plc is progressing. We continue to help our retail, catering and small business customers prosper through improving our choice, prices and service."



Waitrose delivers solid H1 sales

The John Lewis Partnership reported gross sales growth of 2.3% for both Waitrose and John Lewis in the first half of the year. Profit performance excluding property declined sharply at -17.2%, reflecting higher costs, as well the company's continued investment in delivering its long-term strategy.

Financial results in briefAmid challenging market conditions, the company delivered a solid sales performance in the first half to 29 July 2017:Waitrose sales increased 2.3% to £3.3bn, underpinned by like-for-likes of 0.7%. Operating profit declined -17.4% to £100.8m. This reflects exchange rate driven increase in cost prices, putting pressure on margin.

John Lewis also saw sales increase 2.3% to £2.1bn, with flatter life-for-likes of 0.1%. This represents market out-performance amid dampened consumer demand. Operating profit grew 39.7% to £50.2m, though the growth rate before exceptional items and property is a 10.2% increase.

New Essentials campaign highlights ongoing investment in priceThe cost of goods is rising faster than selling prices, with particular pressure in meat, fish and dairy. The retailer has absorbed the vast majority of these costs rather than passing them on to customers. The impact of this on profit has been softened, but not off-set, by improvements in productivity.

Value is the prominent message in Waitrose's new marketing campaign, featuring its entry level private label Essentials range, which accounts for 21% volume of sales for the retailer. Lower prices on hundreds of Essentials lines are clearly communicated at shelf-edge, as well as messages assuring customers about product provenance and quality.

Looking ahead: Six developments to watchThe John Lewis Partnership is accelerating delivery of its long-term strategy: stronger brands and new growth, creating financial sustainability, and focusing on creating better jobs for better performing Partners on better pay. A lot of activity has taken place in the first half in order that the business can realise the benefits in the upcoming peak trading period.Store renewal programme is set to continue: 68 branches have been refreshed to date, with 62 more planned for the second half. Following store closures in the first half, Waitrose is set to open one new supermarket and two smaller format stores by the end of the financial yearContinued investment in online, with a focus on delivering profitable growth (in the first half online grocery sales grew 4.3%). The retailer is also introducing auto-check in for click and collect orders in Waitrose and John Lewis storesIncreased focus on food service following the appointment of the business's first ever food service director. Waitrose's Good to Go range was successfully re-launched in the first half, resulting in sales uplift of 5%. Installation of sushi counters is also gaining pace, rolling out to 21 more stores in the second half. Further developments in this rapidly evolving category are sure to followProduct innovation is set to surprise and delight customers in the coming months, including 80 new Waitrose 1 private label products, and c.600 Christmas products to be supported by a strong Christmas campaignFocus on operational productivity: a new flexible working model is being rolled out in Waitrose stores, which combined with restructuring in head office, is delivering encouraging early resultsNew flagship John Lewis store: the hotly anticipated new Oxford branch opens in October, and will showcase the retailer's latest thinking on customer experience



Category News


boohoo takes on Asos with new own-brand beauty collection

Fast fashion e-tailer boohoo has unveiled its debut cosmetics collection.

With a price tag between £4-£19, boohoo Cosmetics focuses on trend-led, cheap and cheerful products.

The retailer also described its range as “suiting the needs of everyone from make-up professionals to beauty novices.”The initial range features 29 products, including contour and highlighting palettes, lip kits, primers, setting sprays and more – but beauty fans can expect more seasonal drops throughout the year.

Following Asos’ make-up launch last week, boohoo is the latest millennial-focused retailer to venture into beauty. Topshop, H&M, New Look, Primark and Missguided have also ramped up their beauty offerings with a number of new launches and marketing campaigns.



Tyrrells Invests £2.5m In First Ever TV Campaign

The Tyrrells brand has announced the launch of its first ever TV advertising campaign, which will see it spend £2.5m by end-2017.

The campaign, which launched yesterday (11 September) and will run until end-November, sees the introduction of a new tag-line – ‘It’s absurd what we do before Tyrrells gets to you’. It will feature the black and white characters from the packaging with a distinctly Tyrrell’s English tone of voice, and will be centred around Tyrrells Court Farm, where the brand produces its crisps.

The TV ads will be supported by VoD, outdoor, and social media activity.

Adam Draper, Marketing Director at Tyrrells, said: “As our first ever TV advert, we wanted to bring to life the quirky and irreverent nature of the Tyrrells brand but also explain why our crisps taste so absurdly good. We hope that this TVC will tell our Tyrrells story in a way that entertains and ultimately convinces people to go out and try our fantastic hand-cooked crisps”.

Tyrrells’ retail sales are £56m RSV with penetration growing 35% over the last two years (14% to 19%).



