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A new report has suggested discount supermarkets will continue to make inroads in the retail sector, while Australia’s Woolworths and Coles both made it comfortably onto the list of the world’s largest 250 retailers.

As the global economy shifted in 2007 from relatively strong growth, to deceleration and on to modest recession in early 2008, consumers cut back on their spending and turned to discount retailers in ever increasing numbers, according to the report, 2009 Global Powers of Retail, from Deloitte Touche Tohmatsu in conjunction with STORES Magazine.

This is demonstrated in the report, which ranks the 250 largest retailers in the world on fiscal 2007 sales figures, by the strong performance of discount retailers in the Top 10. The big movers were Schwarz Unternehmens Treuhand KG (Schwarz), owner of the Lidl supermarket chain, which climbed three places from 10th to 7th. Over the past five years, Schwarz has grown at a faster rate than any of the current Top 10 with a Compound Annual Growth Rate of 12.6 per cent. Aldi GmbH (Aldi) also climbed this year and was the only new entry in the Top 10 taking the place of Sears Holdings Corporation (Sears). The German discount supermarket operator reaped sales success in a tougher British retail environment last year while stepping up their Australian expansion.

“As we move through 2009, consumers will be intensely value-oriented, even more so than in the recent past,” Dr. Ira Kalish, Deloitte Research’s Director of Consumer Business, advised. “We are seeing this already with consumers shifting to more price focused retailers. For all retailers, this environment will require added attention to keeping costs under control.”

Forty-four retailers experienced declining sales in 2007, compared with 36 the year before. Furthermore, the number of unprofitable retailers in the Top 250 doubled from seven in 2006, to 14 in fiscal 2007.

US-based Wal-Mart remained the world’s largest retailer ahead of France’s Carrefour. Tesco and Metro both climbed one place as The Home Depot, Inc suffered its first-ever annual sales decline in 2007 and dropped two places to 5th. Australia’s two largest supermarket operators both found a place in the global top 30.

Top 10 retailers; sales in $US millions; and compound annual growth rate from 2002-2007 (country of origin in brackets):
1. Wal-Mart (US); 374,526; 10.3 per cent
2. Carrefour (France); 112,604; 3.6 per cent
3. Tesco (UK); 94,740; 12.4 per cent
4. Metro (Germany); 87,586; 4.6 per cent
5. Home Depot (US); 77,349; 5.8 per cent
6. The Kroger Co. (US); 70,235; 6.3 per cent
7. Schwarz (Germany); 69,346; 12.6 per cent
8. Target Corporation (US); 63,367; 7.6 per cent
9. Costco Wholesale Corporation (US); 63,088; 10.7 per cent
10. Aldi GmbH & Co. (Germany); 58,487; 4.3 per cent

22. Woolworths (Australia); 41,021; 11.9 per cent
29. Coles Group (Australia); 27,599; 6.4 per cent

Russian, Chinese and South Korean retailers among fastest growing
2006 saw the entry of two Russian and four Chinese retailers to the Top 250 list, highlighting the growth potential of these regions. This year, all six of these retailers have climbed significantly in the rankings. Indeed, two Chinese retailers now feature in the Top 100. Gome Home Appliance Group is ranked 63rd and is the 8th highest ranked retailer in Asia/Pacific, the first Chinese retailer to break into the regional Top 10.

Furthermore, of the ten retailers with the highest Compound Annual Growth Rate over the past five years, two are Russian, two are Chinese and one is South Korean. Indeed, four of the six fastest growing are from emerging markets.

Tougher times ahead but retailers should still go global for growth
The view that the Asian economy had ‘decoupled’ from the US with Asian companies growing under their own steam, and not because of the United States, has been shown to be wanting following the onset of the current financial crisis. There are tougher times ahead in the emerging markets but they may not be hit as hard as developed economies.

“China’s export growth has tapered off in real terms due to the slowing US economy and the rising value of the Chinese currency. However, inflation appears to be under control allowing the easing of monetary policy,” Dr Kalish noted. “The result is likely to be slower growth but not recession and as consumer spending should remain stable, retailers will be in a strong position. India also faces economic slowdown but not recession. While in the longer term, issues such as excessive regulation, poor infrastructure and limits on the supply of human capital could stifle growth, India should still grow more quickly than its historical pattern and retailers will continue to benefit.”

Many retailers which have gone global to try and take advantage of this growth have found the terrain challenging and not as lucrative as originally anticipated. However, the reasons for going global have not disappeared. Indeed, they have been reinforced by recent events. Retail spending is weak in developed countries and is likely to remain so in the near future.

“For the world’s leading retailers, strong growth will come either from gaining market share at home, or moving into new markets - especially emerging markets,” Dr Kalish said. “In the coming years, we may see second-tier retailers as well as more non-food retailers take the plunge. In addition, we are also likely to see retailers based in emerging markets continue the path of investing in other emerging markets and even in some developed markets.”

In their 2009 Global Powers of Retail report, in which Wal-Mart again came out on top with Australia’s Coles and Woolworths both finding a spot in the top 30 global retailers, Deloitte suggests successful retailers will find a way to enhance the customer experience, while also improving risk management systems.

Cut costs
On a global level, many retailers are finding the going tougher than for the better part of fifteen years, although supermarkets have been among the most resilient worldwide.

“Top-line growth is likely to be problematic for some time to come. Indeed, even after the global economy recovers, some retailers-especially those in the United States-will find that retail spending growth will be constrained by consumer balance sheets,” the report noted. “Thus, profitability will more likely arise from the ability to limit a variety of costs.”

The consolidation of support functions and cuts to the payroll are expected to be among ways retailers will seek to reduce costs. “In addition, they will examine their cost of goods more carefully. They will attempt to negotiate better deals with suppliers, taking advantage of the fact that a recessionary environment creates more of a buyer’s market,” the report added.

Deloitte suggest the time is perfect for businesses to focus on their core businesses, determine the most effective formats for the future and re-negotiate leases.

Risk mitigation
Retailers that were not prepared for a downturn got burned last year and risk management is more important than ever.

“Among the risks that will keep retailers awake will be disruptions to supply chains, currency volatility, natural disasters, man-made disasters, legal liability, and financial market disruption. The latter is probably of most immediate concern,” the report advises. “The recent meltdown in credit markets demonstrated the importance of having sufficient cash on hand and having strong financial service and supplier relationships.”

“Those retailers with supply chains concentrated in one location or with one major supplier may choose to re-think such business design. Diversification of sourcing will be critical.”

A focus on the customer experience will be one way retailers continue to seek a competitive advantage in a challenging environment. Whether it is an improvement in the store layout or design, better customer service or greater product information, retailers need to look for ways that constantly set themselves apart from the competition.

Human resource management
“Perhaps the greatest challenge for retailers, other than the economic climate, will be managing human capital in a way that generates strong results,” the Deloitte report suggests.

A brand or a company is only as good as the people that are behind it. Retailing, be it supermarkets, fast-food outlets, restaurants or clothing stores, requires the ability to attend to the needs of a diverse range of people. Without effective use of human resources, retailers inevitably fail. Training and selection are pivotal, while finding a way to motivate and get the best out of employees is essential to productivity and reducing rates of costly employee turnover.

A multi-channel approach
The retail sector has gone far beyond the traditional ‘brick-and-mortar’ storefront as the internet changes the way businesses interact with consumers. Whether it’s selling products, providing information to consumers or learning about consumers, the internet is a very powerful medium when used correctly.

It has become increasingly important for restaurants to understand how to use the internet to good effect, though it is yet to be used to a great extent by consumers with regard to supermarkets, although this could change in the decade ahead.

Smaller stores
As has been seen in Australia with growth in “express” stores, there will be a continued global shift toward smaller outlets this year. Deloitte suggest this will occur as there will be fewer regulations blocking smaller outlets, they can serve niche sectors and they offer the ability to meet the needs of local customers who do not require the range of larger stores.

Think global
The push toward retail globalisation has continued, but few have managed to reap the rewards they had anticipated due often to either a lack of understanding about the new market they enter or resistance from consumers and local retailers.

The reasons for embarking on a global expansion remain, with developing economies like China and Brazil commonly viewed as some of the most lucrative markets to enter as growth in many western countries stagnates. Strong growth in markets such as Australia relies on market share growth, with expansion overseas possibly providing the best way to boost profits in the long-term.

Many of the world’s largest retailers, particularly those that focus on food, have made considerable investments outside their home markets. In fact, eight of the world’s top ten operate in at least seven countries.

Branding
“Aside from specialty apparel and luxury retailers, branding has not always been seen as important for retailers-especially those that sell food and other mass products. Yet for these retailers, branding has never been more important,” the report states.

Thriving companies will either offer lower costs and prices due to having the most efficient supply chains and economies of scale or focus on managing their brands and the consumers experience with it.

“Indeed, the least successful retailers in recent years have been those with uncompetitive prices and undifferentiated shopping experiences,” the report concluded.

In 2008, food and beverage claims classified as “Natural” - including all natural, no preservatives, organic and wholegrain - were the most frequently featured on new products globally, according to Mintel’s Global New Products Database (GNPD). Claims of ‘fortified products’, on the other hand, took a hit, while declarations of “low” (e.g. low-fat) stagnated.

Almost one in every four (23%) launches last year had “Natural”, a nine per cent rise on 2007 figures.

