Welcome to our 'weekly news in brief', covering the latest from UK retailers and manufacturers.
RETAIL NEWS
B&M sales surge as DIY and gardening demand spikes in lockdown
B&M has posted a jump in sales during the lockdown, driven by “exceptionally strong” performance in grocery, DIY and gardening categories. The value operator said like-for-likes climbed 6.6% during its fourth quarter, covering the 13 weeks to March 28, buoyed by consumers stocking up on supplies ahead of lockdown. It hailed sales in its grocery categories, including its Heron Foods business, during the period.
B&M said revenue growth has continued since the start of its new financial year. In the eight weeks to May 23, like-for-like sales in its core UK business surged 22.7%.
The retailer said performance in DIY and gardening categories offset “a significant fall in customer count” during the period, as customers stayed at home during the coronavirus pandemic. Excluding those two categories, B&M’s like-for-likes advanced 10.3% over the eight-week period. B&M cautioned that growth in DIY and gardening was likely to represent “significant pull-forward in demand”, sparked by warm weather and the lockdown, rather than additional sales.
Boots leans on digital as it prepares to reopen beauty counters
The health and beauty retailer will be able to offer services in its stores deemed ‘non-essential’ from June 15, which will include reopening its beauty counters. Although the retailer will be temporarily removing testers and face-to-face beauty consultations to adhere with social distancing requirements, Boots will offer shoppers in-store and online video consultations with No. 7 advisers, which last 15-20 minutes and focus on skincare and cosmetic advice.
Other additional in-store safety measures include the introduction of a triaging process for different customers’ needs alongside dedicated social distancing wardens who will patrol stores at all times. The retailer will also have a queuing system to limit the number of shoppers in-store at once and increase its use of floor markings and PPE for staff.
Boots, which launched a new GP and online pharmacy consultation service last month, will also be relying on its digital platform to launch its latest No. 7 product in its first worldwide product launch. The retailer’s new retinol night cream, which has a waitlist of over 100,000 shoppers ahead of the launch next week, will be launched in the UK this week and across the USA, Thailand and Walgreens Boots Alliance’s other international markets at a later date.
Shoppers buying the product via the Boots app will have their loyalty points doubled for their purchase, and the retailer will promote the new product across social channels and digital campaign. Boots’ online sales have nearly doubled during the pandemic, and searches for skincare are up 140% year on year.
WBA global chief commercial officer Annie Murphy said: “We’ve approached this launch really differently and I am so proud of the teams who have remained determined, under such unique and unprecedented conditions to bring, yet another, game-changer to our customers.
Working together with our colleagues at Boots UK and Walgreens we have focused on improving our website capacity and introduced a number of brand new virtual services to ensure our customers can still get the care and advice they expect from our amazing No. 7 beauty advisers.”
Morrisons set to open first concept store to drive clothing sales
Morrisons has reportedly announced it will open its first standalone clothing and homewares store amid the lockdown in an attempt to increase sales of its Nutmeg label.
The grocer said the standalone store would offer the Nutmeg clothing range as well as its own-brand homewares, Retail Week reported. Morrisons has already posted jobs adverts looking for a team leader and customer assistants for the new store.
The retailer said the new store would be located in Bolsover, Derbyshire. It added that due to the success of its products, it is opening a new standalone concept store in Bolsover which is a “one-of-a-kind store” and the first one ever opened as a home and fashion store outside of a Morrisons supermarket. Nutmeg womenswear is currently available across 100 Morrisons stores, while its childrenswear line is available in all of its stores.
Last week, Morrisons become the first grocery chain to offer a safe space for domestic abuse victims as the UK Government mulls a codeword scheme to help them escape from danger. A specific phrase could be used to alert shop workers, who have been trained to identify the key words, the Home Office said.
The Big 4 grocer said it joined forces with charity Hestia in its UK Says No More campaign because a trip to a supermarket is such a routine activity it’s unlikely to alert an abuser.
UK regulator tells retailers to halt Covid-19 antibody test deliveries
UK regulators have told retailers to halt the sale and deliveries of home testing kits for coronavirus antibodies as doubts persist over their accuracy. The Medicines and Healthcare products Regulatory Agency (MHRA) said labs must stop processing the blood samples derived from finger prick tests while it examines how well they actually work.
MHRA devices director Graeme Tunbridge, said the use of unvalidated samples may lead to unreliable results. “People who have purchased one of these sampling kits, and received an antibody test result, should not consider the result to be reliable and should not take any action on it,” he said.
Retailers in the UK that have started selling home antibody tests include Superdrug and Babylon.
