|
Shopper
Marketing News:
The shopper of tomorrow...
Attention Shoppers: We no longer have the following items -- "a sense of entitlement," "conspicuous consumption" and "a golden period of luxury." At least that is the word from Wharton faculty and other experts who point to a new logic that is defining not just what U.S. consumers buy, but how they view the shopping experience.
While shoppers typically pull back during the downward phase of any economic cycle, the severity and uncertainty of today's crisis is likely to have longer-lasting effects on their attitudes than most slumps, these experts note. Consumers, they suggest, will eventually start spending again, but without the vigor enabled by easy credit in the Roaring 2000s.
"The Great Depression certainly changed consumer behavior and attitudes for a generation," says Wharton marketing professor Wesley Hutchinson. "It's not obvious that we will have that psychological scar, but there is precedent for a very large shift."
Over the next 18 months, Hutchinson predicts, consumers will learn to become more frugal and are likely to carry those skills over once the economy recovers. "At some level, everybody has now been schooled about financial markets and overextending one's credit -- something American consumers have been notoriously bad at. We had a habit of not paying a lot of attention to the cost of using borrowed money."
Wharton marketing professor Stephen Hoch sees consumers as embracing a new logic. "Until recently, there has been a theme of entitlement that people really latched onto," he says. It was built on the belief that consumers worked hard and were entitled to splurge on rewards to compensate for the time and energy devoted to making money. Luxury goods marketers promoted the "entitlement" theme heavily, although they have now backed away almost entirely from this pitch.
Consumers who had learned to trade up when times were flush are now learning to trade down, Hoch adds. They realize they were wasting money on higher-priced goods and services when less expensive alternatives were available with little real trade-off in quality or satisfaction. Indeed, many consumers regret what they used to spend; they are finding a new sense of well-being in becoming more discerning shoppers. "There will be more of a premium placed on seeking value," Hoch says. "People will realize that's being smart."
$1,200 Shoes
Erin Armendinger, managing director of Wharton's Jay H. Baker Retailing Initiative, suggests that people "are definitely changed by what has happened. I don't think they will go back to spending like they did, at least not anytime soon." Consumers, she notes, have cut back sharply, not by choice, but because credit card companies and other lenders pulled their support for the consumption binge that fed into the current financial collapse. The halt in credit expansion is a "hard stop" for consumers who have been forced to retrench and reevaluate their attitudes toward spending.
In the future, shoppers will learn to focus on the value of goods and services, she predicts, citing designer shoes as an example of the new consumer economics. Five years ago, shoes with high-end names sold for $300 to $500. Leading into the economic meltdown, shoe-minded shoppers -- buoyed by easy credit and a sense of newfound wealth based on elevated stock and real estate values -- were paying $800 to $1,200 for shoes.
"Was there a 100% increase in the value proposition? The answer is probably 'No,'" says Armendinger. "Everybody got caught in a cycle of conspicuous consumption. Everybody had to have the newest, the latest, the best."
We Suggest...
Lesson One: What Really Lies Behind the Financial Crisis?
Global Economic Forecast for 2009: Will Demand for Good News Outpace Supply?
The Financial Crisis: Bad and Getting Worse, but Put Away that D-word
The Fairness Issue: How to Cope with the Flood of Foreclosures
Jeremy Siegel on the Market: Rough Going for Now, but Stocks Still a Good Bet
Now, she says, that "crazy mindset" is over and shoppers are only willing to pay for what they absolutely need or items that present extraordinary value. "We are back to simpler times, but the pendulum will settle somewhere in the middle. We are a country that historically has bought more than we need and we will swing back at some point to buying more than we are now." As for the pre-meltdown "go-go times, we will never go back to that, at least not anytime soon."
According to consumer consultant Paco Underhill, author of Why We Buy: The Science of Shopping, the psychological reaction to the financial meltdown is segmented somewhat by age and income, although overall the mood of consumers is clearly downbeat. "The level of depression is pervasive. This is a very dark period. I hope it provokes some serious introspection."
Underhill describes what he says are three consumer segments now, divided not by income levels, but by income security. One group is made up of those who have lost their jobs and are downwardly mobile. For the wife of a Wall Street banker, that could result in the elimination of weekly hair and nail appointments, while a General Motors worker whose benefits have been cut may struggle to pay the mortgage. "For them, this is traumatic and it cuts across economic classes," says Underhill.
Those in the second group are not at immediate risk of losing their jobs, but they have friends or family who are out of work. These consumers, he says, are cutting back as a cautionary measure. They are still spending, but find a new sense of pride in comparison shopping for the best deals.
A third group is relatively untouched by the downturn. The individuals in this group have paid off their mortgages and, while their investment portfolios may be down sharply, they still have an adequate cushion. Nonetheless this group is also cutting back because engaging in conspicuous consumption seems like bad manners when so many other people are suffering. However, he says, people in this group are still traveling to places where they can be reasonably confident no one they know will see what they are spending.
The changing consumer psychology also cuts across age cohorts, Underhill suggests. "For Generation Y [those born after 1978], the crisis has hit harder than September 11. This is the first financial trauma of their lives, and they have been led to believe that access to capital and spending is limitless. Many of them are just completely over their heads. They have no idea of budgeting."
It will be interesting to see how this generation responds, Underhill adds, noting that Generation Y could remain in denial for some time, or they could face the crisis with a rich new set of consumer options, such as so-called "disposable fashion" available at Zara and other retailers. In addition, he says, this generation's parents seem willing to take them back home to regroup if they stumble financially.
For Generation X -- those born between 1965 and 1977 -- the decline in housing values is the challenge. Those who bought homes around 1995 with a long-term mortgage probably still have equity in their homes. "But if you bought a house in 2005 or traded up, you are in bad shape," says Underhill. Baby boomers, too, are caught off guard by the collapse in housing values. "They forgot to save, and thought their houses were doing the saving for them." For this generation, the idea of retirement will be downscaled from a golden period of luxury to a more modest lifestyle similar to that of their working years.
The way to cope psychologically with these changes is with better education and financial literacy, according to Underhill. "It's important that people know there is no acquisition in life that is transformative -- not a lipstick, not an iPhone, not a new Chevy. Nothing changes you into somebody you weren't before that purchase happened."
Wharton marketing professor Leonard Lodish says Americans may have a reputation for materialistic values, but are probably not any more inherently consumer-driven than human beings around the world. The French, he notes, coined the term "prestige" while the Japanese, and now the Chinese, have both exhibited explosive levels of post-industrial consumerism.
Marketers, he says, do not ignite consumerism, but respond to the urge which comes from within. "It's very hard to create an innate need. That comes from the interplay of society and the values and norms of the culture."
Loading up on Ketchup
Armendinger points to another impact on shopping patterns -- having enough space to store all one's purchases. U.S. shoppers do seem to lead the world in consumerism, in part because they have enough land to build huge homes and storage units to house all their belongings. "In a nutshell, we have too much stuff," she says. In Europe and emerging economies such as India, the desire to consume is there, but falls short of American-style hoarding. "You don't see the Costco mentality of stockpiling toilet paper or huge vats of ketchup, simply because [people] physically don't have the space."