Meanwhile, widely discussed food and drink claims, such as “Convenience” or “Ethical and Environmental,” failed to put up much of a challenge to the number one position of “Natural” on new products. In 2008, Mintel’s GNPD found only 12% of new food and drink products highlighting “Convenience” benefits, while a mere 5% claimed to take an “Ethical and Environmental” stance.

“Although convenience and the environment are popular talking points today, these benefits did not receive anywhere near the same level of attention as ‘Natural’ claims did,” Lynn Dornblaser, new product expert at Mintel, noted. “With economic struggles driving people toward a simpler way of life, we expect that food and drink manufacturers will
continue to prize natural, wholesome benefits well into 2009.”

In America, the GNPD discovered an even greater percentage of new food and drink products launched with “Natural” claims. One-third of new launches highlighted these attributes, up 16% from 2007. Only 18% of new food and drink products communicated “Convenience” on the packaging, while just 7% expressed “Ethical and Environmental” benefits.

While “Natural” claims increased on new food and drink launches in 2008, fortified “Plus” claims, such as added vitamins or calcium, took the hardest hit. These claims fell 20% during 2008, appearing on just one in 20 new product launches worldwide, according to Mintel GNPD.

What is more, “Minus” claims (low-fat, reduced sugar, low-calorie, etc.), once the height of healthy living, have begun to drop in popularity on new products. Between 2007 and 2008, the number of new “Minus” food and drink launches stagnated globally.

“In the past, low-fat and low-calorie were the hallmarks of good nutrition and dieting, but today, that lifestyle seems passé. On top of this, fortified products are falling out of favour,” Ms Dornblaser advised. “Food and drink manufacturers today realise that natural and pure have become healthy eating ideals, as people look for holistic, genuine nutrition they can trust.”

American research suggests consumer habits are shifting toward thrifty grocery spending but away from more extreme belt-tightening measures seen last year.

The American economy has entered the third stage of its unprecedented transformation and will be characterised by shoppers permanently changing several of their most important rituals involved in the consumer packaged goods (CPG) products they select, purchase and use, according to the “Transforming Economy 3.0: The Search for Affordable Solutions” report, created by Information Resources, Inc. (IRI).

With volatile and uncertain conditions ahead, consumers are spending with caution - continuing to define what is truly essential. Despite relief from record breaking fuel prices, increases in food prices still have shoppers spending more on groceries and getting less. It remains a challenging time for manufacturers who must reinforce the value proposition of their brands without selling out their equity. For retailers, private label continues to be a survival strategy for many consumers, and private label brands continue to evolve in their sophistication, quality and availability.

“While the recession is far from over, our new research reveals that we are entering a third phase,” IRI Consulting and Innovation President Thom Blischok suggested. “The first phase “Shocking the System,” was characterised by rapidly rising energy and food prices, and a dramatic weakening of the home mortgage market starting in late 2007.”

“This phase was followed by stage two, “A Refocus on Impact,” during which consumers reacted radically to their imperiled financial situation by extreme belt tightening, even while prices were beginning to stabilize. In the third phase of “The Lasting Reality,” prices are continuing to level off, financial markets have halted their downward spiral, and many shoppers are backing off their most extreme belt-tightening behaviors.”

Shoppers Continue to Struggle
Shoppers remain significantly concerned about how economic conditions are affecting their financial situation. For example, 84 per cent of surveyed consumers with annual incomes of $35,000 or less point to rising food costs as affecting their financial condition in Q3 2008, although this figure is down slightly from 87 per cent in Q2.

Concurrently, surveyed shoppers report they are spending more but purchasing less. In Q3, shoppers paid on average 3.7 per cent more, but purchased 2.0 per cent fewer units.

“Lower-income consumers began savings strategies the earliest and practiced them most aggressively as compared to other income groups,” Mr Blischok added. “While other groups are beginning to retreat from aggressive savings strategies, lower-income consumers are either not pulling back at all or doing so more slowly.”

Private Label Popularity Based on More Than Price
Private label products continue to be popular with consumers, with dollar share increasing 1 per cent and 0.9 per cent in Q2 and Q3 2008, respectively. However, the attraction of private label results from a combination of quality, variety and convenience, not simply lower prices - according to IRI. Private label purchases grew most rapidly among shoppers earning more than $100,000 annually during Q3.

“The private label phenomenon will continue to be a bright spot for innovative retailers that invest in providing a high-quality, convenient, affordable alternative to shoppers,” Mr Blischok claimed. “It is also a call to manufacturers to rewire the value proposition they offer shoppers and ensure that all product development, merchandising, pricing and related strategies are closely tied to a well articulated, shopper-centric strategy.”

As today’s ageing population spends increasing amounts on prevention rather than cures, the market for mood-enhancing foods will continue to experience healthy growth rates, according to the latest research from worldwide consulting and research firm Kline & Company.

While the functional foods industry has so far focused mainly on physical benefits and health claims, mood, emotional, and cognitive health claims are emerging to form an important new market segment, according to Kline’s FlashPoint report titled Mood-Enhancing Foods and Beverages: The “Fun” in Functional Foods.

Where functional foods and beverages are broadly defined as fortified and enhanced products that offer additional health benefits beyond nutrition, “mood foods” are products that claim to uplift mood, boost mental health, or improve cognitive functions by stimulating brain chemicals known as neurotransmitters.

Mood foods compete directly with a number of dietary supplements that make claims of stress and anxiety reduction and mood enhancement. However, the supplements market contains a plethora of products with unsubstantiated claims and dubious ingredients. Mood foods that are able to furnish scientifically-based, proven claims of efficacy are more likely to realise commercial success.

“Increased consumer demand, the rising incidence of heart disease, a need for cost-effective treatment options, and aging populations worldwide are expected to drive the global markets for functional foods over the next five years,” Laura Mahecha, healthcare industry manager at Kline, indicated.

A number of market research companies have begun to pick up the “mood” trend, as manufacturers look for ways to extend interest in ‘health and wellness’ beyond the usual domain of improving the nutritional profile. Market and consumer intelligence firm Mintel recently included the trend amongst their top 5 to watch in 2009, while the Center for Culinary Development noted it was an emerging trend that had the potential to capture substantial interest and support from a diverse range of consumers.

P.S. Special thanks to Jody Turner and Kathy Baylor from San Francisco / New York based Culture of Future, who gave this great GENERATION G input. For more generosity insights pertaining to attitude differences between various age groups (Boomers, Gen X, Gen Y), please do visit their site.

Has there ever been more urgency for corporations to ditch the greed and embrace generosity? It's something that countless individuals have already started doing, of course: giving is the new taking, and sharing is the new giving. And yes, we do realize that this month's Trend Briefing is massive, but in this business climate, can you really afford not to spend some time figuring out how to get a little closer to your customers? To be a greedy pig or a free cone, that’s the question.

Sometimes big events and ongoing trends clash in a beautiful way, only to converge soon after. Consider the following:

GENERATION G | "Captures the growing importance of 'generosity' as a leading societal and business mindset. As consumers are disgusted with greed and its current dire consequences for the economy—and while that same upheaval has them longing more than ever for institutions that care—the need for more generosity beautifully coincides with the ongoing (and pre-recession) emergence of an online-fueled culture of individuals who share, give, engage, create and collaborate in large numbers.

In fact, for many, sharing a passion and receiving recognition have replaced 'taking' as the new status symbol. Businesses should follow this societal/behavioral shift, however much it may oppose their decades-old devotion to me, myself and I.”

The current financial meltdown has led consumers to be more disgusted than ever (if that’s even possible) with greedy corporate execs who just don’t care. Many in the corporate world are so far removed from what is now an immensely better informed, more opinionated consumer arena, that their (non-)communications, their (inter-)actions, their entire behavior is deeply out of tune with what consumers want and expect in the years to come.

This didn’t happen overnight of course. The financial crisis was just the straw that broke the camel's back: consumers’ negative and raw emotions stem from too many brands who decided to stop caring a long time ago. In most cases, this starts at the top, with share-price-obsessed execs not generous to (or caring for) their employees, who in turn stop giving a damn about actual customers*.

Some fun (US) stats from Reputation Garage:
As few as 13% of all Americans place their trust in big business (and it's not much higher for other mature consumer societies!).
Only 39% of employees in a Watson Wyatt survey said they trusted senior leadership.
Some three-quarters of US consumers feel that companies don’t tell the truth in advertising.
Three-quarters of employees in big companies observed violations of the law or company standards in a 12-month period.

* Now, there are of course brands and executives who do get it, and those tend to be the ones that pop up as leading examples in our trend briefings ;-)

And yet...the need for the opposite of greed (that would be generosity!) is never greater than in challenging times. Challenging times see people craving care, empathy, sympathy and generosity. Now, with a full-blown recession having set in, expect to hear even more about caring, as that’s what consumers and citizens will demand from governments and organizations: someone to take care of their jobs, their savings, their fellow citizens. This need becomes extra poignant in societies where individualism is the new religion, and thus every person, young and old, rich and poor, has been told by society that he or she matters as an individual.

3. For individuals, giving is alerady the new taking and sharing the new giving...

However, in essence, GENERATION G isn't about anger and recessions: the larger and more lasting trend is passionate, empowered individuals (if not entire generations) being more willing and able to give, to share, to collaborate; to be more ‘generous’ in many ways. Which in turn has made generosity one of a new set of status symbols.

