UK retail

Posted on by

Payment delays by Tesco found to breach UK Groceries Code

Groceries Code Adjudicator (GCA) Christine Tacon has told Tesco to introduce significant changes to its practices and systems.

Retail chain Tesco acted unreasonably when delaying payments to suppliers, often for lengthy periods of time, according to the UK’s grocery watchdog.

Groceries Code Adjudicator (GCA) Christine Tacon has told Tesco to introduce significant changes to its practices and systems.

After “a thorough investigation” covering 25 June 2013 to 5 February 2015, she found Britain’s largest supermarket seriously breached a legally-binding Groceries Supply Code of Practice that protect groceries suppliers

In a press release, the GCA said the adjudicator was concerned about three key issues:

  • Tesco making unilateral deductions from suppliers,
  • the length of time taken to pay money due to suppliers,
  • and, in some cases, an intentional delay in paying suppliers.

Her five recommendations are:

1: Money owed to suppliers for goods supplied must be paid in accordance with the terms for payment agreed between Tesco and the supplier.
2: Tesco must not make unilateral deductions.
3: Data input errors identified by suppliers must be resolved promptly.
4: Tesco must provide transparency and clarity in its dealings with suppliers.
5: Tesco finance teams and buyers must be trained in the findings from this investigation.

In her report, Tacon said an example of delays in payments arising from data input errors included “a multi-million pound sum owed to a supplier as a result of price changes being incorrectly applied over a long period. This was paid back by Tesco more than two years after the incorrect charging had begun.”

In regard to duplicate invoicing, generally in respect of promotional activity, she said she saw “examples of large amounts owed to suppliers, of which money owed for duplicate invoices formed part of the total, including…nearly £2 million which took over 12 months to be repaid.”

Tesco says it’s sorry & has already made big changes 

Responding to the report’s release, Tesco said in a press release that it accepts the findings of the report and is committed to continuing to build trusted partnerships with suppliers.

Tesco CEO Dave Lewis said that in 2014, Tesco undertook its own review into certain historic practices, “which were both unsustainable and harmful to our suppliers.”

“We shared these practices with the Adjudicator, and publicly apologised. Today, I would like to apologise again. We are sorry,” he said.

After a comprehensive review of how it works with its 3,000 UK suppliers, Tesco says it has implemented 14 significant initiatives to improve the way it works with suppliers and how it runs its business.

The company said that new initiatives included it becoming the first UK retailer to publish its payment terms with its suppliers, resulting in a fair, transparent and consistent approach across its supply base. “The move introduced payment terms of 14 days for hundreds of small and medium-sized businesses across the UK,” it said.

 

 

Posted on by

Sainsbury’s, Lidl and Aldi gain share in UK grocery market

Kantar use this

“Not much festive chair for supermarkets collectively this month with growth falling to a feeble 0.1%.” That’s how Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, began discussing the company’s latest data on grocery share in the UK, covering  the 12 weeks to December 6.

Furthermore, like-for-like prices had fallen by 1.9% in the previous month, he said.

But in among the gloom, Sainsbury’s was the stand-out performer. It boosted sales by 1.2%, growing across its convenience, supermarket and online businesses and increasing its market share to 16.7%.

Meanwhile it was a familiar story of falling sales and shrinking share for Tesco, Asda and Morrisons, but for Aldi and Lidl, one of double-digit growth and they “are surely looking forward to a record Christmas market share,” McKevitt said.

Listen to his analysis and read more here: http://www.kantarworldpanel.com/en/Press-Releases/Sainsburys-stands-out-in-the-run-up-to-Christmas

 

Posted on by

Waitrose plans to open 14 new branches in 2016

Waitrose expects to create 1,500 jobs in new branches and its e-commerce grocery depot in 2016.

Waitrose is to open 14 new shops across the UK from spring next year, including five new supermarkets and nine new little Waitrose convenience shops.

It will also create up to 200 roles in its e-commerce fulfilment centre in Coulsdon, South London, to service its expanding number of branches.

In a press release, the UK supermarket chain said the supermarkets already confirmed include High Wycombe (Buckinghamshire), Uttoxeter (Staffordshire) and Solihull (West Midlands), which will all open in spring, and Truro (Cornwall) and Worcester, which will open in summer.  

It will also add new little Waitrose shops in the South Bank Tower in central London and Leatherhead in Surrey during the summer and has plans for seven more convenience branches in new locations throughout next year.

Juice bars, areas for grazing and informal dining, wine bars and welcome desks are among the concepts Waitrose said it aims to introduce more of in the new stores, “to deliver the modern Waitrose shopping experience.”

