Can re-categorizing one brand into another brand boost the performance of the first brand? Organizations and retailers commonly use private labeling (PL), in which they group similar products under one category. The recent intake in this idea relies on a more generalized categorization of products/brands in one group. By re-branding several category-specific private label brands into one larger group with a particular name, retailers attempt to influence buyers’ purchasing decisions. This strategic technique is known as umbrella branding or family branding, and it affects individuals’ mental categorization in evaluating the products. The positive effect of this strategy is a noticeable decrease in costs and risks of presenting new products. But how can retailers assure brand strength and marketing effectiveness of their products when re-positioning their marketing strategy to umbrella branding? Kristopher O. Keller, Inge Geyskens, and Marnik G. Dekimpe’s recent Journal of Marketing Research article addresses this research question by evaluating the strategic decision made by the retailers SPAR, Attent, and Colruyt to rebrand specific PL brands to one umbrella brand. “That’s extremely interesting. We have just rebranded one of our private label tiers and would love to know more about that.” SPAR Group to Prof. Keller The Idea The concept of this study emerged from the previous paper by the authors (“Let Your Banner Wave? Antecedents and Performance Implications of Retailers’ Private-Label Branding Strategies”). This study revealed that retailers’ branding decisions differed on another dimension: whether one brand is used across all product categories or whether individual brands are developed. The result triggered the authors’ interest in studying the change in private labels over time, including umbrella-branding decisions. Even though PLs maintain their growth, many retailers still offer these products in small categories that may, individually, not be strong enough to perform in the market. To create a more substantial impact, retailers are now more open to using an umbrella branding strategy, which allows them to put differently labeled products under a group name. Although prior studies have focused on the creation and utilization of re-branding strategies, little is known about whether changes from multiple brands to a single brand would materialize. The disadvantage of applying an umbrella strategy refers to the risk that customers could hold favorable associations with particular brands and are not willing to accept a category aggregation with other brands. Can such re-branding attempts be successful? Methodology Through intense collaborations with the SPAR Group (which owns SPAR and Attent) and GfK Belgium (delivering insights and data for Colruyt), the authors had the opportunity to observe and evaluate the PL umbrella branding from different angles. During the re-branding phase, the three retailers granted in-depth company views about the steps they performed as well as why and when. These insights advanced the understanding of the re-branding efforts and augmented the valuable data sets that were already available, especially with regard to real-life cases. “This is a great scenario: we were actually able to observe the exact same brands, just sold through other retailers.” Keller, Geyskens, and Dekimpe SPAR, Attent, and Colruyt have re-branded all of their category-specific private labels to one umbrella brand across 50+ product categories. Some product examples of SPAR unifying different PL brands under the umbrella brand name “OK€” are presented below. As the three selected retailers SPAR, Attent, and Colruyt differ in terms of store format, service type, size, value sales, selling space, the re-branded PL tier, and its prior market share, the authors were able to generalize their findings from one case to other cases. With the available data, the research objective was to determine whether the strategic decision of re-branding was effective with respect to the businesses goals to gain brand strength and marketing-mix effectiveness. When choosing a suitable method for data gathering and analysis, the authors faced the challenge of lacking knowledge about how the brands would have performed without the strategy change. For this reason, they decided to utilize a difference in differences (DiD) analysis and a quasi experimental procedure to analyze the obtained data. By observing control cases by means of outcomes for very similar brands that did not engage in the strategy change, they were able to understand how the treated brands would have performed the change not taken place. The authors utilized weekly sales data for five years, including at least one year before and after the re-branding, and rich marketing mix information to understand the effects of the re-branding. When performing DiD analysis, a good setting with a clean set of control cases is essential. Fortunately, the DiD approach was suitable in case of the SPAR Group. The SPAR Group is part of a group of several retailers, which collectively source some of their private labels. As some of the group’s members decided not to re-brand the category-specific private labels, the authors were able to observe how these brands performed, while also observing the move to umbrella branding performed by SPAR and Attent. Hence, they were able to observe the exact same brands sold through different retailers. Findings When the authors started the research project, they discovered an empirical literature stream on umbrella