OUGD601 - Context of Practice 3: Tesco Bread Article

When searching for bread related articles I came across this one below, which talks about Tesco food waste as well as just bread. I am finding it really interesting to discover more about this subject and can't wait to see how it develops. 

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OUGD601 - Context of Practice 3: Research (Big four supermarkets article 2)

Sainsbury’s is said to have suffered more than Asda from the late fall of Easter, when it usually benefits from sales of Easter eggs. Photograph: Sean Smith for the Guardian

The grocery market has fallen to its slowest pace of growth in at least 12 years, with all four major supermarket operators losing sales and market share in the first three months of 2014.

Data from market research group Kantar says a late Easter and drop in grocery inflation are combining with the growing power of discounters Aldi and Lidl to pile pressure on Tesco, Sainsbury's, Morrisons and Asda.

Aldi shrugged off the problems of its bigger rivals to achieve a record 35.3% growth in sales in the 12 weeks to the end of March, taking its market share to 4.6%, just a step away from Waitrose's 5%. Lidl continued its rapid gains, with sales up 17.2%.

The discounters are ratcheting up the pressure on the big four, which are also under attack from Waitrose at the top of the market.

In a blow to the incoming chief executive, Mike Coupe, Sainsbury's showed its biggest drop in market share since 2005, as sales fell back by 1.7% – widening the gap between it and closest rival Asda to nearly a percentage point. Asda's sales also fell but it held market share almost steady at 17.4% while Sainsbury's slice of the grocery market slipped to 16.5% from 17% a month ago.

Kantar director Ed Garner said Sainsbury's had suffered more than Asda from the late Easter, usually benefiting more than other stores from sales of British lamb and Easter eggs. The supermarket is also being measured against a strong performance last year when it had a clean sheet during the horsemeat scandal. Garner said: "Sainsbury's figures are a surprise. If they have another period like that then we might start to worry."

Tesco and Morrisons saw sales fall by 3% and 3.8% respectively in the period. Both the Tesco boss, Philip Clarke, and Morrisons chief executive, Dalton Philips, are under pressure to turn around months of falling sales.

Clarke told the City in February he had accelerated his turnaround plan for Tesco with more store refurbishments in prospect and a planned £200m in price cuts on staple groceries. Morrisons has pledged £1bn in price cuts and food quality investments over the next three years as it fights back against Aldi and Lidl.

Clarke also appears to be responding to the latest round of criticism with an executive clearout. Chief financial officer Laurie McIlwee resigned last week amid rumours of a fall out with Clarke and on Tuesday it was reported that the head of the Clubcard loyalty scheme had departed.

Online

The UK's online retailers are the latest to suffer from a wave of cynicism about tech stocks sweeping around the globe. Online takeaway ordering service Just Eat yesterday fell 5.3% to 250p – its first full day of trading on the stock market, after it launched at 260p.

Shares in AO World, the recently listed electrical appliances retailer, sank 5%, while online grocer Ocado's stock sank 6% and fashion retailer Boohoo was down 4.3%. Only Boohoo's bigger rival Asos escaped the carnage, with shares up just 0.8% – although its shares have dropped a third in the past month.

Analysts said the rout, which reflects similar slumps on the US Nasdaq exchange and in Europe over recent days, was the result of investor moves away from riskier stocks where the share price is way ahead of the sales and profits achieved. Events in Ukraine, concerns about the slowing of quantitative easing in the US and reassessment of the risks and rewards from online retailing have all fed a flight to more stable stocks.

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OUGD601 - Context of Practice 3: Research (Big four supermarkets article 1)

The article below highlights the problems that the big four supermarkets are currently facing. I have highlighted a key section where the article talks about the vast choice of brands. This is something I could look at within my dissertation and could perhaps consider this when making a decision about the practical element to work alongside my essay.

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Procter & Gamble’s seemingly drastic decision to cull more than half its brands is actually a sensible move aimed at focusing its efforts in the areas where it can make the most money and is one that the supermarkets could well learn from.

Sales at the big superstores are in decline as shoppers eschew them for online, convenience stores and the discounters. Gone are the days when everyone would do a bit weekly shop at whatever their nearest supermarket was.The big four are currently facing unprecedented challenges as the grocery industry goes through a significant structural shift. Having spent the past decade engaged in a race to buy up as much land and build as many big hypermarkets as possible they now find that this isn’t how consumers want to shop.