For a long time, in the world of the super-wealthy, not engaging in a little philanthropy has meant a serious loss in status. Over the past few years, billionaires around the world have been upping the ante for other financially independent individuals by giving away really big chunks if not all of their fortunes. In fact, it's impossible these days to be very rich and not to donate uber-generously to charity: the benefit to one's social capital completely trumps the monetary gains from keeping one's financial capital sitting in an account. Being generous is seen as a class act, while greed is, well, out.
Now, will the rich donate less to charities in difficult times? Of course. But while economic prosperity dictates the size of gifts and donations, generous behavior has already become the long-term norm.

But. The most important driver behind GENERATION G is a wide variety of consumers and citizens being more generous. We're talking the collaborative / free / creation / crowdsourced / gift / sharing movement* that—especially online—has unlocked in entirely new ways the perennial need of individuals to be appreciated, to be loved, to feel part of the greater good, to contribute, to help... To basically find status and gratification in something other than consuming the most or the best.

Don't think this a passing phenomenon: younger generations practically live online, while over the last dozen or so years, virtually every prediction of how the web would infiltrate the 'offline' world has proven too conservative. As our favorite online guru, Kevin Kelly, rightly stated a few years ago: ‘online culture is the culture’.

So... Everything seems to have aligned to make generosity (“liberality in giving or willingness to give”) a leading theme in the business arena this year. As always, companies can learn from consumers, though it's not a 'want' but a 'need': companies need to mirror this societal shift if they want to regain their relevancy. We’re talking truly becoming a caring brand—one that is generous to customers, generous to employees, generous to the environment, generous to social causes, and so on. We know you know this: GENERATION G is more about context and timing than out-of-the-blue insights.

Still, whereas you (and we) enjoy broad statements like ‘younger generations are more prone to collaboration, sharing and giving’, some of your colleagues and/or superiors will want to see proof of this phenomenon, especially if they themselves are not (yet) part of GENERATION G. Numbers! Facts! Stats! So here are some tidbits—all related to well-known ‘generous’ sites for and by the people—that may help:

Flickr, the photo sharing site, now boasts more than 33 million users, more than 3 billion images, and was handling 3,087(!) new uploads per minute last time we checked. Oh, and the below (from RapLeaf) speaks volumes about which age groups are dominant within GENERATION G:

Wikipedia has 8,687,877 registered users, 144,788 of whom have been actively involved in the last 30 days. It offers 15,741,616 info pages.
13 hours of video are uploaded to YouTube every minute, while 1 billion videos are watched. A day. And that was LAST year.
And don't get us started on the millions of blogs (sharing insights and thoughts), or on reviews (Tripadvisor.com alone hosts 20,000,000 hotel reviews), or on an entirely new infrastructure for giving away excess stuff (just browse the listings at the Really Really Free Market and the FreeCycle Network). Add your own examples if you must, but don't dwell too much on collecting evidence. GENERATION G is above all a trend to be applied as soon as possible.

We know, there’s hardly a company left that doesn't have some kind of ‘social responsibility’ program in place. But while supporting a faraway orphanage, making sure office coffee cups are recycled, and celebrating an annual ‘Diversity Day’ are all laudable causes, social responsibility is hardly ever more than the sum of a number of initiatives that at times can feel forced—a response to societal pressures instead of a holistic desire to be good and to be generous. And we haven't even addressed the need to incorporate generosity towards employees and, above all, customers.

Speaking of which: being generous to customers doesn't always mean giving away everything you have: we're not suggesting you forget about bottom lines and profitability. GENERATION G is about being a bit kinder, a bit more caring towards your customers.

Now, if you’re a loyal trendwatching.com reader, you'll know that in the past few years, we’ve addressed all kinds of ‘generosity’ sub-trends, from FREE LOVE to PERKONOMICS to BRAND BUTLERS. So GENERATION G is really a long-overdue ‘umbrella trend’ that pulls together various existing and new sub-trends. Warning: this is where we’re going to stuff you with examples. So no more excuses: other brands are jumping on the GENERATION G bandwagon, and so can you. Learn from, and get inspired by:
1. CO-DONATE
2. ECO-GENEROSITY
3. FREE LOVE
4. BRAND BUTLERS
5. PERKONOMICS
6. TRYVERTISING
7. RANDOM ACTS OF KINDNESS (RAK)
8. (F)RIGID NO MORE

Let's start with social responsibility, charity and good causes. There are lots of innovative corporate donation programs popping up, and one characteristic many share is that—in tune with the aforementioned 'age of collaboration'—they ask customers to co-decide and (often) co-donate. Another common element is the use of online and/or mobile technologies to make the most of impulse-driven and/or networked fundraising and donating. Be inspired by the following CO-DONATE examples (just the tip of the iceberg, really):

Last year, Google launched Project 10100, encouraging the public to submit ideas that help other people, with the most helpful concepts eventually being implemented with a share of USD 10 million. Submissions can fit into a number of categories, including community, environment, health and education, although Google is reluctant to place any restrictions on the ideas, and also offers an ‘everything else’ category. After the submission deadline on 10 October 2008, the proposals were narrowed down to a shortlist of 100. On 27 January 2009, the general public will be invited to vote for 20 semi-finalists, from which five winners will be chosen by an advisory board.
waitrose

Last July, British grocer Waitrose launched a locally-focused giving program that enlists customers' help in focusing on issues closer to home. Waitrose's Community Matters program assigns each store GBP 1,000 each trading month to donate among three local organizations such as community groups, schools or local divisions of national charities. Customers nominate the organizations to benefit, and Waitrose's local democratic bodies make the final selection. Customers are then offered a token each time they shop that can be inserted in any of three Perspex tubes—one for each of the selected charitable groups. At the end of the month, the pile of tokens donated to each organization is weighed and the beneficiaries receive a corresponding proportion of the cash.
A similar program is in place across the Atlantic at upscale chain Whole Foods, where customers who bring their own bags are rewarded with wooden nickels that can be deposited in boxes assigned for donation to select local charities.
It's a tragic fact that one in five African children die before their fifth birthday from simple causes like dehydration. Basic medicines could save those children's lives, yet no means has yet been found to make them readily available. The ColaLife project aims to tap into the formidable distribution network of none other than Coca-Cola to get oral rehydration salts and educational materials to the children who need them. The project has tapped the power of Facebook and other social networking tools to amass a group of more than 6,000 supporters, garner widespread media coverage and—at least as important—get the attention of Coca-Cola.

One of Denmark's largest consumer goods retailers, Coop Denmark, has added a charitable twist to the process of claiming deposits on bottles. The retailer’s collection machines (in over 1,200 stores) feature a button that lets customers instantly donate their bottle money to charity instead of collecting it for themselves. Also check out a similar German initiative: Pfandtastisch Helfen.

tripadvisor

Tripadvisor recently ran a 'More than Footprints' initiative, in which the company promised to donate USD 1 million. Visitors to the site were invited to vote for one of five pre-selected charities. One million votes were cast, with Doctors without Borders ending up receiving most votes and thus the biggest donation.

mgive

More CO-DONATE initiatives will no doubt follow online, as online spirit of collaboration and new technologies continue to converge. From impulse-driven 'mobile giving' (check out mGive and TEXT2HELP) to political donations (USD 500 million for Obama—need we say more?) to the ubiquitous social networking sites getting into the game too (visit MySpace's Impact initiative, or learn from this Top 10 of Facebook Charity Apps.)

Last but not least, some examples of what we've dubbed 'adopt-a-consumer', a ploy that involves well-off consumers buying something for themselves, and then, directly or indirectly, buying a similar product or service for someone who's, you guessed it, less-well-off:
TOMS Shoes sells simple, ethical, slip-on shoes online, and donates a pair of shoes to a child in need for every pair sold. In addition, TOMS has its own non-profit organization, Friends of TOMS, which allows customers to participate in shoe drops in Argentina and elsewhere, as well as in shoe decorating and give-away parties at American schools. The business distributed 10,000 pairs of shoes in 2006, its first year, while 2008 saw close to 100,000 pairs being donated.
Californian eco-urban design firm LJ Urban aims to make giving more concrete—quite literally—by matching sales of homes domestically with funds to build homes in the impoverished African nation of Burkina Faso. LJ Urban has designed a new eco-urban community of 35 LEED ND Certified homes in the urban core of Sacramento. The community is suggestively named Good, and for each home that is sold, LJ Urban has committed to funding the complete training of a West African mason to build sustainable homes for families in Burkina Faso. By partnering with the Association La Voûte Nubienne (AVN), which has already trained about 60 local masons to build durable homes out of earth bricks and mortar, LJ Urban aims to go beyond just providing homes to imparting enduring skills and jobs to the local community.
Meanwhile, the most publicized adopt-a-consumer' initiative—One Laptop per Child's 'Give One, Get One' program—saw its campaign with Amazon (which ended on 31 December 2008) bring in fewer sales than expected: blame everything from the recession to the growing competition from cheap netbooks. However, the Give One, Get One set-up still offers plenty of good learning (both the dos and the don'ts) if you plan to do something similar this year.

The ECO trend lends itself well to combinations with other trends. So here’s one that’s generosity- related and should make some waves this year: ECO-GENEROSITY.

ECO-GENEROSITY | “Expect companies who are serious about GENERATION G and the environment to quickly move from merely neutralizing and offsetting their undesirable eco-effects to actually boosting the environment by going the extra mile.”