branding, but these studies focused exclusively on national brands. Another research trend led them to examine game-theoretical papers, which further contributed to their understanding of the effects of umbrella branding. The authors were fascinated to find that no single lens would provide a comprehensive answer but that a combination would advance their understanding of the relationship between private labels and umbrella branding. The study’s findings indicated that rebranding to an umbrella brand makes the PLs more reliable brands, less price-elastic and reliant on low prices, and less reluctant and sensitive to price promotions. In contrast, the famous brand name across a large and diverse set of categories throughout the store seems to lead to a reduced variety perception and decreases the effectiveness of further SKU additions under the PL brand. Consequently, the authors recommend that managers should avoid siloed thinking in setting the umbrella brand’s promotional intensity. According to the authors, the results of this study provide retailers that still offer category-specific private-label brands with insights into the various implications of a shift to umbrella branding. Although private-label umbrella branding is common, looking at the market leader in the largest five countries in each of six continents, close to 30% of the banners still use category-specific branding. Avenues for Future Research Since the results obtained were successfully applied to three European retailers, the authors suggest that their key results can be applied to American retailers or other European retailers. As all examined retailers operate in more developed countries, it may also be interesting for future studies to compare the results obtained in less developed retail landscapes. Furthermore, in the article’s limitations and future research section, the authors raised the thought of an inverse positioning by splitting one umbrella brand name to multiple PL brands. Would the flipside of the setting be an effective marketing strategy and worth studying in future research streams? The authors suggest that if moving from an umbrella brand to category-specific PLs would produce symmetric effects to the reverse move, a steep drop in brand strength could be expected, making the new private labels less appealing. Also, the price elasticity would increase, bringing rock-bottom prices back to the fore—quite the opposite of retailers’ efforts to create private labels that are brands in their own right. Another idea could be to combine the best of both worlds: A hybrid strategy with selected product categories getting independent brands from an umbrella brand that covers most other product categories. Research could examine if this approach would be fruitful or too complicated for retailers to manage and for customers to understand. Referenced article: Kristopher O. Keller, Inge Geyskens, and Marnik G. Dekimpe (2020), “Opening the Umbrella: The Effects of Rebranding Multiple Category-Specific Private-Label Brands to One Umbrella Brand,” Journal of Marketing Research, 57 (4), 677–94. Need support in your Private Label brand strategy, business development or SKU portfolio restructuring please see our Private Label DRC services on: https://www.discountretailconsulting.com/private-label

Consumers in Europe remain weary of activities that involve close proximity with others, with most expecting at least 18 months to pass before life goes back to normal. This is according to a new consulting firm Bain & Company study. Across all five countries, the majority expects it will take 18 months or more for life to resume as normal, while a small set believe that things will never normalise. Interestingly, Bain and Dynadata conducted a similar survey back in May, when people emerged as far more optimistic. At the time, most respondents thought it would take half a year for things to stabilise, or a year at most. Many even thought that we’d be done and dusted within 5-6 months. Now, the five to six month bracket has shrunk considerably, while those expecting a year and a half of recovery time are at par in numbers with those expecting 7-12 months. Most of the rest fall into the 13-17 month bracket. There are some variations across individual markets. For instance, most consumers in Italy are hopeful about things stabilising in the next year. At the other end of the spectrum, France and Sweden have the highest share of consumers expecting an 18-month or more recovery period. That being said, these differences are marginal, and the bigger picture is one of a cautious and increasingly pessimistic consumer sentiment. Covid-19 cases The development is in part a result of spikes in Covid-19 cases across Europe in recent weeks, as lockdowns were lifted and crowds returned to public places. Against this backdrop, the researchers found that most consumers are hesitant about resuming normal routines, with a strong tendency to avoid close proximity and crowded spots. Certain activities remain off limits. For instance, most will refrain from taking a busy bus, train or plane over the next year at the very least. As a direct result, the number who plan to go abroad on holiday in the same period is also much less than before the outbreak. Instead, vacationers are choosing to holiday close to home, where personal vehicles can be used for access. In similar vein, restaurants and bars are also falling out of favour for fear of infection. Broadly, consumers are focusing on essentials, with activities such as grocery shopping remaining