It already has eight shops with a juice bar and five shops with a wine and beer bar and recently became the first national supermarket to install a counter for freshly made sushi in its shops with the launch of sushi counters in its Battersea Nine Elms and Bath branches (in partnership with Kelly Deli).

Waitrose director of development, Nigel Keen, said many of the new shops will “go beyond the traditional supermarket, delivering exciting modern shopping experiences, which tap into the growing demand for grazing and casual dining.”

“At a time when many retailers’ estates are contracting, we are delighted to be opening new shops around the country,” he said.

The new outlets will give Waitrose almost 200,000 sq ft more selling space.

Its 80,000 sq ft e-commerce grocery depot in Coulsdon opened in 2015 to allow the supermarket to build its online capacity. The multi million pound centre will eventually fulfill 20,000 orders a week or over 1 million orders a year for Waitrose customers living within the M25. It already employs almost 400 people and once fully operational expects to employ more than 700.

Waitrose currently has 346 shops in England, Scotland, Wales and the Channel Islands, including 62 convenience branches.

Its omnichannel business includes the online grocery service, Waitrose.com, through which customers can choose to have their shopping delivered direct to their home or collect items from their local branch with a Click & Collect service.

Read more articles about Waitrose: https://www.eurofresh-distribution.com/tags/waitrose

Images: Waitrose

Posted on by

British-grown seedless grapes to hit UK stores in 2016

British table grapes are set to become an industry wide initiative by 2018, reducing reliance on imports and significantly decreasing its carbon footprint, Asda said.

British supermarket chain Asda says promising trials growing seedless table grapes in England make it confident of having at least two varieties on its shelves as of early 2016.

It said this would be the first time British seedless table grapes have been on sale. Furthermore, British table grapes are set to become an industry wide initiative by 2018, reducing its reliance on imports and significantly decreasing its carbon footprint, Asda said in a press release. 

It sells 1.4 million punnets of grapes a week and currently imports the fruit from 15 countries, mainly Spain but also from as far away as India, Brazil and Chile.

The grapes grown in the UK will be harvested between August–October, meaning they’re ready to go on shelf to coincide with the Spanish grape season ending,” Asda said.

Its trial took place over the last three years in Kent, in South East England, and originally 8 varieties of grapes were planted – a mixture of red, green and black. This is the first year the grape vines have been full of edible produce, Asda said. It is confident at least two varieties suitable for everyday consumption can now be grown successfully in UK soil.

Asda’s category manager for grapes Alberto Goldbacher said the main challenge in the trial was getting the sweetness right because of a lack of sunshine and light needed for this to develop within the grape. “However, we’ve now seen great promise and are happy to move forward with this trial on a much larger scale.”

“Grapes grown in the UK have previously only been suitable for making wine as they’re typically very small, have a thick skin and have a large seed in the middle. For the first time ever in the UK, these new table grapes are exactly what you’d expect to see on a supermarket shelf, in both look and taste,” Goldbacher said.

Asda said it hopes to educate growers across the UK with its findings, “to give them the skills and knowledge they need to help this become an industry wide initiative by 2018.”  

“The grape project has been made possible thanks to Asda’s ownership of IPL, the biggest single importer of produce in the UK. IPL operates a unique sourcing model which works directly with growers at source rather than going through third-parties. IPL has technologists based around the world who have built close relationships with growers; for this project IPL’s Spanish grape supplier provided the grapevines and their chief agronomist also supervised the planting,” it said.

About Asda

  • 18 million customers a week
  • 616 stores: including 32 supercentres, 332 superstores, 34 Asda Living stores, 201 supermarkets & 15 standalone petrol stations
  • 650 click and collect sites
  • main office is in Leeds, Yorkshire
  • since 1999 has been owned by Walmart

More articles about Asda

Posted on by

Tesco chief calls for retailer-government parternships to tackle challenges

Dave Lewis Tesco boss

The rise of e-commerce was among the challenges for retailers – and nations – that Tesco CEO Dave Lewis raised during a speech today in London.

Saying that “increasingly the world is mobile first, “ Lewis said major online retailers report more than half of their UK transactions are completed on a smart device. “In the UK, digital retailing has doubled over the last five years to become a £10bn business.”

“As a business, we expect continued growth…the challenge for us is how to make our online business of tomorrow as profitable as our offline business yesterday,” he said.

