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The UK Competition and Markets Authority has revealed the issues it will scrutinise for its in depth investigation into the proposed Sainsbury's - Asda merger. The investigation will consider how the merger may affect competition in each of the product markets in which it operates, at both a national level and in each local area.

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Grocery market growth has slowed from 3.8% to 3.2% according to the latest data release from Kantar Worldpanel, pulled down mainly by weaker volume growth.

Inflation constant as volumes dip

In the 12 weeks to 7 October 2018, the market grew by 3.2%, down from 3.8% in the previous month when the period included the late June / early July heat wave and the boost from the World Cup. However growth remains comfortably above the average market  of the last five years (+1.7%), supported by inflation of 2.0% (unchanged on the previous month).

Discounters buck the downturn

While market growth has slipped, this is not the case for the leading food discounters. Aldi's growth has picked up from 13.9% to 15.1%, and Lidl from 8.3% to 10.0%. This outcome follows last week's release of Aldi UK & Ireland's 2017 results in which it reported sales had topped £10bn for the first time and that it planned to open 130 more stores by 2020, taking its total to over 900. Find out more about how to grow your business with Aldi at our Aldi Category Immersion Summit on November 6th.

Lidl is also pressing ahead with a faster rate of store openings while driving like-for-like sales. Last week it announced the opening of a number of pop-up bars to promote its popular products as the festive season draws nearer.

Strong growth from the Co-op

Aside from Ocado, Co-op was the only other multiple to gain market share. Its growth of +7.0% was driven by step up in footfall. An extra 265,000 households visited a Co-op store over the last 12 weeks and its own brand offer has proved particularly popular, with shoppers buying 10% more of these ranges than this time last year.  Tickets are selling fast for our Co-op Trade Briefing on November 22nd when the leadership team will share their commercial plan and what it means for suppliers.

Asda and Morrisons lead the Big Four

Asda and Morrisons both grew sales by 2.4%. At Asda, investments in updating its private label offer drove sales while at Morrisons higher sales of brands and fewer promotions boosted its growth. Despite this Morrisons still sells more products on promotion than any other operator according to Kantar. 45% of its sales are made on some kind of deal.

Tesco's growth has slowed to 0.9% but the market leader will be cheered by the popularity of its 'Exclusively at Tesco' range which Kantar reports are now bought by one in four British shoppers. This proportion is likely to increase as Tesco begins to market the range fully now it has been fully launched.

 

 

12 weeks to 8 Oct 2017 (% share)

12 weeks to 7 Oct 2018 (% share)

Sales growth (Y-o-Y %)

Tesco 28.0 27.4 0.9
Sainsbury's 15.8 15.4 0.6
Asda 15.5 15.3 2.4
Morrisons 10.3 10.3 2.4
Aldi 6.8 7.6 15.1
Co-op 6.2 6.4 7.0
Lidl 5.2 5.6 10.0
Waitrose & Partners 5.3 5.2 0.1
Iceland 2.1 2.1 4.8
Ocado 1.1 1.2 7.5
Other multiples 1.8 1.8 7.8
Total symbols & independents 1.8 1.7 -3.7
       

Source: Kantar Worldpanel

 

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Sainsbury’s has announced plans to boost its beauty offer by expanding its range and introducing in-store specialists.

Becoming a destination for beauty

Sainsbury’s has launched a new and improved beauty offer in eight stores, including an enhanced range and improved in-store shopping experience. The concept has taken inspiration from the strategies of health and beauty specialists, Boots and Superdrug.

According to IGD Shopper Vista research, health and beauty is a destination category for many shoppers, with one in six grocery shoppers claiming to be on a health and beauty mission on their last trip.

This provides an opportunity to enhance in-store execution and range portfolios, to prevent shoppers from going elsewhere for their health and beauty shop. Paul Mills-Hicks, Sainsbury’s Commercial Director said; “We think customers will love our beauty makeover, which creates an alluring space where customers are inspired to browse the new ranges and try before they buy.

If the revamp proves successful, the retailer plans to roll the concept out to more storesin 2019.

Boosting its range

The retailer is set to double the size of its beauty offering to include 3,000 products. The range is set to benefit from exclusive brands such as Mane & Tail, Burt’s Bees, Essie, Korres and Dr PawPaw. The development creates room for specialist beauty suppliers to gain a presence in a mainstream grocer, as well as allowing Sainsbury's to boost its specialism in the category.

