IRI's Weekly Retail News Update - w/c 28th November 2016

IRI
Weekly News update
Your window on the latest trends
in Packaged Groceries
Stephen Hall
Friday 2nd December

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• Dunelm acquiring Worldstores, Achica and Kiddicare
• McColl’s completes contactless roll-out
• Poundland to shut up to 80 stores
• New figures have shown that footfall in shops rose by 2% year-on-year on Black
Friday.
• Superdrug creates 43 new jobs with store openings
• FMCG brands reducing reliance on price promotions
• Consumer confidence drops in November
• Britvic posts solid results in challenging market
• 15% of consumers receive unwanted Christmas gifts
• McColl’s hits 1,000 C-stores target but sales performance remains weak
• Tesco hires in 15,000 Christmas staff
• Iceland releases Christmas advert after waiting “until it’s actually Christmas”
• Morrisons ditches Pop music in favour of traditional Christmas carols
Weekly News Summary – 28th November 2016

Dunelm Acquiring Worldstores, Achica And Kiddicare
Dunelm announced today that it has reached agreement to purchase the assets of the WS Group, which consists of the
online retailers Worldstores, Kiddicare and Achica.
The £8.5m rescue deal comes just weeks after KPMG was drafted in to oversee a hunt for new investors in the business
after a difficult few years. The acquisition is subject to each of the companies in the WS Group being placed into
administration and Dunelm then acquiring each of the businesses later today from the administrators.
The WS Group currently generates annualised revenue of around £100m.
Worldstores, which was established in 2008 by founders Richard Tucker and Joe Murray, is one of the UK’s largest online
retailers of products for the home and garden. Achica is a members-only online store offering furniture, homewares and
accessories, often at significant discounts to RRPs for limited periods through flash sales.
Meanwhile, Kiddicare sells nursery supplies and merchandise for children online and from its store in Peterborough. It was
bought by Morrisons for £70m in 2011 before being sold for £2m just three years later.
John Browett, CEO of Dunelm, commented: “We are excited by this opportunity to accelerate the growth of our internet
operation, more than doubling its size, and enhancing our position as the destination Homewares retailer in the UK, both
online and offline. Between the store network, broad product range and strong brand that Dunelm has built and
Worldstores’ extensive homewares and furniture offer and unique platform for next day delivery and flash sales, we will
strengthen our leading position as the UK’s Home of Homes.”
Richard Tucker and Joe Murray, Worldstores’ founders, added: “We’re delighted to be working with Dunelm, in whom we
have found a partner who shares our vision for our company and brands, and is backing our ambitious plans for growth.”
The WS Group management, including the founders, will continue to run the WS Group. Dunelm said it plans to inject up
to £15m into WS Group to fund historic working capital and to manage disruption for suppliers and customers. Dunelm
will also pay around £3m of ancillary and transaction related costs.
The WS Group is expected incur trading losses of around £5-10m in the ending 1 July 2017, but it hoped it will at least
break-even the year after.
Source: NamNews 28th November 2016

McColl’s Completes Contactless Roll-Out
McColl’s Retail has announced that it has completed the roll-out of contactless payment across its entire 1,366-store
estate.
The technology allows customers to make payments in store using debit and credit cards with contactless capability, as
well as via Android Pay and Apple Pay on their smartphones.
The roll-out, which began in August 2016, was carried out at a rate of 100 stores per week.
Dave Thomas, Chief Operating Officer of McColl’s, said: “We are always looking to make the shopping experience more
convenient for our customers at McColl’s. In an increasingly digital retail environment, we wanted to offer our customers
the option of contactless payment, and we are delighted by the response, with a third of all credit card transactions
already coming via this method in our stores.”
“We developed the initiative to meet a clear customer demand for contactless and it will help us to capture more customer
spend as we continue our expansion in the convenience sector.”
UK consumers spent a total of £2.3bn in August 2016 using a contactless card, according to the UK Cards Association, an
increase of 270% per the year.