Carl Steidtmann, chief economist and director of Deloitte Research -- Consumer Business, emphasizes that the Great Depression, combined with World War II, amounted to a 15-year period of consumer constraint, first because of the economic contraction and then because of rationing for the war effort. He predicts that the current downturn, which began in December 2007, will start to abate by the end of this year, and is not likely to have as great a long-term impact on consumers as the Great Depression.
He also suggests that the most lasting impact of the current downturn may be on homeowners who are severely stressed by mortgage debt. Going forward, he expects more of a "renter mentality" in the housing market, with less emphasis on homeownership as an investment vehicle. Still, don't expect to see modern-day nomads piling Pottery Barn furnishings into their SUVs as they abandon their McMansions. "In every recession, there's the hypothesis that the consumer is chastened and that we will come out living the simple life of monks," says Steidtmann. "It hasn't happened yet."
He recalls a Time magazine cover story that ran in June 2001 as the economy was slowing, titled "The Simple Life: Goodbye to having it all."The articleread, in part: "After a 10-year bender of gaudy dreams and godless consumerism, Americans are starting to trade down. They want to reduce their attachments to status symbols, fast-track careers and great expectations of Having It All. Upscale is out; downscale is in. Yuppies are an ancient civilization. Flaunting money is considered gauche: If you've got it, please keep it to yourself -- or give some away!"
Sound familiar?
Wharton marketing professor David Reibstein says the current angst about consumer spending reminds him of the periods of recession in 2001 and 1991. At both extremes of any economic cycle -- the highs and the lows -- conventional wisdom holds that during the highs, everyone feels the status quo will continue, while during the lows, everyone feels that life as we know it has forever changed. "While we're in the midst of it, there's always that concern," he says. "What's amazing to me is how resilient we are."
Reibstein points to the weeks and months following the terror attacks on September 11, 2001, when it seemed no one would ever have the courage to board an aircraft again. By the time the current financial crisis reduced demand, air travel volume had recovered. "It's going to take a long time for us to get through this because of the severity and depth of this cycle," says Reibstein, "but once we do, it will be amazing how quickly people do rebound."
Gradually, he adds, as the recent shocks to the economy are absorbed, people will begin to reinvest and cautiously step up purchases. Confidence will improve even more as job losses stabilize and hiring begins again, he says. "It's only going to take time."
Source: Brandish.
Strategies for retailers & manufacturers to cope with changing shopper behaviour...
The year 2008 may be gone, but it is definitely not forgotten. Most consumers are feeling the impact of the global economic battle and are making substantial changes to their everyday lives and shopping habits to stay afloat. Because changes have been broad and deep, the consumer packaged goods (CPG) industry must stay on their collective toes and respond to continually changing rituals with a new level of deftness, according to the latest IRI Times & Trends Report, “2008 CPG Year in Review: A Market Re-Defined by Budget-Strapped Consumers.”
IRI has studied this economic transformation since the beginning and has divided 2008 into two stages. Stage I, “Shocking the System,” took place in Q1-Q3′08 and was characterised by an unprecedented rise in energy and food prices.
“Consumers reacted with sharp cutbacks to purchases overall and began a re-evaluation of what, why, where and when they buy food and center store items,” according to IRI Consulting and Innovation President, Thom Blischok. “Shoppers took a new look at old spending habits and started to make significant changes.”
Stage II, which IRI named “A Refocus on Impact,” began in Q408. During this quarter, commodity prices moderated and energy prices plunged, but consumers continued to cut back. Surprised and concerned by the severity of price increases and the credit crunch earlier in the year, shoppers did not re-open their wallets as prices moderated.
January 2009 began Stage III, “The Lasting Reality.” With the continuing rise in unemployment, ongoing weakness in the banking system and credit structure, and a belief that energy prices will increase again in the near future, consumers remain extremely skeptical. Among consumers earning more than $100,000, there are few signs that shoppers are backing away from their most extreme cost-cutting behaviors; but among all other income groups, the wallet remains closed.
“Recessions expose the health of CPG manufacturers and retailers,” Mr Blischok continued. “Innovative companies thrive, while weaker companies struggle and fail. To be a success in this recessionary environment, you must anticipate and respond to change before it happens. This is instrumental in establishing long-term shopper loyalty even after the economy gets back on track.”
IRI recommends the following action steps that retailers and manufacturers can take to improve market share, shopper loyalty and financial position in today’s economy:
* Planning: Shoppers are making most decisions before they enter the store. Manufacturers and retailers should shift merchandising and promotion strategies into people’s homes via traditional media and online social media.
* Purpose: Consumers have changed their rituals and are cooking more at home with fresh ingredients and are bringing snacks and lunches from home to work. Manufacturers should make fresh ingredients more available and rewire their snack strategy. Retailers must make it easy for shoppers to find these ingredients and supporting products in their stores.
* Price: Shoppers demand good prices and quality in what they buy. Manufacturers and retailers should redouble their collaboration strategies to offer consumers the best value possible.
* Product: Shoppers are buying familiar products, so new product experimentation is at an all time low. Manufacturers should consider an enhanced brand-extension strategy. Retailers can increase shelf space of existing brands at the expense of new products.
* Promotion: Shopper direct marketing has arrived and will become a strategic differentiator. Manufacturers and retailers should develop new media strategies which will ensure consumers’ maximum exposure to marketing messages.
* Place: Shoppers are looking for the best deals wherever they can find them. Loyalty to a channel/banner is only as good as “what have you done for me lately?” Manufacturers and retailers must review and update the value proposition of products and stores.
* Permanence: Shoppers are deeply worried about the future, and many changes they are currently making will last. Manufacturers must update their management structure in a way that facilitates an ongoing ability to offer new shopping experiences that address evolving consumer needs.
Source: IRI
Restaurant sales on the up again, food retail remains strong...
The latest ABS data has indicated that restaurants, cafés and take-away outlets have begun to regain some of the customers they may have lost last year, while food retail continues to record robust results.
The seasonally adjusted estimate of retail trade surprisingly increased by 0.2% in January 2009, following increases of 3.8% in December and 0.4% in November 2008.
In original terms, Australian turnover decreased by 23.0% in January 2009 compared with December 2008 as sales declined in the month after Christmas. Chains and other large retailers (which are completely enumerated) decreased by 24.6%, while the estimate for ’smaller’ retailers decreased by 19.8%.
Australian turnover increased by 6.3% in January 2009 compared with January 2008, however. Chains and other large retailers increased by 10.5%, while the estimate for ’smaller’ retailers decreased by 0.6%.
