Christmas 2016 Food Retail Review – Republic of Ireland

Christmas 2016 Food Retail Review – Republic of Ireland

Background

Christmas week is a truly enormous trading period, with sales ramping up through December and peaking in the week up to Christmas eve.  Sales jump significantly in this final week versus a regular week.  Shoppers are well stocked-up and emerge from Christmas hibernation to top-up on bread and milk, preparation for New Year’s Eve parties and maybe even some early January sales shopping.  It is important to observe the market closely in the weeks leading up to and after Christmas for three key reasons;

  1. It is a major logistical challenge for a business to deal with this sales uplift so it highlights the strengths and weaknesses of the end to end supply chain.
  2. The retail strategy at Christmas is a strong indicator of overall strategic direction.
  3. Christmas is a time for retailers to put their best foot forward and impress their customers.

Objectives

The retail survey is an assessment of the key activities taking place within the grocery retail sector during Christmas 2016.  The report focuses on range, price and promotion activities but also comments on marketing, stock levels, currency impacts, money-off vouchers and the resulting market share performance.

Methodology

The research was carried out through a combination of store visits, on-line research, marketing materials review and an online survey.  Research commenced on 15-Dec-16 and extended to 26-Jan-17.

Executive Summary

Premium Ranges

Christmas 2016 was highly competitive.  With improving economy and purse strings loosening slightly, the retailers saw an opportunity to expand premium ranges.  This was in line with their all year around strategies but much more overt since consumers want more options to trade up and spend more money at Christmas.

Competitive Core Ranges

This premiumisation was placed right alongside a very competitive core range.  There is now minimal differentiation in the basic ranges and the prices are very keen across the market.

Currency Exchange Rates

There was an added reason for ROI retailers to be extra-competitive this Christmas.  From mid-October to early November ’16 the £/€ exchange rate fluctuated around 1.10 to 1.12 with reports of strong alcohol sales in Northern Ireland thanks to cross-border shopping.  The overall offer food was largely based on EDLP pricing with many seasonal products launching and staying at the same price. It was still a challenge for consumers to make sense of everything with quite widely varying prices depending on what quality tier they picked up whilst shopping.

Money Off Vouchers

Some retailers enjoyed good success with their vouchering activities in both holding and winning new business. The combination of high volume ‘value’ ranges and lower volume premium ranges is leading to a polarisation of volume and value where a relatively small cohort of products is being subjected to price deflation.  At the same time, retailers have deployed new strategies to concurrently inject some value and profit back into their range mix.  Opportunities remain for all the retailers and suppliers to grow their businesses.

The ROI market is interesting for several reasons:

  1. High discounter market share at +22% combined
  2. High private label penetration
  3. Consumers with strong knowledge of farming and the food retail market
  4. Money off voucher dynamics.
  5. Post-recession consumer sentiment dynamics

If your business is currently operating in the Republic of Ireland market, then you’ll know how competitive it is. However, you might be surprised to learn how much potential still exists to grow your business. If you’re thinking of getting into the ROI market or you’re interested in applying learnings in your market then you should read this review.

The report is based around a full product survey over all the key food and drink categories.  225 product lines were surveyed to create a detailed gap analysis and competitive comparison.  Retailer advertising was studied as was the in-store experience.  Finally, bespoke research was undertaken with an online panel to further explore some of the trends especially around, premium private label, money-off vouchering, cross-border shopping and the impact of advertising.  The list below details the sub-sections of the report.

  1. Introduction
    1. Background
    2. Objectives
    3. Methodology
    4. Executive summary
  2. Detailed report
    1. Range convergence
    2. Price report
      • Core needs shop
      • Potential to spend study
    3. Promotional plan
    4. Range differentiation
      • Free From
      • Premium private label
    5. Exchange rates
      • What happened this time versus 2008?
    6. Stock Levels, reduce to clear & clean exits
    7. Market share summary
    8. Vouchers and customer retention
    9. Advertising
  3. Opportunities for retailers and suppliers

Please contact me for more details.

malachy@foodfirstconsulting.ie

+353 87 9380216

MALACHY O’CONNOR

FOOD FIRST CONSULTING

 

10 ways Food First Consulting can help your business

 

Who is behind Food First Consulting?

