Tesco to launch discount chain within weeks

Speculation is rife that Tesco is on the verge of launching its new discount chain after it advertised for workers to staff new format stores.

Weekend chatter in the UK business press highlighted the forthcoming arrival of Jack’s, the new name of Tesco’s discount fascia that could launch as early as September in a bid to claw back some of the market share it has lost to German discounters Aldi and Lidl.

It comes after the UK’s biggest retailer started advertising for workers to staff new format stores in Wandsworth, Lincolnshire and Cambridgeshire.

One of the job ads for Tesco’s new stores reads: “The new retail format will be operated separately from the core Tesco business and as such benefits offered will be different from those offered at Tesco.”

According to The Guardian, the Tesco Metro in St Helens, Merseyside is also set to re-open under the new name, and staff at a Tesco Metro in Liverpool’s Edge Hill were reportedly given new jobs for a store that will open in five weeks.

The affected Tesco Metro staff are reportedly being made redundant and asked to reapply for the new roles.

The news follows revelations in February that Tesco had earmarked two potential sites – the Lincolnshire and Cambridgeshire sites – and entrusted former Aldi operations director Lawrence Harvey and advisors from Boston Consulting Group to spearhead the project.

Tesco built these stores with a view to adding them to its estate but had to back out in 2014 and 2015 amid its financial crisis, along with 47 other stores.

According to The Mail on Sunday, as many as 60 stores could be launched under the new Jack’s banner initially.

Wegmans’ Love Affair with Customers

A recent AT Kearney study found that only 10 percent of consumers say they enjoy shopping for groceries in store. I suspect that shoppers’ preference for in-store shopping experiences would be higher in any other category of retail.

Recognizing that there is a burgeoning opportunity in the grocery space, Amazon has been working diligently to solve that problem, greatly aided by its acquisition of Whole Foods that appeals to its 100 million Prime member demographics.

Taking an early lead, Amazon has an estimated 18 percent share of the online grocery market at the end of 2017. Most recently Amazon introduced free two-hour grocery delivery from Whole Foods for its Prime members in some trial markets and plans to expand to San Francisco, Atlanta and Los Angeles.

Traditional grocers are responding to the online Siren. Target, Kroger, Vons/Safeway, Ahold-Delhaize (Giant and Stop & Shop), Foodtown, Harris Teeter, Trader Joe’s, H-E-B, Costco, Walmart and Sam’s Club are answering the call, as are services like Instacart, Peapod, FreshDirect, Google Express and Yummy.com. The potential for online grocery is tremendous –The Food Marketing Institute estimates online grocery sales will reach some $100 billion by 2025, or about 20 percent of the grocery retail market.

Yet with Kroger, Vons, Ahold Delhaize and the rest working overtime to convert customers to online sales, their efforts might be better spent is learning how to make the in-store grocery store experience better, more rewarding and just plain more fun.

Wegmans Food Markets, the Rochester-based regional grocery chain, with a reported $8.3 billion in sales, knows which side its bread is buttered on: in its 90 stores. Wegmans is more than just a good place to shop and work. It is hands down the most beloved supermarket in the country among its customers and employees.

If you’ve never had a Wegmans shopping experience, it is worth the trip. The exceptional high-quality and engaging displays extend to its meat and fish counters. And its private label offerings are exceptional quality too. Prepared foods are also a big part of the Wegmans experience, where customers can pick up dinner from a wide range of choices from sushi, Mexican, Italian or classic American comfort foods. Whenever a new Wegmans store opens, people stand in line to get bragging rights as one of its first local customers.

The 2018 Harris Poll Reputation Quotient Rankings of the top 100 best-known brands found that #2 rated Wegmans (82.75 points) was edged out by #1 Amazon (83.22 points) by less than 1 point in consumers’ perception of the brand. It scored among the top 5 companies in these five dimensions measured, including products and services, vision and leadership, emotional appeal, financial performance and social responsibility. Plus, it was #1 in the workplace environment.

A recent study by Engagement Labs adds more dimension to consumers passion for the brand. In Engagement Labs study Wegmans ranked second on its list of Most Loved Brands of 2017 among offline brands measuring face-to-face conversations. While online social media engagement is what most brands are chasing, the most powerful word-of-mouth marketing comes from personal, face-to-face conversations and recommendations. Wegmans nails that, as does top-ranked Disney World.

