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Italy’s discounters increase market share to 18.1%

Italy’s discounters increase market share to 18.1%

Nielsen research has confirmed that discounters have become the most dynamic channel in Italy’s retail sector. In 2018, over 180 new discount outlets have opened across the country. Aldi leads the way with 50 new stores, followed by Md (38), Eurospin (34), iN’s (39), Lidl (12) and Penny Market (11). These investments are set to continue, with Md opening 45 stores a year until 2021, and Lidl ready to open 40 new stores costing an investment of €350 million.

The discounters’ market share has now reached 18.1% in terms of total retail sales in Italy – up from 13.4% in 2008. Supermarkets and superstores hold a 50.6% share and hypermarkets have 12.6%. According to the Nielsen data, it is the fresh produce segment that is driving the growth of these discounters.

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Fresh produce delivers over a third of Lidl’s turnover

This month Lidl started a new marketing campaign centred on the slogan "If it's fresh, it's from Lidl" and focused on its assortments of meat, fruit, vegetables and ready-to-eat salad packs.

Fresh produce accounted for 35% of sales of its sales last year, says discount retailer Lidl.

That’s up five percentage points on the previous year and reflects the fact it puts freshness at the heart of its product strategy, the German global supermarket chain said in a press release.

Fresh produce section in a Lidl store

Lidl said it is also continuing to carry out major projects designed to strengthen its fresh produce assortment. It said in fresh fruit and vegetables it now has an offering of 110 references, 10% more than in 2015.

Head of purchasing for Lidl Spain Miguel Paradela said Lidl maintains its strong focus on fresh produce “because we are aware of how crucial it is when it comes to winning customer loyalty and making sales.” The retailer wants not only to offer a wide range of fresh produce, but at the cheapest price on the market, he said.

Lidl said it also remains the biggest buyer of Spain’s horticultural produce, last year buying 1.2 million tons of fruit and vegetables – up 11.6% on 2014 – and the equivalent of 6% of Spanish agricultural production. About 80% of this produce goes abroad to stock the 10,000 stores Lidl has across the 26 European countries in which it operates.

This month Lidl started a new marketing campaign centred on the slogan “If it’s fresh, it’s from Lidl” and focused on its assortments of meat, fruit, vegetables and ready-to-eat salad packs.

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UK fruit & veg market demands savvy suppliers

Retail analyst John Giles, divisional director at Promar International, provides insights into the major changes and opportunities in the UK retail sector.

The UK is a strategically important global market undergoing changes which offer opportunities for well informed suppliers. That was among the messages from retail analyst John Giles in his presentation “Discounters on the march – Britain’s retail sector” as part of the Future Lab at Fruit Logistica in Berlin in February. Divisional director at Promar International, an agri food value chain consultancy firm, Giles started with a snapshot of the UK market, which ranks 9th in the world, has a population that is still growing and an economy in reasonable shape, relative to much of the rest of Europe.

The established players still account for about 80% of the UK grocery market but Giles stressed that in recent years they have had “a massive wake up call” from the discounters, which now have a combined market slice of 11% and are poised for continued strong growth in the next five years.

Giles presented IGD data showing Aldi enjoyed growth of 15.4% and Lidl 9.41% in the UK grocery market last year, while that of all other players was under 1.5% and was even negative in the case of Sainsbury’s, Tesco and Asda.

The shift to the discounters

It’s not that discounters are new to the UK retail space, Giles pointed out. Indeed, Kwik Save has been present since the early 1960s, though with very mixed success and multiple ownership structures. Lidl has been on the scene since 1994 and Aldi since 1990, he said. But with the economic downturn of 2008-9, more consumers turned to the discounters and found it was a format they liked, with the quality often exceeding their expectations. Backed by a strong advertising push and support, media exposure, and aggressive store openings, the discounters made strong inroads while the mainstream retailers had their eyes off the ball.

And the top two discounters, the German juggernauts Aldi and Lidl, have aggressive expansion plans, as Giles illustrated with points including:

• Number of stores to rise from 560 to 760 in next 3 years
• Sales expected to grow from £5.3 billion to £8.2 billion in same time
• Plans bigger stores, expanded geographic coverage and new products and ranges (organics, exotics etc.)

