The first email of 2021
Our first email of the year! As things get back to normal, we hope, that regular insight via this service can be of benefit to you, and your teams.
As ever, we continue to provide insight and imagery from the stores on a weekly basis and maintain coverage across the sector too. Don't hesitate to book some time for us to explore your requirements.
In terms of the market, there has been a fair number of events to consider, naturally, John Lewis closing stores has captured all the headlines and their strategy, to chase down the likes of Dunelm, IKEA et al with a lower priced range of products, like tea-lights.
Which are £9.
IKEA? £3
Then at least compete with them on price if you want to use them as a point of reference 😏 pic.twitter.com/MgoCfLm3SP
— Andy (@Wroe_Tweet) April 12, 2021
The decision to close quite so many stores is surprising, especially as England reopened non-essential retail yesterday after another period of closure under COVID19 regulations.
Indeed, said stores in Sheffield, York amongst others were not given a chance to reopen, nor move their stock, nor for the partners to say goodbye. All seems unnecessarily cruel.
Not one of us knows how the future months will pan out, if there's such confidence in the new strategy, then stores are required and one would want to showcase this in every, single store, where possible.
Especially if the new ranges are pitched at the shoppers who are going to Next, or Dunelm (heaven forbid). It all feels so rudderless, online is always a big channel, but fulfilment is questionable.
We ordered a number of items in January, all came via DPD next day, pre 9am. We paid one delivery charge, however the parcels all came individually, which meant 6x the delivery cost for John Lewis.
Mere basics.
Sainsbury's as we know landed their Aldi price match, after a journey of some 18 months replacing their Basics value range with a number of household based brands, evocative of the Tesco work.
Indeed, the scheme itself is an imitation of the Tesco work also. Nothing wrong with that, materially at least. The data and tracking does show that some lines have not been covered, whereas the Tesco dataset does feel more 'complete'.
What it does give rise to is the phoney war on own label and value brands, allowing Tesco to call in to question Aldi mid tier versus their own value products.
The challenge for the mainstream retailers is that their own products that attract a price premium, such as the premium tier can then be caught in the crossfire with Aldi highlighting their lower prices in this regard.
All things considered, we have seen a fair old tailing off in the Aldi numbers, even with COVID, there has been a slowing down and yes, online is a factor (or lack of online) for them. However, Lidl have zero online presence and their numbers have held up nicely.
The move by Tesco in the past week or so to replace Boswell Farms product with the Tesco mid tier equivalent (same price vs. Aldi) in Red Meat is a big move however.
This makes Sainsbury's look as if they're offering a poorer value scheme as their value lines in Meat are equalled to Aldi, whereas Tesco are putting their mid tier product front and centre.
Whether further categories will move is another question, but we should remember that the first categories Tesco selected for price activity, were Produce and Meat due to their comparative strength for the discounters in terms of switching data.
Your reminder that running online out of supermarkets is not easy, this was Whole Foods in Ardmore, PA, pre COVID, in February 2019.
A lovely new store but Prime online shoppers were everywhere, this area was behind the cash registers, no less!
Two shoppers (employees of the store) audibly tutted when customers were in their way. Fulfilment in stores is effective, but not easy.
Plus there's the added drawback of the impact to customers who are shopping in store for themselves, and face availability issues and shelves nearly bereft of stock too.
Speaking of online fulfilment and pivoting, we have seen numerous admirable attempts by retailers and food services to pivot their offering in the absence of normality - via dining and other things that we took for granted.
McDonald's have done a great job with their app and ability to make it as seamless as possible to order, customise and also, collect food without having to join the drive thru queue, despite having ordered ahead.
Several local drive thru restaurants locally (presume nationally) have added click&serve points where you can plug in the number to the app and someone then brings your food out, once it's ready.
The only challenge with this has been the limited car park spaces, due to the plethora of cars collecting orders for Uber Eats, et al and thus, making it difficult to find an identifiable space to collect food, ordered ahead.
A nice problem to have, perhaps, but McDonalds, despite having been around for many a number of years, with their rigid systems have been able to pivot quite admirably here in the digital space.
Lessons for every business I feel.
Heady days in the above image. Pre pandemic of course. But free collection alongside a same day click/collect service!
Click & Collect remains a key avenue of opportunity for food retailers in the UK, whilst our friends on the continent embraced the collection model over the delivery model.
We in the UK have become accustomed to low price delivery, 2 hour slots that went to 1 hour slots, lower prices, free delivery and indeed, delivery passes (pre pandemic) that offered a subscription model for customers to benefit from regular, low priced deliveries.
The cost is significant to retailers, of course, it has to be. The costs of vehicles, repairs to vehicles, insurances, fuel, drivers, hiring drivers, wages, doubling up in some cases in the vehicle alongside so many other elements means that the cost is well established in the chain.
A mere delivery charge, even at £4.50 / £5 is not coming close to covering the costs (not to mention picking and the in store activity). So click/collect takes the hassle out of fulfilment but it can both aid convenience for customers (IE don't want to be tied to a time slot) but also, harm convenience for customers (IE I don't want to load the car, I can't, I've got young kids etc).
So it's not perfect, but far cheaper to operate as a model versus deliveries. But the costs can also be hard to recover, customers don't want to pay for delivery, but are able to complaint bitterly about Amazon drivers not getting a living wage.
When customers are collecting the shopping themselves, it's an even harder sell for them to pay. With the capacity / demand situation via the pandemic, the costs have been easier to justify for customers.
However we have a degree of flex in the system via the various click/collect solutions that have popped up as retailers aimed to get online capacity, quickly. Taking advantage of the fact that planning rules were eased and solutions could pop up, literally, overnight.
Sainsbury's above have been flexible with their work to develop click/collect options. Some stores have literally added a fence and set up in the car park. Whereas other stores look to have converted trolley bays to smaller click/collect booths to facilitate collection.
With the tailing off of online demand as we (hopefully) end the cycle of lockdowns being ever present, already tracked via Kantar. The rise in demand will stick, but it will be in no way sustainable at the levels we saw at the height of the pandemic.
Looking at Tesco, the delivery schedule for next week is reasonably free, however there is some availability this week too, if one wanted.
However the click and collect availability is vast, perhaps reflecting the battle that remains with retailers trying to persuade customers that this channel is good for them to utilise.
Capacity is a good thing and retailers can be flexible, but there is little doubt that there will be changes to the model as we transcend in to the next phase of lockdown restrictions ending.
Certainly, one can see that the item restrictions have been increased at Tesco (now can order more with each shop) which has helped matters. But, there is little doubt that the online boom is not a sustainable one, and the peaks we have seen are unlikely to be reached any time soon.
That's for this week, we have covered a fair amount of ground here. More to come next week on the wider events and happenings in the sector that we know and love.
As ever, we continue to provide insight and imagery from the stores on a weekly basis and maintain coverage across the sector too. Don't hesitate to book some time for us to explore your requirements.
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Grocery Insight
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