PLMA E-Scanner – June 2019

June, 2019
Tesco cuts products

Tesco plans to cut 20% of its 40,000 products as it tries to fight back against discounters. According to published reports, Tesco told suppliers that more cuts are on the way and they will be focused on household products. The supermarket is placing bigger orders with fewer suppliers, as well as rebranding and prioritising private label ranges. Since 2014 the retailer has more than halved the number of individual products stocked across its stores.

Tesco has begun selling products from its Jack’s discount stores in its Tesco stores, offering nine Jack’s items in 850 Tesco stores. Tesco also is extending its sole supplier strategy. It signed a deal with Greenyard to become its sole supplier of own label frozen fruit, vegetable and herbs from September. 

Rewe invests in convenience

Rewe is making a big investment in convenience retailing. The company has acquired all shares of specialised wholesaler Lekkerland, which supplies over 91,000 sales outlets in seven European countries. These outlets are mainly gas stations, kiosks, bakeries, food retailers, fast food chains, tobacco shops and convenience stores.  Lekkerland had turnover of 12.4bn euros in the last financial year, supplying food, beverage and tobacco products.

Rewe CEO Lionel Souque says the move reflects the retailer’s strategy of investing in convenience retailing.  He believes the growth of on-the-go and out-of-home consumption is one of the strongest trends in grocery retailing and Rewe is steadily expanding and improving its convenience ranges.

Aldi opens store in China

Aldi opened its first store in China this month. The store is in Shanghai and plans call for nine more stores to open there soon. Lebensmittel Zeitung expects the medium-term store count to reach 50 to 100 in order to obtain the necessary economies of scale.

Sources say the store format is more modern than those in Europe. Under the slogan ‘Everyday value – Handpicked for you’, Aldi will be offering a more upmarket proposition than on any of its other foreign markets. The convenience-oriented assortment will apparently feature many import goods from Europe, including the dairy products and cosmetics.

Lidl posts big gains

Lidl’s turnover increased by 8.8% to 81.2bn euros in the past year, according to its parent Schwarz Group. Its Kaufland group posted slower growth, with sales up by 1.6% to 22.6bn euros. The group now operates more than 12,100 stores across 30 countries and opened 400 stores in 2018, most of which were under the Lidl banner.  

Lidl’s sales in Germany increased by 5.9% to 22.7bn euros. Outside of Germany, Schwarz Group sales increased by 9.1% to 67.3bn euros. In 2018, the group entered Serbia where it opened 23 Lidl stores; in the US, it acquired 27 stores; in Spain sales were up 11.5% to 4bn euros, and in Italy, 40 stores were added.

Auchan sells off stores

Auchan is leaving Italy and Vietnam, cutting back in France and investing in Russia.  The French retailer is selling 46 hypermarkets in Italy to an Italian businessperson and the stores will be managed by Conad. The acquisition is expected to strengthen Conad’s position in northern Italy.  

In Vietnam, Auchan has decided to sell all its 18 stores there, which currently post sales of 45m euros annually.  In France, Auchan plans to sell or close 21 stores.

Meanwhile the retailer is investing in Russia.  Auchan plans to increase the production capacity of its meat-processing plant in Tambov Oblast to 70,000 tonnes. The overall investment in the project is said to be RUB3.5m. 

Coop Sweden acquires Netto stores

Coop Sweden has acquired all 163 Swedish stores of the Danish Netto chain, pending permission from the competition authorities. Coop Butiker & Stormarknader, which manages 240 of Coop’s 650 stores, will take over Netto’s complete store network in Sweden. During a transition period, the stores will continue to use the Netto brand, but afterwards they will be rebranded into Coop stores. Changes will include a wider range of food products, including Coop’s large number of sustainability brands. Netto has a strong position in the southern part of Sweden.

Amazon introduces Counter service

Amazon is launching its Counter service for the European market. Amazon Counter brings Amazon pick-up points to physical retailers. The project will begin in the United Kingdom and Italy, but it is expected to expand to the rest of Europe. Amazon will soon open counters in the more than 500 stores of the British chain Next. Amazon has also reached agreements to open manned pickup points with stores in Italy, such as the book retailer Giunti and proximity retailer Fermopoint.  The physical pickup points also come with a new app, both for consumers and for the retail partners.

Aldi launches fresh brand

Aldi in Spain is launching El Mercado, a brand for its fresh foods in the country. The initiative is part of the company’s new strategy of regrouping its private label brands. The range offers an assortment of approximately 300 fresh products, including fruits, vegetables, salads, meat, fish and eggs. El Mercado also includes an assortment of salads, smoothies and juices ready to go. Almost all the 90 fresh meat offerings all come from animals raised in Spain.

Sainsbury’s upgrades premium range

Sainsbury’s is upgrading its premium Taste the Difference range with new packaging, reformulated recipes and new products. The changes are first appearing across ready meals and selected deli products. Ready meals have been expanded with the addition of 10 new lines.  The new packaging features longer product descriptions focusing on provenance and quality alongside the new tagline “that’s why you can Taste the Difference”.

Albert Heijn tests discount system

Albert Heijn is testing a dynamic discounting system based on artificial intelligence to prevent food waste. An algorithm developed by Albert Heijn helps in determining the value of discount on products based on their shelf lives. The algorithm also takes into account factors such as location, bonus offers, weather conditions, historical sales trend, and stock in the store.

The aim of the move is to offer the best discount on products that are approaching their expiry dates. Albert Heijn is testing the technology in a store with poultry and fish items. The retailer has put electronic price tags on the products showing the regular price and the discounted price on a specific expiration date.

X5 introduces a ‘smart kitchen’

Russian retailer X5 Retail Group has introduced what it describes  as a ‘smart kitchen’, operated by its Perekrestok banner to increase the range and quality of its ready-to-eat and ready-to-cook ranges. The retailer said that it would more than double the range of items available under the Perekrestok Chef brand.

