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MARCH 2009

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IN THIS MONTHS ISSUE....... 2 NEWS

44 REINVENTING CUSTOMER FOCUS

6 PROFITS UP AT KELLOGG’S

It is worth reminding ourselves that many an empire was begun in recession.

10 IS THIS SCHADENFREUDE TO THE RETAILERS?

48 BRANDING- THE BEST OFFENCE IS DEFENCE

A successful Irish economy needs retailers to be prosperous. The two are almost inextricably linked.

Does branding matter during economic meltdown?

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52 CHARTING RETAIL EXPANSION

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There aren’t many iconic brands left that can be recognised the world over, but one name that has constantly remained a household staple for over a century is PERSIL.

M.D/Editor: Deputy Editor: Bsn. Dev. Managers:

18 WASTE NOT WANT NOT Somehow, despite ourselves the Irish are still wasting food and lots of it. 22 M&S KEEP IT POSITIVE 26 BEER

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- FAIL-SAFE?

HEALTH

& WELLNESS

38 BATTLES LAID TO REST IN UNCERTAIN TIMES Those developing new outlets will be top of their game.

Contributors: Circulation: Design:

Frank Madden Ruth Timmins Niall P. Madden Sarah Griffin Emma Maguire Tomas O’Brian Margaret Corry 90% Proof

Todays Grocery Magazine, The Mews, Eden Road Upper, Dun Laoghaire, Co. Dublin Tel 2809466 (6 lines) web: www.todaysgrocery.com email: info@todaysgrocery.com editorial@todaysgrocery.com Small Print Todays Grocery Magazine is circulated to all proprietors, directors and managers of all relevant manufacturers and distributors, to every cash and carry, every multiple supermarket, group head office and wholesaler, all group affiliated shops and Londis outlets in addition to over 6,300 unaffiliated independent retailers and the country’s leading off-licence outlets. All articles are copyright of Todays Grocery Magazine and cannot be reprinted without the written permission of the editor. All letters to the editor of this magazine will be treated as having been submitted for publication. The magazine reserves the right to edit and abridge them. Disclaimer While every effort has been taken to ensure that all information is accurate at the time of going to press, neither TGM Ltd or Todays Grocery Magazine accept responsibility for any inaccuracies or omissions. Please note that the opinions expressed in the articles are strictly those of the authors.


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Bord Bia Targets Rise news

Aidan Cotter

Bord Bia has announced a plan to increase exports by more than 20% to reach €20bn by 2011. This positive step comes despite a 6.5% decline in Irish food and drink exports last year. Aidan Cotter, chief executive of Bord Bia explained that despite the decline last year the performance was impressive as 43% of exports went to the UK market where sterling declined by 22% against the Euro.

Cotter said food markets remained relatively stable during recessions. People still ate food but tended to buy cheaper food and use discount stores. 2 TGm

“Exchange rate movements also affected exports to destinations outside of Europe, which last year amounted to 24% of the total”, said Cotter. “The dollar was significantly weaker for much of 2008, and while the average decline across the year was over 7%, the cumulative depreciation since 2006 reached 17%.” Meat and livestock performed the best last year and recorded increases of 2% to €2.85bn. Pigmeat fell by 2% to €360m and it will be difficult to reopen markets for it until the product recall was fully complete. Dairy prices fell, resulting in sales dropping back 5% to €2.2bn, and exports of alcoholic beverages, affected by slower consumer spending and the weakness of the US dollar, declined by 13% to €1.25bn. Cotter said food markets remained relatively stable during recessions. People still ate food but tended to buy cheaper food and use discount stores. They also made some alternative choices such as switching from, steak to mince. Cotter and Dan Browne, chairman of An Bord Bia, said the strongest growth potential for the future was in the dairy and beef sectors. Dairy quotas were increasing , said Cotter, and our dairy sector was world class, while on the beef side, Ireland was the largest beef exporter in the northern hemisphere. He continued that the goal was to drive the success of a prestigious Irish food, drink and horticulture industry through strategic market development and information success. Bord Bia would also concentrate on the home market where it emerged Irish people spent just over €4bn or €100 each annually on imported food, a figure which went up by nearly half in the years 2000-2007.


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Dairygold Chief Steps Down

Jerry Henchy

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Jerry Henchy, Dairygold chief executive, stepped down after five years with the Group. The shock announcement came in a carefully worded statement issued on behalf of the group which focused on the need for the individual stewardship of both Dairygold and Reox. Henchy remains in charge of Reox, the Dairygold spin-off. The company responded to Henchy’s stepping down by stating; “The Board of Dairygold Co-Operative Society Ltd has decided that the time has now come for the Society to have its own full time chief executive. Since the demerger of substantial business operations from Dairygold to Reox Holdings plc the Society has been availing of the services of Jerry Henchy, chief executive of Reox Holdings, in the role of chief executive of the Society. The board of Dairygold believes that the time is right for a change in this arrangement and for the Society to have its own full-time chief executive.” The statement continued that recruitment for a new chief executive is currently in place; “The company’s chief financial officer, Michael Harte, has been appointed acting chief executive in the interim and the operations will continue to be run by the divisional managers.” The statement also praised Henchy claiming that when Reox Holdings was spun off from Dairygold, it was envisaged that Dairygold ‘would eventually need its own chief executive’. “The time is now appropriate to

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move ahead and appoint a full time chief executive whose task will be to focus on the business of the scoiety. “We face enormous challenges in our dairy and agri businesses in maximising return to our farmer members during these extremely difficult times. We thank Jerry Henchy for his tireless efforts and valued service to Dairygold Co-op and I (Vincent Buckley, Dairygold chairman) personally wish to thank him for his help since I became chairman.” Henchy joined Dairygold as chief executive in 2003 from Kerry Group where he had served in strategic

management roles in the US, Central and South America. Under Henchy’s leadership Dairygold implemented some important restructuring with the group’s consumer foods, DIY and property divisions all being spun out to Reox Holdngs which was created in 2006. During his time as ceo of the group. Henchy instigated some contentious moves including axing staff numbers from over 3,000 to 900 as well as the group exiting from pig processing creating anger among local pig producers in North Cork.


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PROFITS UP AT KELLOGG’S More good news for Irish manufacturers, the Irish subsidiary of cereal giant Kellogg’s increased its pretax profits by 44% to €31.3m in 2007. According to accounts recently returned to the Companies Office, Kellogg Europe trading Ltd recorded sales of €1.46bn in 2007. The cereal market is a consistent category, on the one hand capable of great innovation yet reverting to base when times are challenging. After all everyone needs a breakfast and Kellogg’s is what most of us reach for. Kellogg’s established its Irish base in Swords, Co. Dublin in 2004, to serve the company’s European operation. The principal activity of the Irish subsidiary is production and marketing of ready-to-eat cereals and related foodstuffs in Europe, Africa and the Middle East. The accounts show the firm’s operating profit increased from €106m to €110m in 2007 as it reduced the cost of sales by 24% to €986m. The directors anticipate midsingle-digit growth in turnover in coming figures and high-single-digit growth in operating profit, generated through improving pricing and product mix, with increased marketing support to generate more sales. The accounts also show that the UK accounts for the largest proportion the company’s sales - €780m, or 53% - compared to €682m or 46% in Europe. The company employed 101 staff during 2007, with staff costs coming to €36m. The accounts show that director’s emoluments came to €2.54m. Kellogg’s is the leading supplier of breakfasts in Ireland. There are currently 25 brands in the Kellogg’s family. It’s top brands in this country include Kellogg’s Corn Flakes, Special K, Rice Krispies and Coco Pops. The marketing of Kellogg’s and the creation of the most valuable individual brand names has been key the company’s success. Kellogg’s advertises using a whole range of media, in the press, radio, cinema, mail and online. However, its main channel for advertising is on television where individual brands are given their own airtime, aimed specifically at a target audience. For example, Kellogg’s launched a €2m media campaign to support its annual Special K Slimmer Jeans

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campaign. The through-the-line campaign includes TV and outdoor advertising, online activity and in store promotion. Kellogg’s is obviously a very lucrative company in Ireland. For example, the company provides one of its customers, Centra, with 60,000 cases of product per month; and of these cases 20% of Centra stores take the majority 80% of product. The strive for excellence is of the utmost importance to Kellogg’s and sources recently informed TGm that the company engaged a consultancy firm to undertake an analysis of its functionality and efficiency and allegedly had some surprisingly tepid feedback. However, to coin a phrase, a brand is not what you say it is; it’s what they say it is. Someone once mused that ‘hope is a good breakfast but a bad supper’. Breakfast is one of the most important meals of the day and is worthy enough to have philosophers quoting its relevance. Cereals are consumed in Ireland by most adults and children

On a global scale, many challenges face the cereal industry as a whole including increased grain and oat prices due to a number of factors such as increased feedstock demands, grain for bio-fuel production and a reduction in support following the Agricultural Policy Reforms.

and have formed an integral part of the Irish breakfast for many decades.

Consequently the market is in a state of maturity but not devoid of innovation. Three key trends emerged in recent years that helped change the nature of breakfast in Ireland. These are consumer needs based on the quest for health & wellness, the convenience required for “Life on the Go” and sensorial experiences based on taste. Gone are the days when everyone sits down together to a family breakfast. In fact we can now see from recent research that only 31% of people sit down together to a family breakfast during each weekday morning. People have also become more concerned with family and children’s health, food quality and buying local. Although these are still relevant factors even in these challenging economic times, consumers are looking for ways to cut costs and ‘On the Go’ priorities have taken a step back. One of the key components of the success of cereals is its popularity among children. According to research an estimated eight out of ten children eat breakfast cereal every day, meaning it is found in the vast majority of houses. In fact the Irish top the table when it comes to eating cereal, with 95% of Irish households buy cereal on a regular basis which translates 36 million trips to the cereal aisle each year! Despite its endurance, the market is not immune from market challenges which are driven by cultural changes. These challenges have pushed manufacturers to embrace the new ways we approach breakfast, repositioning their brands to suit these changes. The most obvious of these market challenges is health and wellness elements which have givensome cereal brands a bad name in terms of sugar and salt contents.


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Ongoing health campaigns have been encouraging several foods and drink markets including cereals to reduce fat, salt and sugar content. Most have responded and have included new healthier product offerings in their portfolio. One sector of the cereal market which has capitalised out of the health and wellness trend for cereals is porridge with brands like Flahavans surging through the market as a result. The porridge market has become very exciting in recent years, with a revival of interest in porridge for health reasons. Of late, porridge has been considered a ‘superfood’ for its health benefits.The strong market growth in porridge is seriously influenced by the increasing awareness of the many health benefits of porridge. These benefits help address a broad range of health issues from nutrition, diet and weight management to cholesterol and long-term heart health. The popularity of GI diets has also helped change the perception of porridge in recent years. Another problem for cereal manufacturers is attempting to grow in a commodity based industry with near complete household penetration and a strong position as a breakfast-only product. Cereals are still largely seen and consumed as a breakfast meal as opposed to a snacking option as promoted in some advertisement campaigns. For a busy working population, eating patterns have changed irrevocably and away-from-home breakfasts through the deli counter at convenience stores or cafes has made it difficult for cereals to gain share. Cereal manufacturers are also facing increased competition both from within their sector and from suppliers

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of other breakfast options such as fruit, yogurt or breakfast rolls and sandwiches. On a global scale, many challenges face the Cereal industry as a whole including increased grain and oat prices due to a number of factors such as increased feedstock demands, grain for bio-fuel production and a reduction in support following the Agricultural Policy Reforms. The rate of inflation and cost of raw materials have created challenges for many companies but recent years have been dramatic exceptions with an increases in oat prices of over 60%. Poor harvests worldwide, increasing demand and competition from other crops, as well as weather extremes have taken a toll on grain harvests this year, creating a very tight worldwide stocks that are pushing prices to new highs. There are also more acute longer term changes, that are leading to structural shifts that may keep prices increasing over time. Another contributing factor is occurring in the Eastern markets, such as China, India and Pakistan, which are experiencing growth in the demand for grains as their diets and tastes become more “Westernised”. These new appetites have led to a shift from traditional dishes to an increase in the consumption of meat. As a result, part of the demand for grain is driven by the global meat market as animal foods contain a high proportion of grains and cereals. Additionally, European wide government policies are encouraging the use of biofuels as a source of energy. The increase in demand for biofeul is leading to an increase in demand for cereals and in the absence of grain commodity stockpiles, this

increase is driving up grain prices. These combined factors have led to increased price volatility and will keep prices increasing over time. Figures show the market is worth an estimated €180m with projected growth of 5.4%. Adult cereals account for an estimated 16.3% of the market, while corn cereals are 14.9% and relative newcomers’ cereal bars have clocked up an impressive 12.4% of the overall cereal market. Hot cereals account for €15.5m, and showed a stronger growth trend of 15.1% in 2007. The reality for 2009 is that projections will undoubtedly be lowered, as they are simply unsustainable in economic downturn. Kellogg’s is market leader in the cereals sector with a host of well known and loved brands. The success and longevity of its brands is largely due to the fact that it has consistently increased its range to meet the everchanging needs of the Irish consumer, through continuous development in product innovation and nutrition. The Kellogg’s range offers tasty, fun, convenience and nutrition from a choice of cereals including new brands like Rice Krispies Multi-Grain – the first kid’s cereal with a natural prebiotic. Kellogg’s Corn Flakes remains the most loved and favourite cereal for Irish consumers. The demand for even tastier, lower salt or innovative options has led to the introduction of a wide range of no-added salt, and low salt cereals and it continues to innovate to provide consumers with lower salt, lower fat alternatives. Kellogg’s huge range of cereals includes well-known names such as All Bran, Bran Flakes, Coco Pops, Crunchy Nut, Fruit ‘n Fibre, Special K and Rice Krispies to name a few.


