Why Aldi is winning way beyond price

The ongoing success of Aldi in the UK is not just based on the way it has taken on the major multiples in terms of price. Their financial performance is impressive enough, with their latest results showing a 30% increase in like for like sales, but this is complemented by recent research studies, such as being voted the most popular brand in the recent YouGov brand index poll or the MMR research study which highlighted shoppers as having a very positive emotional association with Aldi.

Shoppers in the major multiples are being turned off by being overwhelmed with choice, which often leaves them lost and confused. The Aldi proposition, which may not provide the most inspirational in-store environments, is one of simplicity and honesty. This is something that the major multiples need to understand and react to if they want to protect their market shares. In terms of inspiration, although the store layout may not offer much, the store still manages to provide inspiration and excitement by the ever changing WIGIG (when it’s gone it’s gone) offerings. Judging by the items I see in the trolleys and baskets at the checkouts, the amount of unplanned purchases created from this section of the store must be a significant contribution to both the stores financial success and the positive association shoppers have with the brand.

The message is clear and shoppers are reacting with both their feet and wallets.For more information on shopper marketing and what The Quantic Group can do for you contact Jon Norbury at jnorbury@thequanticgroup.com or call +44 (0) 1252 616100.

Grocery shopping from a shoppers perspective

We live in Ilkley, a couple of empty nesters. Within a short drive we have access to most of the UK’s retailers. We do a lot of online shopping but never for groceries, we lost faith when one retailer substituted private label cola for Coke and another sage for rosemary.

I thought you might be Interested in our reasons for shopping where we do, like most people we shop a range of grocery retailers.

• For quality meat we go to one of two of our local butchers who supply from local farms. For everyday meat we’ll buy from any of the chains, similarly when we shop for fish.
• For general grocery we go to Booths, we love the fact they are a regional chain and they wear their Yorkshire/Lancashire roots on their sleeve.
• For quality ingredients we go to Waitrose. We even think Essentials are high quality.
• Morrisons Local is our emergency shop, we liked the idea of them supplying anything their local large store has but we’ve never used the facility. We’d buy more there if their meal solutions were more inspiring.
• We are regulars at M&S Food, a meal for two for £10 and we’ve never been disappointed.
• Then there’s Aldi, we lived in Germany for four years and shopped with them regularly but never do here. We probably chose Aldi because other German multiples were shockingly bad.
• We do shop at Tesco but only when convenience wins over the other criteria. On the topic of Tesco are we only ones who scan our card every visit but rarely redeem the coupons?
• I should mention JS, but we hardly ever find a reason to drive past the Waitrose, which is close by.

So what does it mean for retailers? Dare to be different and be famous for something.

Pop-up retailers: the next big thing

Pop-up retailers are tipped as being a huge contributor to the retail sector, as much as £2.1bn over the course of 2014.

The pop-ups occupy empty spaces, setting up temporary shops or fixtures for a brief period of time before moving on. These temporary retailers have been among the fastest growing sectors in the retail sector this year.

A study by EE, the digital communications business and CEBR, the economic consultancy returned staggering results for the growth of these mobile retailers, forecasting growth of 8.4% for next year, notably higher than the 3.4% growth expected for the high street.

However, these results also beg the question: coupled with the expectation of average consumer spending to grow from £110 to £120, could pop-up retailers be just what the high street needs to provide that welcomed boost as the warm weather that drove sales this summer will begin to fade? There are already 9,400 pop-up stores in existence in the UK but it’s likely that this number will rise over the course of 2014 and into 2015.

Low interest rates spark a huge boost in car sales

The UK car sale market now sees a collosal 83% of purchases made using credit.

The recent survey by Black Horse, part of Lloyds Banking, says buyers have borrowed, or will borrow, at least as much as the value of the vehicle they’re purchasing.

The figures are in contrast to those across Europe where sales have been in decline over recent years.

Perhaps even more revealing is the fact that the number of cars bought on credit has risen sharply since the beginning of the recession.

Pre-recession saw around 50% of all vehicles bought on finance, compared to 75% in the first eight months of 2013.

Low interest rates are an undoubted factor in the appeal of finance but there are some analysts who question the fragile nature of sustainability of sales if rates were to rise.

April 2014 saw an 8% rise in sales and the first four months of the year were 12.5% up on the same period in 2013.

Which retailer tops the list of sales per square foot?

e-Marketer have published a list of the top 15 retailers in the USA based on sales per square foot of retail space.

Despite the surge in eCommerce of recent years, stores still account for 94% of retail sales in the United States. The list has some surprises, but a lot of very expected names make a strong showing.

