Macroview weekly news update - 18th july 2016

Macroview
Weekly News update
Your window on the latest trends
in Packaged Groceries
Stephen Hall
Friday 22nd July

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• Asda taps into Pokemon Go craze
• Brexit concerns, weather and major sporting events impacts retail footfall
• Boots to launch in South Korea
• 28% of shoppers in Ireland say they would go elsewhere after finding their product
was out of stock on two occasions or less
• Sainsbury's emulates Amazon with one-hour home delivery service trial
• Sainsbury's completes axing of multi-buys ahead of schedule
• Consumers name Amazon as their favourite retail brand
• Nine out of 10 UK retail sales “touch” bricks-and-mortar stores
• Warmer weather helps lift sales at Waitrose
• John Lewis sales up 3.8% last week
• WHSmith pledges to pass on savings to some airport customers
• Scottish retail sales dip 1.4% in June
• Unilever reports slightly better than expected sales growth but remains cautious on
outlook
• New research highlights Olympics sales opportunity for retailers
• CMA clears Sainsbury’s acquisition of Home Retail Group
Weekly News Summary – 18th July 2016

Asda Taps Into Pokemon Go Craze
The Pokemon Go craze sweeping across the country has prompted Asda to issue a list of tips and guidelines for playing
the game in its stores.
The app, which was launched in the UK last week, is a location-based augmented reality mobile game which encourages
users to search out Pokemon characters in their local area and around the country.
Following a surge in customers asking its customer service staff for assistance in finding Pokemon, Asda has issued official
guidelines to help customers enjoy Pokemon Go, while keeping safe in its stores!
An Asda spokesperson, said: “We all want our customers to enjoy finding a Pikachu at the pizza counter, or a Jigglypuff at
George, but we acknowledge that there have been some concerns about the distractions caused by the game. So today’s
guidelines will help everyone catch those highly sought after items safely – not to mention Pokemon too.”
Asda’s official Pokemon Go in-store guidelines:
1. There is enough Pokemon for everyone – no running in stores to be the first to catch one
2. Celebrate respectfully – shouting ‘YESSS’ at the fish counter may unnerve people
3. Help is on hand – customer service colleagues will be on hand to offer safe directions around stores if you need
assistance in safely locating a Pokemon
4. Eyes up – please be mindful of fellow shoppers and be aware of your surroundings
5. All children must be accompanied by a parent or guardian and should not engage strangers (that’s a very serious one
please, folks)
6. Everyone is welcome to use the in-store Wi-Fi – please don’t run up huge bills on our account
7. Please refrain from abandoning trolleys while catching Pokemon
8. If any Pikachu are found in our stores then please let customer services know and we’ll congratulate you over the
tannoy
9. Gym etiquette – when training in our stores which are Pokegyms, feel free to use our store cafes to train in comfort
10.Please keep your Pikachu on a lead at all times
Source: NamNews 18th July 2016

Brexit Concerns, Weather And Major Sporting Events Impacts
Retail Footfall
Retail footfall in June was 2.8% down on a year ago, worse than the 0.3% rise in May and the sharpest decline since
February 2014, according to figures released today by the British Retail Consortium and Springboard.
High Streets reported a 3.7% fall in footfall in June, followed by shopping centres, which recorded a 2.3% decline. Footfall
in Retail Parks fell 1.0% after rising 1.0% in May, its worst performance since November 2013.
“The results are shaped by a political and economic storm against a backdrop of rain downpours and generally inclement
weather throughout the whole month,” said Diane Wehrle, Marketing and Insights Director at Springboard.
She said that footfall deteriorated from a 0.4% rise in the first week of June to a 4.6% drop during the week of the
referendum and a 3.4% drop in the weeks following, as consumer confidence took a hit from the unexpected result.
Wehrle added: “The issue for retailers is how quickly shoppers will return to their usual patterns of behaviour.”
Meanwhile, BRC Chief Executive Helen Dickinson suggested that the EU referendum was only one factor keeping some
shoppers away. She said: “Despite today’s figures showing the deepest decline in footfall since February 2014, the same
period has seen UK retail sales rise. June has seen many distractions from Euro 2016 to Wimbledon so heading out to the
shops seems to have slipped down the priority list for many. In the coming months we all must redouble our efforts to
remind customers that now is a great time to get out into their local communities.”

