• Morrisons fires starting gun on 2017 grocery price war, slashing cost of 800 products • UK shop prices fall in December but also show first signs of upward trend • Christmas delivers for The Fragrance Shop as luxury brands dominate • B&M reports strong sales growth after record Christmas trading • Nisa sales rise over Christmas as promotions pay off • Amazon starts Prime Air drone delivery trial in UK • Boots like-for-likes flat as international profits slip • Poundland launches first sale • Disappointing Christmas for high street retailers • Good Christmas for Midcounties Co-operative’s food stores

1. IRI
Weekly News update
Your window on the latest trends
in Packaged Groceries
Stephen Hall
Friday 6th January

2. Copyright © 2015 Information Resources, Inc. (IRI). Confidential and Proprietary. 2
• Morrisons fires starting gun on 2017 grocery price war, slashing cost of 800
products
• UK shop prices fall in December but also show first signs of upward trend
• Christmas delivers for The Fragrance Shop as luxury brands dominate
• B&M reports strong sales growth after record Christmas trading
• Nisa sales rise over Christmas as promotions pay off
• Amazon starts Prime Air drone delivery trial in UK
• Boots like-for-likes flat as international profits slip
• Poundland launches first sale
• Disappointing Christmas for high street retailers
• Good Christmas for Midcounties Co-operative’s food stores
Weekly News Summary – 2nd January 2017

3. Copyright © 2015 Information Resources, Inc. (IRI). Confidential and Proprietary. 3
Morrisons fires starting gun on 2017 grocery price war, slashing
cost of 800 products
Morrisons has fired the starting gun on the 2017 supermarket price war by slashing prices on hundreds of products. Eight-hundred
products have had their prices lowered
The grocer has cut shelf prices of 800 popular items including potatoes, fish fingers, meatballs, avocados and kale.
The fresh wave of cuts under Morrisons’ ‘Price Crunch’ campaign means a total of 1,500 products are currently for sale at reduced
prices across the supermarket giant’s stores.
Prices have been slashed by an average of 19% under the rolling programme of investment, which was revived by boss David Potts
in January last year.
Morrisons’ cuts, which come into effect this week, include packs of beef meatballs falling to £1.77 from £2, a two-pack of avocados
dropping to £1.47 from £1.80, and King Edward potatoes being sold for £1.67 instead of last year’s £2 shelf price.
The Bradford-based grocer has also simplified the price of 5,490 items into “round pounds”, in a bid to make it “easier for customers
to calculate what is in their basket”.
Morrisons is the first member of the big four to show its hand as far as prices are concerned in 2017, as the mainstream
supermarkets continue their fightback against the discounters.
Tesco and Sainsbury’s have both invested heavily in price over the past two years, while Asda is expected to hit the accelerator
further this year after new boss Sean Clarke slashed prices as part of the grocer’s ‘That’s Better’ campaign towards the end of 2016.
Morrisons marketing and customer director Andy Atkinson said: “These price cuts will help families who are on a tighter budget and
will continue to make Morrisons more competitive.”
It comes months after Tesco’s UK boss Matt Davies said the market leader would do “everything” in its power to keep prices low,
dubbing food price inflation “a bad, bad thing” for shoppers.
Experts have warned that the Brexit vote – and the subsequent slump in the value of the pound – will make imports more expensive
and drive up prices.
But so far the leading supermarkets have managed to keep their prices down, with Tesco becoming embroiled in a well-publicised
dispute with Unilever over the supplier’s demands to hike the price of Marmite by 10%.
Source: Retail Week 3rd January 2017

