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Coop Italy fuses modern retail with values

Coop Italia was founded in 1967 and is now Italy's biggest retail operator, with a total of 1,087 supermarkets, 102 hypermarkets and 1,189 points of sale.

‘La Coop sei tu’ – The Coop is you – is the slogan of Italy’s biggest retailer, comprising 1,087 supermarkets, 102 hypermarkets and 1,189 points of sale in 16 regions.

The Coop system is made up of 115 consumer cooperatives of varying sizes and geographical spread, from the biggest – such as Coop Alleanza 3.0 (the result of the recent merger between Coop Adriatica, Coop Estense and Coop Consumatori Nordest), Coop Liguria, Coop Lombardia, Novacoop, Coop Centro Italia, Unicoop Firenze, Unicoop Tirreno, Coop Sicilia and SAIT – to other smaller ones, each of them legally and operatively autonomous but all bound together by belonging to Legacoop and ANCC-Coop. As regards their purchases of food products, they all come under Coop Italia, the national buying consortium of all the Italian consumer cooperatives, created to achieve greater muscle in contracting with suppliers. Other activities are also delegated to the consortium, from store management through developing promotional activities to staff training, enabling the cooperative system to compete with the major private retailers.

Citrus from the south of Italy

Fruit and vegetables account for 70% of the total sales of Coop brand points of sale and citrus fruit comprise a very big proportion of these, 70,000 tons, with 85% grown in Italy. They are divided into five subcategories, as Claudio Mazzini, the sector chief explained: “The citrus fruit sold by Coop mainly come from Sicily, Apulia and Calabria, although 15% are imported in the offseason, particularly lemons. Oranges (50%), lemons (25%) and clementines (20%) account for almost all the fruit in this category, but the new varieties include Taclè, a cross between a nucellar Tarocco and a clementina.” Coop is also developing new premium citrus products such as Fiorfiore Washington navel oranges, Fiorfiore Tarocco oranges and Fiorfiore Amalfi lemons.

Eleven apple varieties and rising

The apple sector also takes a big share, with sales of 52,000 tons, almost all Italian-grown, organised into 11 different segments. “99.3% of the apples we sell at Coop are from Italy. The main regions are Trentino-Alto Adige, Piedmont and Friuli-Venezia Giulia, which grow around 70-80% of the country’s crop,” said Claudio Mazzini. The Coop range includes Golden Delicious, Stark, Gala, Fuji, Renetta, Pinova, Pink Lady, Granny Smith, Stayman, Morgenduft/ Impero and Annurca, and new varieties such as Kanzi and Jazz are on the rise. Coop is also working to develop premium segments such as Fiorfiore Renetta apples.
The same applies to pears, with sales volumes of 16,000 tons, largely of Italian origin and divided into nine segments. Coop pears are 83% Italiangrown, mostly in Emilia-Romagna and the Veneto. “Our main segments are green Williams, Coscia, Kaiser, Decana, red Williams, other pears, summer pears and Conference pears,” said Claudio Mazzini, who confirmed that Coop is developing a Fiorfiore brand Decana pear and that Abate Rossa (red Abate) is at the trial stage but is not yet being marketed because of the limited quantities.

Red and green tomatoes

Tomatoes also make up an important proportion of the Coop range, with sales of 37,000 tons, largely from Italian growers, divided into 10 segments. Of the tomatoes sold by Coop, 98% are from Italy, especially Sicily, Apulia, Calabria, Campania, Emilia-Romagna, Liguria, Piedmont and Tuscany. “Only 2% are imported from the Netherlands, mainly when the Italian product is scarce in July and August,” said Mazzini. The red tomatoes include datterini (plum vine tomatoes), smooth round tomatoes, red vine tomatoes and local specialities such as ciliegino di Pachino or San Marzano. Green or salad tomatoes include oxheart, oblong green, Camone and ribbed tomatoes.

Four lines of branded products

Branded fruit and vegetable products make up 22% of total sales. They total over 700 items, divided into four main lines: Coop Tutela for products that meet the Coop requirements; Vivi Verde, the organic line; Fiorfiore, the premium line; and Solidal, the fair trade line. “As well as the certificates required by current legislation, Coop brand products are certified to ISO 9001, BRC, IFS, ISO 14000 and SA 8000 and we are working towards obtaining GLOBALGAP,” said Mazzini, who confirmed that advanced integrated crop management, residue reduction, no post-harvest treatment and the eating quality standards set by the ‘frutta saporita’ (tasty fruit) project are all essential requirements.