In seasonally adjusted terms, food retailing (+1.5%) and cafes, restaurants and takeaway food services (+2.3%) posted the strongest results in January. The data represents a major turnaround for cafés, restaurants and take-away outlets as declines, in seasonally adjusted terms, were commonplace last year. Based on research into consumer behaviour and the performance of a number of fast-food chains, it is likely that the fortunes of take-away food outlets were a key to the positive result.
Source: AFN
Alcohol & tobacco sales suffering in Australia...
The National Accounts, which show the economy contracted 0.5% in the December quarter, confirm that Australian shoppers are saving rather than spending, the Australian National Retailers Association - which represents some of Australia’s largest retailers including the nation’s two biggest supermarkets - said today.
“Retail spending was weak in the December quarter. Our appetite for imported consumer goods dropped sharply while household savings soared to their highest level in almost 20 years,” ANRA CEO Margy Osmond said.
Year-on-year the national accounts show cigarette sales dropped 0.9%, alcoholic beverages fell 2.5% and the hotels, cafes and restaurants lost 2.6%. Essential consumer items were less affected. Food rose 0.6%, clothing and footwear 1.7% and furnishings and household equipment up 1%.
“To a great extent food is recession-proof as people have to eat, and if they’re eating out less they’ll naturally spend more money on their weekly grocery shop,” Mrs Osmond noted.
“Households are saving a greater proportion of their income. The household saving ratio more than doubled in the last six months of 2008 to reach its highest level since the last recession,” she added. “Consumers are naturally hesitant to spend. Household debt is three times what it was during the last recession, super funds have taken a battering and home values are stagnating. It’s not surprising that people don’t feel as secure as they used to.”
Meanwhile, retail inventories fell $820 million a sign of a lack of confidence in the retail sector. “The massive drop in retail inventories is a clear sign that retailers are not replacing stock for fear of not being able to move it,” Margy Osmond said. “Australia is stuck in a crisis of consumer confidence with the natural reluctance of people to spend at a time of uncertainty compounding the pressures on our economy.”
Source: AFN
Energy shot drinks to become all the rage...
The rapidly emerging market for energy shot drinks in North America and Europe achieved a 130% boost to 188 million units and a sales value of US$423 million (A$614m) in 2008, indicating the potential for such drinks to gather support in Australia.
The new report from drinks consultancy Zenith International sheds light on the changing demands of consumers in a market which has been growing rapidly since the turn of the century.
Energy shots are an extension of the regular energy drinks market, typically packed in 60ml shrink-wrapped plastic bottles. Manufacturers have sought extra points of difference in an ever more crowded and challenging sector as consumers refine their needs and energy requirements. This has resulted in increasing pressure for innovation amongst the many functional drinks now on offer.
“Standard 250ml and supersized 500ml energy drinks may contain too much volume and too many calories for certain consumption occasions such as driving. Energy shot drinks are a major new opportunity for the energy drinks category,” commented Zenith Market Intelligence Consultant and functionaldrinks Editor Jenny Foulds. “They can be carbonated or non-carbonated; berry, juice or even dairy based; with very wide ranging potential positioning and target markets.”
Further key findings from the 2009 Zenith Energy Shot Drinks report include:
* Energy shots have so far been predominantly a US phenomenon, but are poised to break into other markets.
* Living Essentials, which produces 5-Hour Energy, leads the US market.
* Top energy drink brands such as Monster, Rockstar, Full Throttle, NOS and Red Bull have now entered the segment.
* Production is often outsourced to co-packers.
* Energy shot drinks present traditional energy drinks with new distribution channel opportunities such as the health and nutrition sector.
Zenith anticipates that the combined markets of North America and Europe will reach over 500 million units and a retail value approaching US$1.2 billion (A$1.75b) by 2010, with the concept also spreading to other regions by then.
Source: AFN
Weight whilst you wait...Gorilla marketing at its best!!
No more living in denial about the size of your waist line, thanks to this fantastic albeit terrifying guerrilla marketing initiative from the health club chain, Fitness First. Unsuspecting commuters in the Netherlands are faced with viewing their body weight in bright lights - quite literally - when they take a seat at this Rotterdam bus stop. Scary to say the very least, but extraordinarily clever and likely to increase membership numbers at the local Fitness First. The brainchild of Netherlands’ agency N=5, the initiative takes the concept of guerilla marketing to a whole new level.
Source: The Cool Hunter
Nanotechnology used in food creates a stir...
The use of nanotechnology in food could lead to food tasting and looking better, but knowledge regarding any possible negative health affect is scarce.
Leading Australian consumer group Choice believes nanotechnology is already used in around 800 non-food products, with food manufacturers now exploring its potential behind closed doors.
“(There are) invisible sunscreens, where there’s a nano-scale titanium dioxide, which gives transparent protection from UV,” Choice spokesman Christopher Zinn told ABC radio on Saturday. “There’s also shirts that don’t actually stain because they’ve copied the nano-structure of Lotus leaves to create water repellent surfaces.”
Mr Zinn added that there was now a lot of work being carried out in the food sector to capitalise on the new technology.
“Developing an ice cream which has lower fat content but has the same fatty texture and flavour,” was one of the current tests being undertaken, he noted. “Food packaging can keep food fresher if you’re using nano-materials. There’s a lot of applications; there’s a lot of work going on.”
Choice is, however, concerned that foods made using nanotechnology could enter the food system without informing the public.
“Under our current food code there’s no requirement for any of this to be specifically labelled the use of nano-particles,” Mr Zinn advised. “They’re so small they can actually enter cells and enter parts of the body, which might not routinely happen with normal food stuffs. And that’s why want to see a regime with Food Standards Australia New Zealand, where there is going to be much greater safety assessments carried out.”
The Australian Office of Nanotechnology, which oversees FSANZ and develops nanotechnology policy, is confident in the current regulations Australia has in place.
“A major report just commissioned by the Australian Government by Monash University found that right across the board the regulatory systems in Australia are sufficient to cover most things,” Craig Cormick from the Australian Office of Nanotechnology said. “However, they did point to some areas where we have to do a lot more work to make sure we keep on top of these things.”
Associate Professor Thomas Faunce, from Australian National University’s Medical School, reported some doubts about the Monash University report.
“All the research at the moment tends to indicate nanoparticles have unusual toxicities related to size and shape,” he told ABC radio. “In this sort of climate it’s much better if regulatory authorities apply the precautionary principle and start developing nano-specific regulatory structures. If we don’t we’re going to have a catastrophe-driven approach to regulation, where we wait for a major public health crisis to arise because of nanoparticles causing toxicity in people.”
The European Food Safety Authority recently carried out an assessment into nanotechnology and its impact on health, concluding that products needed to be assessed on a case-by-case basis. Given current data limitations and a lack of validated test methodologies, risk assessment of specific nano products remained very difficult and subject to a high degree of uncertainty, they reported.
The European Parliament has since passed amendments to proposed reforms of the EU’s novel food regulation, which will force food manufacturers to state if their products contain nanoparticles. The legislation is likely to be in effect before the end of the year.