Now consumers are prepared to shop around to get the best deal and top up their weekly shop with trips to the store on the way home from work.

The supermarkets have tried to deal with this in a number of ways. They are opening convenience stores, investing in online and cancelling big store projects.

To see off the discounters they are cutting prices and launching multi-million pound marketing campaigns shouting about their new low prices.

The problem is that consumers aren’t listening. Sales at Tesco and Morrisons fell 3.8 per cent in the 12 weeks to 20 July, according to Kantar Worldpanel. Even Asda and Sainsbury’s, the most stable of the big four, are only just managing to keep pace with growth in the wider market.

Talking to shoppers it becomes clear that what they like about the discounters isn’t just the price. They find it easier to shop there, not having to choose between 15 different brands of baked bean or work their way around huge stores dedicated to every product imaginable, from clothes to sofas and dishwashers.

Simplicity is the key. Shopping at the big four has become complex and consumers now are after less choice not more.

The supermarkets so far have taken only small steps to attempt to turn around their stumbling sales. However such huge changes in grocery shopping require even bigger responses.

The supermarkets must stop focusing on projects and services that aren’t core to their business. This might mean taking some big decisions.

Tesco’s Hudl tablet, for example, has been a success, selling 500,000 units in the first seven months following its launch. Tesco is now planning a second generation tablet and a smartphone.

Tesco should be congratulated on its success here particularly as others have failed to make inroads, such as Argos with its MyTablet. However this doesn’t help its core grocery business and simply serves as a distraction.

The same with Giraffe. If Tesco and the other supermarkets want to lease out some of their spare space to cafes or restaurants by all means do so. But get other companies to run them like Asda is doing partnering with Barclays for banking.

In a tough market tough decisions are required. P&G has been roundly applauded for recognising its issues and tackling them head.

The supermarkets should take a leaf out of P&G’s book and refocus on the areas that are most important and where they can boost growth. Everything else should go.

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OUGD601 - Context of Practice 3: Research (Big four supermarkets article 3)

One thing that really stood out to me about this article is the fact that the big four are losing business to Aldi and Lidl and a lot of people are buying less food from the mid range supermarkets and instead go to discounters for most items and buy their treats from Marks & Spencer and Waitrose. This is an interesting change in the market and leaves a lot of unanswered questions for me to investigate and look at in more detail. I could consider how each different place markets themselves to try and create a solution for the big four and by doing so, this could help me to come up with a solution.

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- A price war is coming, according to experts in supermarket economics

• - UK supermarket chains have been losing money to the German mega-stores
• - Sales down at Christmas for UK stores, hitting profits
• - Many major British stores 'ducking the challenge' set by Aldi and Lidl
• - Aldi and Lidl are beating major supermarkets on name-brand item price

- Asda reduces many items to 50p in a bid to contend with losses

Tesco, Asda, Sainsbury’s and Morrisons have been losing market share to the fast growing discount chains, Aldi and Lidl.

David Cumming, who is responsible for investing billions of pounds of pension funds cash, says they will have to slash prices if they are to stop the loss of customers becoming a stampede.

The more established UK supermarket chains might be losing out to the super-cheap German mega-stores, who can offer interesting brands at much lower prices, and have an emphasis on bulk goods

‘Investors know a price war is coming,’ said Mr Cumming, who is the head of global equities at Standard Life.

Christmas was a difficult period, particularly for Tesco and Morrisons, where sales were down on a year ago, which will hit profits.

By contrast, sales at Aldi are growing at more than 30per cent a year, while the figure at Lidl is up by more than 15per cent on the back of a concerted attempt to attract squeezed middle income families.

Both are part of extremely wealthy German-owned multi-national chains, which have ambitious plans to open hundreds of new stores over the next five years.

Mr Cumming said the mainstream supermarkets have, to date, ducked the challenge presented by Aldi and Lidl, but this will have to change.

‘Morrisons, Tesco, Asda and, to some extent, Sainsbury’s are all losing customers at an increasingly rapid pace to the discounters, mainly Aldi and Lidl,’ he said.

‘That is simply because of the perception that a shopping at Lidl and Aldi is about 20 per cent cheaper for a similar quality. They have got to do something about it.

