Intermarche - Quarterbridge

Government officials took time off from Brexit negotiations last month to launch two crucial initiatives: A ‘traffic light’ scheme from DEFRA proposing retailers add red, amber or green labels to show if their packaging is recyclable. And a ‘calorie cap’ recommendation to limit the size of takeaway pizzas. A pleasant change to worrying about Brexit no doubt but rather missing the point – the need to reduce consumption. Curbing the volume of unnecessary packaging and banning double sausage and egg McMuffins would be a start. Quite how HMG would implement these proposals is not clear. Maybe Brexit will provide an answer.

The LADS must be doing something right.

Meanwhile the quarterly results for the LADS (Limited Assortment Discounters i.e. Aldi and Lidl) show they continue to bite chunks out of the ‘Big Four’ supermarkets. Lidl boosted sales by 10% and Aldi by 15%, partly from new store openings and partly from own-label product lines. The Co-op also did well with turnover up 7%. By comparison Asda and Morrison increased sales by 2.4% but Tesco only managed 0.9% and Sainsbury 0.6%. The LADS must be doing something right.

Variety is the spice of life.

Retail analysts have pointed fingers at the oversupply of supermarket space by the Big Four, problems with suppliers and poor variety. Reducing product lines to reduce prices has been adopted by Tesco to compete with the LADS but I think they’re missing the point. Variety is the spice of life. It‘s what makes a Market successful.

Morrisons offers the best variety in the UK

My holiday comparison between Aldi and Intermarche (France) and Morrisons and Tesco (UK) was an eyeopener. OK, the prices are higher in the EU thanks to exchange rates but the sheer variety on offer in France is far wider. Morrisons offers the best variety in the UK and their sales confirm as much but Intermarche simply crams more product lines into the same floor space.

Note for Market Managers – Variety attracts footfall.

A pallet of engine oil at the end of an Aldi aisle might seem odd but expectation of a ‘Managers offer’ or an ‘own-brand special’ attracts footfall. Maybe it’s time for you to stooge around the competition and offer seasonal specials.

Note for Market Stallholders – Look at refreshing your offer on a regular basis.

In direct response to the challenge of the LADS Tesco launched ‘Jack’s’ last month – it’s new brand of discount store. It used a mothballed store development in Chatteris to offer limited range, no frills displays, short -term discounts and an emphasis on British suppliers. ‘The cheapest in town’ said Lawrence Harvey, retail director of Jack’s – but only locally, not nationally. My suspicion is this is not going to cut it with an Aldi or Lidl shopper who enjoys cheap (if oddly-named) chocolate across the UK.

Retail analysts have reminded everyone of Sainsbury’s Danish experience

Retail analysts have reminded everyone of Sainsbury’s Danish experience. It dipped a toe in the discount pool four years ago when it partnered with Dansk Supermarket Group to bring discounter Netto to the UK in a £25m partnership. It trialled 16 stores at discounted prices but folded the partnership two years later because of an ‘increasingly competitive market’

Do you go for high-volume ‘pile it high, sell it cheap’ sales

And therein lies the dilemma for many Market businesses. Do you go for high-volume ‘pile it high, sell it cheap’ sales with a limited variety you can buy cheaply in bulk, or do you push high-margin niche products for which you have specialist knowledge? My money is on the latter.

Checkouts will soon verify age using facial recognition technology

Finally, those of us fortunate enough to still enjoy youthful good looks will be relieved to learn checkouts will soon verify age using facial recognition technology. ‘Fastlane’ self-service checkout manufacturer NCR has announced a partnership with software company YOTI to integrate a camera and age assessment technology into self-service tills.

No longer will we need to answer tedious questions and produce proof of age when buying age-restricted goods such as booze, fags, knives, fireworks, X-rated DVD’s etc.

Waiting for age approval at self-checkouts is a source of frustration

Robin Tombs, chief executive of Yoti, said: ‘Waiting for age approval at self-checkouts is a source of frustration for many shoppers who just want to get home as quickly as possible. It’s a simple process that helps retailers meet the requirements of regulators worldwide’.

Hmmm… NCR did not confirm whether their tills will breathalyse the shopper to determine if he/she is already plastered (selling to them would also be an offence) or whether it will remove the security tag on your bottle of gin.