Top 15 retailers by retail sales per square foot:
1. Apple-$4,551
2. Murphy-$4,221
3. Tiffany & Co. – $3,043
4. Michael Kors Holdings – $1,886
5. Lululemon Athletica – $1,841
6. Coach-$1,532
7. Kate Spade & Co. – $1,280
8. Deckers Outdoor – $1,246
9. Birks Group – $1,224
10. Select Comfort – $1,136
11. PriceSmart – $1,115
12. Signet Jewelers – $1,030 12. Tumi -$1,030
14. Movado – $1,029
15. Vince – $1,017

The survey added that there were a number of brands to watch in terms of high performance, including Restoration Hardware, HomeGoods and Lane Bryant. It is evident that the list is dominated by luxury goods retailers, but the remainder of those in the top 15 span a broad range of sectors.

One retailer expands into Indian market, could others follow?

A French sportswear retailer has announced plans to open 60 new stores in India.

The new outlets will open over the next five years, said Decathlon. The company has experience of retail in India through the operation of cash and carry outlets to date.

Decathlon expects India to become one of the top five markets in the world in terms of number of retail stores. The other four countries in which it operates are its home market of France, along with Italy, Spain and China.

Their CEO in India, Steve Dykes, said “India is a priority country. We dream to open 100 stores in five years.” He added that the company will also be looking to sell products online (once the government allows foreign direct investment in eCommerce).

With a strong presence in the south of India, it is anticipated that Decathlon will seek to focus on strengthening their brand in the north and west of the country.

India has a population in excess of 1.2 billion people and in 2012 the GDP of the country was reported at over $1.8 trillion.

Wet bank holiday dampens sales

Figures published for the last UK bank holiday weekend in May show a decline of 8.3% in footfall on the Saturday when compared to 2013.

The statistics included high street, retail park and shopping centre footfall. Worst hit on the Saturday were UK high street retailers, with a 19% drop in footfall due to the heavy rainfall that hit many parts of the country.

Better weather on the Sunday saw an increase of 4.7% over the previous year, giving a ray of sunshine over an otherwise gloomy bank holiday period.

The results dampen otherwise optimistic performance at a time when retail growth continues. In April it was confirmed that the UK had seen the strongest annual rise in retail sales in a decade.

Overall, the forecast remains bright. The Office of National Statistics (ONS) confirmed that quarterly retail sales have grown for 14 months in a row.

UK retail sales slow in May

The CBI has released data showing a slowdown in the rate of growth of retail sales in May.

The report states that the 136 retailers included in the survey anticipate a growth in sales in June.

Growth in retail sales in the UK in 2014 has been at a steady rate and the CBI pointed out that, despite the slowdown, the figures were a sign of sustainable growth.

38% of retailers had seen a growth in sales in May, with 22% suffering a decline, giving a balance of +16%, down from +30% in April 2014. The growth fell short of analyst predictions of +43%. A later than normal Easter in April was attributed as being responsible for a boost in sales in the prior month.

The report went on to say that the growth was driven by furniture, carpets, DIY equipment, clothing and chemists.

Bulgaria: the dark horse of EU markets

Bulgaria might not be the first country that would spring to mind when looking at FMCG markets in Europe, but new statistics make it a difficult country to ignore from a news perspective.

In early April, the “Made in Bulgaria Union” revealed that a mere ten retail chains control over a third of the FMCG market and that the trend looks set to continue and grow.

The figures were brought to the attention of others in a radio interview by the executive director of the union, Plamen Grozdanov, as he urged amendments be made to the Competition Protection Act.

Bulgaria is amongst the poorest of all European nations and has seen an influx of businesses and business owners from elsewhere in Europe, with many claiming this is due to an incredibly low flat rate of tax at 10% (the lowest in the European Union).

The country sits alongside Romania, Albania and Macedonia in its requirement for a monthly minimum wage of approximately €350.

Greek owned businesses alone rose 75% in Bulgaria in a two year period up to 2012. However, SMEs are far from the only types of organisations being attracted by the low costs of setting up business in Bulgaria. A number of multi‐nationals have withdrawn offices from Greece and replaced them with a Bulgarian based presence.

One political commentator pointed to the exodus of fleet transport from Greece. He claimed that from 30,000 vehicles, over 8,000 had already relocated to bases in Bulgaria.

Year-on-year prices drop again for UK retail

The British Retail Consortium has said that retailers cut prices at the fastest yearly rate on record as they continued to try to attract customers in March.

Prices fell 1.7% compared to the same month in 2013. Furniture, electricals and clothing all saw price drops whilst food prices continued to rise but at a slower rate than ever seen before.

Fierce competition amongst retailers was a primary driver of cost cutting, said the BRC.

Across all non-food categories, goods were 3.2% lower than a year ago. The news lifted shares in the FTSE 100 index after an earlier fall when the US markets were lifted by better than expected profits from Citigroup.

Perhaps even more interesting than the dramatic fall year-on-year, March became the eleventh consecutive month in which retail prices have dropped.