Australia’s food regulatory body, FSANZ, is currently reviewing its requirements for foods using nanotechnology.
All new products containing nanoparticles will be required to undergo a safety assessment by FSANZ and may need to have specific labelling requirements, the Australian Food and Grocery Council noted last week.
“…Each technology must be assessed carefully by food regulators to ensure its safety and to determine any specific labelling requirements,” AFGC Chief Executive Kate Carnell said. “We are not aware of nanotechnology currently being used in Australian food and grocery manufactured products, but clearly the industry is considering what opportunities may exist.”
“In the end the food industry will listen to its consumers, and ensure products provided meet all their needs. They will be safe and they will be labelled so consumers can make informed choices,” Ms Carnell concluded.
Source: AFN
Gorilla beats down the door in Australia...
IF THE loudmouths on YouTube and Twitter are to be believed, Cadbury Australia has just committed the gravest of crimes.
The wildly popular "Gorilla" advertising film Cadbury launched in 2007 in Britain featuring a drumming primate - it has since been viewed 6 million times online and parodied and mashed-up endlessly by fans - has apparently been bastardised by the chocolate maker in its latest Australian TV campaign.
The outrage from armchair critics is that a 1980s ballad by Phil Collins, which our hairy friend passionately drums to, has been replaced by a 1980s ballad by John Farnham. Tragedy.
Debate could go on for eons about the merits of Collins and Farnham. But what is interesting is that Cadbury, a notoriously conservative advertiser that for decades has stuck to a painfully boring advertising rulebook, has found entertainment religion. Rather than mindless messages telling us so factually we need, or should covet, Cadbury chocolate, the cocoa king is moving to let the masses actually enjoy Cadbury ads.
Indeed, Cadbury is showing all the signs of coming to grips with the need to engage people in an increasingly cluttered commercial world and much of the credit lies with "Gorilla". Made by ad agency Fallon in London, it has won a host of international accolades, including a top gong at the Cannes Lions International Advertising Festival last year and, more importantly for the bean counters, it has increased sales. In Britain, chocolate sales shot up 9 per cent when "Gorilla" was running. In Ireland sales rose 40 per cent.
Cadbury recently released a follow-up to Gorilla featuring two children with dancing eyebrows. Although launched initially on TV last month, "Eyebrows" is already rivalling "Gorilla" in online popularity. The new ad has been viewed more than 6 million times on YouTube and other sites and has doubled the popularity achieved by "Gorilla" at the same stage.
The journey from mundane advertising to snappy Cadbury entertainment is a little different in Australia, however. Cadbury's conversion here to treating advertising as something that people should enjoy has not been easy. Insiders say the Australian operation resisted using "Gorilla" for nearly a year after its launch in Britain. Only after Gorilla's massive international acclaim became so undeniable did Cadbury use the spot during the Australian Idol series late last year on Network Ten.
"There wasn't a lot of love for it in Australia," says one executive familiar with the internal machinations at Cadbury's headquarters in Melbourne. "That turned out to be a bad call. Australia has been very conservative and traditional because of its dominance as market leader."
Cadbury's general manager for chocolate marketing, Jeff Swann, rejects the assertions, arguing instead that the schedule for its Australian-made ads had to finish before "Gorilla" could start. Swann also says the Australian group was waiting on "diagnostic" data from Britain to see what effect "Gorilla" was having on public perceptions.
When the figures did come through, the results were overwhelmingly positive and Cadbury Australia is now a convert to the entertainment genre.
So much so, it released its own mash-up of "Gorilla" using John Farnham - which is the reason for the current round of online gripes. Swann says Cadbury deliberately did not apply "too much craft" to the ad to reflect how people were making their own versions of the ad online.
"We're just picking up on the enormous play levels that ad has had, the amount of fun people have had morphing the ad with their own music," Swann says. "It's just a two-week burst of fun before we move onto the next campaign."
And that new campaign, unlike "Gorilla", is a very quick pick-up of the latest "Eyebrows" spot from Britain.
Swann says Australia is already working on a collaborative project with its British sister company for the next instalment, which he says will be "unpredictable" but something consumers will again want to engage with.
Source: SMH
New product pacesetters Top 10...
For the last 14 years, IRI has published its New Product Pacesetters report, an analysis that showcases the ten best-selling new food and beverage products in the US.
2008 New Product Pacesetters: Top 10 Food & Beverage Brands (US$s in millions)
(Total year-one dollar sales across food, drug, mass channels, excluding Wal-Mart)
1. Gatorade's low-calorie beverage G2. Sales = $159m
2. Dunkin' Donuts Coffee. Sales = $112m
3. Healthy Choice Cafe Steamers. Sales = $95m
4. Progresso Light. Sales = $75m
5. Hormel Compleats. Sales = $71m
6. DiGiorno Ultimate. Sales = $61m
7. Smirnoff Ice Flavors. Sales = $61m
8. Pepsi Max. Sales = $61m
9. Tyson Any'Tizers. Sales = $59m
10. Doritos Collisions. Sales = $58m
Source: Just-food
Australian
News:
Woolworths not changing targets...
Woolworths, Australia’s largest supermarket operator, is not expecting to lower their guidance despite economic headwinds, as they remain positive after reporting a record first-half.
“One of the things we did when this first erupted, we determined a couple of things. Number one, let’s not change our targets, so our guidance has been the same even though we set those back in March last year for ourselves, we haven’t changed them,” Woolworths CEO, Michael Luscombe, told ABC’s Inside Business program. “Number two, it was going to be important for us to remain confident and to remain very positive about our business and to accelerate the investment in our business and in our people and delight our customers.”
“We also said that we need to have contingency plans should the real unexpected happen. So each of our businesses actually did contingency plans which said x, y and z,” he reported. “When we looked at them we said, ‘Well, hold on, there are a couple here that actually make sense, even now, so let’s start on those’. And they’re under way at the moment.”
The company is looking closely at cost-cutting measures but not planning any redundancies. “If we need to stop doing that job, we need to find another job, re-deploy them elsewhere in the business, and we need to invest in new business so that we can continue to grow our people,” Mr Luscombe said. Last week, the company advised that they would be creating 7000 new jobs in the second-half of the 08/09 financial year.
Mr Luscombe has been satisfied with the stimulus packages to-date, believing the Government’s focus on retail will serve the economy well.
“I think the Government has actually got a good range of immediate fiscal stimulus, because they clearly saw if consumer confidence and spending drops, then the multiplier effect through the economy is going to be pretty dramatic,” he suggested. “There’s no doubt that the Government has looked at the retail industry and seen that whilst it is also the biggest employer of all sectors, that a dollar sale actually has a lovely flow on and an immediate effect, because, you know we sell a box of Corn Flakes, you know, we need to get one made and we need to get one delivered. And the multiplier effect is very strong.”
Source: AFN
Heinz keen to grow Golden Circle brand...