Fair trade

Fairtrade certification guarantees the producer stable prices, credit facilities and long-term purchasing contracts, which are all useful tools to fight poverty and strengthen the producers’ position on local markets in the name of a better future. Fairtrade also promotes biodiversity, the variety of national crops and the value of local traditions, encouraging the spread of products with a lower social and environmental impact. In fruit and vegetables, the most sensitive segments in this area are the banana sector (almost 80% of the fair trade fruit and vegetable products), pineapples and nuts. As well as the Solidal line, Coop is involved in various projects to support developing countries. “Terra equa is a Coop pilot project to assess the agricultural excellences of countries in difficulties and contribute to their growth,” explained Claudio Mazzini. The project began in 2010 with dates from Jericho. Coop spent part of the proceeds from selling the dates on setting up the first paediatric surgery clinic in Bethlehem. The project has continued with green beans from Burkina Faso and melons from Senegal. The Senegalese melons grown in 2014 and sold in Coop supermarkets throughout Italy contributed to building a new health facility in the village of Tassette, not far from Dakar, the country’s capital. “The objective for next year is to buy instruments so that medical analyses can be carried out in the village,” Mazzini said.

COMPANY PROFILE

Coop Italia was founded in 1967 as the central buying office for all the affiliated Italian consumer cooperatives. Nowadays it is the biggest retail operator in the country, with a total of 1,087 supermarkets, 102 hypermarkets and 1,189 points of sale of different types spread over 16 regions, 75 provinces and 744 municipal areas, only excluding Valle d’Aosta, Molise, Calabria and Sardinia, equivalent to 19% of the national market. Its turnover is €12 billion and it has over 56,000 employees. The present-day heir to the Italian tradition of consumer cooperatives, which dates back to 1854, Coop Italia combines the efficiency and vastness of the commercial offering of the main private volume distribution chains with the typical cooperative values of solidarity, mutuality and participation, subjecting all the main company policy decisions to the general assembly of the members under the “La Coop sei tu” [the Co-op is you] slogan.

GO

http://www.e-coop.it

 

 

 

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Carrefour to acquire Billa supermarkets in Romania

Carrefour says its planned acquisition of the Billa network in Romania would see it become the leading supermarket operator in the country.

Carrefour has announced an agreement to acquire the network of 86 Billa supermarkets in Romania from the Rewe group.

In a press release, Carrefour said the stores are spread throughout Romania, with a total sales area of 83,000 m2.

“Through this acquisition, Carrefour would become the leading supermarket operator in Romania, strengthening its multiformat offer to better serve its clients. The completion of this transaction remains subject to approval by the relevant antitrust authorities,” it said.

Image source: http://www.billa.ro/Footer_Navigation/Magazine/Stores/dd_bi_subpage.aspx

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Carrefour opens 4th distribution centre in China

December 2, 2015, the grand opening ceremony of Carrefour supply chain in China-North-West China distribution center is held in Wuqing Economic Development Area, Tianjin municipality

Carrefour has consolidated its supply chain in China with the December 2 grand opening of its North-West China distribution centre in the Tianjin municipality.

The centre is intended to be a bridge for Carrefour China’s supply chain in northern China, radiating out to the Beijing-Tianjin-Hebei integration economic cycle and Shandong, Shanxi and other provinces’ logistics and distribution network. It is also designed to increase distribution efficiency, support the business of stores, and boost regional economics.

Located in ProLogis modern international distribution park, Wuqing economic development area, in the Tianjin municipality, Carrefour’s northern distribution centre covers 39,000 m2.

It will use the Voice Picking System, achieving 99.997% in its picking accuracy rate. The trays utilise 100cm*120 standard operating procedure to reduce packaging and labour costs and improve efficiency; moreover, the centre is equipped with professional temperature controlled room which sustain temperatures of 18-22 degrees for the storage of alcohol, chocolate and milk powder.

The northern China distribution centre will cover more than 30 stores in northern China, greatly improving the company’s northern China supply chain system to provide more high-quality, convenient products and services for numbers of consumers, Carrefour said in a press release.