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IS THIS SCHADENFREUDE TO THE RETAILERS?

SC HADENFREUDE

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A German philosopher and sociologist, one Theodore Adorno, defined the expression schadenfreude, as ‘largely unanticipated delight in the suffering of another’. This could take the form of genuine cruelty to chuckling at the often violent antics of an episode of the Three Stooges. So common is this emotion in society that the word was borrowed from German by the English language where it has settled, rather too suitably, some might say. Retailers have really taken a beating in recent times, so much so that one wonders if a bit of schadenfreude is not at play here. Clearly on the front line of consumer caution and subsequent sales declines, many have been out there battling like salmon swimming up river, with little help from any quarter. Maligned by belligerent consumers, world weary after years of feeling ripped off, bullied by pressurised head office bosses and unprotected by the government. Leaders in the industry are blaming government agencies like the National Consumer Agency for continuing to vilify the sector in its time of need. Is it any wonder this sector is toppling ever sideways Disgruntled retailers are angry at the government for failing to protect them during the sharpest drop in sales in more than two decades. In 2008, consumers took on a new cautious attitude that has belied the previous religion of shopping away every god given hour. Consumers reclined from purchasing most things and this is not expected to improve as the summer beckons. Everything is down from footwear to food and the consequences are finally being realised. In late February, the sector predicted that 600 newsagents and convenience stores would shut by the end of the year at a cost of almost 7,000 jobs. After the Central Statistics Office showed sales last year had declined by 4.5%, the government has been called to take action and save a once highly lucrative sector. The 4.5% sales decline has not been recorded since the bleak early 1980s when things last seemed

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The smaller retailer is taking it from all sides. It has probably endured the greatest consequences of economic downturn. Some would say they’ve had it coming after years of bloated sales but that’s just schadenfreude. A successful Irish economy needs retailers to be prosperous. The two are almost inextricably linked.

almost as bad as now. And while there was a slight increase in December 2008 to account for Christmas shopping, the overall figure was still 8.3% down on the previous year. Non food has been a great earner for many of the larger multiples like Tesco and in recent years this sector has been expanded to cater for demand. However, electrical goods have been one of the worst hit segments, recording declines of more than 22%, followed by house equipment (19.6%) and hardware, paints and glass (down by 18%). All most likely as a result of the collapsed property market. Retail Ireland, which represents the sector has stated that a reduction in the cost of waste disposal, electricity, rents and VAT is required in order to relieve the pressure on smaller retail firms. Its Director, Torlach Denihan commented;

“It is not surprising that the retail sales figures are the worst on record and we project that at least 25,000 retail employees will be made redundant in 2009. Government and the National Consumer Agency seem bent on vilifying the retail sector.” This is a unique time for consumers and retailers alike. While comparisons of the economy in 2009 have been made with that of the 1980s, some things are different. Consumers have had a prolonged period of consumption and borrowing and have in effect evolved to tiring of the culture of spending. This has obviously fed into the recession but people are far more willing to sacrifice the extras then ever before which has surprised many. New habits are easy to drop, it would seem. The owner of the country’s oldest newsagent has said that everything from newspapers to impulse confectionery purchases are off the public’s collective shopping list. Joe Tierney is over three decades in a business in Navan that dates back to 1895 and he struggles to remember a time as unique as this. He says; “If there were recessions in the 1980s, I didn’t see them because our kind of business was always immune. People still needed cigarettes, they needed papers, they needed chocolate - they didn’t really get affected. Back then people stopped buying televisions and cars. This time I am seeing it at a frightening level.” As proof of the extent that consumers are willing to go in order to cut back; some have stopped their newspaper orders; “Two weeks ago, we had eight papers cancelled in the same week from long-standing customers.” On the subject of newspaper orders as many as 400 newsagents around the country have begun boycotting the Sunday Independent newspaper since February. In a row with Independent News & Media (IN&M) over a cut in margin many newsagents are refusing to offer the top selling newspaper on their premises.


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This includes 120 to 130 Spar shops in Dublin and elsewhere. The Sunday Independent has a circulation of more than 280,000 copies a week and this loss of distribution in so many newsagents and convenience stores could easily take its toll on sales. The row follows a recent decision by IN&M to reduce the margin that retailers earn from the cover price of each newspaper they sell. This change applied to the Irish Independent, the Evening Herald, the Sunday Independent and the Sunday World. In the instance of the biggest selling daily in the country, the Irish Independent, the cost to the newsagent was increased to 1.186 cent per paper, compared with 1.17 cent before. When the entire year is accounted for, this is also a hefty sum for newsagents. IN&M also cut back the allowance paid to retailers for placing inserts into its newsagents. Moreover, delivery charges were increased at the beginning of the year by distribution company Newspread, which is owned by IN&M. What is termed as a ‘carriage cost’ was increased by an average 24%, adding some €450 a year to a newsagents cost base. In the West a small group of retailers initially began boycotting sales of some IN&M newspapers as a reaction to the increased costs to them. This dissatisfaction has now reached other parts of the country. Vincent Jennings of the CSNA (Convenience Stores & Newsagents Association) has stated that newsagents are increasingly aggrieved with IN&M. He said; “It’s a double whammy for retailers. They (IN&M) are cutting the amount paid for every paper sold and charging for delivery. We cannot under any circumstances, afford to take a cut of anything like that.” A spokesperson from IN&M stated that margins the company pays retailers continue to be the highest in the business. The smaller retailer is taking it from all sides. It has probably endured the greatest consequences of economic downturn. Some would say they’ve had it coming after years of bloated sales but that’s just schadenfreude. A successful Irish economy needs retailers to be prosperous. The two are almost inextricably linked.

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Brands are a funny entity. It is nigh on impossible to predict what will stick with the public. Massive amounts of money, inscrutably clever marketing, the best minds in the business, none of these can categorically guarantee a brand’s success. Some brands have all the right ingredients and flop like a wet tea towel, others become icons. There aren’t many iconic brands left that can be recognised the world over; perhaps Guinness, Mercedes, or Coca-Cola but one name that has consistently remained a household staple for over a century is Persil. Many people believe that a logo is a brand but in fact this is just one facet. A brand is not how you look, what you say or even what you sell. A brand is what people believe you stand for. For instance, Starbucks sells coffee; Apple sells computers, Disney sells animation; Persil sells soap powder. In the end, the best pitches have always been the simplest; an uncomplicated exposition of what you sell. Persil has been delivering whiteness for nearly 100 years. Today, you can still trust Persil to provide unbeatable cleaning that gets the washing clean first time, every time. Its no wonder Persil is the nation's favourite washing powder - of the 17 million washes

carried out each day, 30% are done with Persil. Persil commands leading brand share in Ireland as our No 1 Irish detergent - with 27% market share. It continues to be Unilever's flag ship brand and has had great support from the retailers in Ireland, this support has been vital to the strong growth. Persil's success has been its ability as a brand to innovate and meet consumers needs, for example, Persil Tablets, Persil Gel Tablets, and its latest member of the family, Small & Mighty.

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Even the best brands have had to pull it out of the bag in these challenging times. However, only the best innately understand that recession is not the time to lay off innovation and Persil knows this more than most. In Ireland, Persil continues to innovate across the board and invest in research and activity that touches Irish consumers in very important ways, for example, the ‘Persil Dirt is Good’ campaign, encouraged young children to get out and play and get dirty and live.

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In 1998, Persil once again changed the laundry market when it introduced the very first tablets - making washing clothes even more convenient while at the same time making sure that they have the right dosage of powder every time. Persil liquids were replaced with Persil liquigels in 2003. The gel pours like a liquid and works through the fibres for a really deep clean. It was also the year new Persil biological performance tablets were launched, providing an effervescent fizzing action to the wash for an even deeper clean. Persil has a number of unique accolades which have contributed to its staying power. For instance it was the first washing powder to show a man doing the washing in a TV advert. Such firsts have paid off through the years, when asked to name a laundry detergent, 80% of people say Persil. Persil's 'Big Mummy', the world's biggest picture mosaic, smashed into the Guinness Book of Records in 2002. The mosaic, measuring 652 square metres, was made up of over 15,000 drawings of mums, dads and guardians. Moreover, placed side by side, all the 18-tablet Persil packs made in a year would stretch from

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London to Tokyo - and back! Like all the great success stories it is worth pointing out, in these challenging times, that Persil has had its own difficulties along the route and has still managed to stay on top. Its fall from grace with its most important client ‘the mum’ to its risk taking comeback is a journey worth charting. In 1969, alongside the advent of the automatic washing machine, Procter & Gamble entered the market with Ariel. Whilst initially gaining trial which usurped Persil, it was little time before the Unilever brand returned to the top spot. Ariel had come into the category with strong product claims and a commitment to scientific proof, but it seemed Persil’s ‘Mum’s who care’ positioning tugged the consumer more strongly. Despite strong competition, Persil’s devotion to reflect what mattered to mums helped the brand enjoy unthreatened leadership for the next 15 years, at its peak with share figures a massive two and a half times that of Ariel. During this time, new brands had entered the market but for the first time being Persil communication stayed true to what had built the

brand in 1955 and it was paying off. Life was doing well until the late 1980s when continued pressure of increased competition and genuine innovation


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(l-r): Peter O’Brien designer and Dermot Walsh, Unilever

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started to shake up the category. With format choices now in standard as well as concentrated for both powders and liquids, and types of products expanding to include non biological (bleach based), biological (containing enzymes and bleach for superior stain removal) and, more recently, colour products (containing no bleach to help prevent fading) Persil lost focus. The temptation to compete with new and exciting scientific claims saw Persil , for the first time, taking on a largely scientific, rational level and leaving mum in the background. Mirroring the trends in the category, the brand neglected its roots and moved from sympathy to science - from relating to mums, to purely promising them results. It was a mistake. In the confusion that followed Persil lost its

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position as the number one detergent brand and spent the next few years battling with Ariel to recover it. During these troubled times, and the fall of their favourite detergent brand, Unilever needed something big. The subsequent response in an attempt to win in a dominantly scientific market, a new innovation was created - Persil Power. This was a reformulation which delivered genuine superior cleaning results , quicker. At the time scientific proof and strong product claims were winning consumers and with ‘Power’, Persil’s share looked set for a comeback. Soon after launch though, evidence emerged of product problems and the innovation which promised to return the brand to glory was to sink it even further. Persil Power had to be

“Persil commands leading brand share in Ireland as our No 1 Irish detergent - with 27% market share,” according to Dermot Walsh. “Persil is Unilever's flag ship brand and has had great support from the retailers in Ireland. This support has been vital to the strong growth. 2009 is the 10th year of the very famous Persil Irish Fashion Awards. This is the largest student fashion design prize in Ireland and this year Persil will have invested €100,000 intothe future of Irish fashion design.


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withdrawn, share plummeted (reaching an all time low of 20%) and, most disastrously of all, with an already estranged relationship mums’ faith in the brand’s performance, had been severely damaged. It was the worst marketing setback of Unilever’s history and headlines at the time portrayed depressing views like ‘UK Soap War; Peril all washed up’. By the end of 1995 Persil’s share had stabilised around 20-21% and the decline in trust had flattened out but compared to its unmarred history, things still looked austere. Persil trailed behind Ariel in terms of sales and consumer perception, negative headlines were abound and financial commentators were estimating that the Power Crisis’ had cost Unilever as much as £57m.

Following this crisis Unilever took stock and went back to the drawing board, attempting to rebuild trust via its most dependable property - the Persil ‘Mum’. During this time, share remained stable with Persil in a clear number two position; bit it did not seem enough to turn the business around. Having given mum’s a supporting role in advertising, intimacy with this group was less strong. Mum’s had changed and the brand’s way of speaking to them had as well. Next on the recovery to success was a powerfully strong new product launch and it was at this juncture that a real progression to the way the brand spoke to mums’ was developed.