The testing kits are made by the healthcare technology firm Abbott and have been approved by Public Health England (PHE) for the NHS to use for frontline health and care workers.
The MHRA is questioning if a home blood sample, via a finger prick, sent in the mail to the lab provides a result that is as accurate as one taken within a clinic, where a healthcare professional draws blood from a vein. PHE has not approved any for use at home
MANUFACTURING NEWS
Estée Lauder launches skincare experience on WhatsApp
Estée Lauder has launched a chatbot called Liv on WhatsApp, in partnership with Rehab. Liv helps users build and stick to a personalised skincare regime with the
aim of educating and supporting consumers while over-the-counter skincare advice is no longer possible.
With a potential audience of over 1.5bn people, Estée Lauder said the experience would allow it to create a 1:1 relationship with its consumers through direct conversations.
Early testing of the experience by Rehab confirmed consumer research that users welcome speaking to brands via WhatsApp, as long as the brand is providing a helpful,
meaningful and valuable conversation.
Rehab's research found that users enjoyed speaking to Liv in a natural place where they were already having conversations with friends and family. They also liked the fact that they did not have to download another piece of software to engage with the brand. They felt educated on how to specifically use Estée Lauder’s products, and while users felt Estée Lauder had a high price point, after learning about the products, they had a better understanding of the benefits. And all showed purchase intent.
“The forward-thinking nature of this digital experience goes beyond traditional communication to provide personalised 1:2:1 beauty advice in a natural, conversational
way,” said Emmanuelle Noyer, vice president & general manager, Estée Lauder UK & Ireland.
“This innovative approach will allow the Estée Lauder brand to instantly connect with consumers with value and meaning while staying true to the brands high touch
identity.”
Britvic sales hit by coronavirus restrictions
Britvic has reported volatile sales across the board due to the pandemic, with its out-of-home channel adversely hit by lockdown restrictions. In the six months to 31 March, revenue rose 1.4% to £698m with profit before tax up 16% to £53m.
Britvic said while it is confident of its liquidity the board will defer its dividend decision to later in the year when the full impact of the coronavirus is clearer.
The drink producer’s net debt position is £664.5m at the half year with undrawn facilities of £162m with £47.6m of cash holdings as at 31 March. The drinks retailer said it had a robust start to the year, but since mid-March the coronavirus restrictions have hit trading activity in the hospitality industry have impacted out-of-home.
The largest impact has been seen in Britain and Ireland, where exposure to the out-of-home channel is greater than in France or Brazil.
Britvic will cut discretionary spend, within which “the most significant lever is A&P”, while also stopping all non-essential and non-committed capex for the remainder fo the financial year. Britvic’s modelling for the impact of coronavirus on its trading assumes that a level of restrictions on movement and social distancing will remain in place until March 2021. Within this, the firm’s conservative view assumes only a small proportion of out-of-home outlets will reopen in this time.
Lactalis UK & Ireland appoints new MD and sales director
Lactalis UK & Ireland, the UK subsidiary of the French Lactalis Group, has announced the appointment of a new Managing Director.
Mike Chatters, formerly the company’s Sales Director, will take responsibility for all the Lactalis UK & Ireland businesses from 1 June. He replaces Hugues Meaudre who is taking on a new position as Managing Director of Lactalis AOC France, based in Roquefort.
Chatters joined the business in June 2015 having previously worked with FMCG brands such as Colgate Palmolive, Coca-Cola, Guinness, and Birds Eye.
He said: “This is an exciting time for our business at a time of growth, and I’m thrilled to be taking on this new opportunity. We have a dynamic brand portfolio, a growing private label business, a dedicated and committed team, and we’re seeing sales growth in all trade channels.
“I’m looking forward to working with the team, our customers and business partners to ensure we continue to meet our ambitious growth objectives by responding to the ‘new normal’ and beyond for our industry.”
Meanwhile, Ian Sanger has been promoted to take over the role of Sales Director. He joined Lactalis in August 2011, with his most recent position being Business Unit
Director – Retail Sales. Lactalis UK & Ireland has a portfolio of cheese brands, including Seriously, Seriously Spreadable, Galloway, Orkney, Galbani, and Président.
Nestlé launches snack delivery service in UK with Deliveroo
Nestlé has joined forces with Deliveroo’s Essentials delivery platform to offer a variety of its brands to UK consumers direct to their door.
As part of the new service, consumers can order a variety of chocolate, sweets and snacks, as well as instant coffee from the app. These include KitKat two finger bars, Fruit Pastilles, San Pellegrino, Nescafé Azera and Nescafé Cappuccino sachets.