On-trend beauty products such as contour tools, brow tattoos and bronzer bricks will also widen the appeal and help Sainsbury’s to differentiate itself from other supermarket retailers.

As well as an expanded branded offer, the retailer has also recently relaunched its private label Boutique beauty range. Products within the range are priced at under £6 and are all vegan, appealing to younger shoppers and catering to the recent rise in cruelty-free beauty. According to press reports, the retailer is also trialling concessions of The Fragrance Shop at its stores in Croydon and Selly Oak in Birmingham, with the latter to be opened soon, as it continues to develop its strategy of working with third party companies to create more compelling retail destinations.

Improving the in-store experience

The eight stores involved in the trial will also benefit from specially trained and dedicated beauty assistants, offering tailored beauty advice to shoppers. A different uniform will allow the specialists stand out to health and beauty shoppers.

Tailored advice will help shoppers to navigate the range, and make the experience feel more personal and premium.

Want to know more?

Retail Analysis subscribers can read and download our latest health and beauty insight here.

Retail Analysis subscribers can also read more on Sainsbury’s here.

Sainsbury's will release its interim results on November 8th.

The Competition and Markets Authority has concluded from an initial Phase 1 investigation into the merger that combining the two grocers would risk lower levels of competition at both a national and local level

Competition at risk in 463 locations

In its initial deliberations. the CMA counted stores in local areas and found that that there was a realistic prospect of a substantial lessening of competition in 463 local areas (though this does not necessarily mean all these stores will have to be sold).  It also found that the two retailers are an important competitive constraint to each other at national level.

Inquiry to be fast tracked

At the request of both parties, the investigation will now be fast tracked to a Phase 2 investigation which will consider whether higher prices or a lower quality of service could result in areas where both retailers have stores. For Phase 2, Sainsbury's and Asda have asked the CMA to rethink how it assesses local competition, pointing out that their stores face significant competition from discounters and home delivery services which the CMA has not considered to be part or the same market in previous inquiries.

They have also asked to widen the geographic areas used for the inquiry. Widening the competition definition to include Aldi and Lidl into the competitor set would dilute the local market share's of Sainsbury's - Asda, but this would be offset if Sainsbury's £2.7bn convenience business was brought into the mix. The regulator has said that it will consider both requests.

Phase 2 inquiry welcomed

In a joint statement Sainsbury's and Asda said: “We welcome the start of the phase two process. The grocery market has changed significantly in the last decade and is more competitive than ever, with the rise of discount formats, online grocery and food delivery businesses. We look forward to working with the CMA on the phase two inquiry, where we expect it to conduct a full review of the market and take these changed market dynamics into consideration. Customers will be the big winners from this combination. By bringing the two businesses together, we will be able to invest further in more convenient ways of shopping while lowering prices and reducing the cost of living for millions of UK households.”

For more on the rationale for the merger, read our insight presentation Sainsbury's and Asda: a merger proposal.

Presentations

17/10/2018
Kantar market shares are generated using Kantar Worldpanel’s till-roll scanning methodology and extrapolated using a sample of 30,000 households. Figures are calculated over a rolling 12 week period and include VAT.
09/10/2018
An essential summary of trading priorities, latest developments, and other key commercial insights for Sainsbury's.
03/10/2018
We review five key themes from this year's Convenience Retailing Summit.
19/09/2018
We present our pick of the best new convenience store formats in London.
View all presentations

Key presentations

As its proposed merger with Asda begins to be scrutinised by the regulator, we explore Sainsbury’s full year results and how it is delivering against its established strategic priorities.

This in-depth guide to the United Kingdom explores the key trends in grocery retail and the growth strategies of the leading retailers in the country.

An essential summary of trading priorities, latest developments, and other key commercial insights for Sainsbury's.

We've developed a single, universal methodology for calculating food and consumer goods retail data, supported by our programme of primary and secondary research. This makes Retail Analysis the most reliable and robust source available for data of this type. 

If you have a specific business challenge or training requirement we can put together something just for you.

We've grouped all the latest European retail news, store visits, retailer profiles and downloadable presentations together in one place.