Basically, once companies and consumers can no longer get away with anything less than totally offsetting their negative impact on the environment—and this will happen sooner rather than later—the only way to stand out, to gain any kind of respect in the eco-sphere, will be to go the extra mile and to be ECO-GENEROUS. From planting more trees than is strictly required, to cleaning up not only their own mess, but someone else's, too. Count on being sustainable or being carbon-neutral to soon be merely a starting point, not the end goal. So start thinking about how your brand can actually boost the environment instead of just limiting damage. Call it PR or responsibility or both. As long as you’re going out of your way to be generous, everyone wins.

Check out some early ECO-GENEROSITY examples: some still in the pipeline, others alive-and-kicking:

The 2 billion tonnes of cement used globally every year accounts for more CO2 emissions than the aviation industry; a total of 5% of the world’s emissions. In a bid to combat this threat, British firm Novacem has developed a new formulation that promises not only to negate the 0.4 tonnes of emissions created by one tonne of standard cement production, but to actually absorb 0.6 tonnes of CO2 in the same amount of cement. This turnaround is achieved by using magnesium silicates as raw material instead of traditional alternatives such as limestone. The silicates require far less heating during production and then absorb CO2 during the hardening process. The invention currently has a patent pending, and despite the many hurdles presented by distribution and licensing, Novacem expects to have products on the market within five years. (Tip of the hat to The Guardian.)
ecologos

London-based Ecoigo, a ‘green’ car service, aims to be carbon positive, offsetting double the emissions from every trip as well as from energy used by its office.
As part of its sustainable growth initiative, FIJI Water will offset its total carbon footprint by 120%. Pity it still involves plastic bottles, of course.
The first free green search engine—advertising-funded Ecocho—was launched in 2008 with the intention of planting up to two trees for every 1,000 searches made via its Yahoo-supported search engine, removing a ton of CO2 from the atmosphere. The first trees will be planted in Australia via official government-accredited projects. So far, 6,615 trees have been funded, which will remove 3,307,765 kilos of CO2 from the atmosphere. The service is multi-lingual and will be rolled out globally.
US-based Of The Earth sells handmade Flower Seed Paper that produces flowers after being used. The paper sheets can be planted directly into the soil in a pot or in the garden. Also check out Pangea Organics, who actually incorporate seeds into their packaging.
ecocar

The following is more than a year old (which means ancient in the trend universe), and there’s much doubt if it will become reality any time soon, but it’s the thought that counts: in 2007, Toyota president Katsuaki Watanabe claimed that Toyota’s dream was to create a car that cleans the air while it moves.
Also, the BMW Hydrogen 7 series allegedly sports an engine that actively cleans the air, actually showing emissions that, for certain components, such as non-methane organic gases (NMOGs) and carbon monoxides (COs), are cleaner than the ambient air that enters the car’s engine. Now, even if the above is to be taken with a grain of salt, it perfectly illustrates what ECO-GENEROSITY should be about.

FREE LOVE, or the art of giving away your stuff to consumers, is an enduring trend and is obviously very GENERATION G. Here’s the definition we came up with last year:

"The ongoing rise of free, valuable stuff that's available to consumers online and offline, from AirAsia tickets to Wikipedia, and from diapers to music. FREE LOVE thrives on an all-out war for consumers' ever-scarcer attention and the resulting new business models and marketing techniques, but also benefits from the ever-decreasing costs of producing physical goods, the post-scarcity dynamics of the online world (and the related avalanche of free content created by attention-hungry members of GENERATION C), the many C2C marketplaces enabling consumers to swap instead of spend, and an emerging recycling culture. "

For a lengthy FREE LOVE overview, please read the full briefing (published in March 2008) at trendwatching.com/trends/freelove.htm. In addition, here are a few recent FREE LOVE examples for you to run with:

To celebrate the inauguration of Barack Obama, doughnut purveyor Krispy Kreme UK gave out free Americano coffees. To take advantage of the promotion, which ran the entire week before the inauguration, customers needed only to enter a participating Krispy Kreme UK shop and say, "Yes we can!" to a barista. They’d then walk away with a free Americano coffee.

hsbc

Last December, global banking giant HSBC offered passengers at Heathrow's Terminal 1 a chance to select magazine articles on topics of interest, and have them bound for easy inflight reading. Through a kiosk located beyond security at Terminal 1, travelers were greeted with an HSBC-branded hardback magazine cover. They then browsed a selection of loose-leaf articles, sourced from coverage around the globe focusing on four general topic areas: home and abroad, commerce and politics, health and sport, and media and culture. Once they'd made their selections, travelers took their articles to HSBC's binding bar to be neatly bound inside the cover. During the two-week pilot effort, 2,030 individual magazines were created, while 7,154 travelers visited the stand.

git

Gitchers is a new site that allows consumers to sign up for the chance to receive a free, branded T-shirt. Essentially a database of people who want free T-shirts, either for themselves or for their dogs (special canine T-shirts are distributed through the site as well), consumers tell Gitchers what type of shirt they're interested in—featuring the logo of a favourite brand or website, for example—along with key demographic information such as their birthday, gender and location. Participating companies, meanwhile, tell Gitchers what types of consumers they'd like their T-shirts to be sent to—women aged 35 to 50 in Columbus, Ohio, for example—and pay USD 10.99 each for a minimum of 100 shirts.

tripwolf

Austrian Tripwolf offers free, customized travel guides in PDF format, combining professional editorial content with user-generated content from some 13,000 globetrotters worldwide.
The ad-supported site focuses primarily on Europe and is backed by MairDumont, Europe's largest publisher of travel guides (including the Baedeker, Dumont and Marco Polo brands), which has put all of its content—covering more than 250,000 destinations and points of interest—online for free. Tripwolf also aggregates third-party content from sites like Wikipedia, Flickr and YouTube, and hotel price comparisons are powered by HotelsCombined.com.

FreeGreen offers free, downloadable green house plans. FreeGreen's team of engineers and designers works with industry-leading product manufacturers to create home designs that incorporate different combinations of products, materials and vendors. It also provides 3D images, energy simulations and written descriptions to help consumers find the right fit for their lifestyle. FreeGreen relies on paid placement from product manufacturers, but it takes pains to be transparent about the products it displays.

Last November, the outdoor outfitters at Austrian Northland Professional kicked off a campaign through which billboards gave away free merchandise. Northland affixed samples of its caps, gloves and scarves to roughly 50 billboards throughout the city of Graz. About 20 items were attached to each eye-catching billboard—for a total of about 1,000 in all—and the effort was repeated every other day.

Pedal-powered taxis have been around for years, but Dublin-based Ecocabs has come up with a FREE LOVE twist: free eco-taxi rides throughout the city. Ecocabs are pedal-powered (but battery-assisted, when necessary) tricycles that can accommodate three people for emissions-free transit through congested urban areas. The brand-sponsored vehicles are customized with brand-specific colors and imagery, and drivers can also hand out leaflets, wear branded clothing or target particular areas of the city. Current sponsors of the vehicles include 7Up, Yoplait and KPMG. The company has an ambitious expansion plan: last year, Ecocabs launched free rides in the streets of Toronto, New York, Chicago, and Detroit.

“If consumers value the authentic, the practical, the exclusive, and they're also forever looking to make life more convenient, even save some time, then why persist in bombarding them with one-way advertising campaigns? Instead of stalking potential and existing customers, why not assist them in smart, generous, relevant ways, making the most of your products and whatever it is your brand stands for?”

Shoppers at IKEA furniture stores in Denmark now have a new option for bringing their large, bulky purchases home: a fleet of Velorbis bikes with trailers that are available for loan at virtually no charge. IKEA launched the program after market research found that 20 percent of its Danish customers ride their bikes to the store. It then partnered with Danish Freetrailer, an organization that loans out free trailers for both bikes and cars, to establish the service, which has already begun at IKEA's Gentofte store.
Even more IKEA (yes, they’re quite active as BRAND BUTLERS): in Sweden, the company offered fatigued Stockholm shoppers a form of respite by installing a Sovhotell (sleep hotel) in one of the city's downtown shopping centers. Guests were welcome to snooze for 15 minutes, and were given eye masks and headphones with soothing music to help them benefit from their sponsored power naps.

diesel

Last year, at Dutch outdoor music festival Pinkpop, Diesel provided hot showers, including fresh towels, shower gel and a little something for those pesky hangovers. Festival-goers who showed up between 11 am and noon—the 'One Hour Happy Shower'—were also treated to free underwear.

In November 2008 Zurich Insurance installed ‘Help Point Booths’ at London Heathrow and Zurich airports. The Help Point booths offer free internet access, charging facilities and other concierge services for travelers, including cleaning materials to deal with spilled coffee, and information about travel destinations. Selling insurance will not be a priority, though—the focus is on being helpful. The new campaign arose out of research showing that less than 15% of consumers trust insurance companies and that customers find them uncaring, impersonal and unresponsive.

stovetop

To promote its new Stove Top Quick Cups, Kraft Foods recently offered warmth and samples at select Chicago area bus stops. Kraft posted ads in 50 bus shelters around Chicago featuring the tagline, "Cold, provided by winter. Warmth, provided by us. It's a good night for Stove Top." The company then heated ten of those shelters to give consumers relief from the cold, and gave out samples of its Quick Cups.

And let’s not forget the potential for BRAND BUTLERS apps, widgets and social networking: ‘enormous’ doesn’t even start to describe the potential for brands to serve up useful online and mobile applications that directly tie in with consumers’ profiles, portable devices and so on. Just one straightforward example: Johnson & Johnson lets customers register on its site or via Facebook for an Acuminder account offering renewal reminders for contact lenses changes, easy lens purchasing, and eye exam scheduling.