Boots To Launch In South Korea
Walgreens Boots Alliance is set to expand its global reach after signing an agreement to form a franchise partnership with
Emart (a member of Shinsegae Group), South Korea’s leading hypermarket retailer. Together, they will create a Boots
branded retail franchise in the country.
Under the terms of the agreement, Boots stores will be opened in shopping malls, on high streets and within the
outbound areas of Shinsegae department stores and Emart hypermarkets. The Boots stores will each feature an
independent pharmacy and a range of Boots owned products and ‘exclusive to Boots’ brands as well as leading Korean
brands.
The first stores are expected to open before the end of the first half 2017 and will include Boots popular No7 and Soap &
Glory products.
“South Korea is considered a leading market for skincare and cosmetics products in Asia today. We believe there is a
significant opportunity to extend the reach of Boots own brands into this market and are thrilled to be doing so with
Emart,” said Ornella Barra Co-Chief Operating Officer of Walgreens Boots Alliance. “Emart is the preeminent retailer in
South Korea and their strong experience as well as their marketing expertise gives us great confidence in the long-term
potential of this partnership.”

28% Of Shoppers In Ireland Say They Would Go Elsewhere After
Finding Their Product Was Out Of Stock On Two Occasions Or
Less
him! international’s most recent report on the convenience shopper in Ireland shows that availability is key to a
convenience stores success with 28% of shoppers saying they would go elsewhere after finding their product was out of
stock on two occasions or less.
Based on 5,500 responses from shoppers of retailers including: Costcutter, Londis, Spar, Tesco Express, Centra,Topaz,
Applegreen, Mace, Gala and Maxol the report uncovers key findings from the current Irish shopper landscape. The
importance of health and fresh were recurrent themes throughout the report’s findings with half of Irish shoppers
perceiving their local c-store to offer fresh quality products. However, only 20% of food-to-go shoppers in convenience
feel there are satisfactory healthy options available in store.
Commenting on the report’s findings, Aidan Duffy, Client Development Manager at him! international, said: “The Irish
convenience store landscape has changed dramatically in recent years and with it its shoppers; previously guaranteed
customer store loyalty has now shifted to loyalty to a compelling offer for example innovative and healthier ranges. Irish
c-store retailers must offer true value by meeting the demands of customers in a competitive retail environment.”

Sainsbury's emulates Amazon with one-hour home delivery
service trial
Sainsbury's has announced it is trialling a one-hour home delivery service similar to Amazon's online delivery model.
Britain's second largest supermarket retailer said it was trialling its Chop Chop delivery service in the Wandsworth district
of south London first, with a delivery fee of £4.99.
Customers living within a three kilometres radious of Sainsbury's Wandsworth estate can order up to 20 products for
delivery to their home within an hour via an app on iPhones or iPads.
Sainsbury's chief executive Mike Coupe has said the company could see potential demand for having a basket of food
delivered in such a short amount of time, and this would be complimented by the supermarket chain's nationwide store
network and the range of products they offer.
Amazon launched Prime Now in London a year ago and it is now available to more than 30 percent of the UK population.
The app is available to Prime members only, but offers one-hour delivery on over 15,000 items for £6.99. However, there
is no fee if a delivery is made within a choice of two-hour, same-day slots.
Amazon launched a British version of its US AmazonFresh food delivery service just last month, adding pressure on local
supermarket chains and established online-only grocer Ocado.
According to industry research group IGD, Britian's online food market is expected nearly double to £17.2 billion by 2020.
Source: Retail Gazette 18th July 2016