Heinz Australia has advised that manufacturing job cuts are not on the agenda following the acquisition of Golden Circle in December, as it seeks to strengthen the brand it acquired for $288 million. Golden Circle has around 1000 employees working at their two manufacturing facilities, Northgate in Brisbane and Mill Park in Melbourne.
Heinz spokeswoman, Jessica Ramsden, reported that no manufacturing jobs had been cut since the completion of the takeover, with the company actually planning to increase warehouse capacity by 50 per cent at Northgate.
“There will be minimal impact on manufacturing jobs at Northgate and Mill Park. We have plans to invest in the infrastructure of both,” she advised, according to The Courier Mail. “We plan to grow the Golden Circle brand and the production facilities are a very important part of that.”
In the wake of a review of operations, management and administrative functions of the Golden Circle brand are to be consolidated at Heinz’s Australian base in Melbourne, the company reported last week, a decision that would lead to some redundancies.
Heinz formally took ownership of Golden Circle on 19 December, 2008, with the integration likely to be completed by around the middle of the year.
Heinz Managing Director, Peter Widdows, said, upon announcing the takeover, that Heinz planned to position the Golden Circle business as a healthy brand in both domestic and international markets.
“Heinz is a substantial global food company with considerable marketing expertise and we propose to grow Golden Circle as a “healthy product” brand in many new markets,” Mr Widdows explained. “In this transaction, we saw the opportunity to produce Golden Circle food and beverages both efficiently and profitably and we see Golden Circle’s people, growers and customers as vital to our future success.”
Source: AFN
Coles on top in latest CHOICE grocery survey
A month after Woolworths took the cheapest complete grocery basket in 53 out of the 61 GROCERYchoice regions, its main rival Coles has hit back, with figures released today indicating they are now cheaper in 36 of the areas.Choice, which took over the survey earlier this year from the ACCC and plans to update the oft-criticised site in coming months, reported that the differences between the two majors were most pronounced in NSW, Vic and SA - where Coles dominates in the greatest number of regions and its basket of varied goods is cheaper.
Woolies remained cheaper in Queensland, Tasmania and ACT, however, while Aldi again came out on top for a basic staples basket in all regions it operates.
“The price differences might not be pronounced but it’s interesting to see how the crown of having the cheapest basket swings between the two majors,” said CHOICE spokesman Christopher Zinn. “One of the key advantages of a price comparison website like this is to drive competition and we want to develop GROCERYchoice in such a way to maximise the benefit to all consumers.”
Source: AFN
Coles heightens pressure on suppliers...
Coles, Australia’s second largest supermarket operator, has been criticised for allegedly threatening suppliers with the removal of product lines if they decline a 4 per cent increase in trading rebates.
The Age reported that they had spoken to many disillusioned suppliers of grocery goods, upset at higher trading terms with no reported benefits other than maintaining shelf space. The change in trading terms could provide as much as a $500m boost to Coles, although the chain has advised that savings will be passed onto customers.
There were unconfirmed reports that Vittoria Coffee and Safcol had seen their ranges cut, while Arnott’s has reportedly moved all promotional spending to rival chain Woolworths.
A major battle between manufacturers and retailers has been brewing as retailers look to introduce more private label goods and reduce prices to attract more price-conscious customers.
A recent spat between Unilever and Belgian chain Delhaize is symbolic of the bubbling tensions around the world.
Delhaize withdrew around 300 Unilever products from their supermarkets last month after a breakdown in negotiations due to price and product lines. The decision has appeared to negatively impact both companies, with Unilever losing sales from Belgium’s second largest supermarket operator and Delhaize seeing some customers shift allegiance to other chains due to loyalty to Unilever brands.
And the Delhaize example is not the only one, with Tesco last year criticised for changing their trading terms. It was alleged that they offered alcohol suppliers ‘take it or leave it’ terms as they sought to reduce costs, as well as increasing, by 30 days, the time of payment to non-food suppliers.
“Competitive pricing for its customers can be achieved without resorting to the crippling squeeze tactics on suppliers which are yet again rearing their ugly head,” Peter Kendall, President of the UK’s National Farmers Union, said in November. “We are receiving all too many complaints from suppliers, frightened of taking up their issues direct, who have had unilateral price cuts and demands for back payments and over-riders. Frankly, some of these can only be described as outrageous, bully-boy tactics, and they must not continue as we head into recession.”
The UK’s largest retailer has reacted to research, which has suggested that price is now more important to customers than ever before and their boss, Sir Terry Leahy, has indicated they may place greater pressure on suppliers.
“Commodity prices are down over 50 per cent from their peak, and the price of a barrel of oil is down by about a hundred dollars from the giddy height it reached last year. These lower prices need to be fed into the supply chain, and passed on to consumers who are under growing financial pressure,” he said in January.
“We want to ensure that all our suppliers understand this, which is why we are going to great lengths to talk to them about the new pressures that consumers are under. This adjustment affects our entire industry. It will be difficult for some, but it is critical if consumers are to be given what they want. Think of the alternative: keeping prices as they are, and hoping against hope that consumers on tight incomes will buy our goods.”
The Age reported that a Coles spokesman had said that the company had tolerated price increases from suppliers during the ‘commodity boom’ but were now seeking savings as many commodity prices fall.
“We are in continual discussions with our supplier partners about pricing and quality. We want our customers to get the best possible value in our stores, and we expect our suppliers to share that goal,” the spokesman said.
The move is eerily similar to that of UK supermarkets, with most of the majors placing greater pressure on suppliers in a battle for market share. Asda last week reported a cut in the prices of 7500 products after earlier in the year reducing the prices of 5000 products. Tesco has been similarly cutting prices along with other majors - Morrisons and Sainsbury’s - as they look to counter the discount threat. Asda also said they would reduce some product ranges by up to 30 per cent.
With Coles now having such an influence from Asda, the decision by the chain is not unexpected. Ian McLeod, the head of Coles supermarkets, is just one of a number of former Asda employees that have joined the Coles management team in the past year since former Asda boss Archie Norman assumed the role of advisor to Wesfarmers in their quest to execute a five-year turnaround program successfully.
The change in trading terms comes after Coles last week reported that new store layouts, which could be rolled-out throughout the year, had been well-received by customers along with their private label goods - which reaped year-on-year sales growth of about 12%.
One of the trial concepts involves a reduction of the product range, although they refuted claims from media outlets last year that the plan was to reduce the range by 30%.
“Contrary to media reports, Coles does not have a plan to reduce product range in its stores by 30%,” they advised in a statement. “As part of the work to turn around the business, Coles is trialling a number of retailing concepts and experiments in selected stores. One store is trialling a change to the product range dynamics, reducing the range in some product categories and expanding the range in others.”
With all supermarkets seemingly keen to push private label, while also cutting prices and reducing ranges, tensions can only be expected to rise further. But how fierce will the battle become?
A deepening global recession would no doubt exacerbate the friction, but even a recovery may not soften the growing conflict in the supply chain; as the rise of private label is something supermarkets would love to see continue in the years and decades ahead.