4. Copyright © 2015 Information Resources, Inc. (IRI). Confidential and Proprietary. 4
UK shop prices fall in December but also show first signs of
upward trend
The figures from the British Retail Consortium and Nielsen in their monthly shop price index show that non-food deflation
decelerated to 1.9%, down from 2.3% in the previous month. This is the weakest deflation rate since June 2015.
Meanwhile, food deflation decelerated marginally to 0.7% in December from the 0.8% fall in November.
BRC chief executive Helen Dickinson said: “December saw an easing of shop price deflation. Prices were down 1.4%
compared to last year, but the majority of the categories we monitor, particularly non-food, saw month-on-month
increases in prices, with clothing and footwear seeing month-on-month inflation for the first time in nearly two years.”
The figures also reveal that fresh food deflation remained at 1.2% for the second consecutive month. In addition, the
ambient food category moved into inflationary territory for the first time since June 2016, up 0.1% in December from the
0.1% decline in the previous month.
Dickinson said: “We’ve said for some time that we expect to see underlying inflationary pressures, notably from the post-
referendum fall in the value of the pound, feed through into shop prices. It’s too early to confirm that this is what we’re
seeing in December’s figures: timings of seasonal discounts can cause monthly fluctuations at this time of year and
retailers have continued to find ways to mitigate the impact on consumers.
“However, we expect the general trend in inflation to be upwards over 2017. The magnitude of the exchange rate
movement and commodity price rises combined with the increasing costs of doing business means that retailers will have
little choice other than to pass on some of these rising costs into prices but effect will be lessened by the intensity of
competition.”
Source: The Retail Bulletin 4th January 2017

5. Copyright © 2015 Information Resources, Inc. (IRI). Confidential and Proprietary. 5
Christmas delivers for The Fragrance Shop as luxury brands
dominate
In the six weeks to 31 December, like-for-like sales were up 6.8%.
The retailer said its busiest day was 23 December when it sold over 80,000 bottles. Sales of male fragrance grew faster
than female thanks to new launches.
Top performers included Dior Sauvage, Chanel Coco Mademoiselle and Hugo Boss - The Scent For Her and Diesel BAD.
Fragrances from other luxury fashion houses such as YSL, Viktor & Rolf & Loewe were also big sellers.
Sanjay Vadera, chief executive of The Fragrance Shop, said: "New, accessibly-priced perfumes from high-end fashion
houses were by far the top performing scents this Christmas, reflecting Britain's enduring love affair with luxury brands."
The Fragrance Shop also recorded significant growth in gift set sales and purchases of larger 100ml+ fragrances as
shoppers traded up from spending less on smaller sizes to get better value.
With a total of 184 stores, The Fragrance Shop opened 12 new shops last year and plans to open a further three in early
2017.
Vadera added: “Our complete focus on bringing a wide selection of brands to customers within the best possible retail
experience continues to be the secret of our success, while also enabling us to outperform the market in luxury fragrances
for the second year running, making this our fastest-growing segment."
Source: The Retail Bulletin 4th January 2017

6. Copyright © 2015 Information Resources, Inc. (IRI). Confidential and Proprietary. 6
B&M reports strong sales growth after record Christmas trading
UK sales revenue for the 13 week period increased by 20.7% to £741.4 million while group revenue climbed by 20.5% at
constant currency. On an actual currency basis, total sales revenue rose by 21.8% to £789.1 million.
The company said the stronger like-for-like growth was a reflection of a good seasonal product performance, improved in-
store standards and increased levels of operational stability in its stores and supply chain.
B&M also benefited from an extra day's trade in the quarter compared with last year which added 1.1% to the headline
like-for-like total. This timing benefit will unwind in the fourth quarter.
As a result, the retailer is confident that it will meet market expectations for adjusted EBITDA in the financial year to
March 2017.
Simon Arora, B&M chief executive, said: "We have once again demonstrated the strength, relative appeal and popularity
of our model at a time of uncertainty for consumers generally and continuing structural change in the retailing sector. We
have delivered our best ever Christmas trading and served over 5.5 million customers in a single week in the UK alone as
we continue to gain market share. Our German business Jawoll has also performed well and our first steps towards a
faster pace of expansion are going to plan.”
At the end of the quarter, B&M’s UK business was trading from a total of 533 stores after opening 14 stores in the last 13
weeks and a net 34 in total during the financial year to date. In Germany Jawoll is now trading from 73 stores following
seven new openings in the third quarter.
Source: The Retail Bulletin 4th January 2017