Basically, spend as much time as you can on Yahoo Widgets, scan through Facebook Applications, or roam the virtual aisles of Apple's iPhone App Store and Google's Android Market. Also keep an eye out of the upcoming BlackBerry Storefront, the Palm App Catalog, and Microsoft’s SkyMarket. If that doesn't get you going, nothing will. And remember, you don't have to develop everything yourself: why not partner with someone who has already done the work for you, be it a lone developer or an app-factory?

PERKONOMICS is another integral part of GENERATION G. Offering new-style perks like reserved parking for owners of a specific automotive brand, or letting preferred customers jump queues at busy events, is an excellent way to become a more generous brand. For an extensive overview we refer you to our October 2008 briefing, including many examples. Below you'll find examples we’ve spotted more recently.

"A new breed of perks and privileges, added to brands' regular offerings, is satisfying consumers’ ever-growing desire for novel forms of status and/or convenience, across all industries. The benefits for brands are equally promising: from escaping commoditization to showing empathy in turbulent times."

Through a pilot program, Seattle-Tacoma International Airport now offers six parking spaces in a prime location of the garage for electric vehicles. The green-striped spots—with power sockets—are located on the garage's fifth floor and are available on a first-come, first-served basis. Standard parking rates apply, but the electricity is free.

perkler

Australian Perkler is an online community "for perks and people who love them," giving shoppers a central place to manage all of their loyalty and rewards programs. Users begin by registering and setting up a virtual wallet to track all of their cards. With a database of more than 500 programs and 150,000 rewards, Perkler combines information about those cards so that shoppers can search all of them at once, even linking to specific retail locations so they know where to get each perk they're interested in. The site is free for consumers; rather, its business model depends on partnering with the owners of loyalty programs, offering aggregated data on customer behavior, better targeting, a platform for advertising, and more touch points for consumer interaction. Perkler hopes to launch in the US and UK soon.

Fashion brand Esprit rewards its most devoted customers with an exclusive Esprit Club Platinum Card that offers several perks (in addition to the obligatory discounts): free alteration service at Esprit stores, professional shopping advice by appointment, access to a special newsletter about exclusive products and promotions, and invitations to exclusive Esprit Events.
Lexus sponsored the Summer 2008 Alicia Keys tour; as part of the sponsorship deal, Lexus offered free parking and VIP passes to any member of the audience that arrived in a Lexus.

This sub-trend keeps on giving: for more than three years now we've been tracking the rise in novel try-out concepts, and the drivers behind TRYVERTISING are alive and kicking in 2009:

"A new breed of product placement in the real world, integrating your goods and services into daily life in a relevant way, so that consumers can make up their minds based on their experience, not your messages."

Needless to say that this year, 'try before you buy' will gain even more popularity due to the current economic crisis and more cautious consumers. Some recent GENERATION G-meets-TRYERTISING spottings:

Californian Pomme Bébé serves nothing but organic baby and toddler meals prepared fresh in its on-site kitchen. The TRYVERTISING twist? Discerning baby clientele can sample Pomme Bébé's offerings—for free—at its Tasting Bar and luxurious, sit-down Bébé Lounge.

And just for the fun of it: Sydney-based Rentachook manufactures and sells a variety of coops, as well as selling the "chooks" (as they're known down under) and feed to go with them. For those who want to test the chicken-keeping waters before diving in, the company lets customers try out its Eco-Coop package and see how it goes for as long as six weeks before they commit to keeping it.

Taking its cues from Tokyo's Sample Lab, where Japanese consumers can sample and test new products, a similar concept has come to China with the launch of Shanghai-based Sampleplaza. Sampleplaza is a new showroom featuring brand-new products not yet available to the Chinese mainstream. Membership costs 100 RMB (about USD 15 / EURO 11) per year, and in exchange, consumers are invited to visit Sampleplaza as often as they want and test out a diverse range of products, from exercise equipment to pantyhose, cosmetics to high-tech, drinks, BBQ sauce, soup and snacks. In addition to trying out samples in the showroom, members are allowed to take home up to 5 items per visit as well. Either way, they need only fill out an online survey—a maximum of 10 questions per product—for each sample that they test.

latestinbeauty

Consumers who sign up with Latest in Beauty for free samples begin by filling out a detailed questionnaire about their natural coloring, needs and preferences. Once they've done that, they can browse the site for products that match their profile and read new product reviews by an independent panel. Based on what they see, they can then choose up to three samples to try at home each month. A few weeks later, Latest in Beauty sends an email requesting feedback, which it then forwards to the cosmetics brands. Latest in Beauty is open only to UK users, who must pay GBP 1 by text message from a UK-based mobile phone to cover postage and handling of each shipment of samples.

Here's a simple, under-used branding tactic that, if practiced consistently and long-term, will delight customers, and do more for positive brand buzz than most mass advertising campaigns: random acts of kindness. Yes, that's right; everything from picking up the tab to sending a surprise gift to loyal customers—preferably in a well-crafted, well-understood campaign—will soften up even the toughest of customers. Learn from:
Leading Chinese e-tailer DangDang.com gives back to its customers—and encourages their vigilant attention to the site—by randomly assigning one hour a day as “Lucky Time” in which all purchases made within that hour are free of charge. (Tip of the hat to PSFK.com.)
Wings is a credit card brand owned by Akbank, one of Turkey's largest banks. The card is targeted at frequent travelers, who earn miles as they shop at member restaurants and shops. Wings recently partnered with five upscale restaurants in Istanbul—Ulus 29, Hakkasan, Gilt, Topaz and Beymen Brasserie—to offer a random selection of lucky Wings members a pleasant surprise. After having dinner at one of the restaurants and paying with their Wings card, the customer is notified that Wings will foot the bill.
Northern-Irish fashion brand ARK (short for Acts of Random Kindness) sells a line of logo-emblazoned shirts for men and women. They ask that each time a customer wears one, they do something kind for someone else – whether it be buying someone a coffee or giving up their seat on the bus. In addition to spreading random acts of kindness, ARK's shirts will no doubt also prove to be conversation starters, providing wearers with status stories to share with family and friends.
While Oprah’s Target-sponsored reality show, The Big Give, won't return to the small screen (Oprah felt that the show—which debuted as the third-most watched series but gradually lost steam—had run its course), it remains an inspiring example of the PR power of RAK when done well.

Last but not least, there’s a world to be won by being less rigid—if not downright frigid—when it comes to interacting with your customers. (F)RIGID NO MORE is as close as you’ll get to the required ‘generous’ mindset. It’s about return policies that don’t require a receipt from loyal customers. It’s about hotels not charging an extra night for that late checkout. It’s about ditching three-months-notice rules for a gym member who wants to cancel his membership due to illness. It’s—as described by the always excellent Seth Godin- about recommending a competitor to a customer that you can’t help.

Anyway, you get the picture. GENERATION G is about not screwing your customers over. It’s about treating your customers the way you would like to be treated the moment you shed your company outfit and don your consumer clothes.

If the recession is hitting you where it hurts, and your budgets are tight, GENERATION G may feel like too costly a trend to capitalize on. We beg to differ:
1. Not all GENERATION G projects and initiatives are costly. Often, it’s a case of mindset, of attitude, of being creative, of finding the right partners, without spending millions. In fact, many of the services and projects highlighted in this briefing didn't cost the world.
2. Those projects that do involve serious money should be paid for by shifting funding from any kind of bland, non-relevant, non-interactive, and above all, non-generous ad campaign you’re planning to run this year. Hey, if others—in all the examples above—can do it, so can you.
3. Not infusing your company’s or brand’s mindset with a heavy dose of generosity will eventually cost you much more. Like, seeing your brand go bust. Which makes any kind of expenditure on generosity a bargain.

Joining GENERATION G as a company or a brand is not really optional, it’s a fundamental requirement if you want to stay relevant in societies that value generosity, sharing and collaboration. Joining obviously entails more than adding a social responsibility or sustainability department; it means adopting a generous mindset that permeates every interaction with your community, with your employees, with your customers, with, wait for it, your ‘stakeholders’. Nothing more or less than a holistic approach* to generosity and business.

The benefits?
It doesn’t hurt that in turbulent times like now, generosity will find an extra-appreciative audience, and certainly won't be forgotten.
Not only will your customers be more appreciative, they'll also return your favors by being more willing to spread the word about you. And being more willing to collaborate with you, co-creating or co-inventing or co-improving. Which would get us to CUSTOMER-MADE. See, we told you this would be an umbrella trend.
And last but not least, to manage a company with a caring, generous mindset can actually be good for your soul, too ;-)

* Quick, mention just ONE Big B2C Brand that has embraced generosity as a leading theme throughout its dealings. And no, usual suspects like Ben & Jerry’s, Google and Nike don't count. Let's face it, most companies don't even have an integrated PERKONOMICS or BRAND BUTLER strategy in place yet, let alone an integrated approach to all GENERATION G sub-trends. The good news? Just by making the first firm steps to a holistic approach to generosity, your brand will immediately stand out, if not become known for being a truly generous brand.

So…. Get started on at least one CO-DONATION project, one ECO-GENEROSITY project, one FREE LOVE project, one PERKONOMICS project, one BRAND BUTLER project, one TRYVERTISING project, one RAK project, and one (F)RIGID NO MORE project. All aimed at coming up with new products, services, experiences and/or campaigns for your customers. Or start the world's first GENERATION G agency/consultancy to help other brands develop and implement a portfolio of ‘generous’ offerings and processes.
Anyway, whatever you do, do it generously!