Source: AFN
Cadbury goes Fairtrade with Dairy Milk...
Cadbury and the Fairtrade Foundation have announced plans to achieve Fairtrade certification for Cadbury Dairy Milk by end of the UK Summer of 2009. The move will result in the tripling of sales of cocoa under Fairtrade terms for cocoa farmers in Ghana, both increasing Fairtrade cocoa sales for existing certified farming groups, as well as potentially opening up new opportunities for thousands more farmers to benefit from the Fairtrade system.
“This is an historic moment for our company,” Cadbury Chief Executive, Todd Stitzer, said. “I am proud that the nation’s favourite chocolate bar will display the Fairtrade Mark. I was in Ghana last month and saw how vital it is that businesses support their partners and the communities they live in. We believe that by joining forces with the Fairtrade Foundation, we can further improve living standards and conditions for farmers and farming communities, and create a sustainable supply of high quality cocoa for Cadbury.”
“Cadbury’s commitment is breakthrough news for the farmers in Ghana who are very excited that they will be able to sell more of their cocoa as Fairtrade, bringing greater benefits to their communities,” Harriet Lamb, Chief Executive of the Fairtrade Foundation, reported. “We’re delighted to have the opportunity to certify Cadbury Dairy Milk, enabling all those who buy it to make a real difference for cocoa farmers with every purchase. This certainly sets a new standard for the mainstream chocolate industry.”
The company has so far committed to the Fairtrade certification of Cadbury Dairy Milk for the British and Irish markets only.
“By working together, the Fairtrade Foundation and Cadbury believe we can get more people in the UK to buy Fairtrade products and achieve more for this cause than we ever could individually,” Mr Stitzer added.
The Fairtrade Foundation sees this as just a first step in a long partnership to improve livelihoods for cocoa growers.
“The Fairtrade Foundation set out an ambitious strategy last year to double its positive impact for producers by 2012, by opening up opportunities for more and more farmers to join the system, and for those already in the system to be able to sell more under Fairtrade conditions,” Ms Lamb said. “It is precisely this kind of big commitment by a major player such as Cadbury that could make it possible to achieve these goals.”
The Fairtrade Foundation and its international partner certification body, FLO-Cert, will be independently monitoring and auditing the supply chain against internationally agreed Fairtrade standards.
Source: AFN
Coles looking to capture greater slice of fresh market...
Wesfarmers Managing Director Richard Goyder is looking to address the lack of consumer interest in fresh produce at supermarkets, as less than 50 per cent of their customers purchase fresh produce.
Mr Goyder told the Pastoralists and Graziers Association (PGA) convention at the end of last month that he believed their greatest competition actually came from the local greengrocer, deli, fishmonger and butcher rather than other supermarket chains. “Everyone thinks Woolworths is our biggest competitor, but our biggest competitor is right outside our front door,” he said. “In a world where convenience is so important, why is that less than 50 per cent of our customers trust us on fresh produce? That is an issue we need to deal with.”
The boss of the WA-based conglomerate noted that their producers were “very good” but the supply chain was often too long. “We have to sort these systems out,” he explained. “How do we do this? We source better and establish better relationships with our suppliers to get produce into the stores quicker so it is in the customer’s hands at a better quality.”
Mr Goyder suggested they would look at the option of purchasing some goods from local markets in a bid to boost product quality, while also planning to improve the efficiency of their supply chain.
“We want to take advantage of the national scale we have in terms of being able to get that fresh product into our stores, but we also want store managers to go out and buy locally. Whether we can justify doing this across the board will depend on a capacity to supply these products regularly and do it well,” he concluded.
Source: AFN
Asahi to get Schweppes for $1.2Bn after Coca-Cola steps aside...
The Coca-Cola Company has decided against pursuing a counter offer for Schweppes, paving the way for Cadbury’s A$1.185 billion deal with Asahi Breweries to proceed.
Cadbury announced last night that they had entered into a definitive sale and purchase agreement for the Schweppes Beverages business in Australia. A conditional agreement between the firms was completed on December 24 last year, but remained subject to a right of negotiation granted to The Coca-Cola Company in 1999 - under which TCCC had the right until March 2009 to negotiate with Cadbury regarding a potential acquisition of the Schweppes Australia business. This right was granted to TCCC after a takeover bid for Schweppes failed to gain regulatory approval in 1999.
“TCCC has confirmed to Cadbury that it does not intend to pursue its right of negotiation and consequently, Cadbury and Asahi have today entered into a definitive sale and purchase agreement for the same cash consideration as previously announced,” the UK-based confectioner advised.
Schweppes is the second largest non-alcoholic ready to drink beverages business in Australia and its portfolio consists of both owned and franchised brands, including Schweppes and Pepsi. It has around 1,500 employees.
“The successful sale of Schweppes Australia will complete Cadbury’s divestment of its beverage operations,” Todd Stitzer, CEO of Cadbury, said upon first announcing the deal. “As a result, Cadbury will focus solely on growing its Chocolate, Gum and Candy portfolio in line with the Vision Into Action strategy, announced in June 2007.”
Asahi is Japan’s second largest brewer and the deal continues a trend of expansion by Japanese companies into the Australian and New Zealand beverage market. Kirin started the trend amongst Japan’s beverage firms to expand into the region as their home market growth stagnates, with Kirin now owning Dairy Farmers and National Foods as well as a major stake in Lion Nathan, while Suntory recently completed a purchase of the NZ-based Frucor.
“The acquisition of Schweppes Australia will strengthen our international soft drinks business, create a new platform of growth in Australia, and enable us to capture synergies the Group,” Asahi advised in a statement.
Cadbury said they expected that the pre-conditions to closing the transaction will have been satisfied by 30 April 2009, with the deal having already received approval from the Australian Foreign Investment Review Board.
Source: AFN
Costco to open early...
Supermarket giants Coles and Woolworths will have a new kid on the block to go up against later this year with cut-price international grocery warehouse Costco set to open in Melbourne.
Costco will open its first Australian outlet at Melbourne's central Docklands precinct in July, offering everything from greenhouses to diamond rings and fresh strawberries to toilet paper, at discount prices to both wholesale and retail customers.
The store will create 225 new full-time and part-time jobs which Victorian Industry and Trade Minister Martin Pakula said was a "statement of confidence" in Victoria's economy.
The US-based Costco also planned to open a store in Sydney, and was looking "all over" the city for a suitable site, Costco Australian manager Patrick Noone told reporters at Docklands.
The $60 million Melbourne store will be Australia's first, joining a stable of 535 Costco outlets across the United States, United Kingdom, Canada, Mexico, South Korea, Taiwan and Japan.
Following the inroads made by no-frills grocery chain Aldi in Australia, Costco warehouses will offer wholesale prices to small and medium enterprises and also allow retail consumers to buy goods at wholesale prices, for an annual $60 membership fee.
Commenting on the new central Melbourne Costco site, Mr Noone said he hoped people would travel "a long way" to shop there.