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In a market now complicated from both a trade and consumer perspective, Unilever used the opportunity to simplify their entire range and launch the biggest innovation since the category began tablets. Being first to market was vital so the company took a massive risk and turned its back on traditional FMCG practices believing ubiquity first, profit later. These objectives were to regain the top market spot and the risk paid off beyond expectation. Within two months of launch the tablets had scored an impressive 8% share of the detergents market (overachieving by 4% more than their original predictions) and ultimately restoring Persil to its rightful position at the top. Not everyone setting out to build a brand has the same mission. Some aim above all else to establish and maintain top-of-mind awareness to ensure that the spotlight in their category shines the brightest in their brand’s direction. Others create brands in order to forge emotional connections with customers, to differentiate their products from competing others, or to develop the motivation that prompts purchases and makes registers sing. Persil is one of the few that manages all of the above and more.

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WASTE NOT- WANT NOT

We are all cutting back on waste. Squandering anything is as passé as four wheel drives, over-priced second properties, and bank loans. Consumers in this part of the world have even got good at it -buying own label, making sandwiches at home, cycling, switching off the lights when we leave a room - the list is endless. Yet somehow, despite ourselves, the Irish are still wasting food and lots of it. The Environmental Protection Agency (EPA) is insisting that new bylaws be implemented to prevent increasing volumes of household and commercial food waste from being dumped in landfill. Ireland is facing

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millions of Euro in fines from the EU unless it finds ways to reduce the levels of biodegradable waste going to landfill by 35% come 2010. Latest EPA figures indicate as much as 1,485,968 tonnes of biodegradable waste were dumped in landfill in 2007. The maximum amount permitted by the EU landfill directive in 2010 will be just 967,433 tonnes. This rise continues to soar in spite of the Greens being in Government and the party’s call on local authorities to introduce brown organic waste bins. Less than 9% of organic waste, mainly food and some garden waste, was saved from landfill in 2007 and the amount of biodegradable waste dumped in landfill increased by more than 5% on 2006 figures, separating

Ireland further from EU targets. Organic waste was the largest substance in black bins collected from households in 2008, making up for one third of general waste collected from households and sent straight to landfill without being separated. The level of food and garden waste going to landfill was ‘very disappointing‘, according to the report. However, the report did note that the Minister for the Environment, John Gormley last year asked local authorities to strengthen the roll out of brown bins, and that this, along with legislation requiring the separate collection of commercial biodegradable waste, may show an enhancement in the recovery figures.


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“Urgent and short-term actions are required in 2009 to tackle the generation and recycling of food waste from households and business if we are to meet the 2009 target for diverting an additional half a million tonnes of this waste from landfill.”

The report claimed that all required infrastructure for the separate collection and treatment of organic and other biodegradable waste has to be in place by early 2010 if the EU targets are to be met. Bylaws should also be introduced to enforce the segregation of food waste from households and commercial premises. EPA director, Laura Burke said; “The report clearly shows that Ireland is in danger of missing an EU target for diverting biodegradable municipal waste from landfill.” “Urgent and short-term actions are required in 2009 to tackle the generation and recycling of food waste from households and business if we are to meet the 2010 target for diverting an additional half a million tonnes of this waste from landfill.” However, all is not lost for Ireland’s green credentials, the report also found that Ireland has made important progress in other areas of recycling since 2007. The recycling of municipal waste (which includes household waste

and commercial, industrial and street cleaning waste with a similar composition to household waste) increased by 3.6% to 36%, exceeding the 2013 target of 35% municipal waste recycling. The quantity of household waste recycled increased by 8% to 26%, however this still fell short of the 50% recycling target by 2013. Some 64% of packaging waste was recycled, exceeded the EU target of 60% recycling by 2011. Ireland was also making progress in relation to implementing the Weee

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(waste electrical and electronic equipment) Directive. In 2007, 8.7kg of Weee was collected per capita, more than double the EU target of 4kg per capita. Responding to the report, Mr. Gormley said he intended to bring forward draft regulations to help divert commercially-generated biodegradeable waste from landfill and would introduce legislation to increase landfill levies. The facts about the food we waste are stark and ongoing. A study on consumer’s waste of food put together by UK organisation WRAP throws up some data from England, Scotland, Wales and Northern Ireland which is equally relevant to the average Irish consumer. For instance, we throw away one third of the food we buy. The most common reason for food being wasted is that it is left unused - representing 61% of unavoidable food waste. Of this, 40% is not even touched and at least one tenth is still in date. In addition, consumers also cook and prepare too much food on a daily basis, resulting in more additional tonnage of waste. Put it another way, imagine buying three bags of shopping from the supermarket and as soon as you get home immediately throwing away one of those bags. In effect, this is what happens every day. Of the one third of food we throw away, most of it, 61%, could have been eaten if we had planned, stored and managed it better. A further 20% is made up of things like bread crusts which people chose not to eat, peelings and bones.

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Part of the problem is that we are only starting to realise how much we throw away now. Each of us throws away an estimated 70kg of food every year, that’s roughly one’s own body weight in waste. Even householders that are adamant that they do not waste are throwing away 90kg a year in food waste, according to the WRAP study. In the context of rising food prices, global food shortages and calls for more sustainability of food supply, this should make us all stop and think and decide what to do. Worse still, food waste is not only a waste of money but

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the environment and our climate also suffers as a result. However, this is only a small part of the environmental damage we cause by wasting food. More important are the significant amounts of greenhouse gases emitted by producing, processing and transporting food to us, which is absurd if the food is not even used. The case for action is compelling. Every tonne of food waste we avoid saves about 4.5 tonnes of Co2 equivalent greenhouse gases being emitted to the atmosphere. If we stopped wasting all the food that could have been eaten we could prevent

millions of tonnes of Co2 emissions, the equivalent of taking one in five cars off the road. The energy being expended by business and industry to produce, process and transport - often refrigerated - and sell the food we then waste is immense. Coupled with the energy we expend travelling to stores, transporting our purchases back home and then storing and refrigerating them, it becomes an issue of inefficiency and wastefulness of huge proportions and extremely stark in a time when waste of any kind is the antidote to our current economic climate. Surprisingly there seems to be little difference between age groups in the amounts of avoidable food thrown away. Decades of low prices and concerning food may have contributed to the ‘throw-away society’ we now occupy but a generation that still remembers wartime rationing and food storages appear to be just as wasteful as younger people, each group throwing away 12kg of avoidable food waste per head per week. As might be expected, larger households waste more food, but there are economies of scale so households, of two people don’t waste twice as much as single person households, for example. In fact, on a per capita basis it is single person households that waste the most avoidable food. We have become accustomed to cheap food, as cheap as 10% of our disposable income. Obviously this cheapness allows us to throw away food without thought or much guilt. It is worth noting, however, that outside of Western countries, people are forced to pay 100% of their disposable income on feeding themselves. Waste is a process and should not necessarily be blamed on one sector or industry, it is a shared problem. It begins in the fields where farmers often have no option but to let crops rot in the fields and go to waste because they don’t reach the high standards of the produce glistening on supermarket shelves. For instance, apples and potatoes, which are not perfectly symmetrical are often binned by supermarkets. This wastefulness continues into the supermarket. The reality is that at the end of each day huge volumes of sandwiches are disposed of and industrial sized skips are filled with food that has reached its best before date. The waste continues into the


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household fridge and cupboard. The hang-up of the ‘best before date’ is frequently upheld in the home with consumers rigidly sticking to dates and binning food without even questioning the freshness for themselves. The best before standards of the supermarket is often to do with visual aspects and not the actually freshness or edibility of produce on display. The ‘best before date’ and the ‘buyone-get-one-free’ are big contributors to household waste. One the issue of best before dates, former Northern Foods chairman, Lord Haskins commented sensibly; “The dates and codes are needed for food safety reasons and especially on raw meats, poultry and cooked chicken. I wouldn’t advice anyone to eat any of these out of date as it could be dodgy. But otherwise, they are intended as a guide. The label says; ‘best before’, not that they will kill you after. Yoghurt has a shelf life of three weeks - well I’ve definitely eaten yoghurt that’s been six weeks old and it has been fine.” The trend for ‘buy-one-get-one-free’ offers encouraged people to buy more than they could use. Supermarkets frequently use this selling strategy to get rid of stock they have over-ordered but shoppers are advised to resist these offers especially those for fresh fruit, vegetables and salads which largely end up thrown out. On the topic, Lord Haskins pointed out; “Waste is the curse of consumerist society and we’ve got to tackle it. The true picture is worse because the research is just for household waste. What about the waste from food processors who throw away blemished fruits and overtrim vegetables? What about the waste of food that never leaves the farm? I would guess we

probably waste over 50% of the food we produce.” Jennie Price, chief executive of WRAP is critical of the way food is sold; “If you want three pork chops, they (supermarkets) shouldn’t sell you four. If you eat half a bag of salad you should be able to reseal it and eat it the next day.” The experts offer some simple if obvious tips to avoid wasting the food we buy. Firstly, try to use resealable bags for bags of salad. Plan ahead to stop food waste. Older vegetables can be made into midweek meals such as soup, curries or casseroles; equally older fruit can be made into smoothie drinks. Make a list and check the fridge

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contents before shopping. Use new smart-labels with time strips to indicate if food is safe to eat. Organise the fridge so that older food is eaten first and kept in front. And finally, don’t be tempted by the ‘but-one-get-onefree’ offers you do not eat. In these times, waste is a topic we are forced to contemplate. We have long been made aware of the food we wasted during the boom times, but it didn’t matter because we believed we had more money to waste. Perhaps these challenging economic times will have a knock on effect on the amount of food we waste and landfill we require. Moreover, we may yet meet our EU biodegradable deadline yet.

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M&S KEEP IT POSITIVE KEEP

Like all major retailers the current times have been as reflective for Marks & Spencer as any other. However, despite the reality biting hard for its stores and employees in the UK, things seem to be more upbeat on this side of the water. Always regarded as its jewel in the crown, M&S’ Irish stores will remain intact and future stores are already in the planning. Ireland has always been a very lucrative market for the M&S chain and it enjoys grocery sales at its 27 stores of an estimated €38m. Moreover, staff at its Irish stores are to receive pay rises of up to 6.7%. The deal, agreed with trade union Mandate, sees a 3.5% pay hike back dated to January is paid to all staff as a first phase of a national agreement. M&S has reaffirmed its intention to open two new stores in Limerick by 2012, in spite of the current downturn in the economy and redundancies abroad for the chain. The group is expected to make a decision on its presence in Limerick later this summer - when planning permission is decided upon for the expansion of the Crescent Shopping Centre and for the construction of the Opera Centre development, which will be the largest retail centre in the Midwest if it receives full planning permission. Jenny Mulholland, head of property planning in Ireland for M&S explained; “Our strategy for Limerick hasn’t changed at all. We would like to have a presence in Limerick by 2011 or 2012 and hopefully the picture would be very different then. But at the moment, we don’t have a site due to planning permissions that are pending.” Mulholland further acknowledged the An Bord Pleanala hearing in March on the proposed expansion of the Crescent Shopping Centre. She said; “We would certainly be delighted to

make representations there if we are required.” Initially, M&S wanted to have an anchor store at the Crescent in Raheen that would include a wide range of fashion, home and furniture products , a food hall, café and deli bar. . However, the group is keen to open another outlet in the city; “I think our customers would like us to have a presence in both retail centres.” However, she reaffirmed that a decision could not be made on which of the two proposed stores would be larger until planning permission was confirmed; “We first need to find out what footage we can get.” The company behind the €350m Opera Centre development, Regeneration Developments, pointed out it would be in a position to offer M&S a 120,000sq ft unit - 10,000sq ft larger than the potential store in the Crescent Shopping Centre, provided its modified planning application was successful. Despite the wait for planning permission, the development of new stores is obviously a positive sign for the Irish retail industry. Any development, in fact, is an encouraging sign to potentially reboot the economy. M&S’ relatively good fortunes in Ireland are no reflection of events in Britain, but then they never were. M&S Ireland and M&S UK have never shared fortunes. Throughout the last 15 years M&S stores have gone from strength to strength in Ireland but have stuttered and stumbled through the same period across the water. Now more than ever this is evident. For instance in the UK, M&S announced just under 1,000 job cuts from its stores and head office following among other things, a poor Christmas trading period. The chain is closing 27 stores, 25 of which are the Simply Food format and the remaining two are main M&S chain stores. The closures mean a precise loss of 780 jobs as well as the culling of 450 head office jobs. The cuts come as the retailer

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attempts to reduce overheads, as all retailers enter one of the toughest years in recent history. To date, Sir Stuart Rose, M&S executive chairman has already cut the chain’s capital expenditure, budget and scaled back its store opening programme in the UK. The job cuts have been confirmation that M&S sees no short term end to the current credit crisis and the huge downturn in spending that has hit the high street. Sir Rose has given good insight into the current trading conditions correctly pointing out that the consumer has never had it so good in terms of bargains. In the run up to Christmas 2008, M&S held two one-day sales when it slashed prices by 20% in an attempt to attract more customers; He said;