After the establishment of the distribution centre in Eastern, western and northern region, it plans to set up 2 new distribution centres in North-East Territory and South Territory of China.

By the end of 2016, Carrefour estimates it will have completed the establishment of 6 modern distribution centres in China, covering more than 200 hypermarkets in China to fully support its emerging businesses such as its e-commerce operations and “easy Carrefour” convenience stores.

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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

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Fresh cuts and berries among priorities for BAMA

The Oslo-based BAMA trading group is expanding its offering of organic produce and Norwegian-grown vegetables and is committed to helping people choose healthier foods.

The Norwegian market leader for sales of fresh fruit, vegetables, berries and potatoes, BAMA Group (BAMA Gruppen AS) last year posted consolidated sales of BNOK 13.5 (€1.45b). Through its five business areas – including Grocery and HoReCa – each year 500,000 tons of fresh fruit, vegetables, berries, drinks and flowers – from a network of more than 1,300 producers in Norway and abroad – pass through its terminals on their way to 15,000 customers in Norway. Berries are BAMA’s top fruit category in value and bananas in volume, while for vegetables it’s tomatoes in value and potatoes in volume.

 

 

 

 

 

 

 

 

 

 

 

 

Competition in the Nordic grocery market is razor-sharp, Oslo-based BAMA said in its 2014 annual report, but in its favour is the growing interest Norwegians have in healthy diets, natural foodstuffs and food of Norwegian origin. BAMA Group CEO Rune Flaen says it’s the health trend that’s fuelled significant growth in products such as berries, avocados, spinach, root vegetables and kale. (In the last three years, sales volumes have shot up 856% for sweet potatoes, 1386% for kale and 80% for spinach.) BAMA’s overall volume growth for fruit and vegetables in 2014 was 2.6%.

Also favourable is that fruit and vegetable consumption continues to rise in Norway, in marked contrast to the rest of Europe. However, despite climbing 35% in 20 years, consumption in Norway remains below official dietary recommendations. The growth potential for BAMA’s product groups is therefore significant, BAMA said in the report. With excess weight emerging as Norway’s main health challenge, it has adopted a strategy of actively working to improve public health through increased focus on healthy diets and exercise.

Berries: 15% annual growth target

BAMA has certain focus areas for which it sets yearly growth targets. Berries is one of these, with a target of 15%, and by late September sales were already up 13% in volume. BAMA is the Norwegian market leader for berry sales and over five years logged spectacular growth of 140% to reach about 18,000 tons last year.

Instead of taking big volumes from external suppliers, BAMA now sources berries through its Rotterdam-based partner Nature’s Berries. “We also work directly with major Netherlands-based strawberry producers, cutting out expensive middlemen.”

Aiming for 20% growth in fresh cuts

BAMA Industry is one of BAMA Group’s five divisions and produces freshly-processed products, including fresh ready to eat/heat food, for the group’s HoReCa and Grocery business customers. It generated strong sales growth in 2014, a third of which came from products launched in just the last four years. Among these, new vegetable wok mixes and salad products, including two organic salad mixes, showed the most growth.

BAMA sees great promise in such convenience foods. Some European countries have market shares of up to 30–40%, but in Norway it’s still under 5%. “We see a huge market there in the future,” Flaen said. BAMA plans to grow the category through high speed product development, reliable quality, space management and good marketing. “We already have about 15% growth in fresh cuts grocery this year (first 38 weeks of 2015). The target for the category is 20% yearly growth, so we are well on track,” he said.  

Demand for organic, short-travelled & Norwegian produce

  • BAMA’s organic offering includes carrots, potatoes, onions, broccoli, bananas, apples and citrus.
  • Organic produce represents about 3% of BAMA’s total fruit and vegetable sales volume.
  • Demand for Norwegian-grown organic products rose 29% in 2014.

BAMA reports that its consumers show increasing interest in organic, short-travelled and Norwegian produce. In 2014, 60% of products were locally produced, no more than two hours away from the sales outlet. BAMA is collaborating with Gartnerhallen, Norway’s largest farm cooperative, to increase its proportion of Norwegian produce.

Future focus on smaller formats

In terms of goals for BAMA in the next 12 months, Flaen said one is to work on obtaining even better quality across all products. In doing so it will be examining logistics and temperature control, and working a lot on product development. Acknowledging there’s more focus today on food waste, he sees a need for BAMA to develop more products in smaller formats, “so a single household can have their solutions.”