"We think they will take to it like ducks to water," he said.
Australian Retailers Association executive director Richard Evans said consumers would take some time to come around to the Costco way of shopping, but the wholesaler was a welcome addition to the retailing mix.
"Australian consumers are very set in the their ways, it's very difficult to get them to change their style of shopping," Mr Evans said.
"Retailing is very competitive but the more competition, the better it is for consumers."
Last year the Australian Competition and Consumer Commission (ACCC) ran an inquiry into the competitiveness of grocery prices in Australia, amid public concern over a perceived stranglehold on the market between Coles and Woolworths.
In its July 2008 report, it found price competition between Coles and Woolworths was limited by high barriers to entry for new competitors combined with limited incentive for Coles and Woolworths to compete aggressively.
But it found Aldi had been a "vigorous price competitor", forcing Coles and Woolworths to lower prices on many products.
Docklands retail and restaurant owners, still reeling from the closure of the heat-buckled Southern Star Observation Wheel, welcomed the announcement, saying it would attract people and bring good flow-on business.
Source: SMH
SPC boss steps down...
SPC Ardmona’s Managing Director has resigned to pursue other interests after almost nine years in the job.
Nigel Garrard, who took up the position of MD at the fruit processing company in 2000, will continue his career as the Managing Director of packaging company Amcor Australasia.
Mr Garrard helped guide the company through the merger of SPC and Ardmona in 2002 and the takeover by Coca-Cola Amatil in 2005. He has faced difficult trading conditions in recent years as the drought takes its toll.
Source: AFN
Mixed response to foray into maths curriculm for McDonald's
McDonald’s Australia is offering a free maths program to more than 1.4 million students nationwide in a move that has divided opinion.
The world’s largest fast-food chain suggests that the program, which normally costs $40 per month but will now be offered free, is about helping the community rather than promoting their products.
“There’s no reference to promoting anything, talking about food,” McDonald’s Australia Managing Director, Catriona Noble, claimed. “We think, along with our licensees, it’s about giving back to the community like we do with Ronald McDonald House charities or little athletics.”
Ms Noble added that the site would be independently run and had been bankrolled on the back of a successful trial with their employees.
“We’re certainly not trying to do the job of educators. We’re not experts in that area and that’s why this is independently developed and run,” she noted. “We’re really proud to be supporting that and we do think it’s every corporate’s responsibility to give back.”
Students will be informed that it is “proudly provided by your local McDonald’s restaurant” upon opening the program, but there are no other links to the company once they begin the tutorial.
The company has the support of Federal Education Minister Julia Gillard and the Australian Secondary Principals’ Association, but NSW State Opposition education spokesman Adrian Piccoli was cynical of the move.
“Maccas should stick to making hamburgers and the Government should stick to educating children,” Mr Piccoli said.
The New South Wales Parents and Citizens Federation is also skeptical, accusing McDonald’s of “subliminal advertising in the greatest form” on ABC radio.
Source: AFN
Myer gains ground...
Earlier this week David Jones’ Mark McInnes departed from the script of gentle sniping that has characterised the public commentary of the two big department store operators on each other’s performance to say that he has the greatest respect for his rivals at Myer, Bernie Brookes and his chairman Bill Wavish. Myer’s latest results explain why.
In the past, going into an economic and retail downturn of the magnitude of the one now being experienced, Myer would have been choking on excess inventory and would have slashed prices to dump stock and maintain volume. David Jones would have been side-swiped.
Instead, the new Myer, having completely re-built its supply chain and become fixated on inventory levels, now focuses on margins and returns on funds employed. It is more disciplined and that has proved a positive, not just for Myer, but for its major competitor.
Myer today announced a 5.3 per cent increase in profits to $83 million. On sales that fell 3.7 per cent, that is a more than creditable effort and reflects the fundamental improvement in the detail of the business that has occurred over the first 34 months of what Brookes and Wavish have always described as a 50-month turnaround phase.
The re-built platform of the new Myer is far more flexible, and its cost base far more variable, than that of the old Myer, allowing it to respond far more quickly and dynamically to changes in retail conditions.
When Myer was acquired by the TPG-led private equity consortium and Brookes and Wavish, both ex-Woolworths, installed to lead the new management team, Myer’s cost of doing business, as a percentage of sales, was about 36 cents in the dollar. In the half-year to 24 January, it was 29.5 cents. Its EBIT (earnings before interest and tax) margin was 3.4 cents in the dollar in the same half of 2006 – today it is 9.15 cents. Myer’s return on funds employed has rocketed from 5.2 per cent to 23 per cent.
With Myer forecasting an EBIT margin for the full-year of seven cents in the dollar, the group is closing in on a vital milestone in its revival.
The Myer team has said in the past that the reason the old Myer stagnated and was unable to expand was because, with margins of less than two cents in the dollar, it couldn’t possibly justify new investment. They have also said that, for the new Myer, the point at which their hurdles for capital expenditure were met would be margins of around seven cents in the dollar.
They’ve had sufficient faith in their ability to get to their target to have already been investing quite heavily, much of it above-store in the supply chain and store management systems, although Myer now operates five more stores than the 60 they inherited and is signing new leases and committing to new stores as part of its plan to expand to 80 stores.
It is also refurbishing/rebuilding core parts of its portfolio, with the refurbishment of its Sydney flagship store completed and the Melbourne store on track for completion within the next 18 months.
Capital expenditure in the half was $57 million, compared with the average of $34 million the old Myer used to spend in the same half in the years before control changed. Myer will spend about $140 million this year.
McInnes’ respect for his competitors is that of a very good retailer, one who has overseen a complete overhaul of his own cost base and the detail of his business model, for two other very good retailers – as he said, Brookes and Wavish are doing "sensible" things that make for sensible competition and that allows both to co-exist and compete profitably.
Whether the competition remains quite so civilised as Myer shifts into its planned growth phase, between 2011 and 2014, and starts to aggressively seek to expand its sales after completing the myriad of business improvement projects initiated during its four-year turnaround phase is another thing. Its cost of doing business and its retail margins are now pushing towards David Jones’ own highly-respected metrics, but on a far larger sales base.
Rational competition between two well-managed businesses is, however – as McInnes was implying – far better than the alternative.
Source: Business Spectator
Global
News:
US: Tesco fails to make hit in the US?...
SUPERMARKET giant Tesco has admitted it may have to rethink its strategy in the US, where its Fresh & Easy brand has not been the hit it was expecting.
Tim Mason, head of the firm's US business, said: "We may have assumed that certain elements of the Fresh & Easy brand would do the work for us and we would not have to go down and dirty on price. That may have been a mistake."
There are 113 outlets in the US but plans to open 200 further branches have been postponed.
Source: The Scotsman
UK: Waitrose warns of long-term pain if quality is compromised for price...