Sainsbury's completes axing of multi-buys ahead of schedule
Sainsbury's has announced that it has competed its programme to remove food multi-buys ahead of schedule. Announced
back in February and due to be fully implemented by the end of August, the initiative is a key element of Sainsbury's
value simplicity programme to establish lower regular prices to meet shopper demand.
Positive response from shoppers
The ending of multi-buys represents the culmination of a two year journey for Sainsbury's as it looks to meet shoppers'
appetite for simpler, clearer prices. The retailer has been gradually removing multi-buys from its stores over two years
and has sped-up the project in recent months. Our ShopperVista research shows that shoppers now typically shop 26
times per month for food and groceries, up from 24 times per month last year and that their satisfaction with promotions
has fallen. By ending multi-buys and reinvesting savings in lower everyday prices, Sainsbury's is providing a consistent
value position for shoppers, a move that fits well both with their continuing desire to manage their budgets carefully and
the long term trend towards smaller households. Note that Sainsbury's may continue to run some multi-buys on lunch
and Bistro meal deals, seasonal wine promotions and general merchandise products.
Shoppers experimenting more
Commenting on the strategy, Sainsbury’s food commercial director, Paul Mills-Hicks, said: "We’ve worked hard to phase
out multi-buys as quickly as we could because our customers tell us they value choice and a simpler shopping experience.
It’s very interesting to see people experimenting with new products and pack sizes now that they are not tied in to multi-
buys. It’s clear that shoppers are enjoying the freedom to make decisions about what they buy based on what they need,
rather than what’s on offer. Customers are also telling us that ultimately they’re saving money because they’re wasting
less and only buying what they need.“
More scope for product innovation
Ending promotions will free up more gondola end space in-store for Sainsbury's to showcase more innovative products
that provide a unique reason to choose Sainsbury's over competitors. Already Sainsbury's has had considerable success
with new healthier convenience foods such as 'courgetti' and 'boodles' and it is keen to work with suppliers to grow
demand for distinctive products.
Source: IGD 18th July 2016

Consumers Name Amazon As Their Favourite Retail Brand
Amazon has been named as the UK’s favourite retail brand in consumer survey carried out by the Direct Marketing Association
(DMA).
25% of consumers surveyed said the online giant was their favourite with high street stalwarts John Lewis (14%) and Marks &
Spencer (10%) the next in line.
While Amazon topped the list, just three of the top 20 were online-only – Amazon, eBay and ASOS. However, most of these have
also experimented with in-store experiences over the last 12 months, which the DMA said highlighted the continued importance of a
multi-channel strategy when it comes to retail customer engagement.
Conducted as part of the DMA’s Customer Engagement research, the survey asked 1,000 consumers to name their favourite retail
brand. Respondents were not offered a shortlist of options, but rather offered an open and unprompted text-box to write their
favourite retails brands.
The research also found that most consumers fall into one of three types of brand loyalty, with 40% being actively loyal, 28%
actively disloyal and the loyalty of the remaining consumers depending on the context. In addition, 24% of those surveyed currently
take part in loyalty schemes, with almost half (46%) of respondents not in loyalty schemes, but would like to in the future. More
than three-quarters (77%) of consumers were interested in joining a loyalty scheme after buying a product.
Commenting on the results, Rachel Aldighieri, MD at the DMA, said: “Trust is a key element of building customer loyalty for all
brands, retail or otherwise. That’s one of the reasons we’re seeing loyalty schemes evolve beyond traditional formats. By taking a
more personal approach to these programmes, brands can forge a two-way conversation with their customer that builds genuine
loyalty beyond simply collecting points. When loyalty rewards are made to feel well earned and unique to each customer, bonds can
potentially grow even stronger between retailer and shopper.”
Warren Jenson, president of Acxiom International and a former Amazon CFO, added: “Amazon is the world’s best example of a
company that couples a deep commitment to their customers with the power of data and technology. The results are clear – a great
personalised, relevant experience we all have come to love and trust. Brands everywhere need to understand Internet giants like
Amazon have been perfecting data-driven marketing since they opened their doors. And they are not slowing down. Every day the
giants come into work to further enhance their algorithms and data sets and thereby increase their relevance and reputation with
their customers. The great news is that the technology and know-how now exists which enables all brands – large and small,
physical and virtual – to do exactly the same thing. Your customers will love it!”