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“Every retailer is fighting his corner and customers are going to get some very good deals. This is not to do with M&S. Its to do with the biggest global financial meltdown for two decades. I can’t stand by and do nothing. Everyone else is discounting. The retailers job is to do his best to protect his sales by offering value for money, and the customer is the beneficiary.” UK like for like sales fell 7.1% in the 13-months to December, the third quarter of its financial year. Forecasts were for a fall ranging from 5.5% to 5.9%, according to the group. M&S said it expected UK gross profit margins for the year to the end of this month to be about 1.75 percentage points below 2007-08 due to promotions and discounts, worse than its previous guidance for a fall of around 1 point. The group acknowledged managing costs tightly and now expected operating cost growth for the current financial year to be towards the lower end of the forecast range of 4-5%. Operating costs for next year would be around 1.2% below 2008-2009 levels, equivalent to a reduction of about £175m. Sir Rose said; “We expect challenging economic conditions to continue for at least the next 12 months.” One analyst praised the group for

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“Every retailer is fighting his corner and customers are going to get some very good deals. This is not to do with M&S. Its to do with the biggest global financial meltdown for two decades.... its measures; “The cost initiatives are to be applauded with the pressure on gross margin we’ve got, and given the sales outlook, we still expect profits to be falling next year.” M&S’ finance director has said there was no change in group dividend policy ’at this stage’. Some analysts expect a dividend cut when a decision is made at the end of this month. Like for like general merchandise sales were down 8.9% in the UK, while food sales on the same basis were down 5.2% last year they closed 238.75 pence, valuing the group at £3.6bn. On the upside there have been positive sales opportunities for retailers with M&S outdoing the competition on occasion with its particular product offering. The group tends to do well on Valentines Day but this year things took on a different, albeit still positive, slant. A recent report found that 70% of people surveyed were planning on dumping Valentines Day celebrations in favour of saving some cash. In Ireland the average man spent €114 on his other

half for the special day while women spent an average of €62. The cut backs have been more on expensive flowers and dinner and the food aisles of major multiples were abuzz with shoppers on the day indicating a lot of people decided to stay home and cook rather than go out and dine. On a quick vox pop of consumers coming out of M&S on Grafton street; two out of nine people asked chose to go out to dinner while the remaining seven out of nine said they were dining at home. In Ireland the chain employs over 3,000 people across 18 stores and these jobs are not thought to be under threat. The only outlet to be closed on these shores is its store in Newtonards, Co. Down. Fortuitously, M&S in Ireland is still a solid retail bet. Its presence has worked for consumers here, and it appears to be coinciding with the downturn, as opposed to struggling against it. Any new developments on a retail level are to be welcomed and the proposed Limerick stores may inspire the whole ball to roll once again.


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BEER-FAIL-SAFE?

drinks news

Beer usually holds up well in challenging economic times. In fact it holds up better than most categories. However, many believe that beer is in fact recession-resistant as opposed to recession proof and this distinction is an important one. As Irish beer suppliers and importers recently reported that sales of some Polish beer brands slumped by as much as 60% in recent months, the reality of niche sectors that have propped up sales for years has come home to bite. The exodus of Polish economic immigrants from Ireland may have marked the end of an extremely lucrative niche for many beer companies over recent years. As the Irish property market dwindled, thousands of Poles were forced out of jobs and sales of polish beer has fell by 60% as a result.

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Fourcorners, a Dublin based drinks company which imports Lech, and Tyskie, one the most popular Polish beers, has witnessed a 10% decline in Polish beers in the last six months. Paul Maher, Managing Director of Fourcorners said; “As people decide to return to Poland due to redundancies here, and the ability to get possibly more secure jobs in Poland right now, there is a decline in Polish beer sales.” Dean McGuinness, managing director of Premier International Beers has said that sales growth for Polish beer ‘seems to have levelled off’. Sales of Premier’s Polish beers are now growing at about a third of the rate they grew by between 2006-2007. Furthermore sales of Tesco’s Polish beer cans have been down by as low as 15%, although its bottle sales are up 10% and Musgrave said it saw a drop in sales of Tyskie and Lech last summer but growth picked up slightly once again in autumn. A third of all Polish workers may return home this year, according to recruitment firm CPL. The reality is that for the first time in 14 years, the number of people leaving Ireland this year will outstrip those moving to the country. As many as 30,000 have already left Ireland since 2008, with a further 35,000 are set to leave this year alone. Traditionally, Ireland has always drank a lot of beer and usually in a pub, but cultural shifts in recent years has seen many well-heeled white collar workers try out new beers and this helped to encourage the trend for international beers as a whole. Conversely, non-national workers skipped the pub altogether and opted instead to drink at home, picking up a six pack of their favourite national beer at the off license. As is often stated beer can be one of those odd categories that is recession proof if not actually accelerating growth during tough times. However, these times are unprecedented and on a global scale and latest trends show the market is looking downwards. Overall consumption of alcohol so far in 2009 is down by 6% and beer consumption has decline by 15%. Drinkers from the Republic bought 10 million litres of beer and 800,000 litres of spirits in Northern Ireland last year. Most of the 6% drop in alcohol consumption was due to increased cross border county sales. In contrast the industry here, alcohol sales in the

North grew 45%, in border counties this growth was as high as 88%. For example, take the best selling beer on the Irish market, Heineken Ireland. It has relented that a combination of recession and increased shopping in the North could result in a fall of 8% in alcohol consumption per capita in the Republic this year. The unusual trading environment that companies are currently faced with are new. Declan Farmer, head of corporate affairs with Heineken Ireland said ‘this year is looking very week, and will probably be worse than 2008’. Heineken’s reasonably flat sales figures are just a snapshot of what is ongoing

in every corner of the industry. His comments came as Heineken Ireland released 2008 results which showed flat turnover of €346m, coupled with a 1% decline in sales volumes. During the year, the overall Irish beer market declined by 3%. Consequently, the company’s share of the Irish beer market fell to 22.3% while Heineken lager increased its market share by 0.3% last year to 28.4%. The lager remains the most popular and has a 17.3% share of the beer market. Murphy’s Irish Stout market share slipped to 4.3% blast year compared with 5% in 2007, with overall stout sales declining by 3% in the year.

Traditionally, Ireland has always drank a lot of beer and usually in a pub, but cultural shifts in recent years has seen many well-heeled white collar workers try out new beers and this helped to encourage the trend for international beers as a whole.

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drinks news

Stout sakes account for 33% of the beer market with lager taking a 61% share. On-trade sales dominate overall sales and represented two thirds of all Heineken sales last year. The 2008 figures exclude sales from Heineken’s Beamish & Crawford unit which it acquired as part of its €8.8bn joint takeover with Carlsberg of Scottish & Newcastle last year. Heineken Ireland said sales volumes were 8% lower in the crucial December month in 2008 compared with the same month the previous year with Mr. Farmer attributing a significant part of the decline to

first decline in ten years. Recognising the lucrative potential of the new immigrant customer base in Ireland, Heineken Ireland purchased brewers with a portfolio of international beers including Polish, German, Italian, Belgian and Spanish. Some of these brands include German beer Paulaner, Belgian Affligen, Polish beer Zyiec, and Spanish beer sol. Others did the same. Richmond Marketing, The Gleeson Group and Coman’s Wholesale all distribute international beer agencies. Aside from the returning immigrants, Polish beers have suffered

worldwide. The rise of the foreign beer portfolio within big brewers staple is an interesting insight into how Ireland has evolved. Irish Distillers got in on the action and began distributing two premium Polish vodka brands in the country in 2006 - Pernod Ricard’s Wyborowa Exquisite and CEDS’s Zurbrowka Bison Grass. Barry Fitzwilliam Maxxium Wines & Spirits also invested in international spirits. Furthermore, an array of smaller distributors scrambled to import other beers and brands of vodka that are traditionally popular in Poland.

...concentrating on the off-trade as punters skip the pub in favour of entertaining at home, may be a worthwhile investment for Ireland’s beer companies. Even beer is fallible after all. increased cross- border sales. He said sales volumes in the off-license trade had declined over 4% last year, the

as big brewers have been scaling back on investment in the face of continued cost pressures and slowing demand

High excise duties on spirits meant that prices of Polish vodka here are much higher than in Poland. Official imports of Polish vodka into Ireland have grown significantly up from two million litres in 2004 to 136 million litres in 2007. Late 2007, saw the introduction of new Polish vodka brands into mainstream outlets such as convenience stores and the multiples, although the distribution of these brands is very fragmented. Retailers responded to the growth of Polish immigrants by devoting shelf space to Polish beer. In 2007, it had become commonplace to see popular Polish beers such as Zwiec, Okocin, Lech and Tyskie in multiples across the country. Furthermore, these brands could be purchased in most off-trade convenience stores and specialists. As a consequence, sales of these beers grew by over 900% in volume terms between 2005-2006 in Ireland, although again, from a very small base. While sales of Polish beers grew rapidly in the last few years, it was largely driven by economic immigrants. Now as many return home, the market is likely to all but dry up. Increased promotional activity may become essential if the multinational owners of these Polish beers want to maintain previous values. Furthermore concentrating on the off-trade as punters skip the pub in favour of entertaining at home, may be a worthwhile investment for Ireland’s beer companies. Even beer is fallible after all.


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Health & Wellness The health and beauty market is one of those categories that continually expands in all economic weather. This expansion is consistent and not just conjured up by companies to cash in on another product that we don’t really need. At its best the category manages to bring out products we now can’t live without, such as face wipes. At its worst, premium products will pay the price of a price conscious consumer, willing to take a step down and opt out of expensive brands for cheaper own label offerings. On the flipside of the argument, products which are often perceived as luxury items are, strangely, the last to suffer when the market takes a nose dive. Certain sectors that are likely to survive economic downturn should be examined. In the case of the health and beauty category, the organic and male grooming sectors are both tipped for further growth in the future. Health and Beauty is an innovative and dynamic sector of Irish retailing. It has also become one of the most competitive as the concentration of power moves into fewer hands and price led activity fails to subside. 30 TGm

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Health & Wellness

The personal care industry is a highly complex and fast-paced market. Dynamic NPD, speed to market, brand positioning and building, merchandising and promotions and pricing are all vital components in the fight for market share. As such, growth in sales relies on multi-channel strategies. The personal care market in Ireland has begun to experience strong growth. The market is approaching saturation although added-benefits, premium products and products aimed specifically at men have helped augment sales in recent years. Convenience continues to be an important factor for Irish consumers. Convenient products, such as facial wipes, have benefitted from

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increasingly busy lifestyles, a situation made greater by the high level of working mothers in Ireland. Easy application and usage as well as time saving and multi-functional characteristics are the main requirements. Some of these products have a higher price position; and Irish consumers appear willing to pay higher unit prices if products can offer genuine advantages when it comes to time saving. The Irish personal care market is led by a number of major multinational players who have been snapping up successful independents. Significant changes in overall market have been achieved primarily through major acquisitions and mergers such as L’Oreal’s acquisition of The Body Shop.

Equally, Procter & Gamble’s multibillion dollar takeover of Gillette continues to be the trend in this market. The multiple and discounter sectors are placing a great deal of pressure on branded products with their own-label ranges, and unit prices across all cosmetics and toiletries sub sectors. The end of the Grocery Order in 2006 signalled a price war between the larger multiples like Tesco and Dunnes Stores and major chemist chains like Boots in almost every sub sector. Heavy discounting and promotions have allowed the multiples to increase their share of the personal care market at the expense of the traditional distribution channel of chemists.