“Ninety percent of the conversations about Wegmans is positive, compared to only 6 percent that are negative,” says Ed Keller, CEO of Engagement Labs. “The offline sentiment for Wegmans has always been substantially higher than the Supermarket/Grocery Store category in general.” It leaves its peers on that list in the dust, such as Trader Joe’s, H-E-B, Publix and Shoprite which follow in order.

That Wegmans’ customer love translates into customer loyalty. A recent survey conducted by Market Force Information among 12,700 shoppers found that Wegmans is American’s favorite grocery retailers, scoring 77 percent on its customer loyalty index. On that list Wegmans ties with Publix for the top honor. In the Market Force survey, Wegmans further gets special mention for its specialty department service.

To be first with customers, Wegmans believes it must put its employees first. Fortune just named Wegmans the nation’s second-best company to work for, after Salesforce. There is a noticeable lack of other retailers on that best employer list, which should be a wake-up call to retailers seeking to gain customer trust and loyalty.

Customer relationships start with the people employed in the store and who serve the customers. Wegmans is a family-owned company, now in its 102nd year of operation under the leadership of the third and fourth generations of the Wegman family. The spirit of family extends to its customers, employees and into the community. It is stated in the company’s philosophy that was codified in the late 70s and early 80s:

At Wegmans, we believe that good people, working toward a common goal, can accomplish anything they set out to do. In this spirit, we set our goal to be the very best at serving the needs of our customers. Every action we take should be made with this in mind. We also believe that we can achieve our goal only if we fulfill the needs of our own people. To our customers and our people, we pledge continuous improvement, and we make the commitment: ‘EVERY DAY YOU GET OUR BEST.’

Acting on its commitment to staff, Wegmans devoted $50 million last year to employee development, according to Fortune, including structured programs to help employees grow into management positions and develop culinary skills. Also Wegmans sets aside $5 million for scholarships. In addition, Wegmans offers a workplace that welcomes diversity, recognizing that by employing people from all different backgrounds it gains different perspectives and credibility with a diverse customer base.

The company also touches people beyond its stores in the communities it serves. It donates food to the hungry, upwards of 15 million pounds of healthy food last year. It also donated $7.4m to local community-based non-profits and engages with the United Way through company, employee and customer donations to the tune of $6.4m in 2016.

By putting people first, starting with its employees who personally deliver the products and services to the customers, Wegmans has garnered love and loyalty from both. Wegmans understands that in this age of Amazon, physical retailing now is a people, not a product business. That means retail success is less about what you sell and more about how you sell it. The secret is to put people first.

Source: The Robin Report

Kroger to launch a new fashion line

Kroger Co. has selected a designer and a brand name for its new apparel line that will launch in its stores this fall.

The Cincinnati-based grocer is partnering with fashion designer Joe Mimran to launch the line of clothing for men, women, juniors, kids and babies called Dip, an exclusive line for Kroger.

Kroger announced its plans to launch a clothing line in November as part of its Restock Kroger strategy to improve profits, boost its stock price and change the way people buy food.

“We’ve worked closely with Joe and his team to develop a line of clothing that works for today’s times – easy to buy, easy to wear and easy to love. Effortless style, every day of the week,” Robert Clark, Kroger’s senior vice president of merchandising, said in a statement. “Dip will transform our apparel business, further redefining the customer experience through Restock Kroger.”

The line’s name came from Kroger’s original line of business.

“We looked at Kroger’s unmatched heritage in food. We thought about the fun, easy energy of the clothes. We thought about what makes every gathering better,” Mimran said. “And it just kind of clicked – Dip. Dip is simple, fresh and goes great with everything.”

The Dip line will replace more than a dozen of Kroger’s private-label clothing brands in its more than 300 Fred Meyer and Kroger Marketplace stores in the fall.

Source: Bizjournals.com

Lidl’s US expansion has fallen short

A year ago, the grocery world was abuzz as German deep-discounter Lidl began opening its first U.S. stores on the way to what was expected to be 100 in a year and more after that. Its growth plans left many wondering how established supermarket operators such as Kroger Co. would respond.

Now, a year later, the talk about Lidl has quieted to a whisper and the operator has just 53 U.S. stores. That’s a far cry from the hype last summer as Lidl opened its first 10 stores in June 2017 while targeting 100 within the next year.

Lidl competes largely on price. It’s similar to Aldi, another deep discounter – although Lidl boasts in-store bakeries, more fresh produce and higher levels of service.

“They came in with a pretty big splash,” Jim Hertel, senior vice president at Long Grove, Ill., food retail consultant Inmar Analytics, told me. “But I don’t know that they offer anything superior except price.”