constant or even increasing. Nearly half of all respondents, meanwhile, expect to spend more time at home in the next 12-18 months than they did before the crisis. As people were forced to work from home under lockdown, many businesses realised that virtual working was a viable option that could prove more cost effective and efficient in many cases. As businesses remain in no hurry to get back to the office, and fear of infection keeps usual leisurely activities out of bounds, people expect to be at home a lot more. Social needs As they do so, their social needs are being met through their own ‘bubble,’ consisting of close family and friends. Such gatherings will remain fairly frequent in coming months. Another natural consequence of being at home has been a spike in online shopping, which allows consumers to get what they need without venturing out and risking infection. Online shopping increased in the immediate wake of the lockdown, and many suggest that the preference for online might just be here to stay. The crisis saw many familiarise themselves with online payment methods and other digital platforms. Usership is expected to increase for the long haul as a result. In fact, many of the behaviours expected to persist over the next 12-18 months are natural continuations from life under lockdown. Since the middle of March, Bain reports that grocery shopping was among the only trends that saw an increase, while other shopping, office working, dining out, travel on public transport, going to the gym, and other travel and leisure activities have all been on the decline. Many analysts have suggested that the lockdown might have changed consumer priorities for good. Judging by Bain’s analysis, the crisis has had an impact that will last a year at the very least, if not longer. For those who are now venturing out, certain expectations have emerged, such as hand sanitisers in offices and restaurants and a degree of social distancing, all of which will persist for the foreseeable future. Again, these are broad-based trends, and some variations are visible by country and demography. Younger consumers, for instance, are far more comfortable venturing out, presumably as Covid-19 poses a lower threat for them. By nationality, France and Sweden have seen lower levels of caution amongst consumers, while the UK and Italy have seen minimal activity. Nevertheless, the overall sentiment remains one of caution, and Bain’s report suggests that this will persist for the medium term at the very least. Click here for more https://www.consultancy.eu/news/4871/european-consumers-reluctant-to-go-back-to-old-routines

As consumers seek lower-contact, convenient ways to buy food, the humble vending machine is going beyond snacking Vending machines are known for their convenience. Available 24 hours a day, seven days a week, they dispense emergency snacks and fizzy drinks to bleary-eyed travellers and sugar-starved office workers at the push of a button. What they’re not known for is freshness, sophisticated product choice and healthy options. Typically, their range goes no further than cans of sugary pop, bags of crisps and stacks of calorific chocolate bars. That’s the stereotype, at least. In reality, vending has come on in leaps and bounds in recent years. Forget about spiral vendors stocked with sugar-laden fare – the latest generation of vending takes the form of smart fridges, refrigerated lockers and contactless micro markets able to dispense hundreds of chilled, ambient and frozen SKUs, many of which are healthy to boot. That heady combination of health and convenience is inspiring grocery retailers to get in on the action. This summer, Marks & Spencer started selling fresh sandwiches, chilled ready meals and snacks through a vending machine at one of its Simply Food stores. Meanwhile, in Germany, Aldi Süd is testing the ‘Aldimat’ – a vending machine that stocks up to 30 convenience products including cheese, meats and barbecue supplies. And in the US, a growing number of retailers are replacing in-store delis and salad bars with vending machines. So, what’s behind this sudden interest in vending? And which locations would benefit most from this 24-hour format? COVID, of course, has a lot to do with why vending is moving up retailer agendas. In the age of social distancing, the ability to purchase key supplies without having to go into a store, wear a face covering or interact with another human being has never been more relevant. As a result, vending is becoming an attractive option for a wider range of locations than has traditionally been the case. Although high-footfall locales such as train stations and airports remain an obvious choice – albeit with considerably less footfall at the moment – superstores suddenly make a lot of sense, too. “If you’re a large Sainsbury’s, Tesco or Asda and you are struggling to get people through the door because of restrictions on the number of people in store, then utilising your car parking space with a really good-quality vending solution offering grocery staples could be brilliant,” says Jemima Bird, founder and CEO of Hello Finch and a former customer director at Co-op. Similarly, vending machines located outside convenience stores that are dedicated to specific shopper missions – such as ‘lunch to go’ or ‘dinner for tonight’ – can help with crowd control at particularly busy times of day. “We have many customers who previously only ran bricks-and-mortar stores, but in order to increase sales opportunities placed vending machines next to their shops to let