Tag Archives: supermarkets

Supermarket sales drop below £100 billion

Supermarket sales have sunk below the £100 billion mark for the first time in six years as competition in the grocery sector, particularly between discounters and traditional retailers, increases.

Food retail revenues dropped by 3 per cent to £99 billion in the second quarter, according to a study by The Share Centre. Industry observers say that the UK launch of online grocery service AmazonFresh could make the sector even tougher.

Helal Miah, investment research analyst at The Share Centre, said that intense price pressure and competition from discounters have made it a difficult time for Britain’s supermarkets: “It has been a tough couple of years for UK plc, battling against global economic headwinds and sector-specific problems that have beset commodities, energy, and food retailers.”

He also warned that economic uncertainty, triggered by the EU referendum result, could also harm retailers’ sales. “The implications of the economic slowdown will mean lower demand for sectors such as house builders and retailers, while the travel industry is already feeling the effects,” he said.

Photo Credit: Wikipedia Commons

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Morrisons cuts prices as investors leave

Morrisons has said it will cut the average price of its fresh produce by 17 per cent as part of wider price cutting moves which the retailer hopes will shore up its market position.

1,045 products, including meat and toiletries, have been reduced in price in the third round of price cuts by the retailer this year. Morrisons called them its ‘biggest ever price crunch.’ Fresh produce prices will be cut by 17 per cent on average and up to 56 per cent on some fruit and vegetable products.

Andy Atkinson, Morrisons’ customer and marketing director, said, “We are constantly listening to our customers and know they are concerned about whether food prices will go up following the Brexit vote, especially on imports. We are British farming’s biggest supermarket customer, which means we can better control our prices, and this latest round of crunches demonstrates our commitment to offering the best possible value to our customers this summer.”

However, newspapers reported that investors sold shares in the retailer after the announcement, with the share price falling 2 per cent to 182.05 pence on Monday afternoon.

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Morrisons apologises for Groceries Code breach

Supermarket Morrisons has apologised to its suppliers after it was found to have indirectly required suppliers to pay lump sum payments in breach of the Grocery Suppliers Code of Practice (GCSoP).

In a clarification to the Code issued on 20 June 2016, The Groceries Code Adjudicator (GCA) said that following evidence supplied in June and July 2015 there was evidence that there may have been a code breach and that it wrote to ‘Wm Morrison Supermarkets plc Chief Executive Officer alerting him to the issue. As a result, Wm Morrison Supermarkets plc immediately launched an extensive internal investigation, including reviewing 66,000 emails, interviewing employees and taking disciplinary action where appropriate. Further training for staff on negotiation techniques permitted by the Code was immediately put in place, with particular focus on variation to existing Supply Agreements.’

Morrison’s chief executive David Potts said the retailer has “completely changed the way it works with suppliers.

“These events happened a year ago and since then much has been achieved to ensure they don’t happen again. However, we are sorry they happened in the first place,” he added. “I have brought in a new management team who have modernised and simplified all of our buying practices. We have also reorganised and retrained our buying team.”

 

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Asda asks for supplier payments as profits fall

Asda boss Andy Clarke has said the company will lead the UK supermarket industry in the long term, despite the firm posting the worst quarterly drop in earnings in its history.

The 5.8 per cent fall in fourth-quarter sales, which included the crucial Christmas trading period, was the sixth straight quarterly decline posted by the retailer and was the worst set of Christmas trading figures from the major UK supermarkets.

Mr Clarke said, “In the long run we’ll win in this market. Market share is important to us … But what’s more important is financial control and stability. That’s going to give us an advantage to win in this market.” The company has said it will invest £1 billion to help price cuts, but has recently been reported as requesting help from suppliers.

An unnamed source told the Guardian that suppliers had been asked for “significant amounts of money”, adding, “Individual suppliers are being asked for millions of pounds and asked what they want in return.”

However, the retailer said it wanted to work collaboratively and wasn’t asking suppliers to hit a particular price point. It also said it was working with Groceries Code Adjudicator Christine Tacon to ensure it complied fully with the code.