Kroger, the nation’s largest operator of traditional supermarkets, Walmart and others quickly cut prices in response, making it tougher for Lidl to woo customers.

“My guess is they’re rethinking their strategy,” Hertel said. “Fifty-three stores is not what they came here to do. They have to feel they have a workable model with a scalable proposition. They might try to see their way to four digits of stores (at least 1,000) or take their ball and go home before they lose hundreds of millions of dollars.”

Lidl will continue to open more stores after opening 53 U.S. stores in six states along the East Coast since June 2017, U.S. spokesman Will Harwood said.

The grocery has abandoned plans to build stores in Cary. Leon Capital Group claims Lidl backed out on agreements to buy property and operate stores after signing an agreement, and after the firm devoted money to designing the project and developing infrastructure on the site, according a lawsuit by Leon Capital.

In Greensboro, Lidl pushed back the start of construction at a store in the Shoppes at Sedgefield Crossing from this March to September. The estimated completion is anticipated in March 2019.

“It’s been pushed back six months while they figure out some things internally,” Charlie Fulk of Meridian Realty Group, which represents The Shoppes at Sedgefield Crossing, told Triad Business Journal in March.


Source: Bizjournals.com

Retailers Carrefour, Tesco join forces in strategic alliance

French supermarket retailer Carrefour and British peer Tesco announced on Monday plans to form a global long-term purchasing alliance, as they seek to cut costs.

The deal is the latest partnership within the European retail industry, which has seen U.S. internet giant Amazon make in-roads into the sector in recent months.

The alliance will cover the strategic relations with global suppliers, the joint purchasing of own-brand products and goods not for re-sale, said Carrefour in a statement.

Carrefour, Europe’s largest retailer, in January announced plans to cut costs and jobs, boost E-commerce investment and seek a partnership in China, in an effort to lift profit and revenue and beat domestic rivals in the race to develop digital shopping products.

Source: CNBC

Kroger’s driverless delivery test underscores a focus on the future

Dive Brief:

• Kroger will test a driverless delivery service this fall in a yet-to-be-named market, according to the company. The pilot program, which will happen in partnership with autonomous vehicle company Nuro, will offer delivery through the grocer’s ClickList service, and will include same-day orders. Employees will load up the vehicles at stores, and consumers will unlock them using an access code sent to their phones.
• Officials with Nuro and Kroger say the service promises to make grocery delivery cheaper and easier to do in less densely populated areas. The grocer hasn’t made an investment in the service yet, but according to The Wall Street Journal it may do so if the upcoming test proves successful.
• The announcement comes on the heels of Kroger’s acquisition of meal kit maker Home Chef and its partnership with e-grocer Ocado to build automated fulfillment centers for online grocery. The grocer reported a 1.4% increase in same-store sales during the most recent quarter, and a 66% uptick in online sales.

Dive Insight:

One would expect news about a retailer rolling out driverless delivery to come from Amazon, or perhaps Walmart. But no, the retailer in this case is Kroger, the 135-year-old supermarket chain that is relentlessly focused on staying ahead of the curve.
Much like its investments in meal kits, digital shelves and automated fulfillment systems, driverless technology may take years to bear fruit for Kroger — if ever. But the initiative is promising and aimed squarely at cutting costs while also meeting customers anywhere and everywhere they want to shop.
In addition to reducing labor spending, which weighs heavily on last-mile operations, Nuro’s fully electric vehicles could help Kroger cost-effectively reach low-density markets, opening up its e-commerce platform to more customers. Right now, most delivery services focus on metropolitan markets, where grocers can fill a lot of orders within a limited radius. Kroger currently partners with Instacart and a few other providers for delivery in major markets.
Developed by two ex-Google engineers, Nuro’s fleet is built specifically for delivery, and has been rigorously tested. The vehicles are about as tall as a standard sport-utility vehicle, but are half as wide — a safety measure, according to co-founder Dave Ferguson.
“If you have a vehicle that’s half the width, and you’ve got an extra three or four feet of clearance, you can avoid it… and you have room to maneuver around them,” he recently told The Verge.
Consumers spooked by the recent fatal crash involving Uber’s autonomous vehicle may feel somewhat reassured by this. Overall, people are receptive to the idea of delivery by driverless cars. A survey by the Pew Research Center of 4,000 adults found that half wouldn’t ride in an autonomous vehicle, but two-thirds expect such innovations to deliver their groceries and other goods in the near future.
Will driverless cars be the future of grocery delivery for Kroger? Not likely. If successful, the company will place them in the markets where they most make sense, then do the same with Ocado, Instacart and other delivery options. There’s no one-size-fits-all solution in online grocery, and Kroger will apply its data-focused approach to figure out the best solutions across its network. As Yael Cosset, Kroger’s chief digital officer, told Tech Crunch, this template could even apply to times of the day.
“We may realize the optimal time to use autonomous vehicles is between 10 — 11 in the morning and the rest of the day have a fully staffed model,” he said.
There will be numerous challenges, of course. Nuro’s vehicle only travels between 25 and 35 miler per hour, making its speed, not to mention its viability on highways and Interstates, a question mark. Kroger is also far from the only company investing in driverless technology. Amazon and Walmart have both made investments, and it’s probably only a matter of time before they catch up to their grocery competitor. In terms of overall innovation, Walmart and Amazon are in a class by themselves, having filed patents on everything from 3-D product imaging to drone delivery.
These challenges make Kroger’s mission more difficult, but they don’t erase the need for the company to move aggressively on forward-thinking initiatives. Kroger is the largest supermarket operator in an industry that’s undergoing profound disruption. If it doesn’t work to get ahead of its competitors and consumers that are moving online and in all sorts of other directions, it will quickly get left in the dust.