• Number of stores to rise from 670 to 770 in next 3 years
• Sales expected to grow from £3.5 billion to £5.0 billion in same time
• Plans to expand variety of brands offered
• Family stores – bigger and wider geography

It should be remembered that Aldi and Lidl are not the UK’s only discounters – now joining them in that market are Netto, Poundland, Iceland and B&M. And Giles highlighted the impact of online/mobile shopping, which have also changed the market dynamic. Online shopping, for example, now accounts for just under a tenth of UK grocery sales. Giles said it’s estimated that 80% of UK consumers shop online at least monthly and 70% are willing to pay for same day delivery. Also significant is that 20% research brands on social media and 50% like getting offers by mobile phone.

In response to this big shake-up in the UK, some supermarkets have decided to fight fire with fire and aimed to price match the discounters, while others, such as Waitrose, have a ‘fighter’ brand, like Waitrose Essential, promising good value for money, and alternatives at other end placing the emphasis on quality and provenance.

Importance of UK to international suppliers

The UK sources its fresh fruit and vegetables – amounting to 3 million tons a year – from a wide range of countries around the world. Its top source is Spain, which accounts for 15%, followed by South Africa with 10%, then Costa Rica (8%), Colombia (7%), the Netherlands and Dominican Republic with 6% each, France and Ecuador with 4% each, Brazil and Chile 3% each, Peru 2% and various other countries make up the remaining 32%.

The transformation taking place in the UK market offers opportunities for suppliers – but Giles singled out “well informed suppliers”. They are the ones who understand the major change in the UK market in the last 5 years, how it is continuing to evolve and what that might mean for future demand. He also stressed that the UK remains a key import market – “but not for all.”

For example in the decade to the end of 2014, imports of avocados from Peru rose from 2,100 to 10,400 tons, those of South African grapes from 50,000 to 66,000 tons, and tomatoes from the Netherlands from 159,000 to 194,000 tons.

But over the same period, imports of apples from the US slid from 30,000 to 9,000 tons as that country found other, less mature markets more lucrative. And Giles warned the UK market will be more competitive than ever in the future – with consumers who continue to expect high quality while being even more price conscious.

This article was the cover story for edition 142 of Eurofresh Distribution magazine. Read that issue online here.

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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:


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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.”

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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.

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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%

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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


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Big ad spends help Aldi, Lidl grab more of UK market

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German discounters Aldi and Lidl now hold an 11% slice of UK grocery sales.

According to Nielsen figures for the 12 weeks to March 28, Aldi’s sales grew 17.9% year-on-year, to reach a 6.2% share of the grocery market, and Lidl’s sales rose 10.8%, for a 4.9% share – cementing their positions as the UK’s 5th and 7th biggest supermarkets, respectively.

Lidl biggest spender on TV & press ads

In the four weeks to March 28, Lidl spent the most on TV and press advertising (£5.9 million) – up 160%  on the same period last year – followed by Asda (£4.0 million) and Aldi (£3.5 million).

“Aldi and Lidl have become the fifth and seventh biggest supermarkets partly due to their large ongoing investment in advertising. Not only do they consistently spend the most in relation to each percentage of market share they hold, their advertising has changed the perceptions and expectations of UK shoppers,” Nielsen’s UK head of retailer and business insight Mike Watkins said.

Bad month for the Big Four

Over the same period, all of the big four supermarkets saw a decline in year-on-year grocery sales. Asda’s slipped 1.7%, Tesco’s 1.1% and Sainsbury’s and Morrisons 0.6% each.

However, Tesco remained in top ranking, with a share of 27.5%, followed by Sainsbury’s with 16%, Asda with 15.7% and Morrisons with 10.7%.

Outlook for next 3 months more positive

Watkins said the current trading environment is challenging for the supermarkets. “…people (are) spending less on groceries than they used to.”

“Consumer spend continues to be impacted by a combination of record-low food inflation and supermarkets’ competitive pricing policies – good news for shoppers but not retailers, whose margins are continually under pressure. However, the outlook for the next three months is more positive than we’ve seen for some considerable time,” he said.

Read the Nielsen press release.
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