Peak retail industry body the Australian Retailers Association (ARA) has advised that, after very slow November Christmas sales, the stimulus package and lower interest rates helped Christmas sales skyrocket in the last weeks of December to meet early projections of $37 billion nationally in retail sales. Food retail was not surprisingly at the top of the tree as consumers got into the festive spirit. In fact, food sales accounted for more than one third of retail sales over the period.
According to ARA Executive Director Richard Evans, a two per cent increase on the bumper 2007 Christmas period ($36.5 billion) was a great outcome.

“Considering all the negativity about the economy in the market in October and November, by the last two weeks of December, Australians were more confident about gift giving with reduced petrol prices, lowering interest rates and the Rudd Government’s cash bonus,” Mr Evans said. “From our research, we are also seeing a new type of consumer emerge - a more thrifty, credit-savvy, saving consumer. The lessons learnt from being burdened with high levels of credit card debt will mean in 2009 consumers will be in a much better cash position than we have seen previously.”

“As long as employment in the economy remains stable, and we must remember full employment is measured at five per cent, retailers will remain optimistic of growth returning to the sector in April with significant growth expected from July. We ask all employers, not just retailers, to retain their staff for the sake of the economy,” Mr Evans added.

According to ARA modelling and research among key sector retailers, Christmas sales for 2008 were as follows:

2008 National Christmas retail sales: $36.95 billion (projected $37.2 billion)
National category breakdown:

State by state Christmas 2008 retail sales:
NSW $12 billion (as projected), VIC $8.9 billion (as projected), QLD $7.7 billion (as projected), SA $2.6 billion (expected 2.6 billion), WA $3.95 billion (expected $4 billion), TAS $776 million (expected 781 million), NT $369 million (expected $372 million), and ACT $702 million (expected $707 million)

Kraft Australia has requested approval from Food Standards Australia New Zealand (FSANZ) to use phytosterol esters in their low-fat cream cheeses and low-fat processed cheeses.

Phytosterol esters, commonly known as plant sterols, are prepared by the reaction of phytosterols with fatty acid methyl esters or free fatty acids. They occur naturally at low levels in common vegetable oils and have been reported as an effective way to reduce cholesterol absorption.

Phytosterols are classified as a ‘novel food’ for food regulation purposes, which means that they are not a traditional part of the Australian and New Zealand diet. Phytosterol esters are considered to be novel food ingredients because they do not have a history of significant human consumption by the broad community in Australia and New Zealand at the proposed levels of dietary exposure. They have, however, been introduced to a number of food products in recent years due their nutritional properties.

To date, FSANZ has approved the use of phytosterol ingredients in edible oil spreads (i.e. margarines), breakfast cereals, low-fat milk and low-fat yoghurt to reduce the absorption of cholesterol from food. Coca-Cola recently applied for approval to use plant sterols in fruit juices for the first time.

Kraft has requested exclusive permission for the addition of phytosterol esters to low-fat processed cheese and low-fat cream cheese for a period of 15 months after approval (if approval is granted).

FSANZ anticipates completing their assessment by mid-May, with public comment allowed subsequently. Assuming no concerns are established, approval will be officially provided in early December.

GERMAN supermarket chain Aldi is building new distribution centres in Sydney and Melbourne that will allow it to double its presence in the Australian market.

The company passed the 200-store milestone on December 18 when five stores were opened in Belmont in NSW, Sunshine, Elphington and Cheltenham in Victoria and Beaudesert in Queensland, taking the portfolio to 202 stores just eight years after arriving in Australia.

Managing director Michael Kloeters described the pace of store openings as "frantic", with 38 opened during 2008, 13 of them in December alone, but says he will continue opening at least 30 stores a year "for the foreseeable future".

As a privately held company Aldi doesn't publish its accounts, but Mr Kloeters said annual turnover was now "between David Jones and Myer", which would put annual sales at between $2.1 billion and $3.3 billion.

New regional warehouses to be built in Sydney and Melbourne over the next three years at a cost of $250 million apiece would increase the company's supply chain capacity sufficiently to cater for 460 stores, although the company still had no plans to expand beyond the eastern states, he said.

Mr Kloeters said Aldi would have had an even bigger presence in Australia if it had not been locked out of many desirable locations by landlords who had signed leases with major supermarket retailers that contained restrictive covenants precluding them from renting space to competitors.

"The shopping centre owners are quite keen to have an Aldi store because we are pulling in a lot of customers, but they can only sign a lease with us if there are no restrictive covenants" on leases they held with larger supermarkets, he said.

The Australian Competition and Consumer Commission's inquiry into supermarket pricing last year found restrictive covenants were a hindrance to competition but stopped short of recommending they be banned, although the federal and state governments are examining how zoning laws can be revised to increase the land available for retail development.

Mr Kloeters said a decline in property values was also improving Aldi's prospects for expansion, as landlords became more desperate to fill empty space.

The economic downturn hadn't affected sales to any great degree, he said, with like-for-like sales still increasing across the store network.

But with tighter consumer spending in mind, Aldi had adjusted its merchandise offering over Christmas to include more low-priced gifts rather than big-ticket electronics, Mr Kloeters said.

Unlike a full-line supermarket, Aldi stocks only around about 750 grocery items, more than 95 per cent of which are private-label rather than name-brand products.

By restricting its range to just one of each type of item it can drastically reduce the size of its store and therefore its overheads and prices.

In addition to market-leading prices, shoppers are also enticed with a range of constantly changing general merchandise, shifting from gardening equipment one week to children's clothes the next.

WESFARMERS has confirmed its directors met yesterday "to consider a range of options in terms on refinancing", fuelling expectations the Perth conglomerate is in the final stages of preparing its second major capital raising in less than a year.

One week after warning its first-half profits would be hit by $150 million in writedowns and it "may" need to cut the forecast $2 dividend payout for this financial year, Wesfarmers declined to comment on speculation its board had already agreed to raise up to $3 billion from its shareholders.

The rumours reached fever pitch by late yesterday. One rumour was that Wesfarmers had approached several investment banks including UBS, Goldman Sachs JBWere and Macquarie to help underwrite a rights issue priced between $14 and $14.50 a share. Shares in Wesfarmers yesterday rose 23 cents to $16.83.

Sources close to the company said Wesfarmers had also made "further progress" in refinancing more than $7 billion of debt facilities due to expire by late next year.

But even if Wesfarmers manages to roll over the debt, it is rumoured the company is keen to reduce the level of its debt on its balance sheet to better prepare itself for the economic slowdown which is expected to hit both its retailing and mining businesses.

Expectations have been high for the past week that Wesfarmers could announce the capital raising before the planned lifting of the ban on short-selling on financial stocks (including Wesfarmers) next week. It is unclear if yesterday's decision by the corporate regulator to continue the ban to March 6 affected Wesfarmers' thinking.

An analyst with Merrill Lynch, David Errington, has argued the company needs to raise as much as $4 billion in equity "to secure its future".

"The sooner the issue is resolved the better we believe it will be for Wesfarmers," Mr Errington said in a note following last week's profit downgrade.

"We would maintain our concerns towards the commercial risk of many of its businesses," he warned, if there was no raising.

However, other analysts have argued a capital raising would not be the best option. Citi's Craig Woolford in a note last week said "even at a share price of $26, we estimate the company's cost of debt is now below its cost of equity".

A Goldman Sachs JBWere analyst, Phillip Kimber, said in a note last week it could be preferable for Wesfarmers to have a one-off equity raising rather than a dividend reinvestment plan (DRP). Given fully underwritten reinvestment plans weigh on share prices during the DRP pricing period, Mr Kimber said a one-time equity placement would "effectively condense the share price weakness … into one short period".

Woolworths has today launched a corporate rebranding including a new logo, representing the biggest change to the communication of their brand since the introduction of “The Fresh Food People” just over two decades ago.

The new logo, which resembles a peeling apple, is set to be added to over 100,000 staff shirts, 800 trucks, their trolleys and plastic bags and in their 780 supermarkets. It already appears at 30 stores, all of which have been recently opened or refurbished. The logo will also appear on their private label goods such as ‘Woolworths Select’.

Proclaiming the launch of the logo as “Australia’s new symbol for fresh food”, on both their weekly catalogue and website, Woolworths is confident the update will resonate with consumers.

The new branding was created by Hans Hulsbosch of the Hulsbosch Agency who recently updated the iconic Qantas kangaroo. The logo is designed to provide a connection to “The Fresh Food People” tagline. The image features include:

Woolworths General Manager of Marketing, Luke Dunkerley, has advised that the logo change is part of a host of changes designed to improve the ambience of the shopping experience. “The refurbishment of the supermarkets that is accompanying the rebranding will deliver customers wider aisles, brighter supermarkets and a more pleasant shopping experience,” he claimed.

The update, which will take at least six months, will see all Safeway supermarkets in Victoria adopt the Woolworths name.

Mr Dunkerley added that the company hopes the logo will soon be instantly associated with their famous ‘fresh food people’ slogan. “We believe it expresses, in its own graphic way, our commitment to fresh food in a way that the logo (it) superseded doesn’t,” he told Fairfax.

“As the world becomes a faster place and you need to get through to customers more quickly, having a symbol that represents your company has never been more important. It means we can speak to people [with] one device rather than spell out the whole word.”

Sales growth at retail giant Woolworths slowed in the last three months of last year, with revenue growing 8.1% for the period, down from first-quarter growth of 9.6%.