7. Copyright © 2015 Information Resources, Inc. (IRI). Confidential and Proprietary. 7
Nisa sales rise over Christmas as promotions pay off
Nisa’s like-for-likes climbed during the Christmas trading period as investments in seasonal promotions drove sales.
The convenience specialist and wholesaler said like-for-like sales increased 2.2% in the 10 weeks ending January 1.
Nisa registered an EBITDA, excluding exceptional items of £718,000 during the same period, up 38% year-on-year.
Total sales, excluding its supply deal with the collapsed My Local convenience chain, advanced 2.7% to £235.6m
compared to the same period last year.
Nisa, which swung to full-year profit with an EBITDA of £7.3m for the 53 weeks ending April 3, 2016, hailed the
performance of its fresh proposition, which recorded a 17.7% increase in sales.
The Scunthorpe-headquartered business said its ‘Festive 5’ promotion on its own-label Heritage lines drove a 75% spike
in sales of vegetables across the 10 weeks.
Sales of carrots rocketed 288%, while sales of parsnips and Brussels sprouts both more than doubled year-on-year.
Nisa said it opened 77 new stores during the festive season, compared to 54 last year, as it continued to attract new
members.
The business has recently secured contracts to supply the 298 stores McColl’s acquired from the Co-op and Bourne
Leisure’s shops at Butlins and Haven holiday parks. Both contracts will commence in April.
Nisa Retail chief executive Nick Read said: “I’m very pleased that we have been able to provide significantly greater
investment in our promotions this Christmas to assist our members trading this festive period.
“We believe we have delivered a strong promotional mix to drive sales and footfall in our members’ stores.”
Source: Retail Week 4th January 2017

8. Copyright © 2015 Information Resources, Inc. (IRI). Confidential and Proprietary. 8
Amazon starts Prime Air drone delivery trial in UK
Two shoppers are now able to order products by drone as early trials begin of online retailer’s Prime Air service
Amazon has launched a UK trial of its Prime Air service, with the first delivery including an Amazon Fire TV stick and a
bag of popcorn.
On 7 December the first package was safely delivered to an address in Cambridge, with orders sent out from a Prime Air
fulfilment centre nearby.
The fulfilment centre is different to others, Amazon said, as it uses “innovative Prime Air technology”, which includes an
electrically-powered Amazon drone rising to the sky with the customer’s package on board.
The drones are autonomous and operate entirely alone, meaning that when an order is placed they deploy themselves.
Able to carry packages up to 2.26kg and guided by GPS, the drones can deliver in 13 minutes from the moment of placing
the order.
Currently only two UK consumers can order items using Prime Air, choosing from a variety of items such as electronic
gadgets or dog biscuits.
Amazon will use the feedback and data from the beta test to roll-out the trial to “dozens of customers” living within
several miles of the UK facility, growing to “hundreds” more.
Source: Cosmetics Business 5th January 2017

9. Copyright © 2015 Information Resources, Inc. (IRI). Confidential and Proprietary. 9
Boots like-for-likes flat as international profits slip
Boots’ UK retail like-for-likes came in flat in its first quarter as profits slid at its international arm.
Walgreens Boots Alliance (WBA), Boots’ parent company, reported that sales at its retail pharmacy international unit in
the three months to November 30 edged up 0.5% to US$2.96bn on a constant currency basis.
Operating profits at its retail pharmacy international arm fell 39.7% to $182m.
At Boots UK, like-for-like retail sales were flat, while like-for-like pharmacy sales fell 0.8%.
WBA said Boots’ December retail performance was “solid”, which it said was a “reflection of actions taken to counter
challenging wider market conditions”.
WBA has been cutting costs at Boots in the UK. In October a launched a voluntary redundancy scheme as it moves to cut
500 back-office roles. The high-street giant revealed in June last year it would slash its number of head office and field
staff by 700 over three years.
Former Boots boss Simon Roberts told Retail Week at the time the cuts were first announced that it was part of a move to
get the business “fit for the future” as it ups its focus on its online offer.
Roberts unexpectedly left Boots in July after 13 years with the business, but will join Sainsbury’s as its new retail and
operations director by next July.
He has been replaced at Boots by Elizabeth Fagan, formerly WBA’s managing director of international retail.
WBA’s group profits fell from $1.11bn to $1.05bn in the quarter. Group sales slid 1.8% to $28.5bn.
Executive vice chairman and chief executive Stefano Pessina said: “Overall we are pleased with the progress this quarter,
with results in line with our expectations.”
Source: Retail Week 5th January 2017

