In this week's retail news...

ASDA’s digital investment has led to a 16% increase in online sales during the first quarter of this year

ASDA has also reported a 1.3% increase in like-for-like sales in the first quarter to April 14.

Asda launched its Price Lock initiative in March, pledging to keep the price of staples low after a £100m investment. The scheme complements its Price Guarantee commitment to be 10% cheaper than Tesco, Sainsbury’s, Waitrose and Morrisons.

Asda recently disclosed plans to invest £700m in digital initiatives and building new stores in 2013.

Source: http://www.retail-week.com/sectors/food/asda-boss-insists-low-prices-will-drive-loyalty-as-like-for-likes-rise-13/5049170.article

Boots prepares for online growth Starting in June, Boots will begin launching an online overseas expansion as part of plans to make it a global brand, following international trading profit falling 17.5% to £52m in the year to March 31.

The health and beauty brand will offer more than 23,000 products on yet-to-launch site International.Boots.com in Europe. This represents the first comprehensive online overseas drive by the retailer.

Source: http://www.retail-week.com/technology/online-retail/alliance-boots-prepares-for-overseas-etail-drive/5049167.article

Sainsbury’s launches competitor to Tesco’s Blinkbox Sainsbury’s has launched a new video on demand service. Offering access to over 300 film titles, the service will allow people to rent or buy movies and watch them immediately via any computer or Apple device.

Available at sainsburysentertainment.co.uk, rental prices begin at £1.99 per film for 30 days while purchasing new releases will cost £12.99, the retailer said.

The Sainsbury’s service will compete with Tesco’s Blinkbox, although Tesco Clubcard holders will still have the advantage of the free Clubcard TV, free to users.

Source: http://www.retailgazette.co.uk/articles/24301-sainsburys-offers-video-on-demand-amid-digital-push

UK consumers most concerned about rising utility bills Nearly a third of people surveyed by Nielsen say that utility bill hikes are their greatest or second greatest financial worry.

According to Nielsen’s Global Survey of Consumer Confidence and Spending Intentions, rising food prices were also named as a top concern, this time by 22 per cent of consumers, up 4% on 2011.

The research reflects our own analysis of mums’ concerns as the financial downturn continues

http://www.retailgazette.co.uk/articles/10434-rising-utility-bills-consumers-greatest-concern

Tesco developing alternative to NFC Tesco has decided to overlook NFC and start working on its own version of a mobile phone wallet that the retailer is likely to extend to marketing and loyalty schemes.

Tesco is the latest retail giant to look past NFC. Last year, Walmart head of payments Mike Cook said: “Investors don’t believe - nor does Walmart believe - that NFC will become a payment technology in a retail environment quickly enough.”

http://www.thegrocer.co.uk/topics/technology-and-supply-chain/tesco-dismisses-nfc-payments-as-past-sell-by-date/343175.article?

In other news, Morrisons will be launching an online grocery proposition, following its deal with Ocado, the last of the major supermarkets to do so.

Source: http://www.retail-week.com/sectors/food/morrisons-to-launch-online-grocery-this-year-after-inking-ocado-deal/5049203.article

This week: Tesco, Sainsbury's, Waitrose, M&S, Selfridge's and Starbucks

Tesco is trialing a consumer buying model which will allow its shoppers to use social media to bring down the price of products. The grocer has partnered with co-buying specialist Buyapowa to launch a wine ecommerce site that harnesses the group buying power of consumers.

Tesco Wine Co-buys, which launches next week, allows shoppers to register interest in products, the most popular of which is then put forward for sale. Shoppers commit to a maximum price but the price point falls as the number of people that purchase the product increases.
http://www.retail-week.com/sectors/food/tesco-trials-new-model-driven-by-shopper-buying-power/5048945.article

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Sainsbury's is in advanced talks to take full control of its eponymous bank as the supermarket chain hopes to accelerate sales of financial services products to its customers.

