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Retail round up of news: Christmas has arrived early

Steve Smith's picture

If Christmas ad launches by retailers and supermarkets mark the start of Christmas, then Christmas has officially begun.

Department store Debenhams launched its first Christmas ad in six years this Wednesday, on each of terrestrial TV channels’ biggest shows: at the end of Coronation Street on ITV, Grand Designs on Channel Four and during Dallas on Channel 5. The ad features a woman’s journey home for Christmas.

Also on Wednesday, Marks & Spencer launched its Christmas ad for its clothing range during Coronation Street’s centre break. The ad continues to use the models introduced in its Autumn/Winter campaign, popular for using plus sized women. The ad is shot in the style of a music video and promotes five product ranges including knitwear, dresses and kidswear.

This comes at the same time that Marks and Spencer reported that UK total sales in the 26 weeks ending the end of September grew 0.6 per cent thanks in part to renewed confidence on the high street though like-for-like sales decreased 1.4 per cent. . These figures contrast with Primark like for like sales for the year to September, which grew three per cent.

Also in the fashion retail sector, Matalan launched its Christmas TV advert on Saturday during X-Factor. It features a family at Christmas day opening presents around the Christmas tree, struggling to light the Christmas pudding and carrying the kids to bed. According to Matalan marketing director Lee Pinnington, the ad echoes the retailer’s commitment to being a family retailer that strives to deliver great quality, design and value.

Big launches of fashion retailer ads reflect the importance of the fashion sector to the economy, and represents huge opportunities for supermarkets. Research we have undertaken about these opportunities featured in Talking Retail this week. The work uncovers six fashion shopper segments, with two being especially important to Sainsbury’s and Waitrose.

ASDA also launched its first ever Christmas advertising campaign on Sunday. Following Christmas through a mother’s eyes, the 60-second ad features a mum struggling her way through preparations for the big event. This reflects our work which looks at mums' changing values.

Last Thursday, The Co-operative Food unveiled its Christmas ad campaign, dropping its ‘Good with Food’ strapline for a series of commercials created by The Full Monty director, Peter Cattaneo. The ads, with 27 different executions, use the strapline ‘Here for you for life’, highlighting the availability of the Co-op’s products and seeking to stir customer loyalty.

Sainsbury's launching new services to compete with rivals

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Supermarkets have typically extended their services in-store, as we see with clothes, electrical goods and homeware. Sainsbury’s however, is moving out of store by taking over the management of the outpatient pharmacies at Guy’s and St Thomas’ hospitals in London. This extends its 270 in-store pharmacies, which it plans on doubling within the next three years.

Sainsbury’s move into running hospital pharmacies adds to its operation of nine NHS GP/nurse-led surgeries, and 10 private dental surgeries, in its stores. As government continues to look to private companies to run public services, it will be interesting to see if it will encourage supermarkets to bid for further public service contracts, and if so, which.

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This news comes in the same week that Sainsbury’s will trial mobile phone shops in two of its supermarkets, in direct competition with Tesco over the lucrative mobile market. The retailer currently sells phones in-store and online, and has hosted concessions run by O2 since 2010. The first mobile phone shop will launch at the Letchworth store in two week’s time; the other will launch at the King’s Lynn store at the end of next month.

Interestingly, this comes just a month after former Carphone Warehouse director Anthony Hemmerdinger joined Sainsbury’s as business development director.

Whether Sainsbury will launch its own Mobile Virtual Network Operator is unknown. The supermarket was reported to have been in talks with Everything Everywhere last year, but no deal has been unveiled.

Sainsbury's rival Tesco entered the mobile phones market in 2008, and claims to be the biggest Mobile Virtual Network Operator in the UK with more than one million pay monthly customers.

Which retailers are at most risk of customer criticism?

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Yesterday I began looking at the importance of customer service. Data shows that some retailers need to work harder than others to earn people’s recommendations. People who do most of their shopping at M&S Food, Aldi or Lidl are most likely to tell their friends if these retailers impress them, whilst Waitrose, Tesco and John Lewis shoppers are least likely.