But the sales data for the second quarter - covering the three months to January 4 - were a credible result given the economic environment, and show that consumers are continuing to make staple purchases while cutting back on discretionary items.

The company has now forecast sales from continuing operations to grow in the ''upper single digits'' for the full year, excluding sales from its highly volatile petrol business.

''Factors such as inflation, fluctuating petrol prices, interest rates, rising unemployment and consumer confidence levels are very difficult to predict in the current environment,'' the company said in a statement.

In early trade, shares in Woolworths were up 12 cents to $26.32.

The company's network of nearly 900 supermarkets and liquor stores in Australia posted 7.1% comparable store sales growth for the second quarter, leading the company to say that it was ''pleased with the Christmas trading period'' and had experienced ''increasing numbers of customers shopping in our stores''.

A quarter earlier, food and liquor sales grew 6.0% on a comparable store basis, which includes only stores open at least a year.

At general merchandiser Big W, comparable store sales rose 6.4% in the second quarter, the ninth consecutive quarter of positive comparable sales expansion for the 155-store chain.

''Results in the home entertainment, childrens wear and everyday needs categories were particularly pleasing,'' said Julie Coates, general manager of Big W.

In consumer electronics, the company's Dick Smith Electronics and Tandy stores posted 6.5% growth for the second quarter on a comparable store basis, an increase on the 4.9% growth of the first quarter.

The company has restructured 33 stores in the Dick Smith chain, and said those stores had reported sales growth in excess of the overall average. New store openings meant the overall sales growth in consumer electronics for the second quarter was 15.8%.

But the company warned the sales growth may not translate into increased profitability, saying that ``it should be noted that the sales result has been delivered at a lower margin as we transition out of certain categories and experience both changes in sales mix and a highly competitive market''.

In its New Zealand supermarket business, Woolworths reported that second quarter comparable store sales picked up 3.0% in local currency terms, matching the growth in the first quarter. The figures fall short of the 5.8% food inflation for the half year, suggesting in sales in real terms are shrinking.

When converted into Australian dollars, overall sales in the first half dipped 1.2%.

In petrol, sales through the company's own sites and those included as part of an alliance fell backwards 3.7% in the second quarter on a comparable store basis. The company linked sales performance to the reflected reduced price of petrol.

The company's hotel business has returned to comparable sales growth. Sales increased 0.9% in the second quarter after falling 0.8% in the first quarter.

ELECTRONICS and furniture retailer Harvey Norman Holdings Ltd plans to close up to 10 stores after sales growth for the fiscal 2009 first half slowed substantially as margins remained under pressure.

Retail king and Harvey Norman chairman Gerry Harvey said the first half had been ''quite difficult'' despite the positive impact provided by the federal government's $10.4 billion fiscal stimulus package in December.

''Every month was down on last year - July, August, September, October and November like-for-like sales were down,'' Mr Harvey told AAP in an interview.

''(The package) worked a little bit for retailers in December, January but it's sort of done and dusted now.''

The company reported sales growth for the six months ended December 31 of 3.5 per cent to $3.15 billion, compared to the previous corresponding period, as consumers continued to tighten their belts.

The growth rate represented a significant slowing from the same period in fiscal 2008, when sales increased 12.4 per cent to $3.04 billion.

Like-for-like sales for the half year increased by 1.4 per cent on the prior corresponding period, when they rose 6.9 per cent.

Mr Harvey said the retailer was preparing for further slowdown in the retail sector.

''We are doing what probably every business in the country is doing at the moment, we're looking at our staff numbers, we're looking at all our costs.

''You have to look at this now or before now otherwise it will come and swallow you later on.''

Mr Harvey said he would close five to 10 Harvey Norman stores in the second half of this fiscal year as consumers cut back discretionary spending.

''We will be closing a few more stores as the next few months progresses,'' he said.

''It's the stores that are not making money, they didn't make money when things were good, they're stores that always struggle - there is just no point in having them.''

The closures come after Harvey Norman announced last week it would shut its Domayne store in Campbelltown in Sydney.

Credit Suisse retail analyst Grant Saligari said the first half sales results were within expectations.

''It reflected some strengthening in sales growth in the Australian franchisee operations in the latter part of calender 2008,'' he said, adding that the slower sales growth was expected because the broader economy had backtracked significantly since 2007.

Harvey Norman's second quarter figures reflected the boost it got from a lift in consumer spending related to the federal government's fiscal stimulus package in December.

Sales from the franchised Harvey Norman complexes, commercial divisions and other sales outlets in Australia, New Zealand, Slovenia and Ireland (excluding Singapore), increased 3.9 per cent in the three months ended December 31 to $1.71 billion, from the same period last year.

That compared to quarter-on-quarter sales growth of three per cent in the three months ended September 30.

Aldi UK confirmed its position as one of the few winners from Britain’s economic downturn, with sales up by a quarter over the past year as wealthier Britons flocked to the discount retailer’s stores.

The German chain, which has struggled to make inroads into the UK market since landing on British shores in the early 1990s, said the brand had built momentum over 2008 as shoppers, mindful of tightening household budgets, decided to try out shopping at the hard discounter’s stores.

Paul Foley, managing director of Aldi UK, said half of his customer base were now people from wealthier sections of society – the so-called ABC1s – against a fifth seven years ago.

“There is a [credit crunch] factor in that,” Mr Foley said. “Perhaps it has put a few per cent [of sales] on, but we would have had this traction with or without the economic situation. Consumers are trying something new, but it is also the style and the quality of the offer that is attractive.”

Total sales rose 24.8 per cent to £2.15bn ($3.19bn) for the year. Mr Foley declined to comment on what the underlying sales figure was for the year.

In the month of December, total sales rose 22.2 per cent. In November, market share stood at 3 per cent, against 2.6 per cent last year, according to TNS Worldpanel.

Aldi increased its number of stores by 10 per cent over the year, moving from 416 to 457 stores across the UK and Ireland. Mr Foley said he would continue at that pace in 2009.

He has also extended his cut-price approach to selling food to holidays, becoming the first supermarket chain in Britain to offer city breaks and beach vacations to consumers.

“That is a fabulous market share performance,” said Jonathan Pritchard, analyst at Oriel Securities. “The industry is not growing at 25 per cent, adding space or not adding space.”

The UK is still a tiny part of Aldi, which has a €45bn ($60bn) annual turnover. But it is putting pressure on rival food retailers. Tesco last year launched discounter brands in an effort to see off the threat. That in turn has hurt the retailer’s margins, since it is having to sell more just to stand still.

Aldi was the first discount supermarket chain, launched as Albrecht Discount, or Aldi, in 1962 by the Albrecht brothers, now Germany’s richest men. It is the world’s tenth-biggest global retailer with stores across Europe. In Germany, Aldi and its rivals – Lidl, Netto and Plus – accounted for 43.2 per cent of the €142.7bn Germans spent on food in 2007.

US-based pizza chain Domino's is aiming to attract more value-focused customers through a new pricing strategy. Chief Executive Officer David Brandon said that the company has lost a number of "single pizza customers" referring to those who place an order for just one pizza and are looking for a cheaper dinner alternative. Domino’s is now implementing a ‘barbell’ pricing model. Some products will be cheaper to appeal to customers who are searching for a good deal. Other premium products will cost more, targeting customers who are not as price sensitive. Brandon gave the new hot sandwiches, which are priced at USD4.99, as an example of the new strategy. Brandon said: “The burger guys have their USD0.99 offering. We feel like we have to be in that space and in that game." Brandon also said that Domino’s will not apply limited-time-only deals anymore, instead adding lasting items to its menu.

UK-based retailer Sainsbury’s has given the go ahead for a new reality TV show, where ordinary staff will compete to replace the boss. The four part programme is to air on Channel 4 in the summer and will feature shop workers taking over various aspects of the business such as marketing, finance, supply and logistics and store layout. The final episode will see the winning candidate stepping into the shoes of Justin King himself. According to a Channel 4 spokesperson, Sainsbury’s liked the idea of the show as it is part of the ethos of the group that it finds talent at every level. If successful, the show will provide an opportunity for publicity, both wooing shoppers and providing staff with an endearing image of their employer.

A lawsuit regarding Procter & Gamble patents for packaging of their Folgers Coffee brand has been settled amicably with Kraft.

P&G filed a lawsuit against Kraft for alleged infringement of packaging patents by Kraft’s Maxwell House. P&G suggest that the packaging of Folgers gives a competitive advantage and claimed the innovation of their containers had helped grow the Folgers brand.

“We are delighted by the terms of this settlement and will not hesitate to do what it takes to continue to protect our intellectual property,” Steve Jemison, P&G chief legal officer, said.

Kraft also reported their satisfaction in ending what threatened to be a long-running court battle. “Kraft Foods is pleased to settle this matter with P&G in such an efficient and pragmatic way,” Marc Firestone, Executive Vice President, Corporate and Legal Affairs and General Counsel for Kraft Foods, stated. “We look forward to moving ahead on our Maxwell House brand.”

Folgers and Maxwell House remain the two leading coffee brands in the United States, despite greater pressure from gourmet coffee products. The financial terms and the details of the settlement will not be disclosed.

Tesco Telecom has reported a jump in Christmas sales with mobile handsets and SIM card sales up 69% year-on-year in the week before Christmas in the UK. This growth has been driven by strong offers, including GBP25 (USD37.19) off a Tesco Mobile handset with a retail value above GBP50 (USD74.38) when customers spent over GBP25 (USD37.19) in the supermarket. According to the retailer, in the last quarter Tesco Mobile sales were up 20%, compared with the previous year.