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Health & Wellness

The personal care market is expected to keep up growth in the coming period with value-added products like body lotion, 2-for1 facial wipes, shampoo and conditioners and tanning products, expected to be the main drivers of growth. New innovations will encourage consumers to trade up from basic offerings towards the slightly more expensive brands and ultimately the premium end of things, which will undoubtedly add lasting value to the market. Overall growth will be driven by colour cosmetics, men’s grooming, skincare and oral hygiene. While already commonplace in categories like OTC, older consumers are increasingly looking for more targeted products that cater for

specific age-related issues at their life stage, for example in skincare, issues ranging from lacklustre tone and firming requirements for more crepe like skin as they age. Manufacturers ought to bear this demographic in mind but more importantly retailers have to make sure they are supplying products that cater for these changing expectations. Multiple retailers are expected to account for over half of the personal care sales by 2011, department store operators, specialists and independents all need to improve to simply keep up with market growth. However, margins for multiples are facing increased challenges from higher costs including, fuel, rent, rates and wages The continued strength of the multiple sector and other value-led chains like Boots have influenced several years of price deflation among basic personal care products. The dominance of strong own label products has furthered consumer expectations of at least one very low price option in all major categories from the main multiples. There is a growing consumer trend towards organic, natural and ethical products which create opportunities for manufacturers and retailers to justify higher price points as consumer are prepared to pay a bit more for products that provide the emotional as well as physical benefits. The number of people aged from their mid-40s onward is expected to rise in the next five years. The growth will be stronger towards the older age groups with a particular rise in the over-65 category, which is also set to increase in the coming five years. The overall ageing of the population dynamic is expected to have a positive impact on a number of categories within the personal care market such as OTC healthcare, skincare, and dental care. Conversely, a decline is expected in the number of infants aged 0-2 which is set to continue to 2010 before picking up again the following year. This slow down in birth rate has been the case for enough years for manufacturers to act. However, this slow birth rate trend could potentially decrease the growth of babycare market volumes within the personal care sector. This sub sector will instead be reliant on higher volume products

to drive growth. Manufacturers should take note that recent consumer research showed that 75% of shoppers valued the added convenience of non-food sectors like personal care aisles within the supermarket to allow them to do all their shopping under the one roof. However, it is also worth noting that 44% of category management practitioners are unhappy with the instore implementation of category plans, considering it to be the most difficult part of the category management process. Both points should be considered by manufacturers as the merchandising and display of personal care products is key to their sales. Consumer lifestyles determine the personal care products they consume and consumption choices assist consumers to gain the lifestyle they want. Fragmenting lifestyles present a complex web of influences and triggers. Just as lifestyle becomes more fragmented, so personal care consumption patterns will take less clearly defined paths and become individualised to match the lifestyles and desires of the individual consumer. The market has been very active in terms of new product development which has primarily been directed at women under-30. Added skincare benefits offered by luxury goods are encouraging consumers to avail of these benefits and boost retail sales. Personal care is an innovative and dynamic sector of Irish retailing. It has also become one of the most competitive as the concentration of power dissolves into fewer hands and price led activity continues with gusto. Consumers are spending more than ever on individual health and beauty items, a reflection on the increasing emphasis on looking attractive and younger. If the market is to continue to grow significantly in the future, manufacturers will need to make products more accessible to a wider range of consumers, in particularly, older people and men.


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Health & Wellness The male grooming market, all Ireland basis, is valued at €103.1m, increasing by 24%. The market in the Republic is worth €62m rising by 26%. The multinationals dominate the male grooming market with own label brands from retailers holding a marginal proportion of retail sales. Gillette is currently the market leader in the shaving preparations category, with no other brands remotely close to its position, with disposable razors, razors and shaving preparations. There is further potential to develop the Gillette brand in other areas of the market, as men may be more disposed to buying a brand if they already have a positive experience of it in another market sector. Deodorants account for the largest sector of the market, valued at €18.2m, representing 29% of the market share. Shaving preparations are the second-largest segment of the male grooming market accounting for 25% of the total market value and worth €15.6m. Personal wash and bathroom products, including shower gels and bath oils currently hold an estimated 20% of the male grooming market, worth an estimated €12.2m. Skincare products are worth €6.8m representing 11.0% of the market. Older men’s routines consist of taking a shower or a bath, washing hair and cleaning and flossing teeth. Whilst men in the younger sections of the population, notably those aged 1534 will be more engaged in the market and inclined to use products that fall outside the realm of personal hygiene such as hair styling and skincare products. Younger men no longer consider concern over their appearance as a compromise on masculinity. These men will be most likely to adopt new forms of male grooming such as skincare routines. Whilst men in the older sections of the population are not as easily convinced and will have a very traditional method of grooming which involves primarily washing and shaving. Older men will have taken grooming habits from their younger years into a different life stage and will be least likely to experiment with different brands / products. These men might welcome products such as hair colorants or skin treatments that enhance the texture or colour of the

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skin by providing a healthy glow. There are very few shampoos on the market to treat hair thinning or baldness, which affects a considerable proportion of the male population over a certain age. Manufacturers should embrace this trend by offering a wider selection of products to address this need. Other types of skincare products such as facial scrubs and under-eye treatments are less likely to be used by men in the greying years and it might be impossible for manufacturers to ever turn this around. Male grooming products such as anti-ageing skincare, anti-cellulite and body firming treatments and hair removal creams are still very much niche products and it is difficult to predict if these will move into mainstream or not. Manufacturers need to be careful in terms of the language they use to target men by not over using scientific terminology, as with the women’s cosmetics market, and by communicating the functional benefits of the product without bogging them down with too much fact. Usage of anti-ageing treatments such as under eye creams or gels/creams to reduce bags, collagen fillers and anti-wrinkle moisturisers are not strictly confined to the female consumer base. There are a few male specific anti-ageing treatments on the skincare market for men to treat wrinkles under-eye bags and skin slackness, however nowhere near the same level as for women. There is potential to further develop this market segment when targeting men with skincare products as men are also concerned with the ageing process despite the fact that some men are not willing t admit to being so. Men are far behind women in terms of the purchasing of personal care items and ‘embarrassment’ may be one reason for a reluctance to spend of a range of items. Data shows that at least one in five men is put off skincare products because they perceive them to be female products. In one survey, it was acknowledged among participants that certain brands and environments are more permissible than others. Nivea for Men has quite cleverly tapped into this market and was seen to be acceptable and appropriate.


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Health & Wellness This is perhaps as this product fits into the ream of shaving, rather than general personal care and en felt it was a ‘male’ brand and not one with overt female overtones. It was noted that the level of discomfort with the issue of extending male grooming was reflected in the switching of male respondents to talking a ‘third party’ rather than themselves. Another interesting finding was that the adoption of products may be limited by the lack of other people adopting the products. Men agreed that they would have to accept a certain degree of teasing from friends but as the behaviour became more predominant then it would become a normal activity and ‘they’d all be at it!’ (Male, aged 1825). Consequently, marketers may find that encouraging women to buy on men’s behalf might increase product use and adoption. Christmas is a key time of the year to purchase gifts for loved ones. Christmas is the ideal time to encouragement to try products they would not normally use in the hope that they will see the benefits of the product once tried and tested eventually made a repurchase. Likewise gift packages can encourage people to buy products for men that they would not normally buy for themselves. One good example is anti-ageing treatments or facial treatments. Future projections show a steady rise in this market over the next six years. Mintel predicts that the male grooming market will rise by 25% in the next three years. The most difficult challenge for manufacturers will be to encourage men over the age of 40 to expand upon their current male grooming routine that tends to consist mainly of showering, shaving and hair washing. Products which meet functional needs such as hair colorants for the moustache, beard and sideburns may be an effective way of targeting this category of men. The deodorants and antiperspirants sector has expanded to include a wider range of formats outside traditional aerosol cans. Growth in the market has been driven by antiperspirants whilst body sprays, according to trade sources seems to be in unit decline. The market has seen a steady rise in branded manufacturers with aerosol offerings launching antiperspirant roll and stick formats.

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Health & Wellness Maufacturers need to be careful in terms of the language they use to target men by not over using scientific terminology, as with the women’s cosmetics market, and by communicating the functional benefits of the product without bogging them down with too much fact. The most difficult challenge for manufacturers will be to encourage men over the age of 40 to expand upon their current grooming routine that tends to consist manly of showering, shaving and hair washing.

There has been a slight blurring of the boundaries between the male deodorants and body sprays with Lynx including Lynx Dry, a body spray with anti-perspirant properties. New product developments in the deodorants market claim to offer improved staying power in terms of increased durability. Sure and Nivea are two of the leading layers in this market with a range of antiperspirant deodorants for men and women. The Nivea deodorant range of men has expanded to even include deodorising wipes in recent years. The shaving preparations sector, encompassing both disposable razors and pre and after shaving treatments, has experienced a particularly high level of innovation in recent years in

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terms of new product development. Disposable razors led primarily by Gillette, have increased the number of blades to improve the effectiveness of the product and further segment market. Gillette continue to be market leader in the blades, disposable razors and shaving preparations markets and is the only brand to excel in both markets. Gillette blades and razors account for 78.3% of the total market share and the company holds 60.9% of the shave preparations category. Gillette is driving new product development and category growth with strong investment in the brand through marketing support such as sponsorship, advertising and celebrity endorsements. Other brands which are

strong in this sector include Wilkinson Sword and BIC. Sure for Men sport shower gel and Adidas Active Body care range for men, which includes shower gels and deodorants, offer personal wash products for male grooming. Other manufacturers of male grooming products include Radox, Lynx and Physio Sport. Shower and bath products are increasingly offering multiple benefits, outside the usual cleansing properties such as moisturising, nourishing and skin protection. Manufacturers have launched several sports shower gels to appeal to men participating in sports activities including gym usage. Some of the leading brands in the skincare market have extended their product portfolio by moving into the personal wash market including Dove and Nivea. The Nivea for Men range, from Beiersdorf is a top performer in the personal wash sector, consisting of Moisturising Shower Crème, Revitalising Shower Gel, Fitness Gel and Energising Shower Gel.


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Health & Wellness The haircare market for men has still to reach its full potential in comparison with other sectors of the male grooming market. Men primarily use unisex brand offered by manufacturers such as Wella, Shockwaves, Pantene shampoo and Head and Shoulders which all target men in their advertising campaigns. Manufacturers have been slow in developing male specific shampoos and conditioners mainly due to the fact that they feel men will not respond to these products and will continue to use established brands. Premium manufacturers such as

Clarins and Clinique have been much quicker to respond to demand for male specific haircare products by offering hair and scalp treatments for men. Manufacturers have been reluctant to launch hair conditioners for men as there is a distinct possibility that men will not buy into this market sector. Hair conditioning products for men are mainly offered as 2 in 1 combination – shampoo and conditioner in one. This is probably die to the fact that men will not spend time applying conditioner after they wash their hair and want one product that cleanses and washes in one go.

New product developments in hair styling products for men, including wax, gels, sprays, mousses and serums, have been more active than with hair cleansing or conditioning products. Hair styling products are increasingly becoming an important part of the male grooming routine as men take more pride in having their hair cut regularly and using hair styling products to achieve a certain look. Hair colorants for men are becoming more widely used with manufacturers such as L’Oreal and Wella into the needs of the make consumer. Some men are probably just as concerned with going grey as women and will be willing to spend money on hair colorants to use in the privacy of their home. The range of hair colorants on the market for men is much more limited than for women with products such as Just for Men displayed alongside other male grooming products rather than in the hair dye aisle. The skincare market for men is developing as a new product development activity is growing although nowhere near the same pace as for women’s skincare products. The market leader in the skincare market is the Nivea brand by Beiersdorf Nivea pioneered the entry of skincare products for men with the launch of Nivea for Men in the male grooming market. The Nivea brand was already a strong contender in the women’s skincare market and successfully made the transition into the male grooming market due to the strength of the Nivea brand. The Nivea brand is no longer the only mainstream brand competing in the skincare market with entry of L’Oreal Paris Men Expert. L’Oreal used the colours orange and silver in its brand packaging to ensure the product would stand out POS against other masculine colours. Premium skincare brands for men are starting to increase their presence in the skincare market now that men are prepared to pay more for quality and added skincare benefits. Brands such as Clinique and Clarins for men have extended the range of products now available for men to include exfoliating treatments, under-eye concealers and anti-ageing moisturisers. [Mintel]

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Retail congestion belongs to the era of economic prosperity. As we watch and wait to see what shape the retail industry takes in these uncertain times, planning, developing and raging territorial battles have been laid to rest. For now, that is. The reality is that once things pick up again - and they will - those developing new outlets will be seen as at the top of their game. We often pay attention to analysis of the grocery and FMCG industry. The strengths, weaknesses, opportunities, development and growth of individual sectors is of immense benefit to all. However, what is frequently overlooked is the structure of the grocery industry; its composition from head to toe. Moreover, it is as important to familiarise ourselves before analysis, with the makeup and definitions of the overall industry. At this moment in time, the structure and competition at the wholesale and retail levels of the grocery sector has never been more paramount.

Battles Laid to Rest i The Competition Authority, in its report on Grocery breaks down the retail industry as three types of operators. These include vertically-integrated retailers - who own and operate multiple retail outlets across the State, and in effect carry on their own wholesaling. Affiliated retailers typically own and operate one retail outlet (and in limited cases, several outlets) under a retail brand or fascia which is used by other retail outlets and is under license from a wholesaler-franchiser.

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Finally, independent retailers are those who own and run a retail outlet under a unique retail brand or fascia and who are not affiliated with a wholesale-franchisor. These include independent retailers, newsagents and garage forecourts. There are two types of wholesale operators including wholesalerfranchisors who engage in the traditional function of buying goods from suppliers for resale to retailers (and by definition, do not license a brand or fascia or retailers). Based on information gathered for the project, the Competition Authority has estimated the size of the wholesale and retail levels of the grocery sector in Ireland. The wholesale sector has a turnover of €4.7bn of which €3.6bn is attributable to grocery goods. Retail has a turnover of €14.6bn of which €12bn is attributable to grocery goods. Over 95% of the wholesale turnover in the Irish grocery sector is attributable to seven groups of operators. There are six wholesalefranchisors; ADM Londis, Barry Group, BWG Foods, the Gala Wholesalers, Mangan Wholesale (acquired by BWG) and Musgrave. There is also a group of 12 independent cash and carry wholesalers. This group, along with Barry Group, the Gala Wholesalers and Mangan Wholesale, forms the

in Uncertain Times Stonehouse buying group. Each of the six wholesalerfranchisors licenses the use of a retail brand or fascia under a franchise agreement to retailers and sells goods at wholesale predominantly to its affiliated retailers. For example, Musgrave license the use of the Centra and SuperValu brands, BWG Foods licenses the use of the Spar brand and ADM Londis licenses the use of the Londis brand. The combined turnover of the seven major groups is estimated at €6bn. This represents growth of over 50% in nominal terms since 2001. The wholesale level of the grocery supply chain is highly concentrated. Musgrave and BWG Foods, two groups together account for almost 80% of the €3.6bn.