Poundland to shut up to 80 stores
Leading UK discount retailer Poundland is to close up to 80 stores, just two months after it was acquired by South African
retail giant Steinhoff International, according to press reports.
Consolidation follows rapid expansion
The move to consolidate the Poundland estate follows the rapid expansion of the business last year when it swallowed
rival fascia 99p Stores and converted 235 of its shops to the Poundland fascia, creating an estate of over 900 stores. A list
of stores that Poundland would like to shutter has been circulated to property agents and includes locations nationwide.
First move since Steinhoff acquisition
Steinhoff bought Poundland in a deal valuing the business at £610m in September; previously it owned a 23% stake in
the company. That move has helped Steinhoff expand its position in Europe, building on the 2014 acquisition of Pepkor,
the company behind the start-up variety discount retailer, GHM! Worldwide Steinhoff now operates over 7,000 stores
across 30 countries, including 40 brands in Europe. The acquisitive diversified group also narrowly lost out to Sainsbury's
in its purchase of Home Retail Group earlier this year.
Source: IGD 28th November 2016

New figures have shown that footfall in shops rose by 2% year-
on-year on Black Friday.
According to retail intelligence specialist Springboard, the increase was in contrast to a forecasted drop of 5%.
Diane Wehrle, insights director at Springboard, said: “The results from Black Friday itself were very surprising,
highlighting the fact that Black Friday is still an evolving shopping day in the UK.”
On Friday itself, footfall in high streets rose by 2.8% while retail park and shopping centre footfall edged up 0.8% and
1.4% respectively.
Springboard said the unexpected increase was a consequence of a lower than predicted rise in online purchasing, which
grew by just 6.7% against Black Friday last year. This compared with a forecast of 25% and a rise of 31% in 2015.
Saturday showed a slight fall in footfall overall which was down by 0.8% compared with the same Saturday last year.
However, high street footfall rose by 1.2% year-on-year. Meanwhile, footfall in shopping centres dropped by 4.4% as a
result of a decline in footfall during the shopping hours of 9am to 5pm. Footfall in retail parks was down
1.3%.Springboard said the drop in shopping centre footfall reflects the fact that many of the retailers in shopping centres
are multiples which also have a strong online presence and offer shoppers an opportunity to shop from the comfort of
their sofa.Wehrle added: “This is attractive if centres do not have a range of appeal beyond pure retail that entices
customers out such as restaurants and opportunities for leisure such as cinemas which are now in greater demand as part
of a shopping trip.”
Source: Retail Week 28th November 2016

Superdrug creates 43 new jobs with store openings
Superdrug has opened two new stores in the UK, one on Clerkenwell Road in London and the other in Elliott’s Field in
Rugby, Warwickshire.
The opening of the Clerkenwell Road store created 13 new jobs, while the Elliott’s Field store created 30 new positions.
Elliott's Field opened at 8am on Black Friday (25 November) to give customers early access to in-store deals.
Both stores sell a wide selection of cruelty-free and vegan cosmetics and toiletries, including Superdrug’s own brand and
exclusive products. The London store also has a Brow & Lash Bar for on-site treatments, while the Rugby store will offer
brow threading for as little as £5.
Elliott's Field stocks a wide range of cruelty-free and vegan products
Scott Lewis, Superdrug Clerkenwell Road Store Manager, said: “We’re looking forward to opening a new store in
Clerkenwell offering locals and workers a convenient one-stop shop for their beauty essentials.”
Meanwhile, Anely Kallemets, Superdrug Elliott's Field Store Manager, added: “We think Superdrug will make an excellent
addition to the retail park, and with our beauty services offering, it makes a perfect one stop shop in the lead up to
Christmas.”
Shoppers can order products online and pick them up in-store as part of the click and collect service the A.S. Watson
retailer offers. They can also benefit from using their Health & Beautycard to build up points, which can then be redeemed
on future purchases.
Source: Cosmetics Business 29th November 2016