Falling oil and raw material prices in combination with the discounter threat will lead to a significant easing in grocery prices in Europe in 2009, while six main areas of grocery retailing will be adversely impacted by the economic slowdown. Opportunities still abound, however, with the potential to emerge stronger in the wake of the downturn.

The credit crunch has subdued many grocers’ ambitious plans for mergers and acquisitions, format diversification, international expansion and has put a stop to sales and leaseback deals. Meanwhile, the recessionary environment and financial crisis have dented sales of grocers’ non-food ranges and organic goods.

These are among key conclusions drawn from a report published by Verdict Research, part of the Datamonitor Group.

2008 was a very good year for the European grocery sector with most growth driven by inflation due to exceptionally high oil prices and agricultural raw material price increases. As prices rose grocers reported healthy top and bottom line figures. Food price inflation ran at unprecedented levels, and enabled retailers to prop up their cash profits. As a result the European grocery market grew to €901.5bn in 2008.

However, both trends - high food price inflation and high oil prices - have now reversed. The oil price has fallen back to below US$50 a barrel, less than a third of its peak of more than $150 just a year ago. A glut of better harvests has driven up supply and depressed prices. Adding to the downward spiral of prices are European discounters such as Aldi and Lidl with the influence they exert on price, according to Verdict.

While price reductions will be dependent on currency fluctuations, the competitive environment in various EU countries, the different time lags involved in food production and not least the behaviour of manufacturers and suppliers, Verdict Research believes that falling oil and raw material prices in combination with the discounter threat will lead to lower prices in grocery across the EU in 2009. Last week, an Australian agriculture expert predicted prices here could fall as much as 15 per cent.

“While grocers are to a certain extent insulated against the downturn that is severely hurting the rest of the retail sector, the effects of the credit crunch and the onset of the global recession will still be felt across the European grocery market,” Daniel Lucht, European retail analyst at Verdict research and co-author of the report, advised. “Real estate bubbles have burst, credit availability is curbed and unemployment is rising again. As a result customers have become cautious. The result has been an overriding focus on value from a consumer’s point of view.”

Pushing price increases through, as some hard up producers will demand from retailers, will be extremely difficult in the current economic environment.

Verdict Research has identified six main victims of challenging conditions in the European grocery sector.

Several grocers have suffered declining sales growth of their organic ranges as customers feeling the squeeze struggle to pay the premium charged for these products, Verdict reported. Meanwhile, non-food ranges, which have in the past helped grocers attract footfall and reap the benefits from the higher margin of these products, are no longer pulling in customers as they used to. This has been seen at stores like Marks & Spencer and Tesco in the UK across to Wal-Mart in the US. The hypermarket, popular in the northern hemisphere, but which has never taken off in Australia, is losing favour. Apart from inflationary pressures from exchange rate fluctuations and higher wages in producing countries, the non-food sector is also suffering from a slump in demand for home-related product, especially in countries where the housing market has crashed.

The credit crunch has brought a halt to most M&A activity. “Tightened credit has made financing for any major deal almost impossible to get a hold of,” Mr Lucht noted. “Furthermore while opportunities may exist, in the wake of the crisis any risky investments on the part of both retailers and the financial community are off the agenda for the time being.”

Investments such as store refurbishment, multichannel and format development and innovative ideas to renew the sector have been firmly put on the back burner. Similarly, the pace of international expansion is likely to be subdued as retailers will struggle to raise capital in a recessionary environment and are in any case suffering from a general freeze in liquidity. Another victim of the credit crunch has been sale & leaseback deals, with property prices falling off a cliff, appetite for retail real estate has been reduced significantly.

Despite the grey skies hovering above, Verdict Research believes that there are still opportunities in the market. Significant chances lie in ramping up private label development, gaining more efficiencies in buying and supply chains, cutting unnecessary costs, lateral diversification and in green retailing. Verdict Research believes that organics will be one of the first sectors to bounce back in the post credit crunch era.

“Retailers with the necessary financial muscle should not let this crisis go to waste without emerging far stronger from it,” Simon Chinn, co-author of the report, concluded.

The world's largest drug company,Pfizer, has broken through Wall Street's credit freeze to borrow billions of dollars for a $68bn takeover of rival Wyeth in the first US corporate deal of its scale since the economic crisis began.

The takeover is the biggest tie-up in the pharmaceuticals industry since Glaxo Wellcome's merger with SmithKline Beecham in 2000. It is intended to bolster Pfizer's product pipeline in preparation for the expiry of patent protection on its blockbuster anti-cholesterol medicine Lipitor.

"Investors have rightly been concerned about the clarity of what happens when Lipitor goes off patent," Pfizer's chief executive, Jeffrey Kindler, told a press conference in New York. "Today's announcement definitively addresses that question."

Between them, the two companies will have nearly 130,000 employees although large-scale job cuts are likely as they pool resources in areas such as research and development, marketing and administration.

Pfizer is borrowing $22bn to help pay for Wyeth. Five banks are each lending $4.5bn - Barclays, Goldman Sachs, JP Morgan, Citigroup and Bank of America.

The four US banks involved have all received substantial bail-out funds from the treasury, and Pfizer acknowledged that taxpayers were effectively financing part of the transaction.

"It's really good for America to support a healthy, strong biopharmaceutical organisation," said Kindler, who suggested that few industries created more "intellectual capital" than pharmaceuticals. "It's good to see banks doing what banks are supposed to be doing - lending money to advance the American economy and moving companies forward."

Approved by board meetings of both companies yesterday, the takeover is widely expected to spur further deals in the drugs industry as more multinationals cope with lucrative products losing patent protection.

Wyeth investors will get $33 in cash and 0.985 of a Pfizer share for each Wyeth share - an initial valuation of $50.19 – although Pfizer's stock slumped by 9% during early trading on the New York stock exchange, sharply depressing the price of the deal.

Wyeth's top drugs include an antidepressant, Effexor, and a paediatric vaccine, Prevnar. The company owns over-the-counter brands such as ChapStick lip balm and Robitussin cough mixture. The firm employs 1,500 staff in Britain at four sites, including its European headquarters campus in Maidenhead.

Wyeth's chief executive, Bernard Poussot, said his firm concluded there was a "remarkable" fit: "Everybody in the industry realised that Pfizer would take something of magnitude at some point."

A newly disclosed slump in earnings underlined Pfizer's need for a tonic. Its fourth-quarter profit collapsed by 90% to $266m, partly blamed on a $2.3bn settlement with US prosecutors over the mislabelling of several painkillers. But its underlying sales were weak, with pharmaceuticals revenue down 4% to $11.2bn.

Wyeth, which is based in New Jersey, has insisted on a $4.5bn break fee in the event that Pfizer's deals with banks fall through and the takeover collapses. But irrespective of financing challenges, analysts predict more such pharmaceutical tie-ups.

"This will not be the last deal," said Barbara Ryan, drug analyst at Deutsche Bank in New York. "While Pfizer has specific issues with regard to Lipitor, these issues are systemic and throughout the entire industry. The industry will continue to consolidate to eliminate excess spending."

Sales of Tesco’s discount and value ranges are up 65% year-over-year, and one in four shoppers now purchase these ranges. "Trade is becoming tougher," said Tesco CEO Terry Leahy. "With unemployment rising, and people concerned about their incomes falling, obviously the pressure is on price more than ever." Leahy urged suppliers to pass on lower commodity prices as quickly as possible, and once again called on the government to freeze business rates this year. "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."

Thousands of baristas are to lose their jobs as Starbucks shuts stores to cope with dwindling sales of lattes, cappuccinos and frappuccinos as cash-strapped consumers lose their thirst for coffee.

The Seattle-based chain tonight revealed a 70% slump in quarterly profits to $64.3m and announced that it intends to shed 6,700 employees this year. It is closing 300 stores, two thirds of which will be in the US, on top of 660 shutdowns last year.

As the global economy turns sour, appetite for Starbucks' premium-priced drinks appears to be waning. Like-for-like sales fell by 10% at American stores and dropped by 3% elsewhere in the world - including a decline in the UK during the three months to December.

Starbucks' chief executive, Howard Schultz, is joining in the belt-tightening by asking the company's board to cut his basic salary from $1.2m to $10,000. Schultz, 55, dropped off Forbes' list of the world's billionaires last year as the value of his stake in Starbucks plunged.

In a statement, Schultz blamed the "weakening global consumer environment" for Starbucks' problems. He said the company was following a "well developed plan to strengthen our business through more efficient operations and by preserving the fundamental strengths and values of our brand".

Starbucks' share dropped 2.5% in after-hours trading on the New York Stock Exchange.

The architect of Starbucks' growth during the 1980s and 1990s, Schultz returned as chief executive a year ago to try reignite flagging momentum. He has made a series of changes including improving customer loyalty cards, reviving in-store coffee grinding and axing hot sandwiches which obscure the aroma of coffee in stores.

In another money-saving ruse reported this week, Starbucks' US stores will stop brewing decaffeinated coffee during the afternoons unless a customer specifically asks for it.

Analysts say Starbucks' market has been eroded by improved coffee offerings at fast-food stores such as McDonald's which typically charge much lower prices.

Starbucks has 16,875 stores globally. It once boasted of an ambition to have 20,000 outlets in the US and a further 20,000 overseas, although expansion plans have since been radically scaled back.