The announcement follows in the footsteps of companies such as PepsiCo and Kraft Heinz, which have recently launched direct-to-consumer online stores amid the coronavirus pandemic.
Currently, deliveries are available from 11 Deliveroo sites in Leeds, London, Manchester and Nottingham. Alexandre Manoukian, e-commerce lead for Nestlé Professional, said: “With people not able to just pop to the shop as easily on their lunch break for their favourite drink or snack, it made complete sense for us to be able to work with Deliveroo to bring it directly to their door. Deliveroo offer a completely contactless delivery so it means even those having to self-isolate can enjoy a well deserved treat.”
The partnership comes after Deliveroo collaborated with Kellogg’s last year to offer a menu of meals that incorporate some of Kellogg’s cereals and cereal bars. The delivery-only-meal service, exclusively available on Deliveroo, first launched in East London and then further across the UK for a six-month trial.
Arabella Jenkins at Deliveroo said: “When you can’t justify popping to the shop just for a KitKat to get you through the final hours of your working day, Deliveroo is here to deliver a range of Nestlé snacks and drinks to your door in as little as under 30 minutes.”
Earlier this year, Nestlé reported its best quarterly sales growth in nearly five years, driven by increased consumer stockpiling of its coffee, frozen food and pet food brands.
WIDER INDUSTRY NEWS
Doing the right thing for your consumer is the right thing to do in the ‘next normal’
The grocery trade must now base decisions on what is most important to their shoppers, says IRI UK Managing Director, Dan Finke
In a matter of months, social distancing, panic buying, major staff shortages and stretched supply chains have all placed FMCG manufacturers and retailers under immense pressure. It’s led to the biggest retail reset in decades. We are entering the ‘next normal’ - which will see almost everything about the industry needing to change and adapt.
But, for all the changes and challenges facing brands and retailers, the industry must remember that at the heart of this crisis is a consumer in real need.
With record high unemployment, no clear recovery timeline and shoppers concerned about their health and safety, retailers must consider the human aspect of the impact on the retail sector. Instead of just addressing business challenges, decision making must now shift to reflect what is most important to the consumer.
The pandemic has touched all households and everyone is re-evaluating their circumstances and identifying necessary changes to their lifestyles. We are forecast to enter a deep recession and as in 2008, household spending is likely to come under scrutiny. Retailers and brand owners must work together to provide an offer that delivers value for all, but the subject of value is nuanced and will look very different across households.
We know that shoppers are reassessing where to shop and what to buy as they deal with this continued uncertainty. We have already seen that throughout the lockdown period, consumers have made significant changes to their shopping behaviour; moving from shopping across multiple retailers to picking up all their goods in a single trip to one store for example. As restrictions are loosened, how we adapt will differ across households. Our responses will be individual. Because of that, arguably what we thought we knew about shoppers is brought into question. It’s vital for retailers to connect with the changing needs of their shoppers.
Read the full whitepaper here.
Pandemic hits UK food & drink exports but Non-EU sales of branded goods grow
New data from the Food and Drink Federation (FDF) shows that in the first quarter of 2020, food & drink exports fell by over £700m (-12.7%)
compared to the same period in 2019.
Sales to the EU were hit the hardest, with total value falling by 17.4% compared to 2019. This decrease was largely driven by the immediate impacts of the coronavirus outbreak, including the closure of hospitality and travel sectors, which has meant a loss of sales into restaurants, cafés, bars and the out-of-home sector across Europe.
While sales to the majority of the UK’s top markets declined, demand has been more resilient from other nations, including Singapore, Canada and Norway, which each saw sales growth of more than 10%.
Declines were reported among the UK’s top ten products, with whisky, chocolate, cheese, salmon and gin seeing export value drops of over £20m. Pork, which saw an increase in value, and beef and vegetables, which saw volume increases, were exceptions to this.
The first quarter of the year also saw a fall in the value of branded food and non-alcoholic drinks exports of 9.1%. Sales to all EU nations among the UK’s top ten branded goods export markets decreased in the quarter; almost one third of branded exports are now going to non-EU countries, a 4.5pp increase on the same quarter last year.
The data shows that demand for UK branded food & drink increased in US, Australia and China. Branded exports to Australia rose by 3.5% in the quarter, driven by a rise in sales of cakes and baked goods, including tarts, pastries, wafers, pizzas and quiches, which saw a 12% increase year-on-year. Higher sales of beer and soft drinks helped drive growth to the US by 6.9%, while exports of gin, infant food and bottled water saw the value of exports to China rise to £34m.