FMCG Brands Reducing Reliance On Price Promotions – IRI
A new study released today by IRI looking at the use of promotions by FMCG manufacturers and retailers across Europe, highlights a
drop in the proportion of products sold on promotion.
The IRI Price and Promotion in Western Economies report claims that the proportion of FMCG volume sold on promotion in
supermarkets across Europe declined by -0.7 points, compared to the previous year which registered 28.1% of sales purchased
where trade promotions were available. IRI believes that this indicates the first serious pause in promotional escalation seen by the
region since 2012 and is a sign that manufacturers are evaluating whether the high cost of promotions gives them sufficient returns
in the form of increased sales and profit.
More than a quarter of food product purchasing is now bought on promotion (27.7%) but this is a decline of 0.8 percentage points in
the latest year. The proportion of non-food volume (personal care, household and petcare products) in Europe bought on promotion
remained stagnant at 30.0%, a 0.1 point decrease. The steepest decline in the use of promotional tactics was by food products in the
UK (by -3.4% points to 49.8%) and non-food products in Greece (by 1.1% points to 32%).
While manufacturers are using promotions less, when they do engage with shoppers in a battle over price they are often providing
better (deeper) offers meaning the overall amount that has been saved by consumers from promotions is relatively unchanged. The
IRI report highlighted noticeable increases to the depth of deal in the Netherlands, Spain and the UK.
Off shelf display promotions, popular in the UK and France, have also increased in the last year. They now account for 14.5% of all
volume sales in the UK and 11.3% in France. At the same time, use of multi-buys such as BOGOF (Buy One Get One Free) have
declined in the last year in the UK, dropping from 15.2% to 11.9% of all products sold. This has been driven by retailers such as
Sainsbury’s making the decision to cease all multi-buy promotions in their stores this year.
Tim Eales, Strategic Insight Director at IRI UK and author of the report, said: “Retailers rely on manufacturer promotions to increase
store footfall but manufacturers cannot afford to play the promotion game anymore. We expect that more brands will follow by
redirecting their marketing spend from consumer promotion to activities that communicate brand benefits such as advertising, as
well as new product development. Marketers are more alert to the detrimental impact that continuous promotions can have on their
brand equity.
“Further, using advanced predictive analytics, IRI Analytics Advantage, has shown that promotions do not usually drive category
value sales growth but merely switch volume between brands at reduced prices. Consumers are trained to look for deals in store and
concentrate their purchasing on promotional events. They do not necessarily generate new sales. This year’s Price and Promotion in
Western Economies report highlights a tipping point in the use of promotions by manufacturers.”

Consumer confidence drops in November
New data from GfK has shown that consumer confidence has dropped this month due to continuing uncertainty about the
state of the economy.
The company said its long-running Consumer Confidence Index has decreased by five points in November to -8.
The measure for the general economic situation of the country during the last 12 months fell by six points to -25.
Meanwhile, the index measuring expectations for the general economic situation over the next 12 months decreased by
five points to -22 which is 16 points lower than November 2015.
Joe Staton, head of market dynamics at GfK, said: “The big theme is the reduced confidence in the UK economy looking
back and ahead.
“We are viewing our economy over the past 12 months with increasing despondency. The decreasing score on the
economy for the next 12 months also shows we are resolutely gloomy about the outlook despite strong GDP numbers.”
The index relating to the forecast for personal finances over the next 12 months decreased by four points to +2.
In addition, the climate for major purchase index fell by nine points to +5; this is four points lower than this time last
year.
Staton added: “The ‘next 12 months’ figure has been low since the June vote to leave the EU as ongoing economic
turmoil, inflationary pressures and global anxiety impact our levels of confidence.
“Despite recent strong retail sales, we are reporting a sharp -9 point drop in the major purchase index this month and
this will be an acute concern for retailers as they gear-up for the key Christmas selling period.
“Many are saying that fears about the British economy have been overstated, but time will tell if the pessimism shown in
the Index is misplaced or not.”
Source: Retail Bulletin 30th November 2016