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Key:

Total Net Sales (â‚Źm) Dunnes Stores

2,939.6

Dunnes Stores

304.5

Dunnes Stores

16.0

The wholesalers differ in a number of respects. Firstly, wholesalers differ with respect to the importance of different types of customers. The wholesaler has three main customer types - the affiliated retailers, other

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G/M = General Merchandise S = Suprmarket C/F=Convenience/Forecourt

Format

GM S C/F

No. of stores

Sales Area (OOOs sq ft)

Av sales Area (sq ft)

100

3,320

33,195

15

285

19,000

4

12

3,000

retailers and other customers, principally involved in catering. For most wholesalers, their affiliated retailers are their most important customers. Affiliated retailers accounted for just over 78% of grocery wholesale turnover on average across all wholesalers. For ADM Londis, affiliated retailers accounted for almost all grocery wholesale turnover, while the Gala Wholesalers sales to affiliated retailers accounted for just 29% of the grocery wholesale turnover. Wholesalers have different distribution capacities. They make use of three different distribution channels; delivery of goods that have been stored at the wholesaler’s warehouse; direct delivery by suppliers to retailers and goods that are collected by customers from cash and carry centres. Distribution capacity principally involves warehousing. On average across the wholesalers, approximately 62% of wholesale grocery goods turnover came from goods delivered by wholesalers; 34% came from goods delivered directly by suppliers; and 4% of grocery goods turnover came from goods that were collected by customers. Musgrave, with the greatest amount of warehousing floor space of all the major wholesale groups, derives 79% of its grocery wholesale turnover from sales of goods delivered to their customers, 19% from sale of goods delivered directly by suppliers and just and 2% from the sale of grocery goods that are collected by retail customers. At the other end of the spectrum is ADM Londis which, with the smallest amount of warehousing floor space, derives about 15% of its grocery wholesale turnover from the sale of grocery goods that are delivered to

customers with the remainder of wholesale grocery turnover coming from goods that are delivered directly by suppliers. Wholesalers differ with respect to their geographical scope. While each of the wholesaler groups has customers located across the State, however, some have more of a regional presence than a national presence. Customers of Mangan Wholesale, for instance, appear to be more concentrated in the west and Ulster regions. Customers of BWG Foods and Musgrave are distributed relatively evenly across the country. Given this market structure in which over 78% of wholesale turnover is derived from sales to affiliated retailers, competition at the wholesale level in the grocery sector is focused on efforts by wholesaler-franchisors to compete for retailers to become or remain their affiliated retailers and to increase sales of goods to these affiliated retailers. At its core, wholesaling involves the purchase of goods from suppliers for resale to retailers and other customers. Wholesalers have traditionally been involved in varying degrees in the provision of storage, distribution and other services in connection with the sale of goods. The principal innovation of modern wholesaling is the emergence and growth of wholesaler-franchisors, that is, wholesalers which sell predominantly to retailers who are affiliated to them. The development of this relationship with affiliated retailers has been the main focus of wholesalerfranchisors in order to increase wholesale turnover from sales of goods. The relationship between a wholesaler-franchisor and its affiliated


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Total Net Sales (â‚Źm)

Format

343.0

No. of stores

H/S D

Sales Area (OOOs sq ft)

72

937.0

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Av sales Area (sq ft)

13,014

Key: H/S D = Hard /Soft Discount

Total Net Sales (â‚Źm)

Format

17.0

H/S D

No. of stores

52

Sales Area (OOOs sq ft)

783.6

Av sales Area (sq ft)

15,070

Key: H/S D = Hard /Soft Discount

Key:

Total Net Sales (â‚Źm)

H = Hypermarket S = Supermarket C/F = Convenience/Forecourt

Format

No. of stores

Sales Area (OOOs sq ft)

Av sales Area (sq ft)

Tesco Extra 287.06

H

6

313.0

52,167

Tesco

S

82

2,086.9

25,450

C/F

12

49.5

4,125

Tesco Express

2,417.40

56.83

retailers consists principally of an agreement to license a retail brand or fascia to retailers and to require or to encourage the affiliated retailers to buy all or most of their requirements from the wholesaler-franchisor. To develop and reinforce this relationship, the wholesaler-franchisor strives to offer attractive wholesale prices and rebate policies to its retailers as well as to provide various types of support services to its affiliated retailers to improve their profitability. Thus, modern wholesaling is very much involved with developments at the retail level. Under the franchise agreement with its affiliated retailers,

the wholesaler-franchisor offers these retailers the opportunity to operate their outlets under a common brand. From the perspective of the affiliated retailers, it believes that its outlets will operate more profitably than if operated under its own brand (as an independent retailer) or under a brand of another wholesaler-franchisor. The success of affiliated retailers would be expected to enhance the profitability of the wholesaler-franchisor. The wholesaler-franchisors offer a wide variety of support services to their affiliated retailers which are designed to improve the viability and profitability of the outlets of the

affiliated retailers. The licensing of a retail brand implies that wholesalers as wholesalerfranchisors are now involved in the branding of retail outlets and the marketing of the brand. They assist affiliated retailers with the choice of products they retail and recommend the prices at which they sell those products. Wholesalers are also involved in a variety of the logistical aspects of retailing including product ordering, stock management, billing and business planning, particularly with newly-affiliated retailers.

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Total Net Sales (€m)

2,200

Format

S

No. of stores

Sales Area (OOOs sq ft)

190

1,805

Av sales Area (sq ft)

9,500

Key: S = Supermarket

Total Net Sales (€m)

1,380

Format

C/F

No. of stores

Sales Area (OOOs sq ft)

440

1,100

Av sales Area (sq ft)

2,500

Key: C/F = Convenience/Forecourt The net effect of the emergence and development of the wholesalerfranchisor in the wholesaling of grocery goods is that wholesalers and retailers have become more integrated and in some respected mimic the business models of the vertically-integrated retailers who combine wholesaling and retailing in a single business entity. The trend toward the deepening of the wholesaler-retailer relationship explains, in part, the relative stability of turnover shares in recent years. While the modern wholesaler-retailer relationship holds advantages for both sides, the principal advantage from the point of view of the wholesaler is that it helps ensure a stable and ongoing demand for the products that it wholesales. In this regard it is noteworthy that switching rates among affiliated retailers are relatively low. A further explanation for the relative stability of turnover shares of the main wholesaling groups may relate to the nature of distribution logistics and their potential to inhibit entry. The use of proprietary distribution network seems to be an important barrier to entry. It is not an essential requirement for entry; however, the absence of a proprietary distribution network together with other factors such as economies of scale, economies of density and switching costs for retailers who are affiliated with wholesaler-franchisors, make entry

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difficult at the wholesale level. Market Structure and Competition with in the Retail Level There are an estimated 9,198 grocery retail outlets in the State, of which 2,790 are affiliated retailers (symbols), 1,956 are independent retailers (post -office with shop) 1,835 are garage forecourts (standard 1,056, c-store 665 and kiosk 110), 1,812 are TNS (newsagents), 385 are vertically integrated retailers (multiples), 322 are specialist offlicenses, and 98 are cash & carry outlets. There has been considerable expansion by the main retailer groups in the country. The number of retail outlets belonging to the verticallyintegrated retailers has almost doubled since the early 2000s, as has the number of retail outlets belonging to affiliated retailers. In contrast, the number of retail outlets belonging to independent retailers fell by 44% reflecting a much longer-term trend. Vertically-integrated retailers together account for 46% of the €12bn retail turnover in the grocery goods in the country. The retailers which are affiliated to the four largest wholesaler-franchisors account for 40% of retail grocery turnover while the other retailers, independent retailers and retailers affiliated to smaller wholesaler-franchisors account for 14%. The six vertically-integrated

retailers are Aldi, Lidl, Dunnes Stores, Marks & Spencer, Lidl, Superquinn and Tesco. Six wholesaler-franchisor license 18 retail brands or fascias in the grocery sector. BWG Foods has three brands Mace, a group of interrelated brands under the names Spar, Eurospar and Spar Express, and XL Shop & Stop. Gala Retail Services has the brand Gala, Gala Superstore, Gala Xpress and Checkout. Mangan Wholesale was acquired by BWG Foods and operates three brands; Mace, Vivo and Xpress Stop. Musgrave has four brands SuperValu, Centra, Daybreak and DayToday. The combined turnover of these retailers was €14bn which was 86% of estimated turnover for that year. This represented a nominal growth in turnover of 70% form €7.4bn in 2001. The combined grocery goods turnover of these retailers, for which historical information was available, was €10.0bn which was 85.9% of estimated total grocery turnover for that year. The vertically-integrated retailers and affiliated retailers had combined grocery net retail floor space of 1.1 million m2, a figure which has obviously grown considerably throughout the 2000s. This increase is largely attributable to the growth of the vertically-integrated retailers. Floor space belonging to the verticallyintegrated retailers increased by almost 62% since the early 2000s.


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It is worth reminding ourselves that many an empire was begun in recession and those who can surf the wave will have seen off the worst possible aspects of running a business, including spiralling overheads, inhibited lending, increased scrutiny from banks, and customer panic and discriminating consumerism. Reinventing customer focus; removing dead weight, and staying focused on margin and mix as well as overhead control is always a good starting point for anyone in business and that should not change now. It is true that never before have times seemed so ambiguous; threatening new and ever larger catastrophes with each passing week. Unreserved understanding of the demands of this economic climate is the life blood of survival. The time for analysing, blaming and hiding under a proverbial pit of sand was yesterday. Today is about punching out of the current economic slaughter with

to sort it out for ourselves as consumers than dare cross the personal space of a mono-toned assistant pointing into dead air with the words, ‘Dunno, you’ll have to ask the manager, over there’. The mind boggles. What a difference recession makes. Take a walk down any high street across the country, stroll through shopping malls and witness sales assistant calling out to us like sirens willing our purses into their empty mirages of slashed prices, jaw cracking smiles and wide-eyed attentiveness. As the shopping legions have marched Northwards many had little sympathy for their own failing economy and were quick to blame the retailers for their own downfall. So the first thing that needs to be put back in shape is customer focus - the hallmark of retailing. Time and time again we have read the manuals which tell us how top quality customer service will not only

REINVENTING CUSTOMER FOCUS comprehensive, measured and gutsy solutions. And there are plenty out there. From simple customer service policies to comprehensive auditing of business practices, there are always ways and means to improve effectiveness and alter even the most intransigent company culture One of the more refreshing aspects of these times is that friendly attentive customer service seems to have made a long overdue return. Like some distant relative long emigrated, effective customer relations lurked in sentimental and foggy memory. As trite as it sounds, the more money we had to spend the less effective service we got across many of our leading retailers. Like some kind of Nietzschean reverse psychology, the more willing we were to spend the worse service we got. Good service took a back seat to listless, under trained, nail-picking sales assistants. We learned to fend for ourselves when it came to searching through aisles, figuring out prices and, the great holy grail of elusive good service - asking for advice. Much better

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ensure retention of a customer base but will increase the number of consumers and the amount they spend. In a recession when bargains and discounts are galore, attention to this sort of detail can make the difference. If a consumer has choice, the friendlier service will win over their custom. Think Feargal Quinn and his Boomerang Theory days which essentially advocates if you treat ‘em nice, watch them come back to you, again and again. A simple customer service policy espousing the retailer’s philosophies and expectations of service can create a culture of good customer relations within any store. Such a policy can be drawn up and distributed among staff. This should be followed up with regular checks on the customer service level. This, in turn can be done through observation. The retailer should change his routine of coming and going to the shop at different times to his normal schedule to make sure policies are being implemented.


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Good customer service policy should include how customer enquires are dealt with, if staff know where a product is or the price of an article and the length of time a customer takes to be served. A retailer should have adequate staff for when queues traditionally form; and pricing procedures should be in place for fast moving items. All practical, all straightforward, even obvious, but often despairingly absent and overlooked in many shops. A customer service survey is an effective way to examine and implement the best customer relations possible. Some typical guidelines include; 1. Provide a written policy on customer service in your shop, to all staff. Outline the appropriate relationship between your staff and customers - friendly, efficient and accurate. 2. Record the date you gave the policy to each person. 3. Regularly check in on customer service on the shop floor. 4. Note the time and date of your observations over the period of the survey, for example, over a fortnight. 5. Conduct an appraisal of service with regular customers. 6. Welcome all feedback, positive as well as negative 7. Make sure to act on any observations . Conduct staff meetings to outline any findings. Staff will be unmoved if this is not regularly carried out. There are also some basic rules when it comes to cementing positive customer relations. These include how to deal with complaints, how to listen, be sympathetic, ask questions and how to apologise. Regardless of the size or type of business, there is always a simple way to address the issue of complaints.