Source: Fooddive

Nestle to pay $7.15 billion to Starbucks in coffee tie-up

Nestle will pay Starbucks $7.15 billion as part of a global coffee alliance in which the Swiss-based food giant is getting the rights to market the U.S. coffee company’s products around the world outside Starbucks’ coffee shops.

Starbucks said on Monday it will use proceeds to speed-up share buybacks and the deal would add to earnings per share (EPS) by 2021 at the latest. Nestle saw the deal adding to earnings by 2019.

Nestle and Starbucks are joining forces in a highly fragmented consumer drinks category that has seen a string of deals lately.

JAB Holdings, the private investment firm of Europe’s billionaire Reimann family, has fueled the consolidation wave with a series of deals including Douwe Egberts, Peet’s Coffee & Tea and Keurig Green Mountain, narrowing the gap with Nestle.

“This global coffee alliance will bring the Starbucks experience to the homes of millions more around the world through the reach and reputation of Nestle,” said Starbucks Chief Executive Kevin Johnson.

Coffee is popular with millennials who have grown up with Starbucks and often seek out smaller brands. A willingness to pay up for exotic beans and specialty drinks means companies can brew up richer profit margins than in mainstream packaged food.

Starbucks plans to use the proceeds to accelerate share buybacks and now expects to return approximately $20 billion in cash to shareholders in the form of share buybacks and dividends through fiscal year 2020, it said.

It said the transaction was expected to add to earnings per share by the end of fiscal year 2021 or sooner, with no change to the company’s currently stated long-term financial targets.

In a separate statement, Nestle said it expected the business to contribute positively to its earnings per share and organic growth targets from 2019.

Nestle, which will take on about 500 Starbucks employees as part of the deal, says its ongoing share buyback program would remain unchanged.


Subway to close about 500 U.S. restaurants

Subway Restaurants is planning to shutter an estimated 500 locations in the U.S. The Milford, Conn.-based chain wants to focus on better restaurant locations and boosting sales, according to Bloomberg. High on its priorities list is overseas expansion. The news comes a year after Subway shut down 800-plus locations. 2016 also saw store closings, Bloomberg reported. The chain currently has close to 26,000 locations in the U.S.

Subway also expects to open 1,000-plus restaurants around the globe, including in Mexico, the U.K., Germany, South Korea, India and China, CEO Suzanne Greco told Bloomberg. With an estimated 44,000 locations in 112 countries, Subway is the largest restaurant chain in the world, according to the company website.

Subway is known for its sandwiches, but is facing increasing competition. In addition to convenience stores and drug stores starting to stock sandwiches, numerous other chain restaurants serve similar fare — from Panera to McDonald’s Signature Crafted Sandwiches to Starbucks, which is making a big play for lunchtime business.

Subway, whose restaurants are all franchisee-owned and -operated, could not provide a list of locations that would close, because those decisions are up to the franchisees.

“Looking out over the next decade, we anticipate having a slightly smaller, but more profitable footprint in North America and a significantly larger footprint in the rest of the world,” the company said in an e-mail, which it called the move “an aggressive revitalization plan.”