Nine out of 10 UK retail sales “touch” bricks-and-mortar stores
Nine out of every 10 retail transactions in the UK “touch” a bricks-and-mortar shop, new research on consumer behaviour has
revealed.
Of the £313bn spent annually by UK consumers, £278bn (89%) “touches” a bricks-and-mortar shop via physical sales, click-and-
collect or in-store browsing before the purchase is made online.
The research also quantified the “halo effect”, attributing 5% of online sales to the presence of a store and thereby “boosting” online
sales.
This boost rose to 9% when grocery was excluded, as grocery sales tend to occur either online or in-store and do not have such
multichannel crossover.
The research, drawing on the experiences of 30,000 consumers, by Verdict Retail and British Land also showed that click-and-collect
sales are set to double by 2021.
Women, younger shoppers and Londoners were also found to have engaged the most with physical stores when eventually making a
purchase online.
Category differences
There were marked differences between how much consumers engaged with stores depending on which categories they purchased
items from.
Nearly half (49%) of electrical purchases are made in-store, but two-thirds of purchases (65%) rely on a store. This means that
electrical purchases are boosted the most by physical stores (32%), followed by toys (a 25% boost) and department stores (20%).
Contrastingly, the homewares sector (homewares, furniture and floorcoverings, DIY and gardening) and the health and beauty
sector do not receive much of a boost because of limited online penetration – they already rely on bricks-and-mortar purchases.
Verdict retail content director Patrick O’Brien said: “Electricals is one of the most mature online markets, with customers using a
variety of channels in their shopper journey.
“The prevalence of showrooming is resulting in a number of retailers repurposing their physical stores, utilising them to display
products and promote online sales rather than just to fulfil immediate sales. We expect this trend to grow as stores continue to
migrate to the showcase model.”
Source: Retail Week 19th July 2016

Warmer Weather Helps Lift Sales At Waitrose
Trading at Waitrose picked up last week, boosted by the warmer weather. In the seven days to 16 July, the chain’s sales
rose 2.9% to £126.63m, compared with a 2.1% rise the week before.
The sunnier weather contributed to an increase in fresh produce sales (up 6%), with prepared fruit up 14% and soft fruit
up 16%. Meanwhile, as shoppers began to head off on summer breaks and days out, sales of sandwiches and to-go
drinks increased 6% and 14% respectively.
Overall, sales in the ambient category were up 2%, whilst sales in Chilled, Fruit, Vegetables & Horticulture, and Bakery
increased 5.3%. The Meat, Fish, Frozen & Dairy category saw sales rise 0.9%, whilst Home & Leisure rose 5.5%.

John Lewis sales up 3.8% last week
John Lewis said its customers got into the swing of summer last week with sales rising by 3.8% year-on-year.
Fashion was the strongest performing category, finishing the week with sales up 8.7%. Women's formalwear sales climbed
by 45.3% as customers bought outfits for summer weddings.
Home sales rose by 1.8% boosted by a 46.6% surge in sales of outdoor living products.
Meanwhile, sales in electricals and home technology edged up 0.9% as the retailer enjoyed buoyant trade in audio and
connected home items.
Andy Street, John Lewis managing director, said: “Sunshine forecast for this week will no doubt continue to feed the
popularity of The Gardening Society restaurant on the John Lewis Oxford Street rooftop, which attracted 6,000 visitors
last week alone.”
Source: Retail Bulletin 20th July 2016