Dominic Goudie, Head of International Trade at FDF, said: “Manufacturers and the other hidden heroes working across the supply chain have ensured continued access to essential food and drink for UK shoppers during this crisis. But we can now see how COVID-19 has impacted valuable overseas sales of UK food and drink that were worth over £23bn in 2019. The closure of the hospitality sector in high-value export markets in the EU and further afield has been devastating for many exporters.
However, we can also see that opportunities do remain in retail channels in many markets. Ensuring a quick return to growth will be essential to support resilience in our industry and also the UK’s economic recovery. We are working closely with Government and industry partners to set out a recovery plan that will deliver a return to sustainable export growth right across the UK.”
Nintendo’s Animal Crossing showcases first digital fashion show
Fashion organisation Reference Festival is set to host the world’s first Animal Crossing fashion show, with avatars dressed up in clothes inspired by the likes of Prada, Loewe and GmbH.
The fashion world has embraced Nintendo’s Animal Crossing: New Horizons game since its launch in March, with brands such as Valentino, Anna Sui and Sandy Liang having created custom garments in the game.
The fashion show by Berlin-based Reference Festival has been developed by photographer Kara Chung and Stylist Marc Goehring of 032C, with the final show being three minutes in length and soundtracked by Michel Gaubert.
Speaking about their collaboration, Chung and Goehring told Vogue, “We met through a mutual friend, curator Evan Garza, who had contacted the both of us
for an Animal Crossing piece on Art Forum. We connected on a call right after, and thought it’d be a fun way to collaborate!”
Avatars in the show will be wearing items from brands such as Chanel, Craig Green, and Paco Rabanne.
Talking about the creation of the soundtrack, Gaubert said, “This is the first all digital fashion show I have worked on, and I approached it the same way I would approach a physical show, which is instinctively,”
The online show highlights the ongoing success of cross-industry collaborations, with gaming continuing to be embraced by the fashion world.
Talking to Vogue, Reference Studios Founder Mumi Haiati said, “An intention of the first edition of our festival was showcasing new formats of presenting fashion, innovation at its very core—a subject that has now become more important than ever. With the second edition we will carry on doing so and push the idea even further.
Gaming specifically adds an aspect of community which of course is a most significant factor in contemporary communications.”
Coronavirus: All non-essential retailers to reopen from June 15
All non-essential retailers will be able to reopen stores in England from June 15 as long as they have social distancing measures in place, according to the latest government announcement.
In a statement yesterday evening, prime minister Boris Johnson said that open-air markets and car showrooms would be allowed to open from June 1, and that all other non-essential retailers could open from June 15.
However, he said the move would be “contingent on progress in the fight against coronavirus” and retailers would have to adhere to new guidelines to protect shoppers and workers.
Johnson also said new guidance had been published for the retail sector “detailing the measures they should take to meet the necessary social distancing and hygiene standards”.
“Shops now have the time to implement this guidance before they reopen,” he added. Chief executive of the British Retail Consortium Helen Dickinson welcomed the announcement and said it gave the sector “much needed clarity”.
“We welcome the announcement of the government’s roadmap for reopening a broader range of shops next month, which provides much needed clarity on the route ahead. Safety is the fundamental concern for all retailers and they have been working hard to implement the necessary measures to operate safely over the past weeks. Now that we know which shops can open and when, retailers can begin communicating their plans with their workforces and customers. The industry stands ready to play its part in getting the economy moving again.”
Working towards this date, a £50m fund for local councils to support their high streets was unveiled over the weekend by high streets minister Simon Clarke. The ‘reopening high streets safely fund’ will ”help councils in England introduce a range of safety measures in a move to kick-start local economies, get people back to work and customers back to the shops” and will also help pay for signage, street markings and barriers.
MERGERS AND ACQUISITIONS
Carlsberg UK and Marston’s To Create Brewing Joint Venture
Carlsberg UK and Marston’s have agreed to form a joint venture beer company in the UK called the Carlsberg Marston’s Brewing Company. The creation of the £780m business will allow the two companies to merge their operations and save costs at a time when their sales have fallen dramatically due to the closure of pubs and restaurants during the coronavirus lockdown.
Deloitte seeks buyer for Adelie as it falls into administration
Deloitte has been appointed administrator of food-to-go company Adelie Foods, following the impact of COVID19 on its business. Adelie sells its products to a range of retail customers and contract caterers. Report have mooted Greencore and Bakkavor as potential suitors, but this has not been confirmed
Lotus bakeries acquires majority stake in Natural Balance Foods
Lotus Bakeries has reached an agreement with Natural Food’s to purchase the majority of their remaining stake. Natural Balance foods produces a wide range of innovative wholefood bars sold under Nakd and Trek brands.