Photo Credit: Wikipedia

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Dutch retailer introduces produce ‘happy hour’

Dutch supermarket HEMA, which entered the UK market last summer, has introduced a ‘happy hour’ to boost sales of its increasing range of fresh foods, including fruits and vegetables.

Traditionally HEMA has focused on home wares, but is expanding its food offering. By offering 25 per cent off certain fresh products during the last hour of trading each day the company should also reduce waste while highlighting its expanding fresh food offer.

The company said it was responding to the trend of customers making the most of increased opening hours and shopping more towards the end of the day. A spokesperson explained, “The aim of the strategy was to highlight the company’s expanding fresh offering as well as to reduce food wastage. Customers are still not sufficiently familiar with the fact that we offer fresh produce and one of our strategic goals is to focus on fresh and honest food that we want to make more accessible to people.”

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Aldi overtakes Waitrose in UK supermarket league

The latest grocery share figures from Kantar Worldpanel, for the 12 weeks ending 29 March 2015, show that Aldi has become Britain’s sixth largest supermarket, beating Waitrose to the slot for the first time.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, explained, “Aldi has recorded double-digit sales growth for the past four years and is now Britain’s sixth largest supermarket with 5.3% of the market. Growth has been fuelled by over half a million new shoppers choosing to visit Aldi this year and average basket sizes increasing by 7%. The German discounter’s sales have increased by 16.8% in the latest period, still high compared to other retailers but slower relative to its recent performance.”

The figures show that Lidl and Waitrose were the only other retailers to grow sales ahead of the market and increase their market share in the latest period. Waitrose increased its sales by 2.9% compared with this time last year and now accounts for 5.1% of the grocery market. Waitrose has grown its sales in an unbroken run stretching back to March 2009. Lidl’s 12.1% sales growth moved it up to a 3.7% share of the market.

There was also some good news for Sainsbury’s, which Sainsbury’s which returned to growth this period for the first time since August 2014. Fraser McKevitt added, “The changing structure of Britain’s supermarket landscape is illustrated by two facts. Firstly, the so called discounters Aldi and Lidl now command a combined 9.0% share of the market. In 2012 the same two retailers only accounted for 5.4% of grocery sales. Secondly, the 72.8% share taken by the biggest four retailers is now at the lowest level in a decade.”

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Asda warns of tough trading conditions

Asda’s chief executive Andy Clarke has warned that supermarket trading conditions will remain tough for the foreseeable future, indicating that the retailer will continue to focus on low prices to gain market share.

In the last few days Mr Clarke has spoken to a number of press outlets as the supermarket said it would ‘invest’ £300 million during the first quarter of 2015 on reducing prices across its range, particularly ‘weekly essentials and big brands.’ In a press release the company cited cucumbers and russet apples among those products that would be ‘rolled back’ until the end of March. Asda has been criticised by the NFU for cutting milk and egg prices over the last week.

Speaking on BBC 5 Live last week, Clarke admitted that the rise of discounters, such as Lidl and Aldi, who together now account 8.6 per cent of the UK grocery market, were having a real effect on the ‘Big Four’ of Tesco, Asda, Sainsbury’s and Morrison’s. “The level of profitability decline in some retailers over the course of 2014 – we’ve never seen it before,” he said. “It suggests 2015 is going to be equally as challenging.”

Before Christmas Clarke told The Telegraph that Asda, which is owned by Wal-Mart, was about a year ahead of its rivals in terms of facing up to a marketplace dominated by lower prices and bigger discounts: “I have got a very simple view, which is get your prices to be the best in the market. We know we have got more work to do against the discounters, but in some categories we have got parity already. We have halved the price gap over the last two years; we have narrowed it further in the last year.

“Our ambition is to keep narrowing the price gap to the discounters and widening the price gap to the big grocers. We firmly believe customers are getting bored with gimmicks. They want transparency and they want clarity of basket pricing.”

In November accountancy firm Moore Stephens warned that the number of food production businesses which became insolvent in 2014 was 23 per cent higher than the previous year and that the trend could continue if supermarkets launched a full scale price war.

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