Today, I’m looking at the other side of the coin. Which shoppers are most likely to tell their friends if the retailers at which they shop let them down? It turns out that M&S customers are not only most likely to tell their friends if M&S pleases them, they are also most likely to tell their friends if it disappoints them. Although Waitrose customers are among the least likely to recommend the supermarket following good experiences, they are among the most likely to tell their friends if they feel let down. Evidently, both retailers need to be careful in their dealings with customers.

I looked at John Lewis yesterday because people often cite the department store as an exemplar for good customer service. Although its customers are least likely to recommend the brand if they are impressed with it, they are also among the least likely to pass on any criticisms. Although questions about recommendation and criticisms are about brands in general, John Lewis customers may be reluctant to censure the department store to friends because of its apparent overall good customer service. However, this is likely to change if for some reason people begin to feel let down by it.

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Some retailers need to work harder than others at encouraging recommendations

Steve Smith's picture

In a competitive retail environment, supermarkets depend upon customers recommending them. One way they can achieve this is through good customer service.

People often highlight John Lewis as setting the standard for good customer service. Yet how hard do supermarkets need to work at impressing their customers in order to create recommendations?

A quick survey of Touchpoints 2012 reveals some interesting results. Whilst customers of M&S Food, Aldi and Lidl are most likely to tell their friends if these retailers impress them, customers of Waitrose, Tesco and John Lewis are least likely.

The results mean that Waitrose, Tesco and John Lewis need to work hardest at impressing their customers in order for them to recommend these retailers.

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Supermarket sweep of news this week

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Welcome to this week's round up of supermarket news that has caught my attention.

Morrisons set for online launch Morrison will start selling groceries online for the first time come next year. In so doing, it will compete alongside Tesco, Sainsbury, Asda and Ocado for people’s online spend. In the meantime, Co-Op is considering whether to begin trialling an online offering.

Supermarkets to benefit as mobile operators seek new revenue streams With mobile carriers’ revenues under pressure, carriers are looking for new streams of income. Sale of user data is likely to provide one such stream, and O2 owner Telefonica has set up a company to sell this data to retailers, thus providing opportunities to supermarkets to provide more relevant and personalised communications and offers. Read more here.

Waterstones launches new ad campaign Under continued pressure from online sellers, most obviously Amazon, Waterstones has announced an upcoming ad campaign stressing the value and experience of high street bookshops. They will feature statements such as: “Books you can’t put down are much easier to find when you can actually pick them up,” and “Even the most ardent reader will never reach the end of a good bookshop,”

Supermarket own groceries tend to be cheaper. So why do people continue to buy branded products? A quick survey of our Street members found that people continue to buy branded groceries partly because of routine, experimenting to see which brand is best for them, and perceived better taste and quality. I find the routine reason interesting, because it is often this that is most difficult to break.

Tesco to ‘start getting personal’ Tesco chief executive Philip Clarke has said that retailers need to “get personal” with their customers in order to stay relevant in a changing digital landscape, and create closer links with suppliers to develop innovation.

His message is vital, but also is the in-store experience, which explains why Tesco is investing huge amounts of money on new staff, training, and in-store design.

Supermarkets need to compete on more than price Many shoppers are bewildered by a massive array of supermarket promotions. This is set to continue unless supermarkets effectively compete around other features and experiences.

From 1,001 shoppers polled by IGD ShopperVista, 44% found it difficult to compare prices due to information overload. Supermarket chiefs have been talking change this week during an IGD convention. But it needs to be enacted for customers to notice the difference.

Sainsbury’s joins Tesco and Waitrose on scan and shop trials Sainsbury’s is trialling a new app through which customers can scan and shop with their smartphones. Shoppers will use a QR reader to ‘check in’ when they enter a store. They will then scan items as they go round. Once they are at the checkout, they will pay at a regular till without having to have their items scanned.

