Estelle Alley, Retail Trade Marketing Specialist, GB Market
The latest UK grocery market share figures, published by Kantar this week on 23rd July 2019, show year-on-year supermarket sales fell by 0.5% in the 12 weeks to 14 July 2019 in the UK. This marks the first overall decline in the supermarket sector since June 2016. This has been a week of realities; with Boris Johnson newly elected as the leader of the UK Conservative Party and Britain’s 77th prime minister, and understanding the grocery figures off the back of record sales during last year’s hot summer - will the market will return to growth in light of a looming No Deal Brexit?
The head of the Food and Drink Federation (FDF) Ian Wright yesterday urged the new PM to avoid a potentially damaging No Deal Brexit “It will inflict serious and, in some cases mortal, damage on UK food and drink. Prices will rise, there will be significant shortages of some products, and disruption for shoppers and consumers will be far reaching”.
Most recently Bord Bia attended Sainsbury’s and Tesco’s IGD Trade Briefings to understand further their mid-long term plans for growth and key trading priorities for suppliers for the year ahead. As in politics, nothing is certain in retail.
From a Sainsbury’s perspective it is clear they are targeting growth from their convenience channel, online and repurposing their supermarket space. ‘Destination Sainsbury’s’ is concentrated on creating new missions in stores and driving distinctiveness. They have outlined 5 key customer outcomes that are fundamental to Sainsbury’s success and long term sustainable growth;
- Be competitive on commodity product
- Deliver distinctive and exclusive products
- Serve new food and grocery missions
- Consistent experience across channels
- Colleagues make the difference with personal service
Sainsbury’s play on their heritage and build on their premium proposition. Value simplicity message is working, but agree they can always do better. They are suffering current losses on Sainsbury’s Economy Own Brand at the expense of Tesco and Aldi. As they work through their strategy to meet all 5 customer outcomes the PQF (Product Quality Framework) remains at the centre of every new project and ranging decision that lands on Own Brand and Branded products across all categories.
For Sainsbury’s suppliers the key messages are simple; Firstly to be brilliant at the Basics (admin, supply, online images, range reviews), secondly to have 5 Key Channel Strategies which stretch across main estate stores, online, the convenience channel, Argos, and new business; and finally, Sainsbury’s highlighted the importance of Key Customer Management and knowing who to speak to across the business. Relationship should be centred with buying teams, online, i2C, new business development, product development, and the future brands team so that suppliers are supporting Sainsbury’s key customer outcomes and optimizing your return on investment with them.
Meanwhile Tesco’s trading priorities and future drivers are Health, Sustainability & Packaging and when innovating with Tesco they stressed the importance of having the customer at the heart of your proposal. Future success will be driven through increased supplier partnerships coupled with embracing the ‘stop’ i.e. Tesco have scrapped Tesco Direct (online homeware and accessories channel) and are repurposing stores, making them smaller and smarter.
Like Sainsbury’s Tesco spoke about the fundamentals of having specific channel plans as each channel has a different shopper mission. Tesco’s three channels are Large (Superstore & Express), Convenience (Metro; Extra; One Stop), GHS (Online). Understanding the Tesco shopper and shopping mission is critical. Tesco highlighted its 5 shoppers segments (This was devised in 2015 but the 2019 IGD conference is the first in which they were highlighted so frequently) Tesco shoppers broken into:
- Roshni (Pre-family)
- The Wicks (Lower affluent family)
- The Mayers (High affluent family)
- Carol (Low affluent post family)
- Dawn (High affluent post family)
Booker was highlighted as an untapped opportunity for suppliers; a potential £1billion growth opportunity for current Tesco suppliers
As online has been a focus growth area for all UK Grocery players I wanted to note Amazon’s Prime Day started on 15th July and lasted for 48 hours, the longest Prime Day so far. The event was the largest sales day in Amazon history, with more than one million exclusive deals for Prime members.
Prime Day is Amazon’s summer sales event, where Prime members in various countries are offered exclusive discounts on more than one millions products. This year, over 175 million items were sold, making this the biggest shopping event ever for Amazon, with sales surpassing the previous Black Friday and Cyber Monday combined. 18 countries participated in Prime Day this year including the US and the UK, double the number of countries than the first Prime Day in 2015.
Online will be the fastest growing channel in the UK forecasted to grow +43.8% over the next five years (IGD Research). In a crowded channel the fastest growth will come from smaller and innovative operators that offer shoppers the most convenience, such as rapid delivery services and the meal box operators. Growth at established operators will be slower as they shift their focus from customer acquisition to improving the customer experience and boosting efficiency.
For more information on UK grocery customers and their key trading priorities please contact the GB office, London.
Bord Bia has also announced a new range of support services for Irish food and drink companies to help them to prepare for Brexit. There include:
- Supply Chain Mentoring Programme
- Customer Readiness Training
- Financial Risk Mentoring Programme
- Sanitary & Phytosanitary (SPS) Training Programme
- Supply Chain Optimisation Workshop
- Commercial Marketing Strategy Workshop
- Key Customer Management Programme
Information on the support services can be found by following the above links. Alternatively, all information can be found on the Brexit page on the Bord Bia website