Tom Fender

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Tom Fender
The Truth, not the Headlines

• Director
• him!

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Its easy to find doom gloom
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Source www.factiva.com, September 2008, Shows
number of articles containing search terms in
selected UK broadsheet newspapers. Selected
newspapers are Guardian, Independent, Telegraph
and Times including Sunday editions
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Recession Depression

• It can affect our state-of-mind and focus
  understandably
• But we can only control things in our control
• Only 60 of UK consumers think retailers are
  trying to win their business during the recession
• And things could be a lot worse

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Grocery like-for-likes outperform the rest of UK
Retail
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Total UK retail
Major grocery retailers (groceries only)
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4
Year-on-year LFL value sales growth ()
2
0
Apr-08
Apr-06
Jun-06
Apr-07
Jun-07
Jun-08
Dec-05
Feb-06
Aug-06
Oct-06
Dec-06
Feb-07
Aug-07
Oct-07
Dec-07
Feb-08
Aug-08
Oct-08
Dec-08
Feb-09
-2
Source BRC / IGD Research, April 2008
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And the UK Convenience sector is out-performing
total grocery

• Channel sales UP 6.1
• From 750 fewer stores
• Participation of fresh foods is now up to 30
• Symbol group sales up 7.7

Source IGD 2009
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And look C-stores are attracting MORE Customers
in a typical week
Source
of UK adults visiting in a 7 day period
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As more shoppers choose to shop locally
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Supported by a number of Consumer lifestyle
changes
Having friends family round for dinner or drinks
13
16
Drinking alcohol at home
All good for C-stores
24
Walking to the shops
26
Cooking from scratch
Source him! recession study, March 2009
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And the outlook is quite positive

• Passenger numbers through airports ports down
  11 year-on-year at Easter
• UK summer holiday pre-bookings up 40
• Consumer confidence has risen for the last 3
  months
• Retail footfall (total) is up 4.4 year-on-year
• Long-range weather forecast is promising

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And on our recent tours weve seen
Weve just spoken to 28,000 C-shoppers (27,000
face to face)
Across 1,350 stores in G.B.
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Welcoming stores first impressions count
2007
2008
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Vastly improving fresh standards
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Keen prices, well communicated
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Options for shoppers
value standard best
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Easy-to-shop stores
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Passion for products
2007
2008
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Remembering we are a people industry
2007
2008
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Commitment to ethics values
76 of C-shoppers are buying MORE or SAME
Fair-trade / ethical products
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Consistent standards
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Good availability of core lines
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Recognition that local communities need services
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Food-to-go offer to compete with the
specialists
2007
2008
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Trying to exploit impulse opportunities
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Quality coffee finally being introduced
2007
2008
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Chilled beer ready to drink now
2007
2008
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Options for staying in (the new going out)
2007
2008
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Local products for local people
2007
2008
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74 of Consumers are buying SAME or MORE locally
sourced products
But only 23 of C-shoppers say their C-store
sells L.S.Ps. Missed opportunity
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Exploiting events better than ever
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An industry to be proud of

• Recognised as being the best in the world
• So good, the supermarkets want a slice of the
  action
• Passion for standards great Retailing
• Some best-in-class Retailers on our doorsteps
• Putting Customers at the heart of their
  strategies
• Its tough, but not Armageddon

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So we are in a recession

• What are C-shoppers thinking and doing?
• Is the Convenience industry in a good position to
  weather the storm?

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Price is the supermarkets battleground
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With discounters very much in the firing line
Tesco price matching vs Aldi May 2009
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With 90 price cuts in the first aisle alone
Tesco Express May 2009
Good price image? Or panic tactics?
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On price what do C-shoppers say?

• Price was shoppers 3rd importance in 07 08
• With the current recession
• and the huge price activity by the mults
• 27,000 shoppers said in 2009
• that price is still only the 3rd importance
• No increase in saying its more important now

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Doesnt sound right? Consider the following

• Some key lines - there is no price differential
• Shoppers are on small trips (2.3 items) not big
  trips
• I dont have to go to the supermarket (25
  appeal)
• Time time time 68 from within half a mile
• Shoppers have been prepared to pay more (13)
• When times are tough, we revert to what is safe,
  tried tested (family, local, community)
• we dont like to see closed stores/barren High
  Streets

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Long live the KVI. Except, its not very well
Known in C-stores
Shoppers who say they know how much these items
cost at their C-store
13
Beverages
17
Beer
25
Soft drinks
26
Crisps/snacks
29
Confectionery
32
Bread
34
Milk
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Who received amongst the lowest value-for-money
ratings from 27,000 shoppers?
Those who shout loudest about price dont
necessarily offer the best value-for-money
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But giving shoppers value-for-money is important

• Shaken off a lot of the rip off sector image
• Were attracting new customers, during the
  recession
• The price premium over supermarkets needs to be
  justified
• As the acceptable price gap might close
• But here are ways to enhance our price image

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53 of C-shoppers like the use of rounded price
points (CTP 2009)
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Price marked packs help influence shoppers
purchase decisions
yes it would influence my decision
shoppers
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Frozen
46
Dairy
46
Spirits
46
Bread
47
Beverages
49
Crisps/snacks
52
Soft drinks
54
Beer
55
Confectionery
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44 of shoppers say products which are price
marked offer better value
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And promotion leaflets are proven to

• Drive up footfall
• Increase promotion penetration
• Improve range awareness
• Enhance value proposition

Evidence from CTP
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On price

• Keep out of the price war
• Play to your strengths
• Give value for money
• Shoppers want availability service more than
  pure price

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On promotions

• Only 34 of c-shoppers noticed anything on
  promotion in the store
• With high visit frequency (3.6/wk) wallpaper?
• Of those who noticed promotions, 44 bought
• Where noticed?
• Signs on main product shelves 69
• Gondola end displays 9
• Thats why on-shelf promotions are so often OOS
• more facings required

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In-store media led to 10 of shoppers buying
items advertised
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And then we have the mults pushing their
own-label on to shoppers
Sainsburys Local gondola end
50
Brand strength of shoppers intending to buy
FMCG Brands when arriving at the store
52
Grocery
71
HB
51
Spirits
79
Crisps/snacks
76
Soft drinks
Chilled
43
Wine
74
Confectionery
83
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The brands swing-o-meterC-shoppers switch to
Brands in-store
52
Grocery
73
71
HB
91
51
Spirits
66
79
Crisps/snacks
90
Intended
76
Actual
Soft drinks
75
43
Chilled
56
74
Wine
85
83
Confectionery
93
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Consumers are sticking to Brands
53
Watch what the world does
and do the opposite?
Most of us only have customers to satisfy not
shareholders
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Finally dont assume staff working in C-stores
enjoy working with your category

• Wine
• Frozen
• Confectionery
• Crisps snacks
• Grocery
• Beer

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Summary

• Grocery is a (relatively) good sector to be in
• Convenience is growing at 20 higher than the
  grocery sector
• We are not blind to the recession
• but we think Convenience is recession-resistant
• and can be recession-proof

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But

• Cant let our personal concerns interfere with
  serving shoppers
• Or serving the people who serve them
• What more can we do to secure Customer visits and
  spend?
• Only 51 would recommend their store for FV
• Only 53 for lunch on the go
• Only 38 for breakfast to go
• Dont believe everything you read in the papers

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