Gok Wan and Sainsbury’s in new Tu clothing deal We have an upcoming supermarket fashion study, so I was interested in news that Sainsbury’s has extended its partnership with Gok Wan for another year. Wan launched his first range with Sainsbury’s last year, and will launch five more collections over the next twelve months or so.

That's it. Have a good weekend.

Supermarkets to benefit as mobile operators seek new revenue streams

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Two inter related pieces of news have got my attention today. Firstly, a forecast has just been released which suggests that mobile carriers’ revenues from voice, messaging and data services in the United Kingdom, France, Germany, Spain and Italy will drop by nearly 20 billion Euros, or four percent per year, over the next five years.

This suggests that, despite hopes to the contrary, data use will not make up for stagnant or declining revenues from voice and messaging in the short to medium term. It is therefore unsurprising that mobile carriers have been urgently looking for other revenue streams.

One potentially lucrative revenue stream is to sell aggregated customer usage data. This week, Telefonica announced it will set up a business to sell data that it collects from its mobile phone customers to retailers.

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The company, which owns the O2 brand in Britain and Germany and other European markets, has created its first product, called Smart Steps, which will measure footfall for retailers. By exploiting this data, retailers will be able to find out where different types of people are at different times of the day. Doing so will enable retailers to customise communications, promotions and products, so making them more relevant.

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I can imagine this being very useful for supermarkets. For example, by integrating O2 data with data from Tesco Clubcard or Nectar, Tesco and Sainsbury’s would be able to glean a far greater understanding of their customers’ every day routines and therefore target them with more precise and relevant marketing and communications. Supermarkets will also be able to use this data to help poach business from others stores and supermarkets at which their customers shop.

Why do shoppers buy branded groceries, when own label are cheaper?

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Supermarket own brand groceries now account for 40% of all supermarket grocery sales in the UK, according to the FT. They are important to supermarkets for three reasons.

Firstly, they give supermarkets a firsthand understanding of the dynamics and consequences of changing commodity prices, to which they can respond accordingly.

Secondly, they provide differentiation. With nearly all supermarkets selling the same brands, private brand goods are significant points of product difference, which can be used to attract new customers.

Thirdly, they offer higher profit margins than branded groceries, whilst still being generally cheaper than branded groceries.

This last point raises the question, “Why do people continue to buy branded groceries if they are generally more expensive?”

I posted this question on our online community, The Street.

For some people, it’s about routine:

“I think that it is just force of habit really. We know full well that everybody in the household will eat a certain brand of bread, so we just tend to put that in the basket, without looking or thinking about other options, be they cheaper or otherwise.”

For many people, it’s about experimenting with different brands to find out what’s best for them:

“For us it's a case of trying the cheaper brands and if they're not very nice or of a decent enough quality, we stick with the brands we do like.”
“I will try anything that is own brand, then compare and decide whether to buy it again. I prefer to buy branded ketchup and brown sauce, cornflakes, washing liquid/tablets, cheese, coffee just because we prefer them and don't mind paying a bit extra.”

Some other people won’t even try supermarket own brands:

“I have a perception that branded groceries taste better / are better quality. I suppose I can’t be bothered trying a supermarket brand it there's a risk that it may be poor quality and I then have to replace it with my usual brand.”

Many Street members do buy supermarket own brand products, but these tend to be commoditised staples. One member looked in her cupboards for us, and listed pasta, rice, chopped tomatoes, herbs, spices, and baking ingredients such as sugar and flour as being groceries that are supermarket own brand.

Among groceries people often do not consider replacing with supermarket brands are: bread, squash, ketchup, beans, cornflakes, tea and coffee, spreads, yoghurt, washing liquid and dishwasher tablets.

A mum's online grocery shopping innovation

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Over the weekend I interviewed a mother of three young children about supermarket shopping. Let’s call her Emily. Emily is a loyal Tesco shopper. The primary reason, she says, is because of the Tesco Clubcard vouchers she gets, which she uses to take her children to places like Legoland.

Like many other mums, she does all her Tesco shopping online. “Going round the supermarket with three young children would be horrendous.” However, Emily is frustrated that the “same old routine” of the same groceries. “I really want to try something different, but I don’t know what.”