USTOMER

F OC US

These recessionary times call for tough assessments of business and clear ways forward. While it won’t guarantee a safe passage through the rough ride, it can keep one afloat. One thing that is certain is that complaints will happen to the best, no matter how cautious one is. Some may be real, some may be imagined but they all must be handled well. Complaints may be awkward but they are also an opportunity to correct unseen negatives, learn for the future but above all must not be dismissed. Excuses and being fobbed off are the last thing an annoyed customer wants to hear so patient empathetic listening, compensation where necessary and no quibbling will ensure all are happy. Most importantly if there is a complaint, the first priority regardless of the situation must be to apologise, unreservedly. In other instances, never argue over replacement or exchanging and always offer a full reimbursement. Taking things to another level, understanding who your customer is can make a difference. Looking beyond the shop walls at the surrounding catchment area gives an understanding of what the customer needs. Socio economic and demographics can be accessed through the Central Statistics Office and can assist which product mix should reflect the surrounding area. For instance location can determine whether there will be high incidences of pedestrian traffic. If there is a school nearby, then children and young people will have certain needs. Carrying out a survey of the local area, population, demographics and socio economic breakdown can be helpful data that can give one retailer the edge over another.

Considering what the consumer wants once inside the shop is a valuable way to organise floorspace to the optimum advantage for sales and profit. This will reflect tastes and needs as well as whether customers shopping experience is motivated by basic need, self-reward or simple habit. March 2009 45


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Understanding what motivates the consumer is one of the most valuable aspects of carrying out such research. Considering what the consumer wants once inside the shop is a valuable way to organise floorspace to the optimum advantage for sales and profit. Thus will reflect tastes and needs as well as whether customers shopping experience is motivated by basic need, self-reward or simple habit. Implementing change on a larger scale can be a more complex challenge and often outside help is required. Not being able to see the woods for the trees might be an old chestnut but entrenched cultures and archaic dogma are extremely prevalent in multinationals and can be difficult to wean out. One company which takes on these challenges on behalf of company’s is Sales Refocusing which works with organisations and through various templates enables change in core areas of business. Sales Refocusing tackles key areas which can turn a company’s fortunes around and in these deteriorating economic times, such services are in steady demand. Under the company’s product Tactix, it highlights important issues such as assessing the right customers with the right products and services; having the right people doing the right jobs and planning a deliverable strategy. Sales Refocusing has dealt with many multinationals and its templates can be effectively implemented. Taking one case study is an interesting way to see how the process works. In this case, a multinational food processing company wanted to put a sales process in place to allow one of its subsidiaries to achieve market share increases for their branded products in as cost effective and professional a manner as possible. The products competed in a very competitive and price sensitive market. Sales Refocusing carried out an in depth and confidential audit of the sales and distribution functions that were in place including field units with sales teams and managers, marketing, IT, finance and production. Distribution efficiencies were analysed as well as needs based on interviews carried out with a selection of customers. The results were fed back to the senior management team and it was agreed to adopt a number of recommendations that were put forward. Sales Refocusing facilitated

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Implementing change on a larger scale can be a more complex challenge and often outside help is required. Not being able to see the woods for the trees might be an old chestnut but entrenched cultures and archaic dogma are extremely prevalent in multinationals and can be difficult to wean out.

the re-structuring of the sales and distribution process. The areas that were covered included customer base management, amalgamation of sales and distribution into one core unit and upgrading of distribution process, role of field sales manager restructured, van-selling effectiveness, route servicing cost controls, a modern channel management approach and effective selection and recruitment. The results of the project included an increase in sales in excess of set targets, the reduction of sales servicing costs and overheads and most importantly customers expressed satisfaction with the new service and system. Deciding to tackle solutions in a tough market place is the first step and an important one. Weeding out problems is a tedious business but an essential and ultimately rewarding one. These recessionary times call for tough assessments of business and clear ways forward. While it won’t guarantee a safe passage through the rough ride, it can keep one afloat.


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BRANDING - THE BEST O

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here is a debate on what the future holds for brand manage ment structure given changes that are taking place in the marketing environment. This makes it all the more interesting to consider if branding matters at all during economic meltdown. In a competitive business environment, having a strong brand identity matters a lot. For the last ten years, Irish brands have been constantly innovated, polished and tweaked so that when consumers hear the name of a brand memories pop up and influence their choice. In recent times consumers’ own motivations have also been modified to deal with the cold, transparent veracity of recession over the whimsical aspirations of more buoyant times. This has manifested with a renewed interest in cheap own label products in supermarkets and estrangement from the bigger well known brands, their visceral promise languishing unsought in shelve dust. The challenging economic times have predisposed the average shopper to obdurate prudence. This goes for the manufacturer too. Cutting back, culling budgets; all knee jerk reactions, yet immediate solutions. However, history has taught us that long-term solutions to mending global economies involves spending, investing, and developing. Undoubtedly this goes for brands. Although try telling that to skittish brand managers, dry heaving over flaccid sales figures. Two things can happen to a brand during a recession; weaker brands can be effectively weeded out and stronger ones compounded. Conversely, cheaper own label brands appeal to panicked customers if they’re trusted, whereas more expensive branded goods become overlooked. In a recent report, one brand market expert commented:

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“There is an opportunity for all brand strategists and marketers to lead and grade by example branding carries these companies and products through even the bad times.” Another expert added; “Beyond quality and sheer market weight, brands must be ever more relevant, trustworthy and flexible. They must constantly be in tune with consumers’ values, evolving needs and lifestyles.” Despite this sensible advice, ironically marketing budgets are often the first to get the hatchet during tough economic times. As a consequence, brands risk becoming less visible at a time when they need to stand out. According to Harvard Business School Professor John Quelch; “Instead of cutting back the market research budget, you need to know more than ever about how consumers are redefining value and responding to recession. It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at a lower cost than during good economic times.” Ultimately, it pays to advertise during a recession , according to American Business Media (ABM) there are a number of points worth bearing in mind when it comes to advertising during down times. The organisation refers to a brand as a ‘share of mind’ ; 1. If a company fails to maintain its ‘share of mind’ during an economic downturn current and future sales are jeopardised. Maintaining ‘share of mind’ costs much less than rebuilding it later. 2. If during a recession you maintain a strong advertising presence while your competitor cuts back budget you will automatically increase your ‘share of mind’. 3. Advertising through both boom and bust sustains necessary brand recognition. 4. Maintaining a company’s advertising budget during recession will give the image of corporate stability within a chaotic business

environment and give the advertisers the chance to dominate the advertising media. 5. Economic downturns regards the aggressive advertiser and penalises the timid one. 6. During economic downturn, a strong advertising / marketing effort enables a firm to solidify its customer base, take business away from less aggressive competitors and position itself for future growth during the recovery. The key is to look at the budget as an investment not an expense. Marketing firm About.com says that cutting marketing budgets is the biggest mistake brand owners can make during a recession and advices adopting its SMART strategy. This involves;


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1.Strategise 2.Maintain 3.Access and allocate budget 4.Research customer thoroughly 5.Target and reach out to them. The fact is that many of the world’s famous company’s have weathered economic storms by implementing many of these tips. For example, Procter & Gamble, during the Great Depression, pushed Ivory Soap like never before. In 1933, in the shadow of the Depression, Kraft launched its iconic Miracle Whip. Intel, during the 1990-1991 economic downturn pushed the campaign ‘Intel Inside’ with a huge marketing spend. Wal-Mart; during the 2000-2001 recession launched its ‘Every day low prices’ campaign. In February 1930, just four months

after the stock market crash, Henry R Luce launched an audacious new media product called ‘Fortune Magazine. Not only did he have the guts to launch a new product in such a vulnerable economic environment, he also launched an expensive new product. At the expensive for the time cost of $1 per issue, Luce launched with 30,000 subscribers. By 1937 he had over 500,000 subscribers. According to Branding for Dummies, a book penned by Bill Chiaravelle and Barbara Findlay Schenk, brands are promises that consumers believe in. Brands create trust and emotional attachments. They foster relationships between customers and products that withstand pricing wars, rise above new competitors and overcome rare lapses in product or service excellence. All of

DEF EN C E

which represent qualities consumers are currently in desperate need of. When we see certain brands we instantly think of certain things; Barry’s Tea means a quality cup of comfort to many people, Magnum ice cream means an indulgent treat; Denny’s rashers and sausages mean down home cooked comfort, Dunnes Stores means Irish and reliable; Superquinn; quality and posh, Aldi, cheap and slashed and so on. So in many ways multiples own-brand labels are associated with their supermarket owners, Tesco, variety good value, Dunnes reliable Irish, Superquinn quality, upmarket. Brands are big business because they make selling easier in person or online. People prefer to buy from companies they know and can trust and brands put forth that assurance.

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The fact is that without a brand, you have to build a case for why you deserve the consumer’s business every single time you get ready to make a sale. While brand owners are closing the deal, those without strong brands are still introducing themselves. Ultimately brands that are preferred and valued by consumers deliver a long list of business benefits that translate to higher prices, higher profit margins and higher owner value - all of which are invaluable in times like these. When the dust settles on the present economic outlook, and consumers get back into a spending rhythm, they will return to what they’ve known and relied upon. That’s why now is the time to polish up the brand to effervescent levels. It is worth emphasising why a quality brand works. Fundamentally, consumers are willing to pay more to buy brands because they believe that they deliver outstanding benefits. They stay loyal to brands, buying them more frequently, and in greater volume. Retailers provide brands greater store visibility because they know that brands drive sales and result in higher store revenues. Brand owners don’t need to launch new offerings from scratch, they grow their businesses by leveraging their brands into product and line extensions.

Moreover brand owners find it easier to attract and retain good employees because applicants believe Whether itsthe recession orbased a in the quality of workplace quality sometimes on failure advancein knowledge of the calibre of the bad brand. Theycan runhappen more efficient things to operations because they align all good brands and there are decision with the mission, vision, and certain values thatone-fit-all underpinmeasures the brand promise. which owners can take. In However, spite of despite a millionthis, goodrecent history shows how often companies buryintentions, their headbrands in the can sand.run Huge into trouble ascorporations a consequence multinationals, and banks; of in other wordsfrom somebad of the best anything known brands around the world have management to bad luck. been brought to the brink, by among When they do the other things, ignoring thesituation obvious and requires and before fast. has leaving things toaction late. Never it mattered as much to have some pre .................. before brand emptive strike up one’s sleeve. owners plan how to handle Hopefully most organisations brand need toand understandthreats that they investment marketing in a brand is avoid not just take time to plan how something donethem. in the good times, it is an indispensable advantage, a hardcore asset. Ed McDonald, ceo, Association of Advertisers recently pointed out that those with innovation and creativity will survive. He said; “There will also be a focus this year on expecting agencies to not just talk integration but to be able to deliver. So you need to be able to sit in a room with people who understand the

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THE MATHEMATICS OF COLLABORATION IS NOTHING LESS THAN MAGIC

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internet, media relations, advertising and so on and expect people to be at the table who can talk all of those things in a mature and sensible way. So experience and expertise will come to the fore which ultimately favours bigger agencies because big groups that have a public relations company or a digital company are seen as more comfortable in this space. So it’s a spread of expertise around different channels to market because clients don’t want four different communications partners especially when budgets are under pressure.” Whether its recession or a failure in quality sometimes bad things can happen to good brands and there are certain one-fits-all measures which owners can take. In spite of a million good intentions, brands can run into trouble as a consequence of anything from bad management to bad luck. When they do the situation requires action and fast. Branding for Dummies suggests that before brand owners plan how to handle brand threats they need to take time to plan how to avoid them. In other words, the best offence is defence. This involves two essential steps. Firstly identify potential threats. Identify the kinds of threats that may take a toll on a brand’s reputation. Then assess the likelihood of those threats actually occurring, These can include everything from a lapse in corporate behaviour, to a sudden departure of a high profile corporate leader, product failures, to onset of worldwide recession. For any threat that appears to loom large, work in advance to reduce vulnerability by establishing systems and protective actions that steer your organisation away from potential risks. Secondly, prepare a brand crisis management plan. Prepare a plan complete with assignments for who will lead and serve on the crisis management team, what communication procedures will be followed, and the steps that will get a clear, consistent message out to all afflicted audiences. Taking the proverbial head out of the sand and working out worst case scenarios brands may face, before they face them is worthwhile. Follow this with how significantly each threat could affect the strength of a brand, business and reputation. These are identified by taking a few careful steps;