It wants to acquire the remaining 50 per cent stake in Sainsbury’s Bank from Lloyds Banking Group, 16 years after launching the joint venture.

Research we recently undertook to identify a core financial services target audience for supermarkets shows that Sainsbury’s is best positioned to poach customers from Nationwide and M&S Mastercard, who currently shop at the supermarket.
http://www.ft.com/cms/s/0/52cd45f4-b589-11e2-850d-00144feabdc0.html?

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Marks and Spencer is to create an additional 500 jobs on top of the 1,000 positions already announced at its £200m ecommerce distribution centre in the Midlands, as it seeks to bolster its online offering.

The £200m facility, which it expects to be fully operational by November, is a belated attempt by the retailer to improve its online service, which has just 6 per cent of the market in the general merchandising category.
http://www.ft.com/cms/s/0/0ed3c5c6-b822-11e2-bd62-00144feabdc0.html#axzz2SsgOiMsJ

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Selfridges is to launch its first click & collect service next week, with a drive-thru option for shoppers planned for next year, it has been announced today.

From May 9th 2013, shoppers will be able to collect products ordered online from all of the retailer’s four UK stores to improve flexibility amid growing demand for convenience.
http://www.retailgazette.co.uk/articles/41200-selfridges-to-launch-click-collect-offer

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Shopping mall owners British Land - which includes Meadowhall in Sheffield and Glasgow Fort retail park among its portfolio - is to launch free wi-fi across all its developments, following a deal with BT Wi-Fi.

This demonstrates how digital is becoming a crucial part of many people’s shopping experience. Installing Wi-Fi helps to meet consumer expectation, in-store mobile behaviours, to help retailers to maximise their sales potential.
http://www.retail-week.com/property/british-land-to-launch-wi-fi-across-its-shopping-centres/5048980.article

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Starbucks continues to see significant traction in its mobile efforts. The company has said more than 10 million people in the US are "active" users of the company's mobile apps. The company now counts close to 4 million mobile payment transactions per week (up from 2 million near the end of last year and 3 million a month ago). This, the company said, accounts for roughly 10 percent of the company's total U.S. tender.
http://www.fiercemobilecontent.com/story/starbucks-counts-10m-active-mobile-customers-4m-mobile-payments-week/2013-04-29

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Retail sales volumes were 0.6 per cent lower in April 2013 than the previous April, according to a poll produced by trade body the British Retail Consortium and accounting firm KPMG. Like-for-like sales were more than 2 per cent lower than a year earlier.
http://www.ft.com/cms/s/0/b9235e32-b733-11e2-a249-00144feabdc0.html?

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Waitrose has put a dent in pre-conceptions about its customer base by recording a stronger performance in the North of England compared with the South, while it has also snatched shoppers from discounters Lidl and Iceland.

Stores in Scotland and the Northwest - which are grouped together with Wales - recorded sales growth of 11.1%, while sales in the Northeast - which is grouped with the Midlands - were up 10.3%. By contrast the majority of its stores in the London area grew sales by just 2.2%.
http://www.retail-week.com/sectors/food/waitrose-shrugs-off-southern-image-as-northern-sales-outpace-south/5048954.article

Sainsbury’s has confirmed it is in advanced negotiations with Lloyds Banking Group to take full ownership of Sainsbury’s Bank.

Lloyds Banking Group currently has a 50% share in Sainsbury’s Bank, which the supermarket and Lloyds launched 16 years ago.

The supermarket wants to grow Sainsbury’s Bank’s customer base by selling more financial products to its 23m weekly shoppers. Its Nectar loyalty card database will be a core tool for targeting them.

Research we recently undertook to identify a core financial services target audience for supermarkets shows that Sainsbury’s is best positioned to poach customers from Nationwide and M&S Mastercard, who currently shop at the supermarket.

The banking industry continues to face scandals and technical difficulties, from Libor fixing and PPI, to computer glitches freezing accounts.