consumers buy at their convenience or to alleviate the hardship of limiting customers in a store,” says Lewis Zimbler, operations director at vending machine payment provider Nayax UK. A robot salad bar or smoothy The pandemic has also boosted the case for machines inside stores. In the US, so-called robot vending machines – which assemble products instead of simply dispensing them – are being deployed by grocers that had to close down lucrative delis and salad bars in the wake of COVID. Supermarket chain Heinen’s, for example, has installed Sally. It’s a salad-making robot developed by California-based startup Chowbotics, which can make fresh salads to order. The benefits of these new-wave vending machines – namely, that they don’t require staff present, offer convenience and are available to customers around the clock – are, of course, not new. But with COVID putting pressure on footfall and store staff, experts say retailers are looking at these benefits through a fresh lens and are willing to experiment more. Zimbler says retailers are reassessing the merits of having another revenue channel that’s open 24/7. “The opportunity to extend a bricks-and-mortar shop’s selling hours or expand locations makes vending an enticing proposition,” he adds. “And for sole proprietors, it’s an easy entry point into extra earnings.” Aldi Süd’s vending trial is a good example. The discounter says it’s motivated mainly by a desire to offer convenience products outside normal opening hours. “We aim to test whether we can flexibly offer our customers part of our product range after the store closing time,” says a spokeswoman. M&S, too, is stressing the role of convenience in its vending trial. “We are always looking for new ways to offer our delicious, great-quality range of M&S products to customers in convenient locations,” the retailer told The Grocer at the start of its trial in August. Alberts smoothie robot, Belgium, creates instant fresh smoothies, made to a recipe of your choice, available 24/7: that’s the proposition of the world’s first fully automated smoothie robot, developed by Alberts. The machines are stocked with a variety of frozen fruit & veg, crushed and blended with water for each order. Customers can choose from pre-programmed recipes or create their own. Orders are placed through Alberts’ mobile app and touchless payments are taken via NFC technology. Seven smoothie robots are currently deployed and the machines are due to launch at two retail locations in the EU soon. Alberts says it has also “started talking to several parties in the UK market about preparing a rollout”. It makes sense. So much so that you could ask why retailers haven’t done it before. But it’s important to note that vending comes with its own risks. Chief among these is selling fresh items. Today’s vending technology is perfectly capable of handling fresh products, but consumer perception remains a challenge. Unlike in markets such as Japan or Singapore (Chef-in-Box), where vending is known and trusted for freshness, the channel is still seen as “a bit shabby” in the UK, according to Bird “You almost need to over-compensate for people’s perceptions” It’s why M&S’s move into vending is so significant. The retailer’s reputation for freshness and premium quality has the potential to dramatically change the way the UK thinks about vending. Consumer education will be key to this move, warns Bird. “People will be wary of not being able to touch, feel, look, so retailers will have to do a real PR job on the freshness and provenance,” she says. This includes offering extra-long date codes on products sold through vending, she adds, “because you almost need to over-compensate for people’s perceptions”. That view is echoed by Anouk Snelders, founder of Health Food Wall, a Dutch supplier of lockers and smart fridges that is starting to expand internationally with a focus on healthy, plant-based food. “It’s so easy to lose consumer trust when selling through a new format,” she says. “The freshness and quality have to be absolutely right.” Even recipe development and packaging design may need to be reconsidered, adds Snelders. Ingredients such as cabbage can stink up devices, lettuce leaves can turn soggy and packaging must be designed so consumers can see exactly what they’re buying at a distance. “It’s not as easy as throwing a salad in there,” says Snelders. “We sell only on visuals. The customer can only see the product in the locker and then they’ll decide if they want it or not. You can’t take it in your hands and look at it, so the packaging needs to tell the story.” Fulfilment Then there’s fulfilment. While vending machines can be a great, hands-off option for locations that aren’t staffed around the clock, devices with more extensive offerings – especially ones outside retail stores – will require frequent replenishment and, potentially, dedicated warehousing solutions. “Vending doesn’t necessarily reduce headcount,” says Bird. “Retailers shouldn’t underestimate: having a great vending solution will require a fulfilment that is going to require certain staffing levels.” Making customers feel safe in the current climate is another challenge. Vending machines have the potential to help with social distancing and crowd management in stores, but the devices need to look and feel COVID-proof too. Contactless payment technology plays a big part here and is already being rolled out more widely, but many vending machines still use buttons and touch screens for product selection – not a great proposition in the coronavirus