The perception is that the more established brands are more expensive when it comes to name brands, and don't offer enough obscure brands

‘The problem is that Morrisons and Tesco have not yet had the courage to stand up and fight against the discounters. They are ducking the challenge.’

Morrisons is understood to be planning to sell the freehold to a number of stores in order to raise money that can be invested in more convenience stores and pushing ahead with the roll-out of its online grocery business.

Asda has recently announced a series of price cuts, with some products reduced to 50p, in a rather tentative effort to respond to the challenge of the budget chains.

Tesco has promised to match the reductions of its rivals under its ‘Price Promise’ regime, while it has also offered customers savings on petrol.

But, Mr Cumming suggested a much more radical approach is needed with genuine and deep price cuts that will, initially at least, hit profit margins.

He said: ‘If they are relatively expensive – and the customers know it – they need a price reset, or price war, whatever you want to call it, before they can move forward in terms of sales.

‘Investors know a price war is coming, hence the low rating placed on Tesco and Morrisons’ shares.

‘It is the pricing that is the problem. They have got to reset pricing…to deal with the discounters.

‘Aldi and Lidl are growing shares at double digit while the majors are losing market share and they have to do something about it.’

(Left) Asda has always touted itself as a cheaper supermarket chain when compared with shops like Sainsbury's (right) and Tesco

The cost of living squeeze of the past five years, where prices have risen faster than incomes, has led to a permanent change in shopping habits.

People are buying less food from the mid-range supermarkets. Many are going to discounters for most items and then buying treats from the likes of Waitrose and Marks & Spencer.

Mr Cumming said: ‘They (Aldi and Lidl) are only around 10per cent of the total market, but they are growing at around 20per cent. 

They are significantly cheaper than the competition and they are putting more space down.

‘Unless, Tesco and Morrisons deal with Aldi and Lidl they will become an increasing threat. 

They are taking market share and they are stopping those companies growing.

‘Price is going to be an issue for all the food retailers.’

Research by retail analysts Kantar found that over half the population shopped for something in Aldi or Lidl ahead of Christmas, which was a first.

Edward Garner, of Kantar, told the BBC’s Today programme: ‘The threat of the discounters is very real for the middle ground of the market.’

Aldi has used its success in a series of awards and blind taste testing competitions to promote the theme it is selling high quality food at budget prices.

It has been able to beat own-label foods from the major supermarkets and even defeat much more expensive luxury products.

Tesco (left) run the risk of losing business if they can't match up to the trends that the German mega-stores are presenting and even Morrisons (right) which was set up as a cheap alternative to the more 'high-market' branded stores like Sainsbury's faces losses

For example,  its ‘Specially Selected Luxury Mince Pies’ at £1.69 for six – 28p each – were chosen as the best by consumer group Which?. A Lidl product came second.

Both were better than pies sold by Harrods and Fortnum & Mason, which cost eight times more.

Its £3.89 Connoisseur Christmas Pudding came top in a blind taste test by the Good Housekeeping Institute, while its Specially Selected Luxury Champagne Christmas Pudding was runner up.

Both beat the best that Harrods, Heston Blumenthal and the major supermarkets had to offer.

The ranges at the budget chains have been extended to include dry aged fillet steaks at £5 each, together with frozen lobster and caviar.

Both have a very strong reputation for selling high quality wine and spirits.

The mainstream supermarkets have recently made a stab at undermining the success of Aldi and Lidl.

Asda’s chief merchandising officer for food, Barry Williams, recently said: ‘With hundreds of products at 50p, we’re even making the pound shop and Aldi look expensive.’

The Sainsbury’s chief, Justin King, suggested the budget rivals may be misleading shoppers by highlighting a few premium products and claiming these represent the quality of the whole range.

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OUGD601 - Context of Practice 3: Research (Who are the big four supermarkets?)

The Big Four

This is a list of supermarket chains in the United Kingdom. Grocery sales in the UK are dominated by Tesco, Asda,Sainsbury's and Morrisons. These "big four" had a combined market share of 73.6 per cent of the UK grocery market in the 12 weeks ending 30 March 2014. However, all four have experienced significant declines in recent years and shoppers turn more to discount retailers such as Aldi and Lidl.

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