It is therefore unsurprising that customer satisfaction in traditional financial institutions is at an all time low, adding to the ongoing opportunities for supermarkets to tempt customers with their own financial products.

Customer satisfaction – Supermarkets vs Financial sectors Source: Brand Index (YouGov) (2013)

In order to better understand these opportunities, we identified a group of regular supermarket shoppers whom supermarkets should include in their financial services’ targeting. These heavy financial product users combine regular use of things such as credit cards, savings and holiday insurance purchase, and total 5.1m people.

Source: TGI (2012)

As you would expect, this finance target group is an attractive audience. Three quarters of them are ABC1, they have an average household income of £63,000, and 85% are homeowners. Forty two percent are regular users of online social networking services, and 37% expect a life event over the next twelve months for which they need to prepare. These include making major home improvements, birth of a child, getting married, and buying or selling a property.

Characteristics of the core financial target Source: TGI 2012

Using our proprietary experience planning application, Community Igniter, we uncovered how supermarkets can join, facilitate and positively impacts the conversations and passions of this target group. If supermarkets do this, members of this group are likely to amplify brand messages because supermarkets have made themselves relevant to them and their personal networks.

First off, the Community Igniter data shows that members of this target group are around 10% more likely to have conversations across each of their different personal networks than the average UK adult. These include work, professional and family and neighbour networks.

When it comes to their conversations, they are much more likely to talk about subjects related to new technology, sport and science. Unsurprisingly, they are also more likely to have conversations around business, investments and holidays, especially short trips and activity holidays.

Community Igniter enables us to dig deeper into these conversations, by indentifying their individual topics. By doing this, supermarkets are able to understand what kinds of messages they should target at this group and how they can facilitate them, for example when wanting to promote travel insurance. Taking short trips as an example, this group love talking about their trips and favourite places. They are also like receiving recommendations, hearing other people’s travel stories, and planning their itineraries.

‘Short trips and city breaks’ conversation by core financial target: Top topics Source: Community Igniter

Community Igniter tells us which media members of the financial core target use to facilitate each of their conversations. Understanding this will help supermarkets to understand which media they should use to best reach them. Websites come top, with 45% of this target using this media to inform conversations around short trips and city breaks. Next comes television, with 44%, then newspaper articles and features, with 35%. Twenty nine percent use company brochures.

When we look at where members of the finance core target shop, we see that opportunities are greatest for Waitrose, Sainsbury’s and Tesco. Proportionally, Waitrose is most likely to do well with this audience, as they are nearly twice as likely to shop there than the average adult. Morrisons and ASDA are less likely to attract them than they are all shoppers, although roughly one fifth of this audience shop at these supermarkets.

Where members of the core financial target shop Source: Touchpoints/TGI

Using TGI, we also looked at which financial institutions each of the supermarkets can look to poach from. Looking at savings and insurance for example, we can see that Tesco is best positioned to poach customers from Halifax, whilst Sainsbury’s should look at poaching customers from Nationwide.

Which financial institutions each supermarket should look to poach from
Source: Touchpoints/TGI

Today’s big news is that Britain’s economy expanded by 0.3% during the first quarter of this year.

Yet despite Osborne claiming this is “an encouraging sign the economy is healing,” this rise is negligible. In fact, GDP across the economy is at the same place as it was eighteen months ago. Hardly a sign of improvement.

Mums are at the forefront of Britain’s weak economy. Even though inflation has risen more slowly in recent quarters, the cost of food has increased by 43% since 2005 . Yet at the same time, average earnings have declined by an astonishing 8.5% since 2009 in real terms (ONS 2013).

Poor household finances have coincided with changes in mums’ priorities, away from more macro concerns. For example, the percentage of mums who say they are concerned about the impacts of human activity on the environment has declined by a fifth since 2007 (from 59% to 47% [Touchpoints 2012]) .