The person behind ‘Food First Consulting’ is Malachy O’Connor. I believe strongly in quality food and high integrity relationships. Food retail is really exciting and a lot of fun too.

My technical background, love of products and customer satisfaction were a winning combination in my success as a Buying Director, Marketing Director (Aldi Ireland) and Fresh Category Commercial Director (Tesco Ireland). I really respect the expertise held by farmers, producers and processors and I have learned so much from them.

10 ways Food First Consulting can help your business

In this post, I will run through the top 10 ways that I can help your business. Food First Consulting can help retailers, buyers, sellers, marketers and agencies, using 20 years of insight gained through my career. For me, it is all about the customer and I love the products, the stories and the execution of great strategic plans. I have managed frozen foods and non-food categories, my key expert area being fresh foods.

1. Fresh Food

I am a fresh food expert. I understand the dynamics and challenges with short life, natural variation, seasonal availability and being closer to agriculture. I think that fresh food is the most exciting part of any food retail business and success is largely defined by how much you get it right. I was involved in the SPAR Food Strategy leading to the launch of their international flagship stores in Dublin. During my 8 years at Aldi Ireland, I developed the fresh meat category, turning beef from significant under trade to a 140% over-trade. I led the volume recovery of fresh foods at Tesco Ireland, taking a division in significant decline in 2014 to sustained growth before I left the business in November 2016. With my fresh knowledge, I can help your business sell more profitably.

2. Supply chain efficiency

There is no point in launching award winning products if they are not available on the shelf. People talk about ‘end to end’ but I have lived it and I know how to make it work for your business. I understand farming, raw materials, factory production, forecasting, cold chain, shelf ready packaging and merchandising. In short, I know how to get products through the supply chain and to maximize sales.

3. Range Optimisation

At Aldi Ireland, I quadrupled the range of fresh meat SKUs to step change quality perceptions. At Tesco I reduced the range, thus simplifying it for shoppers and store operations. I can help you get your range right for whatever challenges you face.

4. Brand Positioning

Great businesses know why they get up in the morning, what values define them and how to connect with customers to create sustained growth. As Marketing Director at Aldi I made this work and can do the same with you.

5. Marketing Strategy

At Aldi, with a solid brand position, great insight data, the right agency and a super in-house team, we executed game changing campaigns winning market share in Ireland and the UK, changing forever how the German discounters are perceived. Aldi’s Swap & Save was my brainchild, as were the ‘100% Irish Meat’,‘Love Ireland, Like Aldi’ campaigns. I also delivered the ‘Steak-Out’ and ‘Ploughing Championship’ PR events. I can work with your team to develop the right strategy to engage your customers and achieve your objectives.

6. New Product Development

NPD is a real pleasure for me. I have a highly sensitive tasting palate and an eye for design which combines beautifully in NPD. I launched Certified Angus Beef at Aldi and witnessed what that could do for overall store perceptions. I can read the trends and see the opportunities for volume and value growth. I can work with your team to help you work to your strengths or identify new growth areas.

7. Private label strategy

Not everybody gets private label but I do. I understand the products, suppliers, packaging and customers. My work has delivered significant market share gains and product quality awards at Great Taste, IQFA and Blas na hEireann. I grew Tesco Ireland’s fresh private label business by 25% over two years. I can help you identify your private label objectives and show you paths to delivering them.

8. Buying and Negotiations Strategy

I have navigated some of the most complex, multi-year deals in the market thanks to 20+ years of experience and the skills gained from GAP, Karass and Scotworks negotiations training. The market is moving in different directions. Some retailers are tendering rigorously with increasing frequency. Others are moving to multi-year, full category partnership deals. Either way, the stakes are too high to not be prepared and, with thinning margins, you want me on your side.

9. Business Strategy

I have a track record of developing successful business strategies based on solid insights & extensive knowledge of business turnaround. Do you need help to build a growth strategy for your business?