“There will be a lot of focus on smaller packs in years to come,” he said.

source: BAMA annual report 2014 and interview with BAMA CEO Rune Flaen

JB

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Increase in citrus sales in UK

'Easy peelers' (such as tangerines, clementines and satsumas) account for more than half of all citrus fruit sold in UK supermarkets, Kantar Worldpanel data shows.

‘Easy peelers’ (such as tangerines, clementines and satsumas) account for more than half of all citrus fruit sold in UK supermarkets, Kantar Worldpanel data shows.

For the 52 weeks to October 11, oranges were the next most popular citrus fruit, with just under 27% of sales, followed by lemons with 11.3% and grapefruit with 6.5%.

Total citrus sales over this period reached nearly 384,000 tons, which was up 4% on 52 weeks to October 12 last year, and the spend inched up 0.3% to £726.5 million (€1b).

While there was 5.1% growth in the volume of easy peelers sold, the spend was down 0.4%, and for oranges both the volume and value sold were down, by 2.1% and 6.8% respectively.

UK shoppers increased their spend on the other citrus types, however. Lemon sales were up 13% in volume and 14% in value.

The highest growth, though off the smallest base, was for lemon+lime sales, which rose just over 37% in both volume and value.

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German discounters now command a tenth of British grocery sales

Discount retailers Aldi and Lidl have reached a combined 10% share of the British grocery market for the first time, new grocery share figures from Kantar Worldpanel for the 12 weeks to November 8, 2015, show.

Discount retailers Aldi and Lidl have reached a combined 10% share of the British grocery market for the first time, new grocery share figures from Kantar Worldpanel reveal.

The data, for the 12 weeks to November 8, show Lidl’s market share reached a new record high of 4.4%, up 0.7 percentage points on last year thanks to 19% sales growth. Aldi grew sales by 16.5%, keeping its market share at 5.6% for the fifth consecutive month.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said the discounters show no sign of stopping and with plans to open hundreds of stores between them will further widen their reach to the British population.

“If you look back as recently as 2012, Aldi and Lidl only held a 5% share of the market, and it had previously taken them nine years to double their combined share from 2.5%. In the last 12 weeks the two retailers have attracted another additional million shoppers compared with last year while average spend per trip has increased by 4% to £18.85, which is 78p ahead of the total retailer average,” McKevitt said.

Other highlights from the latest data:

  • Sainsbury’s: has seen its fourth consecutive period of growth despite the tough market, with sales up 1.5%
  • Tesco: sales were down by 2.5%
  • Morrisons: sales fell 1.7%
  • Asda: sales dropped 3.5%
  • Waitrose: sales up 2.7%
  • The Co-operative: sales up 1.5% & a 0.1 percentage point gain in market share

Shoppers paying less

Grocery inflation stood at -1.7% for the 12 weeks to November 8, which means shoppers are now paying less for a representative basket of groceries than they did in 2014. “This is the same fall as reported last month. Falling prices reflect the impact of Aldi and Lidl and the market’s competitive response, as well as deflation in some major categories including eggs, butter, bread, crisps and fresh poultry,” Kantar Worldpanel reported.

 

sources
http://www.kantarworldpanel.com/en/Press-Releases/Aldi-and-Lidl-reach-10-per-cent-share-of-the-British-grocery-market-for-the-first-time
http://www.kantarworldpanel.com/en/grocery-market-share/great-britain

 

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Catalonia’s Bon Preu group on way to beat €1 billion in sales

Catalonia-based retail group Bon Preu is set to end the fiscal year (February 28) with turnover of around €990 million, up 11.4% on the previous year, and aims for €1.1 billion the following one, according to its president Joan Font.

Catalonia-based retail group Bon Preu is set to end the fiscal year (February 28) with turnover of around €990 million, up 11.4% on the previous year, and aims for €1.1 billion the following one, according to its president Joan Font.

Since its origin in 1974, the group has grown to now span about 5,000 workers and about 200 outlets, under the banners Bonpreu (supermarkets), Esclat (hypermarkets), EsclatOil (petrol stations) and iquodrive (e-commerce), Font said at an executive breakfast in Barcelona on November 12.