Changes in macro concerns match changes in demands mums have about companies. The proportion of mums who believe it is important that a company acts ethnically has declined by 14% since 2008 (from 56% to 48%). Mums even place less importance on companies being involved in the local community (a decline from 82% in 2007 to 69%).

Although these issues still remain important for mums, these changes mean that companies can no longer depend upon their ethical and even local credentials as much as they have done in the past, in order to build brand equity and consideration.

What mums do want is for brand owners to facilitate them, their routines and their everyday lives. For example, even though mums may be less concerned about distant environmental impacts, they do want brands to help them to be more environmentally friendly. Nearly a quarter more mums since 2007 are prepared to make lifestyle compromises to benefit the environment (from 26% to 33%). Mums also have a desire to try new things to benefit them. Mums are 11% more likely than all adults to want to try out new products, even from companies with which they have no previous experience.

One of the most important ways that brands can facilitate mums is by enhancing their friendships and family life. Shared media experiences are especially important to them.

• Mums are 42% more likely than all adults to want to watch TV in order to spend time with friends and family. And they are 23% more likely to want to talk about TV with them
• Mums are also more likely to share ads, with mums being 27% more likely to talk about ads with friends and family
• Mums are also 39% more likely to share useful information. Important to supermarkets is that mums are more likely to share tips on how to save money, with 28% often doing this
• Our Community Igniter research shows that TV and ad content mums are most likely to talk about and share include recipes and cooking, purchases for children, weight control, fashion and celebrities. By facilitating these and similar conversations, brand owners are able to build relevance and brand equity
• Mums are 19% more likely to say their main reason for using the internet is stay in touch with friends and family. One of these is Facebook, with 35% of mums accessing the service at least once a day. Facebook provides an important opportunity to engage with mums, and our SMBI research quantitatively shows that relevant and emotionally uplifting content is able to encourage purchase funnel and advocacy behaiovurs.

Community Igniter, SMG, 2012

Data sourced from IPA Touchpoints 2012 unless stated

Tesco has confirmed that it will abandon its Fresh & Easy venture in the US, at a cost of £1.2bn.

This, together with revaluations of its property portfolio and a revamp of its UK stores, means profits have fallen by a considerable 52%, to £2bn before tax.

This is the first drop in reported profits for nearly twenty years.

At home it has become vulnerable to the discounters such as Lidl and Aldi, along with its old foe, Sainsbury's. Yet there are signs that the supermarket’s costly ‘Build a Better Tesco’ investment programme has begun to steady the supermarket, with a return to very modest growth in like for like sales in the second half of 2012. Store refreshes now total around 300 stores - around a quarter of Tesco’s UK selling space.

A priority over the next year is to improve customer experiences in-store and through digital channels. Tesco’s in-store investment programme and recent acquisitions that include Giraffe, Harris + Hoole and Euphorium Bakery show that Tesco is taking customer experience seriously.

Yet Tesco still has a lot of work to do to improve shoppers’ experiences and perceptions. As Tesco UK MD Chris Bush has said, the supermarket continues to be the default option for many of its shoppers rather than the supermarket of choice.

Tesco clearly needs to turn this round. The decision to ditch opening of 100 new stores and make cost-effective use of existing floor space is a bold and strategic step for Philip Clarke, and central to achieving his goals.

Digital growth will play a key part, through multi-channel retail, digital entertainment and data intelligence. Changes in how it uses floor space will involve the supermarket pushing more of its non-food retail online, especially electrical. Money saved from reversal on store openings creates considerable capital for digital investment.

Whilst continuing its UK strategy, Tesco needs to maintain its focus overseas despite its US experience. Tesco is an uncommon example of a UK retail business that has, overall, been successful in parts of the world with very different retail practices. Although trading controls in South Korea, market slowdowns and currency value shifts have impacted profits in Asia, profits they have more than doubled over the last five years, and are likely to continue to grow.

Philip Clarke has taken a huge amount of medicine in one go. This is the moment people are likely to look back on as defining the success or otherwise of his tenure.