10. Retailer Insight

I have worked with some of the world’s biggest and most successful retailers. I have met so many buyers and suppliers who simply don’t get each other. Communication can be hit or miss, trust can be low and business can suffer. I can help bridge the gap for everyone’s benefit.

My Education & Experience

I have a 1st class honors degree in Food Science from Queens University Belfast. I have worked for M&S, Fyffes, Dunnes Stores, Superquinn, BWG Foods/SPAR, Aldi Ireland and most recently Tesco Ireland. I am now available to help your business. I bring 20 years of experience in technical, commercial and marketing roles in mainstream multiples, convenience and discount retailers. I have category experience across, fresh, frozen, non-food and on-line.

If you think I can help your business, please contact me to arrange a phone-call, skype call or to meet in person.

malachy@foodfirstconsulting.ie

+353 87 9380216

 

MALACHY O’CONNOR

FOOD FIRST CONSULTING

. 24/9/2014.Fresh food commerical Dire

Simon Coveney and Malachy O’Connor (Image courtesy of Shelflife.ie)

Christmas Crescendo

2a5a4904
Image copyright Paula Nolan Photography

I love Christmas – the whole crazy crescendo

I love Christmas.  I really love Christmas.  I love the buzz of making the season unfold and every year there’s a new surprise.  I love the pace and the satisfaction of pulling the whole operation together.  The ups and downs, the highs and lows of managing sales, volumes, quality and pricing.

I love the the whole crazy crescendo of nervous energy, excitement and tension.  You can barely take a day off in the last few weeks.  By 23rd December you and your team are truly running on empty.

Reserves?…There are none 

And you reach a point where there’s nothing much more you can do.  All the stock is out on shelf, all the pre-orders have been fulfilled, the final press ad deadline has passed, what will be will be. It’s down to the customers now.

It’s a bit like the pivotal scene in ‘The Battle of Britain’ when Prime Minister Churchill asks Fighter Command’s Air Vice Marshall Keith Park…

what other reserves have we?

and Park replies;

there are none

Breathing a sigh of relief

Suddenly, its late afternoon on Christmas eve.  You breath a sigh of relief because it is time to wrap up.  You’ve given it everything and the team are exhausted.  Another Christmas season under your belt.  Time to close up and make for home.

That’s the best bit of Christmas for me (and possibly for many of us obsessive compulsive retailers).  I love the journey home, an epic trading period behind me and nothing but family and friends ahead.

10 days to go – My first Christmas 2016 recce

It’s Thursday 15th December 2016 with just 10 trading days until Christmas. The weather has changed again and it’s 10oC outside.  Not at all wintry and certainly bad for sales!

I’ve taken a quick spin around the local Tesco, Dunnes, SuperValu, Lidl and Aldi stores.  Everyone is ready and braced for the first BIG shopping day on Saturday 17th. 

But something isn’t right….

………….there’s no buzz.

Then I remember that the children are still at school and there are lunch boxes to be filled. All the Christmas stock is out, except for the turkeys, which should start appearing the following Monday/Tuesday 19th/20th.

First up – best dressed

Tesco and Aldi are first out of the blocks with their 49c offers on carrots, sprouts, parsnips and yellow melons. Dunnes Stores follow on Saturday 17th.  It’s been a good few years since the days of 9c veg and IFA pickets

Food First Consulting Malachy O'Connor
Image copyright Paula Nolan Photography

Make or break

It’s the best time of the retail year.  Christmas can make or break your year as a retailer.  And it can result in a few grey hairs for the buyers if they run out of stock or realise they’ve ordered too much (you only ever have a 1 in 3 chance of getting it right!).

I wish the suppliers and farmers a safe Christmas as they deal with bad weather, stubborn machinery and short lead times.  With the help of God we’ll have no fatal farm accidents this Christmas.

Finally, I wish a merry Christmas trading season to all the retail operations folk who will work exceptionally hard to serve their customers in the next few days.

Merry Christmas

Malachy

Food First Consulting

Christmas Mince Pies Food First Consulting