Britvic Posts Solid Results In Challenging Market
Britvic has hailed another year of strong results despite “challenging” market conditions in its domestic market.
In the year to 2 October, the soft drinks manufacturer saw its revenues climb 10.1% to £1.43bn with pre-exceptional
EBITA increasing 8.4% to £186.1m. Like-for-like revenue increased 0.4% to £1.32bn.
Britvic’s GB carbonates unit, which includes both the PepsiCo brand and its own brands, enjoyed a good year with
revenues up 5.3% to £595.7m and volumes increasing 4.8%. The group said that Pepsi continued to grow and gain
market share, generating retail market value growth of £28m in a category where value declined £22m.
In a declining market, the group’s GB stills business saw revenues fall 7% to £299.2m with volumes down 5.3%. Britvic
said the removal of the added sugar range of Robinsons in 2015 resulted in a decline in sales as fewer consumers
switched to the new formulation than originally anticipated. However, it added that performance in the second half of the
year had improved, particularly in quarter four when it began to cycle the removal of the full sugar variant. Meanwhile,
whilst its Fruit Shoot range declined, it outperformed the category with the Hydro flavoured water variant in growth.
In France, a weak consumer market led to revenues falling 2.5%, whilst Ireland delivered better performance with
revenues up 5.8%.
The group that it had been “excellent” first year in Brazil with its Fruit Shoot range now launched in Sao Paulo. It also
continued to make progress in the US with Fruit Shoot multi-pack now being sold.
Britvic added that its three-year supply chain programme was on-track to deliver a minimum 15% EBITDA return by
2020.
Simon Litherland, Chief Executive Officer commented: “Britvic has delivered another strong set of results in challenging
market conditions. In our core markets, we continued to take market share with a particularly strong carbonates
performance. Internationally, we have had an excellent first year in Brazil and Fruit Shoot continued to grow in France,
USA with the launch of multi-pack, and latterly in Brazil following its recent launch in Sao Paulo.
“We are confident we will mitigate inflationary input costs through a combination of revenue management activities and
internal cost saving initiatives. The new financial year has started well and although 2017 will be another challenging year,
we expect to deliver pre-exceptional EBITA in line with current market expectations.”

15% of consumers receive unwanted Christmas gifts
Research from ING has found that 15% of people in Europe received at least one gift last year that they didn’t want.
The company also found that 8% of consumers couldn’t remember whether or not they liked the gifts they received last
year, meaning that around 81 million unwanted Christmas gifts were given in 2015.
The findings came as part of the ING International Survey Special Report – Christmas 2016. 13,500 consumers in Europe
were asked about what they spend at Christmas.
People in the UK were found to be the least likely to appreciate or remember if they liked their gifts, followed by Italy and
Romania.
While an estimated €3.7bn was spent on unwanted presents, one in ten consumers ended up in debt over Christmas.
Societal pressure was one source of this, with 42% of people feeling forced to spend money on Christmas festivities.
Consumers in Belgium and the Netherlands tend to spend less on Christmas, with more focus on early December’s
Sinterklaas festival than elsewhere.
A majority of consumers, 70%, felt that Christmas has become too commercial. Early sales events such as Black Friday
could encourage panic buying, leading to less appreciated gifts.
Ian Bright, Senior Economist at ING, explained: “There are many different ways to give at Christmas. Consumers may
want to pause and think about the longer-term effect of their spending, before succumbing to pressure and purchasing
expensive gifts that might go to waste.”
Source: Cosmetics Business 1st December 2016

McColl’s Hits 1,000 C-Stores Target But Sales Performance
Remains Weak
A fourth quarter and full year trading update from McColl’s Retail reveals the group has hit its target of 1,000 convenience
stores, although underlying sales performance remains disappointing.
In the year ending 27 November, the group’s total revenue was up 1.9%, boosted by store openings. However, like-for-
like sales were down 1.9%, impacted by weak sales in newsagents and standard convenience stores where they fell
3.3%. In contrast, like-for-like sales in premium convenience and food and wine stores were down only 1%, whilst sales
in recently acquired and converted stores were up 0.8%.
Total like-for-like sales in the fourth quarter of the year were down 1.7%, a slight improvement on previous quarters.
McColl’s acquired 58 new convenience stores during the year, bringing its total to 1,001 at the year-end. The group
recently acquired 298 convenience stores from the Co-op, although the deal is currently subject to an investigation by the
Competitions and Markets Authority (CMA).
The group also completed 59 food and wine conversions during the year and continued the roll-out of its food-to-go
offering (18 new units rolled out and 13 Subway outlets now in operation).
McColl’s also had 559 Post Offices in operation by the end of the year with 183 Amazon lockers now installed across its
estate.
McColl’s Chief Executive Jonathan Miller commented: “I am delighted to announce that with the recent opening of our new
Erdington store, we have achieved our target of operating 1,000 convenience stores by the end of 2016. This is a
significant milestone in our strategy to grow our neighbourhood presence and serve more McColl’s customers.
“As we announced in July, we will accelerate our convenience store openings in 2017 with the transformational acquisition
of 298 stores from the Co-op. Our integration planning is progressing well and we are on track to begin the conversion
programme in January. We are working closely with the Competition and Markets Authority and expect them to announce
their findings by 23rd December.
“The business has traded robustly in the final quarter with total sales for the full year up 1.9% and we expect our overall
financial performance for the year to be in line with the Board’s expectations.”
Source: NamNews 1st December 2016