The Perekrestok Chef brand is currently available in more than 400 stores in the Moscow and Moscow region, but plans are underway to roll it out to St Petersburg and Nizhny Novgorod in the near future, as well as make the range available in Pyaterochka and Karusel stores.

Mercadona automates warehouses

Mercadona will automate the distribution of fresh food at four of its new distribution centres. The four centres will serve over 600 of the retailer’s 1,630 supermarkets. “The main objective of these four centres,” explained Javier Blasco, warehouse purchasing coordinator for Mercadona, “will be to meet the demands of our stores, secure growth in perishable product sales and eliminate the overexertion that results from the manual handling of orders.”

All four of the logistics facilities will have two climate zones for fresh food: +3°C for packed meat products and +12°C for fruit and vegetables.

DIA looks to stabilise

Spanish retailer DIA says that it may be forced to file for creditor protection or even liquidation if it can’t stabilise its capital structure and liquidity. The retailer made the statement as it posted a 4.3% decline in like-for-like sales in the first quarter of 2019. DIA said that the current downward trend in sales is “primarily driven by the negative impact that the uncertainty surrounding the company’s financial situation has had on our suppliers”.

MD rolls out premium range

Italian discounter MD has rolled out a premium line under the Lettere dell’ Italia brand.  It is comprised of regional references, as well as traditional and historical Italian products.  The products have been certified with either the IGP (Indication of Geographic Protection), PDO (Denominazione d’Origine Protetta or Protected Designation of Origin) or DOC classifications, for quality assurance.

The ingredients used in manufacturing the products are sourced from local producers. The discounter plans to expand the product offering by December to represent all product categories from all Italian regions. The product packaging contains information about its history and a link that traces the territory of its origin.

In the Stores 

Tesco has gained an entry in Bosnia and Herzegovina through a partnership with Bingo, a local retailer. A select number of Tesco private label SKUs go on sale in Bingo supermarkets.

Aldi is launching its own wine club in the UK. The retailer is starting with 30 consumers to take part in a Wine Club Panel, where participants will be sent a few free bottles a month for three months in return for a review on social media.

Kaufland is introducing burgers that contain protein powder from buffalo worms.

Colruyt subsidiary Bio-Planet is expanding the number of Belgian products in its organic range, adding four products based on locally grown soy.

Coop Suisse has added around 100 SKUs to its Sapori-d’Italia range of private label poducts.

Migros is working with Swiss Post to allow customers to collect online orders in its stores. The new service will be available at 300 branches across Switzerland.

Albert Heijn has introduced a number of Asian dishes with which the customer can put together a rice table. These include Chinese, Indonesian, Cantonese and Thai dishes.

Walmart is considering a stock market listing for its Asda subsidiary after plans to merge the business with Sainsbury’s failed.

Irma has introduced a range of products sourced from Danish food entrepreneurs.

The Co-op in the UK will supply Superdrug, the health and beauty retailer, with a food-to-go range of more than 40 products under the Co-op brand.

Dm is testing a click and collect programme with in-store picking in about twenty stores.

Delhaize in Belgium is offering discounts to select shoppers who purchase certain healthy food products.

Finland’s K-Group will switch to 100% certified cocoa for all private label confectionery, cocoa drinks and chocolate baking products by the end of 2020.

Online retail sales in France rose by 12% to 25bn euros in the past year.

Russian food retail X5 Retail Group has signed a long-term agreement with wholesale supplier RITM-2000 to open 85 stores across central Russia.

Poundland in the UK is expanding its fresh food and beauty ranges.

Sainsbury’s is trialing a till-free grocery store.  Customers scan and pay for their groceries using the company’s SmartShop Scan app.

Lidl is testing an online food business in Madrid, through the agreement reached with the Lola Market platform.

Biedronka is introducing service counters offering fresh meat, sausage and cheese in its stores.

Waitrose is introducing compostable ready meal packaging.

Alibaba and Bailian Group are planning to open 500 Ego convenience stores in China this year.

Morrisons in the UK is free to deepen its relationship with Amazon after loosening its ties with Ocado, the online delivery service.

Italian regional cooperative Nova Coop is testing its first home-delivery service for online orders.

Coles in Australia has launched a healthy living brand called Wellness Road.

Market Research 
Private label gains in France

Private label is now growing faster than A-brands in France. IRI reports that retailer brands posted a gain of 0.7% for April 2019, compared to 0.4% for manufacturer brands. This is a marked difference from the previous period, in which national brands grew by 1.7%, but private label fell by 0.3%.

Commenting on the results, retail consultant Olivier Dauver said, “The gap is small, of course, but it says a lot: a new era is opening up for retailer brands, whose competitiveness is improving, both through repositioning of the biggest names and a reinvestment in price,” adding that “the direction is clear: the return to favour of private label is going to last.”

PLMA News 
Record attendance at “World of Private Label”

Attendance at PLMA’s 2019 “World of Private Label” International Trade Show reached an all-time high. The event, held last month in Amsterdam, attracted more than 28,000 attendees, including retailers and industry visitors.

At the pre-show seminars, two presentations focused on the future of online grocery retailing. Ben Miller, Global Insight Director of IGD, said that while online retailing may be growing rapidly, physical stores still dominate the business. He predicted that online retailing will account for less than 10% of the grocery market by 2023. The other speaker, Lidia Palubina of Kantar, outlined how Alibaba, the giant Chinese online retailer, is expanding into Europe and other regions.

Events 
22-24 October

Executive Education Programme
Nyenrode Business Universiteit, Amsterdam
 

17-19 November

U.S. Private Label Trade Show
Chicago