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At the end of the day, whatever the economic situation of the day, to win and maintain a slot in the consumer’s mind, a brand needs to begin and remain credible, competitive, current, and relevant to customer wants, needs and interests. `That means tuning in to market conditions, consumer preferences, and cultural trends not only when established on a regular basis but as a brand ages. This all involves investment, creativity and vision.There is plenty of it around in Irish companies, we just have to use it, sooner rather than later. 1. Consider potential brand threats that may negatively impact your brand image. 2. Rank the likelihood of each brand threat occurring. For instance, a privately held service business with no shareholders and no production facilities has a low likelihood of encountering a threat from a lapse of corporate behaviour. If that same service business is headed by an owner with a high profile, jet set lifestyle, however, the likelihood of a real or perceived lapsed of personal behaviour may be high. 3. Determine which of your brand attributes would be most affected should your brand encounter each potential threat. For example, if your business has to deal with news of a product failure, brand attributes such as safety precision, craftsmanship, or quality would be affected. 4. Rank the impact of each attribute that may be affected on the overall strength of your brand. For example, if your brand is primarily known for its safety record and suddenly sustains a safety lapse, the impact on brand strength would be high. It is recommended that brand owners take a straight forward approach to owning up to and addressing brand threats. Where you know there is a risk, admit it. Trying to wish it away is never a decent strategy. If you’re vulnerable, admit it. If the public places high confidence in your high -profile but aging leader, admit it. Regardless of the threat, if it’s real and looming shed light on it and begin examining how best to minimize the threat. Gather a team to discuss risks. Form a brand threat management committee to consider potential threats from a number of viewpoints. Involve not just brand managers but also managers from customer service, production, financial management and other departments. Discuss what kind of events might trigger the brand

threat and how each can be preempted. Take preventative action. If the threat is real and the risk is high, address it head on. Enact new policies. Install new procedures. Establish a succession plan. Create evacuation procedures. Address high-risk behaviours. Take whatever steps are necessary and effective to admit and reduce or erase vulnerabilities that could damage your brand image in the future. If the worst happens and your brand reputation is attacked by internal or outside forces, be ready to control the news, tell the story, remedy the problem, and assure the public that it won’t happen. Public relations speak about a ‘golden hour’ during which you can control the story and move quickly to save your brand image from disaster. Yet too many companies spend the first hour following a brand threat wringing their hands and trying to figure out what steps to take. By the time they’re ready to move, the story is out of their hands and being told by others, often with inaccuracies and from perspectives that damage the brand even further. Case in point - Irish banking institutions. We witnessed overnight their excessively risky business choices which were smeared across every news outlet causing almost irreparable consumer confidence and shareholder panic. Commit to developing a brand crisis management plan that includes the following components. Firstly, who’s who in your management team, including who will serve as the primary and secondary spokespersons, who will provide legal or technical advice, and who will help staff the plan. Whom to contact in the event of a crisis. Prepare a list with home, office, fax, mobile, email addresses and mail addresses for top executives and managers, business and financial partners, media contacts, employees, key contacts in the community,

industry and distribution channels, key customers. Know what to say including what happened, what you’re doing to make it right, and how it will be prevented in the future - all in terms that describe your concern for the public and not simply your accounts to minimize corporate or brand loss. Remember you can’t plan your exact message in advance, but you can plan what your message needs to communicate. Figure out what your strategy is, including plans for releasing the news, establishing and staffing physical and online media centre, handling the gathered interest through expanded and even back-up phone and online capacity, and providing ongoing updates regarding how you’re working to remedy the problem and prevent it from reoccurring. At the end of the day, whatever the economic situation of the day, to win and maintain a slot in the consumer’s mind, a brand needs to begin and remain credible, competitive, current, and relevant to customer wants, needs and interests. That means tuning in to market conditions, consumer preferences, and cultural trends not only when established on a regular basis but as a brand ages. This all involves investment, creativity and vision. There is plenty of it around in Irish companies, we just have to remember to use it, sooner rather than later.

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CHARTING RETAIL EXPANSION Now that the bottom has fallen out of property and recession has stepped into its place, retailers have had to get back to asking the basic question what does the consumer want. Lidl and Aldi opened the first and second greatest number (35% and 19%) respectively of retail outlets over the period of 2000 to 2007. Dunnes Stores showed the third greatest level of expansions over the period and accounted for 16% of all new retail outlets opened by the planning group over the period. Dunnes Stores had 102 or 18% of all retail outlets by the end of 2007. Tesco showed the fourth greatest level of expansion in terms of numbers of retail outlets opened over the period and accounted for 14% of all new retail outlets opened over the period. Tesco opened 30 additional retail outlets over the period so that by yearend 2007 with 100 outlets, it accounted for 17% of all retail outlets. SuperValu retailers, with 171 or 46% of all retail outlets showed the fifth greatest rate of expansion in absolute terms. Up to 16 additional SuperValu retail outlets were opened so that by year-end 2007, SuperValu had 187 retailers (or 33% of all retail outlets). SuperValu therefore accounted for 7% of all new retail outlets opened. When expansion is measured in terms of additional retail floorspace a slightly different picture emerges. In terms of net retail sales two groups of retailers can be distinguished. In the first group are Aldi, M&S and Lidl, who show the greatest growth rates in retail floorspace; 660%, %, and 153% respectively. In the second group are Dunnes Stores, Tesco, SuperValu and Superquinn who show relatively lower levels of growth rates in retail floor space; 72%, 52%, 39% and 25% respectively. As before, growth rates need to be qualified in terms of absolute floorspace. Aldi, who accounted for 1% of retail floorspace added 83,210m2 between 2001 and the end of 2007. Aldi accounted for 10% of all retail floorspace added by the planning group, placing them fifth, so that by the end of 2007 they accounted for

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Charting the journey retail expansion has taken in this country offers insight into how gapingly absent the consumer has been from planning decisions. The greatest amount of expansion in the Irish retail market began in 2000 and began to dry up by the end of 2007 when property slowed and the economy changed for the worse. Expansion in retail has long been associated with success and profit. In this country, the race to expand has grown in tandem with the general property boom of the last decade. Every spare acre has been considered for retail prospect, huge sums of money were handed over and grand territorial battles were fought. But in the rush to build more stores, many retailers may actually have lost sight of one major component of retail success, the consumer. For in many cases, expansion overtook demand and great homages to shopping were built often to keep out a rival than to meet genuine consumer need.

5% of all retail floorspace. M&S who accounted for 1% of all retail floor space added 9,007m2 and accounted for 2% of all retail floorspace placing them sixth. Lidl with 13,422m2 of retail floorspace accounted for 3% of all retail floorspace. Between 2000 and the end of 2007, Lidl added 88652m2 of retail floorspace accounting for 12%. Lidl added the greatest amount of retail floorspace accountings for 24%. Relatively low rates in floorspace belonging to retailers in the second group needs to be put in context. Dunnes Stores showed the second greatest expansion in terms of retail floorspace among retailers (compared to the third when expansion is measured in terms of numbers of retail outlets). Dunnes added 83,150m2 of retail floorspace and accounted for 23%. Tesco expanded by the third greatest amount between 2000 and 2007 when expansion is measured in terms of floorspace. Tesco added 82,679m2 of floorspace between the period and accounted for 23% of all floorspace. . Floorspace belonging to SuperValu retailers grew by the fourth greatest amount between 2000 and 2007 (compared to the fifth when expansion is measured in terms of numbers of retail outlets. SuperValu retailers collectively added 57,957m2 of retail floorspace and accounted for 14%. In terms of floorspace,


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Superquinn grew by the least amount and contributed 2% to overall growth in retail floorspace. Superquinn had 33,633m2 or 7% of retail space as of year end 2000 and by the end of 2007, it had 42,117m2 or 5% of all retail floorspace. Lidl opened the greatest number of new outlets during the review period at 77 and expanded at a relatively even pace. During these years the retailer opened more outlets than any of its competitors. In 2002, 2003 and 2005, Lidl opened 8,6, and 8 new retail outlets respectively and in each of the other four years it opened between 11 and 15 new outlets. A simple count of the number of retail outlets by Lidl tends to overstate the magnitude of its rate of annual expansion owing to the relatively smaller size of retail outlets. Tesco and SuperValu also expanded at a relatively even pace. Tesco opened between five and eight new outlets in each year over the period. No new outlets were opened in 2002, while 14 new outlets were opened in 2007. SuperValu opened between seven and 11 outlets in each year apart from 2001 and 2005 when three and four outlets were opened respectively. When floorspace is considered, Tesco’s rate of expansion is more pronounced. The opposite is the case for SuperValu, who, like Lidl tend to open smaller retail outlets. Aldi and Dunnes Stores have followed a slightly different pattern. For each of the initial years in the period, i.e., 2001, 2002 and 2003,

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As 2009 progresses, expansion has come to a blunt halt in terms of building new stores and for some, in terms of profit growth. Every sector, including grocery may be wondering if they were in too much of a rush to ‘expand’ and if success can be thus measured. In 2009, success will be measured by those who continue to operate, make profit and see off these troubled times, and not as wasp reviously the case, by how many and how big their stores are.

Aldi opened only one or two new retail outlets. During 2004, expansion by the multiple picked up with ten new outlets being opened. Aldi’s rate of expansion remains relatively high for the remainder of the period. Similarly in each of the initial years of the period, Dunnes Stores’ rate of expansion remained relatively low. For each of the years 2001, 2002, 2003, and 2004, Dunnes opened one, two and three new retail outlets. It’s expansion increased rapidly in 2005

when 12 new outlets were opened. Dunnes continued this rapid expansion during 2006 and 2007. When floorspace is considered however, the level of increase in the rate of annual expansion is much greater for Dunnes than Aldi. Again, the reason for this relates to the larger size of Dunnes outlets compared to Aldi Superquinn and M&S have expanded less than any other retailers. Superquinn opened no new retail outlets in three of the seven years since 2001 (2002, 2003 and 2006) and one or two outlets in each of the other years. M&S opened no new outlets during 2001 and 2002, and between one and four outlets in each of the following years. When considering expansion in terms of floorspace a similar picture emerges. The principal differences are, as already noted, the rate of annual expansion by Lidl, Tesco and SuperValu was relatively even over the period with Lidl tending to open a greater number of outlets. When floorspace is considered, Tesco and Dunnes Stores tended to have the greater rate of annual expansion among the three. The majority of new outlets opened by retailers over the period were either entirely new or built with the purpose of replacing an existing outlets and so required significant effort on behalf of the applicant to acquire planning permission. For example, planning applications must comply with the relevant area’s development plan and should be accompanied by a retail impact assessment.


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Each new store was classified as either a ‘new build’, ‘expansion’, ‘replacement’, or ‘acquisition’,

In a Competition Authority report on the planning in retail, retailers were initially asked to provide a planning history for each outlet opened from January 2001 to March 2007. An updated second questionnaire covered the period from March 2007 to March 2008. Specifically they were asked to provide information on; 1. The date of the initial application to construct the new retail outlet. 2. The name of the applicant;

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3. The name of the local planning authority applied to; 4. The decision of the local planning authority; 5. The length of time taken for a decision of the local authority to be delivered; 6. Whether the decision was appealed to An Bord Pleanala; 7. The name of the applicant; 8. The date of the grant decision from An Bord Pleanala; and 9. The classification of the retail outlet.

The number of new retail outlets opened since 2001 includes 217 new builds, eight expansions, 19 replacements, and 35 acquisitions. Tesco accounted for the majority of both outlet expansions (75%) and replacements (63%). This is at least partially explained by the fact that Tesco acquired Quinnsworth in 1997 and has since upgraded many of the newly acquired outlets. The SuperValu group of affiliated retailers account for the majority (71%) of acquisitions over the period. The reason for this lies in the business model operated by the SuperValu retailers. As we know, SuperValu retailers are affiliated retailers of the wholesaler franchisor Musgrave. Expansion by the wholesaler franchisor and their affiliated retailers involves new retailers choosing to affiliate themselves with the relevant franchisor. Such retailers are either impendent retailers or retailers that are affiliated with a different wholesaler franchisor and who choose to switch affiliation. Each of the main retailers have been active in terms of entry and expansion up until the beginning of 2008 when recession loomed In terms of outlet numbers Lid, Aldi and Dunnes Stores have been the most active. In terms of new floorspace Tesco, Dunnes Stores and Lidl have been the most active. The pattern of expansion by retailers over the period differs somewhat. For instance, while Lidl, Tesco and SuperValu have shown relatively even expansion over the period, Dunnes Stores and Aldi have tended to expand by far greater amounts and larger size of outlets, is particularly noticeable over the last three years. As 2009 progresses, expansion has come to a blunt halt in terms of building new stores and for some, in terms of profit growth. Every sector, including grocery may be wondering if they were in too much of a rush to ‘expand’ and if success can be thus measured. In 2009, success will be measured by those who continue to operate, make profit and see-off these troubled times, and not as was previously the case, by how many and how big their stores are.


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Today's Grocery Magazine March 2009