But there are significant challenges the growth of digital  poses for the nation, too. “Digital operations have no real community footprint, far fewer employees and a far lower tax contribution.That should be a dilemma for the Exchequer. Without rebalancing to reflect digital business models the physical side of retail pays a higher and higher proportion of the total tax bill.

“Furthermore it will incentivise a swifter shift to infrastructure light, low employment business with little interaction with communities,” he said.
 

The growth of limited range retailers and convenience shopping

Lewis then went to talk about the rise of limited range retailers and of convenience shopping – in terms of physical shops – which he said have both affected profitability and growth. Limited range retailers have doubled since 2010 and the convenience channel is up 5% again this year.

“Our big stores are also seeing a high proportion of convenience shopping trips – 76% of Tesco convenience trips take place in our Extras or Superstores. But I don’t see this as a challenge per se – I see it as a shift in what customers want or need – and it’s our job to respond.   

“What I do see as a challenge is that whilst the customer was heading in one direction the industry was heading in the other…between 2007 and 2014 it added around 35 m sq ft,” Lewis said, going on to talk about the pain caused by having to close stores and halt construction on others.

 

The burden of higher structural costs when profits are at a low point

Lewis said the real challenge for the sector is that it is struggling with structural cost at a time of historically low profitability. While two years ago food inflation was running at 4%, now it’s -2.4%. That’s great news for customers but puts significant pressure on parts of the retail industry.

“In supermarkets profitability has sunk from 5% to 2% in five years and now we face significant new cost pressure. This is a potentially lethal cocktail,” Lewis said, going on to say that meanwhile property values have fallen but business rates are up. Tesco’s own business rates bill has climbed well over 35% in the last 5 years. “That’s an enormous pressure. Shops have closed. Businesses lost. Jobs sacrificed,” he said.

And on the UK’s National Living Wage, Lewis called for fuller debate, saying that while Tesco was supportive of the living wage when announced, “our concern, and the concern of many colleagues, is that there is pressure to increase base pay at the expense of benefits. We don’t think this is the answer.”

 Tesco boss Dave Lewis

Call for more government-industry consultation, collaboration

Lewis went on to discuss the need and – opportunity – for the retail industry and business to work closely with government on three issues.

“Firstly, I would encourage the industry and Government to sit down at the highest level and consult on the multiple policy changes that are affecting the industry, to share together the consequences of higher rates, the living wage and initiatives such as the apprenticeship levy,” he said.

Secondly, he called for partnership on employment, skills and training challenges.

And Lewis said health and food education is the third area with real potential for partnership and innovation.

“Millions of Britain’s shoppers are weekly Tesco customers.  We have more than 40 million transactions a week. And when we reformulate, we can remove billions of calories from their shopping trips.”

Tesco estimates it has helped save around 1,500 lives through joint efforts to reduce salt and its action on soft drinks means the average customer is now buying 20% less sugar in such drinks, examples of just some of Tesco’s health initiatives. “We make large scale contributions to heart health, cancer research and the fight against diabetes,” he said.

“I want to partner and innovate more on health. Not because I want to burnish Tesco’s image but because two thirds of supermarket shoppers want me to,” he said.

“We are uniquely placed to nudge millions of people every week towards healthier choices. Our customers want it and the government can benefit greatly from it… if we can meet in the middle ground. Nurturing growth – social value alongside economic value – in an era of extraordinary change needs a new level of collaboration.”

Lewis was speaking at the CBI conference. The CBI is the UK’s premier business lobbying organisation, providing a voice for employers at a national and international level.

Read the speech: http://www.tescoplc.com/index.asp?pageid=17&newsid=1242

Images: https://www.flickr.com/photos/tescomedia/albums

 

Posted on by

Waitrose banks on omnichannel strategy

Last year Waitrose opened another 20 ‘little Waitrose’ convenience shops and 13 new core shops. It now has 339 shops in England, Scotland, Wales and the Channel Islands, including 61 convenience shops.

Upmarket grocer expanding in online and convenience as it braces for more pain in the world’s toughest food market.

In February, Waitrose regained its crown as the best UK supermarket after a year in which its like-for-like sales increased 1.4%, it had an average 400,000 more customer transactions a week, and its slice of the UK grocery market largely stayed above 5%, rising from 4.8% two years before.

Even so, a deflationary market and fierce competition from the fast-growing discounters Aldi and Lidl – forcing it to cut prices and invest in improved service – saw its operating profit tumble 23.4% to £237.4 million. And Waitrose expects returns for the grocery sector “to be materially lower for a period of time.”