Tesco Hires In 15,000 Christmas Staff
Tesco is hoping to continue its run of good performance over the Christmas period with it hiring an extra 15,000 staff to
ensure it has the manpower to cope with the extra demand.
The majority are starting in stores this week and will work across a range of departments. Tony Hoggett, UK Chief
Operating Officer at Tesco said: “Our colleagues are already doing a wonderful job getting ready for the festive season
and with our additional Festive Colleagues joining them in store, we’re ready to help our customers every step of the way
this Christmas.”
Thousands of Tesco’s head office staff will also work in Tesco stores over the festive period as part of its ‘Feet on the Floor’
programme.
Source: NamNews 1st December 2016

Iceland releases Christmas advert after waiting “until it’s
actually Christmas”
The supermarket said it decided on the move after its shoppers reported a growing frustration with Christmas advertising
and in-store activity “months” before the big day.
The advert will premiere on Iceland's social channels at 12pm today before hitting TV screens from tomorrow morning.
Iceland’s family oriented offering is its first celebrity free Christmas advert since it made the decision to part ways with its
ambassador Peter Andre in May as it looked to switch its focus to real families in its campaigns. The 60 second clip, which
was created by London based ad agency Karmarama, follows Nick and Sarah Claus being greeted with a surprise
Christmas delivery from Iceland.
Nick Canning, Iceland joint managing director said: “The feedback from our shoppers was that no one wants to see a
Christmas advert at the start of November. They want to enjoy the Autumn and save the festivities until nearer the big
day to avoid Christmas fatigue, so we’ve listened to them and taken the bold move to put our ad out and Christmas
decorations up later.“
He added: "Our sales from last year showed that 56% of our Christmas transactions don’t take place until December itself
anyway, so why hassle our customers for months beforehand?”
Iceland said the campaign will have a more social media focused roll out than in previous years with the main advert’s
premiere being followed by additional activity on the retailer’s social channels.
Source: NamNews 2nd December 2016

Morrisons Ditches Pop Music In Favour Of Traditional Christmas
Carols
Morrisons is bringing back Christmas carols to its stores after 15 years following research that found customers preferred
traditional songs to current pop music.
During December, shoppers in its stores will hear well-known carols like ‘Silent Night’, ‘Hark The Herald Angels Sing’,
‘Twelve Days of Christmas’, and ‘O Come All Ye Faithful’.
Morrisons has changed the festive playlist following research which found 40% of shoppers said they preferred listening to
traditional carols and old favourites, with the number rising to over 50% in the over 55s. Only 11% prefer to hear today’s
pop songs while 50% prefer to hear Christmas pop songs from the 70s, 80s and 90s.
Meanwhile, 24% said that a poor selection of Christmas music is enough to make them leave a store. More than 40% said
that carols are more relaxing while shopping and 53% said that they were better at getting people into the Christmas
spirit.
Rob Perrett, the Morrisons DJ, commented: “We are constantly listening to our eleven million customers and have learnt
that Christmas pop is not everyone’s cup of tea so we have put more traditional carols back on the menu.”
Source: NamNews 2nd December 2016

IRI's Weekly Retail News Update - w/c 28th November 2016

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IRI's Weekly Retail News Update - w/c 28th November 2016

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