The Managing Director of upmarket UK grocer Waitrose, Mark Price, has told a business conference that companies long-term goals must not be forgotten in the current climate - as short-term gains to reduce costs continue to take precedence.Addressing top retail property bosses, Mr Price acknowledged that the recession will inevitably have changed the way that they look at and run their businesses. However, he explained the importance of keeping a customer focus and that remaining true to core business values is key to survival.
“Businesses need to make a decision - whether to bring down the cost of business operations, or invest in quality,” he advised. “Bringing down the cost of business can create a vicious circle, resulting in poor quality, dissatisfied customers, and ultimately, less money spent in stores.”
“An alternative is to become more focused on innovation, creativity and growth,” Mr Price noted. “At Waitrose, we remain true to our core values of quality and co-ownership. We invest in our staff as long-term shareholders - giving them a sense of collective responsibility - rather than being driven by the need to deliver short-term gains for external shareholders. These values have served us well in the good times… (and) we believe (they) will be essential to our success in the future.
Mr Price suggested that understanding the customer’s needs beyond that of low prices was a key and would serve businesses well as the turnaround edges closer. “Our customers told us they wanted to see a warmer, more contemporary environment; so we invested £6 million to improve the look and feel of our stores,” he explained. “We have also developed new smaller store formats, designed specifically for smaller market towns and smaller footprints.”
“It is not just cost and profit that drives our business forward. It is our relationship with our staff and suppliers, built on mutual trust and respect, which enables us to continue to deliver quality products to our customers,” Mr Price concluded.
Source: AFN
Belgium: Unilever - Delhaize feud ends...
A conflict between one of the world’s biggest grocery suppliers and Belgium’s second-largest supermarket operator, which saw 300 products stripped from the shelves of the retailer, has been defused.
Last month, Belgian supermarket chain Delhaize froze orders of about two-thirds of the Unilever products they normally stock due to a dispute with Unilever over pricing and in-store promotion. A survey last month found Delhaize had begun to lose customers who were brand loyal, while Unilever were losing sales to one of their biggest Belgian customers; consequently forcing an urgent need for both sides to come to a suitable agreement.
“The balanced agreement means a positive outcome for both parties and the consumer,” the two companies said in a brief statement.
Delhaize and Unilever both declined to advise how many products the new deal would cover. Normally the consumer products giant has around 480 on Delhaize shelves but this fell below 200 during the dispute.
“Our products will start reappearing very quickly,” Unilever spokeswoman, Aurelie Gerth said, according to Reuters.
Source: AFN
UK: Supermarkets tag food to stop gourmet crimewave...
Supermarkets in the UK are putting electronic security tags on parmesan cheese, lobster and legs of lamb to ward off a wave of gourmet shoplifters.
Security tags are usually attached to smaller, valuable items such as DVDs, perfume and razor blades – historically the most commonly stolen item.
However, in what is being seen as a sign of the recession hitting the more wealthy, supermarket staff are taking drastic steps to deter thieves, according to UK press reports.
Sainsbury’s in Bedford – north of London – said light-fingered foodies have stolen more than 70 percent of its hard Parmiganio Reggiano cheese, which costs around $4.50 a wedge.
Staff have responded by selling the cheese inside tamper-proof plastic security boxes normally used for selling DVDs. The supermarket said thieves left the more expensive blocks of $8 cheddar behind.
Meanwhile, upmarket food store Marks & Spencer has begun tagging expensive items such as lobster and steak, and supermarket giant Tesco is tagging joints of lamb, organic chickens and pecorino cheese.
Warren Beadle, a Somerfield store manager, told The Guardian: “There’s been a big increase in shoplifting in just the last few months. People are stealing everything from cheese to chewing gum, and we’ve seen them selling on food they’ve just shoplifted in the pubs. I’ve witnessed people selling legs of lamb that have been shoplifted straight out of Marks and Spencer’s.”
Source: Ninemsn
UK: Supermarket shopping & brands? It's a habit...
Supermarkets remain on top when it comes to customer loyalty, according to new research from the UK.
The survey found supermarkets were rated most highly (72%) with consumers when asked which sectors they felt most loyal to.
Perhaps surprisingly, banks remain on a par with supermarkets, attracting the same degree of loyalty.
The study, carried out by researchers Ipsos MORI on behalf of The Logic Group, suggested loyalty to supermarkets and banks “may suggest that for many people loyalty today is still more about habit than a deeper attachment.”
“The traditional models of engendering loyalty are changing with the economic climate; even in sectors where the barriers to switching brands are significant. As consumers we are very clear on the need for organisations to deliver on promises, customer service and recognising us as individuals,” Antony Jones, CEO of The Logic Group, said. “As the recession bites, it is evident that businesses have a very clear brief: focus on improving the customer experience and building loyalty through schemes that deliver rewards that are actually valued by customers.”
In the retail sector, only 24% said they were “very satisfied” with loyalty schemes, highlighting the potential to further engage with shoppers.
“In a business environment where the focus has shifted sharply onto the retention of customers, it is striking that so many of us don’t feel part of loyalty schemes,” Simon Atkinson, MD of Loyalty at Ipsos Mori, noted. “And those of us that are members of loyalty schemes don’t necessarily value them. Current programmes urgently need to be reviewed and refocused if businesses are to successfully create true loyalty amongst today’s consumers.”
Good customer service (34%) remains the leading driver in encouraging people to spend more in the shopping and retail sector, followed by rewards that were relevant to the individual (30%). Rewards that provide discounts were important to 25% of consumers.
In contrast, poor customer service (44%) was the feature most likely to put people off from increasing their spend as members of loyalty programmes, as were unachievable rewards (28%), unrealistic points expiry deadlines (20%) or too much communication (18%).
Source: AFN
UK: ALDI feels weaker demand for non-food...
Hard discounter Aldi is celebrating the opening of its 400th UK store this week. The retailer is feeling the effects of the recession in the UK, with sales growth dipping below 20% chiefly because of weaker demand for non-food goods, Managing Director Paul Foley said. "This is not an easy climate to persuade people to buy a new television, a new water butt, a new wheelbarrow. People are in the mode at the moment of thinking the old one's OK," Foley commented. Aldi makes just under a fifth of its turnover from 'special buy' promotions of non-food goods which vary with the season. However, sales of groceries, its core business, remained strong and were comfortably outperforming rivals - even excluding new store openings - despite the launch of a range of 'Discount Brands' by market leader Tesco. When Tesco rolled out the new private label line positioned against the discounters, "they did me a very big favour because they advertised all my prices... What they basically told the consumer, I believe, is if you want to know what the benchmark for a good price is, go to Aldi." Foley added Aldi's growth was not just a product of the economic downturn as it saw mid-teens percentage sales growth well before the recession in 2006/2007, with less than half from new stores. This Thursday, 2 April, Aldi is opening its 400th store in the UK, in Exeter. In the long term, the discount retailer sees room for up to 1,500 stores in the UK and the Republic of Ireland, where it runs more than 60 outlets.
Source: Planet Retail | 