Screenshot 2015-07-06 at 12.41.59.png

The UK grocery market is rapidly fragmenting and the ‘big four’ – Tesco, Asda, Sainsbury’s and Morrisons – are being squeezed at one end of the price and quality scale by Aldi and Lidl, and at the other end by upscale rivals Marks & Spencer and, particularly, Waitrose.

According to Kantar Worldpanel data on Great Britain’s grocery market, Waitrose’s share has risen from 4.6% in the 12 weeks to October 14, 2012, to 5.1% as at this June 21, while Lidl went from 2.8% to 3.9% and Aldi, overtaking Waitrose, from 3% to 5.5%.

Novel ‘Pick Your Own Offers’ scheme

Fighting back amid the unrelenting price war in the UK, in June Waitrose introduced a new scheme offering loyalty cardholders 20% off their favourite 10 items from an initial list of almost 1,000 lines.

WAITROSE Pick your own offers.png

Waitrose CEO Mark Price described the ‘Pick Your Own Offers’ scheme as ground-breaking but admitted it would be expensive for the grocer. Cherry vine tomatoes have been among the most chosen products so far.

Building online and convenience offer

Being “Britain’s leading omnichannel retailer” is now one of Waitrose’s key strategies, according to the John Lewis PLC financial statements for the year to January 31. The priorities listed under the goal include building Waitrose’s online presence, broadening its convenience offer, and developing compelling reasons to visit shops.

In order to grow its online grocery business, in March Waitrose opened a 90,000 sq ft bespoke e-fullfilment centre in Coulsdon, South London.

Screenshot 2015-07-06 at 12.20.54.png

Waitrose e-fullfilment centre in Coulsdon, South London

In regard to its convenience offer, last year Waitrose opened another 20 ‘little Waitrose’ convenience shops and 13 new core shops. It now has 339 shops in England, Scotland, Wales and the Channel Islands, including 61 convenience shops.

Central London was the focus for the new ‘little Waitrose’ openings last year but this year Waitrose has said it will go further afield in Greater London for its planned 7 new ‘little Waitrose’ shops.

little Waitrose at John Lewis Watford - Edited.jpg

The ‘little Waitrose’ shops range from 3,000-7,000 sq ft, in comparison to an average sales area of 20,000 sq ft for traditional Waitrose branches. In August last year, in a bid to attract ‘transumers’ – the fast-growing market of travelling consumers – Waitrose opened the first of its railway station outlets, a 2,500 sq ft ‘little Waitrose’ store at King’s Cross in central London.  

And among measures to encourage visits to stores and respond to changing shopping habits, Waitrose has introduced new services, hospitality – such as opening more in-store cafes – and grazing areas where shoppers can try food and drink. “Branches like Salisbury are tapping into growth in casual dining with a wine and tapas bar.”

Responding to food trends

In its Food & Drink Report 2014, Waitrose reported on its response to food trends including “a huge surge” in flexitarianism – where someone follows a plant-based diet but occasionally eats meat products.

“Shoppers are choosing a ‘hero’ vegetable – such as a stuffed mushroom or a spiced aubergine – and adding a sprinkling of bacon chunks or chorizo pieces. To meet this growing demand we have launched new vegetable meals, such as our mushroom and spinach filo parcel and a new baby kale and butternut squash microsteam pack to save time for our flexitarian shoppers.”

Waitrose also said consumers’ taste buds are demanding new, exotic flavours and increasingly there’s a mix-and-match approach, using ingredients associated with one country in dishes from another. “Yuzu, a Japanese citrus fruit, is now often used in French dressings, and Kimchi, fermented cabbage from Korea, is employed as a burger dressing.”

The same report said that compared to 2013:

  • Exotic fruit online sales were up 81%
  • Stuffed mushrooms sales were up 22%
  • Stuffed pepper sales were up 17%

​​Inside Can Wharf orig - Edited.jpg

Inside Waitrose, Canary Wharf

Summer brings higher salad, fruit sales

According to recent weekly trade updates by Waitrose, it is seeing strong increases in its sales of salad bowls and British asparagus, which for the week to June 6 were up 43% and 41% respectively on the same week last year, while frozen fruit surged 26% and soft fruit saw an 11% uplift. And for the week to July 3, it said the start of Wimbledon saw strawberry sales up 15%. Amid the good weather, its ‘food to go’ range was up 10%, with salads proving particularly popular, at 21% higher than last year​. Waitrose has also reported that with the bumper UK cherry harvest this year it has 20% more of this fruit on sale.

sources: various, including Waitrose, Kantar Worldpanel

JB