WHSmith pledges to pass on savings to some airport customers
• Travellers going outside the EU spending £6 or more will see savings
• Decision follows last year’s revelations over VAT savings retained by retailers
• Travellers must have their boarding pass scanned
WHSmith has pledged to pass on savings to some non-EU-bound travellers at its airport branches following last year’s
revelations over VAT.
The retailer’s customers who are flying beyond Europe will get a discount on items costing £6 or more. However shoppers
must agree to have their boarding pass scanned.
The discount will not apply to items such as books and newspapers, which are not subject to VAT.
“Following customer research, focus groups and an in-store trial, WHSmith has introduced a new approach to the VAT
relief concession at UK airports in time for the peak summer season,” a WHSmith spokesman said.
The move comes after revelations last summer that WHSmith was among retailers that was failing to pass on savings to
customers on products that are VAT-exempt for people travelling outside the EU. Boots and Dixons were also embroiled in
the scandal.
The controversy prompted the government to launch a review into the practice. Then Chancellor George Osborne branded
the practice “unacceptable”.
However the government review is understood to have been delayed following Brexit and is now likely to report in the
autumn.
Source: Retail Week 20th July 2016

Scottish retail sales dip 1.4% in June
Scottish retail sales experienced a 1.4 per cent drop in June compared with the same period last year, in contrast with the
year-on-year rise for the UK as a whole.
Figures released by the Scottish Retail Consortium (SRC) today also indicated a 0.1 per cent rise in food sales in June, the
first year-on-year rise in the value of food sales in Scotland since December.
Meanwhile, the value of non-food sales in Scotland last month dropped by 2.6 per cent compared to June 2015.
SRC said that consumer confidence may have been hit by the vote to leave the EU, although it insisted it was not
yet possible to properly forecast the impact it had consumers.
Figures released last week by the British Retail Consortium showed the value of UK retail sales for June went 0.2 per cent,
although this was a sharp slowdown in the year-on-year rate of growth from 1.4 per cent in May.
Source: Retail Gazette 20th July 2016

Unilever Reports Slightly Better Than Expected Sales Growth But
Remains Cautious On Outlook
Unilever has today reported a slightly better than expected rise in second-quarter sales, although the group remained cautious on
trading for the months ahead amid weak consumer demand in key markets.
Underlying sales in the second quarter grew 4.7%, helped by higher prices. However, volume growth slipped to 1.8%, compared
2.6% in the previous quarter.
For first half as a whole, underlying sales also rose 4.7% with volumes up 2.2%. However, actual sales fell 2.6% over the six-month
period to €26.3bn, impacted by the weakness of emerging market currencies against the euro.
Net profit grew 2% to €2.7bn, whilst core operating margin was up 50bps to 15.0%, driven by an 80bps improvement in gross
margin.
Unilever’s performance in its second quarter was driven by robust growth in its core Personal Care division where underlying sales
rose 5.6%. Volumes rose a healthy 3.4% with the group saying they improved across all sub-categories driven by innovations in its
core brands and its move into more premium segments.
Sales growth in its Foods division accelerated to 2.7% with a good performance in savoury and dressings. However, volumes
declined by 0.9%, due to further weak performance in its spreads business in developed countries.
Paul Polman, Chief Executive Officer, commented: “Our first half results further demonstrate the progress we have made in the
transformation of Unilever to deliver consistent, competitive, profitable and responsible growth. Despite a challenging environment
with slower global economic growth and intensifying geopolitical instability, we have again grown profitably in our markets,
competitively and driven by strong innovations.
“This consistency of performance, achieved during a period of high volatility and accelerating change, shows that our long-term focus
is paying off. We are seeing the benefits from delivery against the four differentiated category strategies that continue to guide
investment in our brands, our infrastructure and our people.”
However, he warned of more difficult times ahead: “We have been preparing ourselves for tougher market conditions in 2016 and do
not see any sign of an improving global economy. Against this backdrop we continue to drive agility and cost discipline,
implementing the key initiatives announced at the end of last year: net revenue management, zero based budgeting and ‘Connected
4 Growth’ which is the next stage in our organisational transformation. Our priorities continue to be volume-driven growth ahead of
our markets, steady improvement in core operating margin and strong cash flow.”
Source: NamNews 21st July 2016

