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Co-Operative Back In Growth Ahead Of Overall Grocery Market
The latest grocery share figures from Kantar Worldpanel for the 12 weeks ending 19 July 2015, show a slow growth in the British grocery market.
Overall sales have increased by 0.8% compared with a year ago, with stronger growth being enjoyed by the smaller retailers.
Fraser McKevitt, head of consumer and retail insight at Kantar Worldpanel, explains: “The Co-operative has returned to growth for the first time since July 2014, increasing its sales by 1.0%. The Manchester-based grocer’s focus on its convenience offer has been rewarded with an increase in shopper numbers, which have risen by 133,000. While The Co-operative’s growth is slightly ahead of the market, its overall share of 6.3% has remained the same as last year.”
Despite a fall in sales of 0.3%, Sainsbury’s has edged its market share of 16.5% ahead of Asda, which now stands at 16.4%. Sainsbury’s has returned to its position as the nation’s second largest supermarket for the first time since January, boosted by non-food sales, its Sainsbury’s Local outlets and faster market growth in the south of the country, where it operates a larger number of stores.
Growth has accelerated at Waitrose, where sales have risen by 3.0%. Customers have taken advantage of the recently introduced ‘Pick Your Own Offers’ initiative to push market share up to 5.0%, an increase of 0.1 percentage points compared with last year.
Fraser McKevitt continues: “The continued slow growth of the overall market can be explained by minimal volume growth and lower like-for-like prices, both as a result of cheaper commodity prices and the fierce competition between supermarkets. Comparable groceries are now 1.6% cheaper than a year ago, meaning prices have been falling since September 2014, although they are projected to start rising again by early 2016.”
Aldi grew by 16.6% while Lidl saw growth of 11.3%, meaning both have moved to new market share highs of 5.6% and 4.0% respectively. Morrisons was the best performer among the ‘big four’ retailers, although sales fell back by 0.1%. Meanwhile, sales at Tesco fell by 0.6% and at Asda by 2.7%. At Iceland sales were up by 3.0%, coinciding with its recent ‘Power of Frozen’ advertising campaign.
Red Tape Adds £6.4 Billion Onto The Cost Of Distribution In The UK
Red tape now costs distributive trades around £6.4 billion or 32% of the total cost for the UK’s micro, small and medium sized employers.
This means that compliance with legislation now costs firms in this industry £15,900 each or around £1,845 per employee – according to research from the Forum of Private Business.
Internal compliance costs have risen to £4.1 billion, eclipsing the modest savings on external consultants which has dropped to £2.3 billion, however companies in this industry account for 35% of consultant costs despite being 32% of overall employment
Time has now become the most pressing issue for the industry and it is not difficult to see why as the time spent internally meeting regulatory compliance rose to 40 hours per month, up 11% on 2013. Time taken to complete payroll requirements has risen 1.2 hours across the industry with small and medium companies (those with over 10 staff) seeing the biggest rises in time spent on payroll.
“This industry is very price sensitive – particularly in the current economic climate – and red tape can make good companies uncompetitive as a result” said the Forum’s Managing Director, Ian Cass.
“The Forum has raised our game and increased cover for our members in this industry removing the pernicious 51% prospect of success clause on our standard cover and including support for companies that have to act before they have time to take insured advice.”
Retailers, hoteliers and other business owners in the industry work long hours and need support that is designed around them so we have introduced video training modules, case studies alongside our employment and health and safety guides to support them when they need help.
The Forum has found that small firms across the UK pay external contractors a total of £6.5 billion for regulatory compliance services, while internal time costs are £13.5 billion in total.
“There is also evidence that the government are failing to consider the implications of regulations on the regions smallest and most numerous employers as micro businesses are paying almost ten times more per employee than medium sized firms,” continued Mr Cass
“Paying commissions on holiday pay has been a bolt out of the blue and businesses with less than 5 people say that they simply cannot get shared parental leave to work without it harming their ability to grow”
The Forum has also bolstered its support for members in light of concerns about tax investigation, cyber crime and the complexity of legal compliance. Overall Forum members pay around half as much for employment law and health and safety specialists as other firms, but spend a similar amount of time on health and safety compliance and 15% less on employment law.
It’s Back To The Future As Consumers Shun The Big Shop
Shoppers are turning their backs on the big shop and reverting to the buying habits of their grandparents.
A Co-operative Food report ‘Back to the Future’ compares and contrasts food shopping in 2015 with the mid-sixties and shows that less than half (48%) of today’s consumer’s now go shopping just once a week.
The Co-op’s Convenience Retailing highlights: · Millions are stepping back to the way consumers used to shop for food in the 60s before the advent of huge supermarkets and fridges, freezers and microwaves · The modern trend of shunning the big shop in favour of buying smaller amounts locally reflects exactly what was happening 50 years ago. · Almost half of shoppers now no longer do a big weekly shop, while more than a third have adopted a ‘grazing’ shopping mentality
Shopping baskets in 2015 compared to 1965 show a stark difference in diet and tastes, with more convenience food now compared to more basic ingredients which were used to make the foods from scratch. In 1965 the average basket would have contained butter, meat, milk, bread, sugar, flour, eggs as well as lard, suet and yeast. In 2015 consumers are more likely to have confectionary, yogurts and desserts, crisps and snacks, in store bakery products, bananas and energy drinks.
The amount consumers spend in proportion to their income has also fallen sharply. According to the ONS, today the average weekly expenditure is £517.30 with food and non-alcoholic drinks accounting for 11% of this expenditure at an average of £58.80. In 1965, families spent 23% of their income on food.
In the mid-sixties there were still individual butchers and greengrocers, many operated by the Co-op, and so grocery stores concentrated on selling food in packets and tins. Another big difference was there was very little alcohol sold because drink consumed at home was generally purchased at standalone off licences.
After the Second World War, the Co-op was the first to introduce the American idea of serving yourself but it was mid-1965 before the majority of its stores had been converted from the old fashioned counter service.
The report includes a plan of how a Co-op food store would have been laid out in the mid 1960’s, highlighting how many innovations introduced back then are still recognisable to 21st century consumers.
Steve Murrells, Chief Executive, Retail said: “After the war the Co-op pioneered relatively small self-service shops and we are again aiming to be the leading convenience operator in the UK.
“Our report shows what a typical newly-converted store would have looked like and, while today there is far more emphasis on fresh produce, many aspects of the layout are still familiar.
“In half a century much has changed while in many other ways little has altered. Many of the staples found in people’s shopping baskets in the 1960s remain, yet, there are new additions which reflect changing lifestyles and modern shopping habits.”