The year-end announcement by Tesco of a stunning £3 billion gross profit from worldwide operations was soon followed by the announcement it is expanding it’s F&F fashion offer into the growth economies of the Middle East and Central Asia through franchise deals. They seem to have learnt from their disastrous foray into the USA with the Fresh & Easy store brand. Partnering with an established local retailer ensure stores reflect local preferences rather than imposing a ‘one-size-fits-all’ approach, as used for Fresh & Easy.

Knowing your customers and adapting your offer to suit is more important than ever if you’re selling into a non-European culture.

The Fresh & Easy format is much smaller than most American supermarkets and stores are located mainly in ‘blue collar’ neighbourhoods on the US West coast – California, Nevada and Arizona. When it was launched at the end of 2007 it planned to open up to 1,000 outlets based upon a projected break even of 2013. The site of their equally-ambitious distribution centre acquired in Southern California is bigger than Disneyland.

Fresh & Easy lost some £120 million last year and Tesco have mothballed many new openings.

But sales at the first 100 stores to open have been so poor that Fresh & Easy lost some £120 million last year and Tesco have mothballed many new openings. They seem increasingly likely to pull out of the USA altogether at a cost to themselves of some £1 billion which is affordable to the mighty T but must hurt neverthleless.

Given that the US economy is so enormous and self-reliant (only 39% of US citizens own a passport, versus 71% in the UK) there’s little appetite for new-fangled British retail methods like self-service checkouts.

Tesco have blamed poor sales on the economic recession but US analysts say that’s wrong. What they failed to appreciate was just how deeply conservative (with a small C) American shoppers are – especially in blue collar neighbourhoods. Given that the US economy is so enormous and self-reliant (only 39% of US citizens own a passport, versus 71% in the UK) there’s little appetite for new-fangled British retail methods like self-service checkouts. Shoppers have complained about portions being too small for American appetites (have you ever seen the size of a US shopping trolley?) and short expiry dates on food items.

‘I’m paying for the groceries so they need to pay for a full service checkout’ is a common complaint despite prices being up to 15% cheaper than the competition. Marketing and products seem to be aimed at more affluent shoppers than the pickup truck-driving, steak-barbequing, good old boy. As one analyst said: ‘Fresh & Easy is a format muddle. Instead of promoting berry-flavoured gourmet cheese and Spanish sparkling wines, they need to focus on the basics: essential food and grocery items at the lowest possible prices.’ Sounds like an Aldi format to me.

And talking of getting a caning…

I tend to shy away from politics but the blistering performance of UKIP in the local government elections was so remarkable I assume the coalition government is getting the message. One of the many issues to have eluded the coalition is how everyone dislikes any government which messes with their home – ‘an Englishman’s home is his Castle’ etc. As well as reneging on the pre-election commitment to abolish Inheritance Tax, HMG have now introduced ‘empty-bedroom tax’ on recipients of housing benefit who occupy Council and Association housing. How unimaginative. No-one likes new taxes but everyone does like opportunities, so why not encourage people to move back into work and use the national property stock more efficiently by incentivising them to let-out empty bedrooms? This could be administered through HMRC and the domestic rating system – and in return the pointless individual rating assessment of Market Hall stalls could be dropped.

The worst recession for 60 years.

And here’s another bright idea – in the middle of ‘the worst recession for 60 years’ why not scrap the HS2 high speed rail line and instead spend a fraction of that on high speed broadband to everywhere in the country to stimulate business development? The government is promoting HS2 to overcome the ‘North-South divide’ but experience from Spain suggests High Speed Rail simply concentrates economic growth in the capital. PS: The business plan is based on a cost of £59 billion versus revenue of £33 billion. Do you reckon you could sell that to the Manager at your Bank?

And finally, the charming story has emerged of an unnamed 73-year old lady locked into a French supermarket over New Years Eve. Apparently she was doing some last-minute shopping in the Intermarche store near Lille when she felt dizzy and retired to the Ladies loo to recover. When she emerged ten minutes later the store was deserted and ferme. She then set off the alarm which was ignored by the local gendarmerie who were enjoying a knees-up, so instead she tried to get some kip in a back office. That didn’t work so she spent the night wandering the aisles looking for bargains before being discovered none the worse for wear the following day. A spokesman for Intermarche cunningly diverted attention from several rather fundamental management failures with typical Gallic sang froid. He announced the supermarket was packed with seasonal champagne and truffles but ‘she was too polite to help herself to food or drink’.

Having made her miss the New Years Eve I hope they had the decency to donate everything needed for a slap-up birthday party.