10. Copyright © 2015 Information Resources, Inc. (IRI). Confidential and Proprietary. 10
Poundland launches first sale
Poundland has started the new year with its first ever sale, allowing shoppers to pick up products at half price following
the costly Christmas period.
Products reduced to 50p
Poundland has cut the price of several core products by 50p from 1st January 2017. These include household brands such
as Dolmio, Heinz, McVities and more. Beyond grocery, Poundland is focusing its new year sale on beauty products, with
the promotion including Pure deep cleanse and exfoliating wipes and Aquafresh toothpaste.
This first-time promotion is expected to run for the month of January, giving shoppers plenty of time to stock up in the
new year. The offer is only available in-store, however Poundland is promoting it online. The company's Irish business,
Dealz, is also offering half price promotions at 75 cents.
'Mission to re-power the business'
Talking about the promotion, new trading director Barry Williams, has said: "No-one loves a bargain more than
Poundland customers and they're asking us to do more. Our promise to them is clear – amazing value on amazing items.
That's why we're on a mission to re-power the business and look for new ways to provide that value. This 50 pence event
to kick off the New Year is just the start of exciting times at Poundland as we work even harder to deliver on that promise
in the months ahead."
It will be interesting to see what other initiatives Poundland uses to attract shoppers this year and whether or not the
discounter will roll out its multi-price Poundland and more format following the company's takeover by Steinhoff.
Source: IGD 6th January 2017

11. Copyright © 2015 Information Resources, Inc. (IRI). Confidential and Proprietary. 11
Disappointing Christmas For High Street Retailers
The UK’s high street failed to rally last month as shoppers shifted more of their Christmas spending to online retailers.
December’s like-for-like sales growth was 0.1% lower, according to BDO’s High Street Sales Tracker (HSST). The negative
figure means the UK has now seen four consecutive Decembers with no high street sales growth.
Year-on-year sales of fashion goods declined by 1.07% in December, but the overall figure was pushed toward parity by
like-for-like increases in the lifestyle (+2.4%) and homewares (+2.6%) sectors.
BDO said that while December’s decline of 0.1% may appear marginal, it comes off of a negative base of -5.3% for the
same month last year, which was the worst month since December 2008. It added that a further decline from such a
weak base will come as a serious disappointment for retailers.
However, BDO stressed that many stores did manage to capitalise on what was expected to be a very strong week leading
up to Christmas Day, which this year fell on a Sunday. In that week overall sales were up by 11.7% year on year – the
largest weekly growth for the whole of 2016 and the best weekly total like-for-like growth recorded since February 2014.
As expected, online retailers were the real winners over the period with sales in the channel rocketing in the week before
Christmas – up 51.1% – a figure not beaten since the first week of 2015. The result helped to lift online sales growth for
December up 19%, a notable improvement on the 7.5% increased seen in December last year.
Sophie Michael, Head of Retail and Wholesale at BDO LLP, commented: “With such a weak base for December 2015, any
further decline can only be seen as a poor result for retailers.
“Coming at a critical juncture, this fourth negative December in succession highlights the magnitude of the challenge that
lies ahead for 2017, when consumers will more keenly feel the bite of inflation and a falling pound.”
Source: NamNews 6th January 2017

12. Copyright © 2015 Information Resources, Inc. (IRI). Confidential and Proprietary. 12
Good Christmas For Midcounties Co-operative’s Food Stores
Midcounties Co-operative has reported a robust 3.6% increase in like-for-like sales across its food stores for the three
weeks to 31 December.
The UK’s largest independent Co-operative said that an enhanced range of offers, along with improved the availability of
locally-produced and Co-op own label products, helped it attract shoppers over the festive period.
It’s newly expanded chilled and frozen food party range, which included Christmas centre-piece styled desserts, was said
to have proved popular. Meanwhile, sales of own ‘Best of Our Counties’ range jumped by 42% compared to the previous
year. The range includes fresh produce from Warwickshire’s Mudwall Farm and creations from local producers, such as
Whisky Beer from Chase Distillery and Hobson’s Brewery.
Last year, the retailer began a three year £30m store investment programme which included the development of new
formats for its supermarkets and convenience stores.
Phil Ponsonby, Deputy Chief Executive of The Midcounties Co-operative, said: “Our rising sales over Christmas this year
reflect the growing popularity of our stores and the quality of the product ranges we now offer. We’ve improved our
product range with our own locally sourced products and the new Co-op branded range getting a good response from
customers.”
He added: “We have been particularly pleased with the results of our new format stores which are attracting new
customers and increasing the share of spend from existing shoppers. We have seen sales increases of up to 40% which is
testament to the popularity of these new format stores and improved customer service.”
Source: NamNews 6th January 2017

13. IRI
Weekly News update
Your window on the latest trends
in Packaged Groceries
Stephen Hall
Friday 6th January