New Research Highlights Olympics Sales Opportunity For Retailers
New research from retail and shopper marketing agency, Savvy, indicates that 51% of shoppers plan to get involved – and celebrate the
Rio Olympics – presenting retailers with an opportunity to capitalise on the event and increase sales.
Alastair Lockhart, insight director at Savvy Marketing commented: “After a quiet 2015, 2016 is a busy summer of sport which continues to
present retailers and brands with a number of opportunities to engage with shoppers. Interest in the Olympics is high – but the time
difference between us and Rio is significant and could impact marketing successes. Marketers will need to be clever in the way that
campaigns are carried out – beyond the live events and into the store & online.”
Key findings from the research:
Who will be celebrating the event?
• 51%of UK shoppers are planning to get involved or celebrate the event.
• Men are more engaged in celebrating the event than women – 56% compared with 47% respectively.
• Families with children are most likely to join in – 58%, followed by couples with a partner/spouse – 54%.
• Life stages again show that young families are most interested in the event – 58%. Older families are next in line with 54% whilst
50% of Generation Y and Empty Nesters will be joining in.
• Geographically interest is highest in the South of England with 55%. The Midlands came in second place with 51% and the North
of England was marginally less with 50% interested.
• On the age front, 45-54 year olds are most interested (55%) followed by 35-44 year olds with 54%. 18-24 year olds were the
least interested with 41% planning on getting involved.
Time difference concerns?
• It hadn’t occurred to 56% of shoppers that the time difference would cause difficulties in watching events.
• 53% of shoppers said they were less likely to watch Olympic events due to the time difference (meaning events may be shown at
night).
• 33% of shoppers said they were likely to record Olympic events that were shown at night and watch them later.
How are shoppers planning to get involved/celebrate?
• Medium – 44% of shoppers said they would be following the events on the television and 18% said online. 10% said they would
use their smartphones to get involved and nine percent would be using the radio. Catch-up TV was also cited by nine percent as a
medium for keeping up to date.
• Location – 14% said they would be watching events with family and friends making it a social occasion and six percent said they
would be going to the pub to watch it.
Lockhart concluded: “The London Olympics presented exceptional opportunities for retailers – although interest in the 2012 Games did not
really gain traction until the games had commenced. It will be interesting to see whether interest in Rio receives a similar boost following
the opening ceremony. Despite the time difference, high profile athletes and events will attract substantial shopper interest, and retailers
need to be ready to react depending the performance of Team GB’s competitors.”
Source: NamNews 22nd July 2016

CMA Clears Sainsbury’s Acquisition Of Home Retail Group
The Competition and Markets Authority (CMA) has given the go-ahead for Sainsbury’s £1.4bn acquisition of Argos owner
Home Retail Group.
Sainsbury’s and Home Retail agreed a deal back in April with the CMA launching a phase 1 inquiry in May to establish
whether the tie-up would lead to a lessening of competition within the market. However, the CMA said today that it would
not be referring the deal for further investigation.
“The boards of Sainsbury’s and Home Retail Group welcome today’s announcement by the CMA that it has unconditionally
cleared the acquisition following its Phase 1 investigation,” both companies said in a joint statement.
The takeover is now subject to clearance from the Financial Conduct Authority and Home Retail shareholders, who will be
asked to approve the deal next Wednesday (27 July).
Source: NamNews 22nd July 2016

Macroview weekly news update - 18th july 2016

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