You would think that with such a huge variety of groceries at her fingertips, it would be different. But it turns out that because she has such little time to even do online shopping (“Sometimes ten o’clock at night, and I just want to go to bed”) she buys the same food because she goes through selecting from her favourites: “It’s just so quick”.

When we explored this in more detail, she told me that it would be so beneficial to her if there was a ‘suggestion’ feature, for example “You’ve bought these before. Why not try one of these?” These could be based on an Amazon type system. It could even be integrated into Facebook via a login, and so look at what people buy who have similar Facebook behaviours and demographics (even among FB friends).

I wonder how many other mums feel the same?

Retail round up of news, 5 October

Steve Smith's picture

A general rule of thumb in research is that you should not presume that people’s attitudes translate into actual behaviour. Often, attitudes can be a kind of ideal for people – “this is how I would like to behave in a perfect world”.

A case in point is a question posed in a poll by The Grocer, in which it asked 532 supermarket shoppers how environmentally friendly they are. Forty one percent said being environmentally friendly was more important to them now than it was 12 months ago, and a whopping 94% said that being environmentally friendly was important to them.

Well of course, most of us want to be environmentally friendly. It’s the right thing to be, right? But when asked which products they would be prepared to pay more for if they were produced using environmentally friendly processes, 39% selected “none of the above” from a choice of twelve categories.


The UK was once ahead when it came to emerging mobile behaviour, but in more recent times has fallen behind. A major reason? Continual delay of 4G rollout. But at last, 4G is nearly here. On Tuesday, the heads of mobile operators Vodafone, O2, EE and Three and regulator Ofcom met at the Trafalgar Square offices of Culture Secretary Maria Miller, with the result that 4G can finally go ahead.

The company formerly known as Everything Everywhere (the parent company of T-Mobile and Orange), but now known unimaginatively as EE can now go ahead and use some of its existing spectrum over the next few weeks without the threat of a legal challenge from its rivals.

Vodafone, O2 and Three, which don’t currently own any airwaves suitable for 4G, conceded their position because Ofcom has agreed to bring forward its much-delayed auction of new spectrum to January.


This is also the week in which Tesco and Sainsbury released their preliminary sales data for their most recent reporting periods.

Sainsbury reported sales rose 1.9% from stores open at least a year during in the 16 weeks to 29 September, which was slightly higher than analysts’ forecasts. Store extensions added 1 percentage point of the like-for-like sales growth. Like-for-like sales in the first half were up 1.7 per cent.

Sainsbury’s sales were boosted by the grocer’s official sponsorship of the Paralympic Games, which saw it increase its media spend in the seven weeks ending September 10th 2012 by 98 per cent year-on-year to £3.8 million.

In contrast, Tesco reported a profit before tax drop of 11.6% to £1.66 billion, its first profit decline since 1994. Nevertheless, Tesco’s second quarter, which covers the three months to August 25, saw UK sales rising 0.1% over the same period a year earlier (excluding store openings, sales tax and petrol purchases).

During Tesco’s press conference, Tesco chief executive, Philip Clarke, stressed, “The UK [plan] is on time and on track.” But he continued, “This is only the start of a long journey; a long journey to come to a very different Tesco.” In two years, Tesco aims to have 20,000 extra staff. A total of 8,000 additional staff are already in store while over 230 stores have been refurbished over the first half of 2012. High quality global journalism requires investment.

Clarke also claimed that the supermarket is leading the market in customer service innovation, especially around digital, such as click and collect. Tesco is also aiming to reduce its electrical and general merchandise offer, and plans on decreasing the space devoted to non-food by up to 20% in some stores.

Tesco's decisiveness, online shopping services, and focus on improving customer experience so dramatically should concern its rivals. The cost of these changes initially worried investors, but they should expect improvements in the coming quarters.


Meanwhile, in other retail news, a sofa store 'robbery' was foiled after Laurel and Hardy duo forget to close van's doors: video