Professor Scrubbington’s Secures Boots Listings

The Professor Scrubbington’s range has secured its first listing with the Boots chain in the UK.

The range offers up natural, foaming children’s toiletries which are designed to “help grubby children to wash themselves”. The range includes a Hair & Body wash, Bubble Bath, Hand & Face wash, 2 in1 Shampoo & Conditioner, and a deodorant (all RRP £3.99).

The range is also available from select Waitrose stores and from Ocado, Amazon, or directly via www.scrubbingtons.com.


http://www.scrubbingtons.com/


Tortilla Wraps, Halloumi And Cambozola Cheese Now Everyday Essentials, Says Waitrose

Tortilla wraps, halloumi and Cambozola cheese never used to be found in many shoppers’ baskets. However, new data from Waitrose shows how they and a wide range of other products are now everyday ‘must haves’.

The findings come from analysis of the supermarket’s £1bn ‘essential Waitrose’ range, which has seen around 300 new products added since it was launched in 2009. Growing in line with food trends and responding to consumer demand, the additions mean that products as varied as artichoke hearts, coconut milk and tortelloni are now branded ‘essential’.

And in taking a look at the highest-rated ‘essential’ products, coconut ring biscuits rank in the range’s 10 most popular items and fruit juice ice lollies are the fastest growing in the range.

Waitrose said consumers changing tastes have in part been shaped by cuisines which have become popular since its essential range was launched, with Mexican, Middle Eastern and Greek foods now firmly in the mainstream. Jonathan Moore, Waitrose executive chef, gave the example of Tortilla wraps which are the second best-selling essential Waitrose product in the bakery aisle (second only to the baguette).

He added: “We now sell five different types of essential Waitrose houmous and they make up 82% of all essential Waitrose dip sales. Also, sales of essential Waitrose Cypriot Halloumi have risen 24% over the last year – it’s one of the most popular cheeses we sell.”Cheese is a big focus in Waitrose’s essential range. While Parmesan takes the top spot in the speciality range, it’s the lessfamiliar Cambozola, a German soft cheese, which is now the second most popular.

Away from the novel, though, some old favourites never change. The most popular essential Waitrose category is fruit and vegetables, with strawberries the best-selling fruit, carrots top for vegetables and cucumbers the most popular salad item. Meanwhile, sales of essential Waitrose blueberries have grown 25% in the past year.

Martin George, Customer Director at Waitrose, commented: “It’s been fascinating to look at our sales trends to see what have become must-have items in our customers’ eyes. From chamomile soap and baby avocados, to our latest additions to the range – quark and pickled beetroot – consumer tastes are much broader now, and this is reflected in the array of products which are now ‘essential’.”The supermarket chain has released its findings to coincide with the launch of a new advertising campaign for its ‘essential’range.



Other News


Staycation-ing Brits And Foreign Tourists Drive Up High Street Sales

August was the UK high street’s best month since September 2015, according to figures released by accountancy and business advisory firm BDO.

Overall like-for-like sales increased by 2% last month, making it the best August since 2013. BDO’s figures show how a marked rise in ‘staycations’ by Brits and an influx of overseas tourists – both of which have been driven by the weak Pound – helped push sales of lifestyle goods up 3.1% year-on-year in August.

Fashion sales have struggled all year to generate growth, but a like-for-like rise of 1.5% for August represented the sector’s best performance since last November. Sellers of homewares also saw year-on-year sales increase by 1.9% in August.

The news wasn’t all positive for retailers though. The overall growth came after two Augusts of negative growth –particularly in the fashion sector, which dropped 3.3% in August 2016 and 5.5% in August 2015.

Footfall also decreased throughout August as patches of bad weather dampened spending, but non-store sales also struggled at 18.3% overall for the month, the second lowest monthly growth rate in the year-to-date. Non-store sales in the lifestyle sector increased by 19.7% during August, but for fashion retailers the growth was more muted at 16.7%.

Sophie Michael, Head of Retail and Wholesale at BDO LLP, welcomed the improved performance, but said the figures should be taken in context. “This increase is off the back of a 1.5% decline in 2016 and that figure was based on a drop of 4.3% in 2015, so August is still proving to be a challenging month for retailers,” she said.

“Stay-at-home holidaymakers and increasing numbers of tourists have made a positive difference to sales this month, but retailers would have wanted to make up more ground from the negative like-for-likes resulting in August in prior years.

“As school terms begin after the summer break and the start of festive trading nears, retailers will be gearing up for their most critical trading months. The uncertain environment and fragile consumer sentiment requires all retailers to be ever more strategic with their pricing and promotional activities. Agility will be key to enable retailers to quickly adapt to consumer behaviours and product trends to attract their share of the falling discretionary spend.”