 Joan Font speaking

Discussing the strengths of the group, which has its headquarters in Osona, he said one is its heavy focus on fresh produce. “We have to work on and promote this even more,” he said. “We have the best fresh produce sections and believe in its future.”

However, Font made the point that while in other countries fresh cut fruit is eaten in the street, that is not the case in the local market where the concept is not understood.

Esclat hypermarket opened in Terrassa in September, 2015, at which point Bon Preu had 118 supermarkets, 44 hypermarkets, 36 gas stations and 5 minimarkets.

From among the three supermarket categories of discounters, specialists and generalists, he said Bon Preu is a generalist. But given the industry trend of segmentation in demand, the group’s banners are increasingly focused on very specific segments. “We can’t claim to be the best at everything,” Font said, adding that customers are multichannel and multiformat and that can’t be expected to change.

According to the newspaper La Vanguardia, Font also signalled that looking ahead to 2016, the group plans to open 10-12 new stores and would not rule out locations beyond Catalonia, though such a move would be given careful thought.

Sources:
“Intervenció de Joan Font a l’esmorzar executiu de PwC i La Vanguardia”, Bon Preu press release in Catalan
“Bon Preu prevé cerrar el actual ejercicio con una facturación de 990 millones”, article in La Vanguardia in Spanish

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Hemköp on why berries matter so much to Scandinavia’s supermarkets

Scandinavian retailers are the frontrunners of the European berry market, as their fresh produce departments are responsible for no less than 13% of the total supermarket sales.

Scandinavian retailers are the frontrunners of the European berry market, as their fresh produce departments are responsible for no less than 13% of the total supermarket sales. So says a press release from berry giant Driscoll’s in which Hemköp sales manager Joakim Bäckstäde and Driscoll’s commercial director Wyard Stomp talk about why the high value berry shopper is here to stay and the potential of this promising market. Their interview is reproduced below.

What makes the berry category interesting?

Bäckstäde: “Berries are fresh, delicious and healthy. It’s fun to eat and share them with your family and friends. Furthermore they are impulse driven products. Buying berries can trigger other purchases, or as we like to say; berries have a lot of in-store ‘friends’, such as ice-cream, yoghurt and cake. By combining these products in the shelf, we stimulate cross-selling.”

Stomp: “Berries are a perfect match with recent consumer trends and can make any ordinary moment more special.”
 

Why is the berry shopper valuable?

Bäckstäde: “Next to berries they also love other premium products such as dairy and pastry, which makes them extra appealing for our supermarkets. I am positive that the berry shopper is the shopper of the future and will influence many other categories in a positive way.”

Stomp: “It’s our mission to gain the shopper’s trust by offering them delicious, fresh and beautiful berries all year round. This is something we can only do by working closely together with our retail partners.”

Hemkop Driscoll's.png

Why are berries Sweden’s favourites?

Bäckstäde: “That’s simple, because they are healthy and tasteful! Scandinavian people really care about health and the environment. Berries remind them of the warm summer months and they fit very well with other popular Swedish products such as soured milk, yoghurt, quark and cottage cheese.”

How do you tempt shoppers to buy more berries?

Bäckstäde: “Recently we have installed special coolers in almost all new and renewed stores. This way our berries stay fresh for a longer period of time. By placing the coolers in premium spots in our supermarkets, shoppers cannot miss out on these fruits while visiting the store.”

Stomp: “We want to do more for our customers than just offering berries. That is why we support our partners with shopper insights and advise them on how to create a successful in-store berry presentation.”

How do you promote berries outside the local season?

Bäckstäde: “We promote berries at least once a month. This is something we do through our flyers, in-store promotions and our own social media accounts. By offering tasty recipes to our shoppers and making them aware of the joy that berries can bring to the table, we have already seen an impressive sales growth outside the regular season.”

What are you expectations of this promising category?

Bäckstäde: “I expect a lot of the berry category; a growth in demand and more packaging diversity, that will seduce shoppers to buy more berries. My personal goal is to have berries on full focus in all our stores every single day, not only during promotion periods.”

Stomp: “I will be proud as people at every office location and at every school around the world will enjoy berries during their lunch break.”

Read an interview with Daniel Månsson, Axfood’s general manager of fruit and vegetables, which also covers berries: Inside Swedish retail giant Axfood

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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