The revitalization plan is part of chain’s recent attempt to rebrand itself. In March, Subway launched a new line of wraps and a loyalty program, called Subway MyWay Rewards. The month before, its new “Make It What You Want” ad campaign began. And in July, Subway began rolling out a big redesign of its stores, which included a bright, new color palette, inspired by fresh vegetables.

“People are voting with their feet. They don’t want what Subway has to offer,” said Bob Phibbs, CEO of the New York-based consultancy The Retail Doctor. “They’ve been closing stores for a long time. They’re hoping to make this up internationally.”

He pointed to Subway franchisees’ anger over the reintroduction of the chain’s $5 Footlong and a spate of bad PR stemming from former pitchman Jared Fogle. In 2015, Fogle pled guilty to possession of child pornography and traveling across state lines to engage in sex with a minor and was sentenced to close to 16 years in prison.

“High volume covers a wealth of sins,” Phibbs said. “At end of the day, you cull out the ones that aren’t helping your brand. It’s less than 1% of your units.”

Source: www.usatoday.com

Walmart’s Asda agrees to UK merger deal with Sainsbury’s

U.K. food retail is set for a massive shake up as J Sainsbury and Asda plan to merge in a deal worth $10 billion, creating a new giant for the supermarket sector.

The two companies merging are the second and the third largest retailers, currently. Given the size of the two companies, regulators will have to assess whether their merger would not create market disruptions.

Kevin O’Byrne, the chief financial officer of Sainsbury’s, said: “We think this is a great combination, creating a very dynamic player in the retail market.”

“The market has changed beyond recognition in the last 10 years and even in the last three years, the discounters have doubled their share, we’ve got new entrance coming into the market that just couldn’t exist a few years ago,” O’Byrne told CNBC Monday morning.

The merger will keep both the Sainsbury’s and Asda brands. The firms said in a statement that Walmart, which owns Asda, will have 42 percent of the issued share capital of the combined business and will not hold more than 29.9 percent of the total voting rights.

They also said that the combined business will generate at least $688.62 million in cost savings and lead to a reduction in prices of about 10 percent.

According to Bruno Monteyne, European food retail analyst at Bernstein, “scale remains the most important factor in food retail profitability.”

There have been several recent mergers in the food industry across Europe, in an attempt to fight increased competition from e-commerce firms, including Amazon. “The power of purchasing has been a driver behind several recent deals within the industry,” Monteyne also said in a note Monday.

The two grocers have struggled with their sales growth, which has weighed on their ability to get cheaper deals with suppliers.

“We think if you don’t change, if you don’t evolve, if you don’t move forward in the current climate then that’s very risky,” he said. The merger “allows us particularly in a very competitive market online and with discounters to give much greater value to our customers and that’s very important,” he added.

The deal will now be assessed by the U.K. competition authorities. Bruno Monteyne, from Bernstein, said he expects this process to take about one year to be approved.

“We expect the process for the CMA (Competition Markets Authority) to take one year and to be swiftly approved, if the CMA gives clearance with limited disposals. We think the risk of higher disposals is high and a non-negligible risk of outright rejection of the deal,” Monteyne also said in the note.


Source: cnbc.com

Monoprix is here – through the good songs and the bad

French grocer Monoprix struck the right chord with shoppers by proving how delivery is the answer to one of the greatest ills of our time — bad music.

It’s been another weird week in retail. Monoprix proved that free grocery delivery is the solution to listening to bad music, a Walmart shopper took customer service into his own hands and Auntie Anne’s threw some salt into the fashion market.

Geico and Budweiser have taught us that humor in advertising goes a long way in making marketing campaigns more tolerable, but for reasons that probably have nothing to do with work-life balance (*cough*) the only retailers catching on are located outside of the United States.
In a move not quite as bold as Ikea’s peeing pregnancy test ad, nor quite as satisfying as the grocer’s last jab at Amazon Go, French chain Monoprix released a video advertisement centered entirely around the trials of listening to bad music. We’ve all been there: Spotify misreads our tastes and gives us Jack Johnson instead of Jack White. After a brief moment of bemused disappointment, we skip the song and all is right again.
Monoprix’s ad operates in a world where our overstuffed, grocery bag-laden hands leave us tragically devoid of this fallback, abandoning us to the mercy of whatever song crops up next. As it turns out, the ad is for grocery delivery because — barring inconvenience — listening to a bad Backstreet Boys cover is the worst form of torture the grocery chain could think of.

Hard to say whether this says more about how inconvenient carrying groceries is or how bad the music industry has gotten.

Source: Retail Dive