‘Consumer confidence dipping’ as high street sales fall again

High street retail footfall declined by 2.6% in August – a deeper fall than the previous month –suggesting shopper confidence is dipping, according to figures from the British Retail Consortium (BRC) published today (11 September).

It was the worst performance of the year and the third month out of the last four in which footfall has dropped by more than 2%, following a 2.1% fall in July. In contrast, online business jumped 11% in value in August – the highest monthly rise in 2017.

Footfall measured across all retail destinations and outlets in August was down 1.2% with the steepest declines in greater London (down 2%) and Northern Ireland (down 2.3%). The east and south-east of England and Wales were the three regions that experienced a footfall rise during the month. The east has now seen nine months of consecutive footfall growth in contrast to the East Midlands, which marked six months of consecutive year-on-year decline with a 4.9% fall in August.

BRC chief executive Helen Dickinson said: “Encouraging shoppers back to more of our town centres is crucial to reducing the high number of vacant premises and the increasing gap between the vibrant and in-demand areas and those at the much more economically fragile end of the spectrum.

“The sheer cost of doing business on high streets has direct implications for the affordability of retailers’ investments in new or refurbished stores. A far more concerted effort is required from policymakers to stem and ultimately reduce the cost of doing business, particularly in more economically fragile communities.”

Diane Wehrle, marketing and insights director at retail intelligence company Springboard, said: “Part of the reason for more subdued footfall was a rise in online activity in terms of value and volume. In part, the rise in online activity will have been a result of much cooler, rainy weather in August than in 2016, which undoubtedly discouraged some shopping trips.

“However, it is also a function of increasing inflationary pressures, driving consumers online in a search for lower prices which is likely to become more significant as inflation continues to increase its bite on household budgets.”

Source: Talking Retail 11th September 2017


Cash is king for British consumers, finds Mintel

Only 33% of British shoppers would be comfortable with a cashless society, according to research from market intelligence firm Mintel.

The study found that a cashless society is most appealing to Britons aged 25-34 (46%), but its appeal declines with age, falling to 20% among Britons aged 55 and over.

Mintel discovered that while women (28%) are less in favour of a cashless society than men (38%), regionally, those in London(37%) and Scotland (36%) are most comfortable dispensing with cash. This compares to 30% of Britons living in Yorkshire and Humberside and South East/East Anglia, respectively.

The survey found the top three payment methods used in the past three months are: cash (93%), debit card (Chip & PIN) (82%) and direct debit/standing order (79%), the study revealed.

Patrick Ross, senior financial services analyst at Mintel, said: “While alternative payment methods continue to grow, the demise of cash has been greatly exaggerated. Many people still prefer using cash, while others simply like to have some cash with them just in case. Although card payments are almost universally accepted in urban areas, cash continues to play an important role in everyday life.”

The research found that 49% of consumers have used a contactless debit card in the past three months and 45% have used a contactless credit card. In contrast, 31% of consumers have used a cheque in the same period, only contactless smartphone payments (13%) and contactless wearables (9%) attract a lower number of users.

Mintel found that although consumers continue to adopt high tech payment methods, many remain reluctant to use them. More than half (52%) of consumers said they would put off using a payment method if it is not widely accepted and 34% said they have security concerns about smartphone payments or transfers.

Ross added: “Despite widespread ownership of both smartphones and cards, many people continue to show a preference for cash. Putting aside allowances for finding anything in a bag quickly, it’s clear that there isn’t all that much difference in terms of the convenience of these options.

“The fact that contactless smartphone payments don’t offer added convenience over contactless card payments will remain a significant barrier to uptake.”

Source: Talking Retail 13th September 2017


Boots has been named the most visible online beauty retailer

Boots has been named the most visible online retailer in beauty, according to a new report from marketing company Inside Online.

The research firm combined brand search volume with a score representing the effectiveness of content performance across social channels to rank how much ‘umph’ a brand has online.

Boots was found to have the most online reach with 3,350,000 brand searches per month.

It also claimed the top prize in terms of link authority with an average of 1,693 monthly referrals and plenty of high quality referral domains.

Boots’ domain visibility grew 11% from 2016, followed by QVC, Superdrug, The Body Shop and lookfantastic.com.

Meanwhile semichem.co.uk, Salon Services, Space NK, extras and Regis Salons were revealed to be the bottom five in terms of growth.

“Keeping an eye on the content and link acquisition strategies of your competitors will stop you from falling behind in this competitive online retail market,” Michael Robinson, Sales and Marketing Coordinator at Inside Online, told Cosmetics Business.

"There is increased competition in this marketplace as retailers are competing against brands on the same search terms.”


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

Stephen Hall

Friday 15th September

iri's weekly news update - w/c 11th september 2017

Food