era. Consumers may also need extra reassurance on how products were handled before they were put into the vending machine. “Vending doesn’t necessarily reduce headcount” Regular cleaning schedules, as well as wipes and disinfectant sprays at vending devices, can help. But many operators believe touch-free technology – where shoppers can select, buy and pay for products using an app on their smartphones – will be critical for instilling confidence in the current climate. “Touch-free vending is something that companies are working on to ensure that consumers are more comfortable buying from a machine without having to touch any surface,” says Zimbler at Nayax, which is about to add touch-free product selection to its own payment app. Vending in the workplace Coronavirus has wreaked havoc on the food-to-go sector. The move to remote working saw sales collapse virtually overnight. And even as some workers return to offices, many have fallen out of the habit of buying lunches on the high street, or prefer not to leave their premises. Some experts believe vending could present an opportunity to make up for that lost footfall. By installing machines in the workplace, employees can get their food-to-go fix at the touch of a button, rather than visiting stores. Example of US based firm Canteen: “Employers are going to try to create environments where their staff don’t have to leave once they get there for the work day,” says Jeff Veres, international programme manager at micro markets operator 365 Retail Markets. “We’re getting a lot more interest from companies looking to move away from the traditional catering sector and looking into unattended retail solutions that are more affordable and easier to manage.”  Employers will want to offer a solid fresh food range that employees recognise and trust, meaning well-known high street brands could be the perfect fit. “I think it’s a matter of time before you see someone like a Pret or a Costa wanting to entertain how they can supply their fresh food into these workplaces,” predicts Veres. Jemima Bird, founder and CEO of Hello Finch, also sees potential for high street brands to expand into vending in the workplace. “Lots of brands will be looking at a digital-first strategy to replace the footfall they won’t get into their stores,” she says. Brands such as Costa, which already have an established vending offer for their coffee, are in a particularly good position to make the leap, adds Bird. She suggests they could start by making snacks that are currently sold at the till available to buy through their coffee vending machines. Other brands could also benefit from using coffee as a launch platform into vending, says Bird. “If I were Pret, I would definitely do it and I would base it around coffee being a good starting point.” Click here for more: https://www.thegrocer.co.uk/technology-and-supply-chain/how-can-brands-and-retailers-utilise-the-reimagined-vending-machine/648699.article

The COVID19 crisis presents itself primarily as a crisis in the city center. There, the frequencies fell particularly during the restrictions on public life. At the same time, the trend towards urbanization took hold before COVID, especially in the food trade. While local suppliers used to prefer to settle in the outskirts in the form of large centers, special sales formats adapted to the shortage of space are increasingly shaping the quality of life in residential areas. They represent what today's customers want: short distances for frequent, flexible shopping. How local suppliers can make greater use of the trend in the future and what municipalities can do to make residential areas more attractive with their help, was shown last year with the study “The reurbanization of food retailing” in cooperation with the partners BFW and discount retail chain Lidl. But is the COVID crisis a disruption for the changed shopping and mobility behavior of customers, or will the trend towards local supplies close to the center continue? In a follow-up to this study, 1,006 test persons were asked in Munich about their preferences during the four phases of the corona pandemic: In the pre-COVID phase, in the hamster phase (after the first movement restrictions took effect), during the shutdown of Shops without a local supply function and - purely hypothetically - in the phase after COVID, for example no longer requires significant restrictions due to vaccination. For example, the question of how many people preferred to order online during the restrictions on grocery shopping is interesting: Even before the corona pandemic, 20 percent of city shoppers in Germany regularly bought groceries online - in Munich it was even 28%. During the lockdown, however, the values ​​reflexively rose and then fell sharply again. It can be said that COVID has certainly given the online grocery trade a boost: The proportion of online grocery buyers rose by 2.9%. In view of the previously low market penetration and the volume behind every percentage point (grocery purchases are big and heavy), such an increase within a few weeks is considerable. For several years it has been observed that the quality of the products has become significantly more important for shoppers than their price. In the two alarm phases of the COVID pandemic, this importance decreased somewhat. However, shoppers say they want to pay more attention to quality "after COVID". The same applies to the regionality of the food, which did not seem to play a major role in the alarm phase, but is now in high demand again. Even before the COVID, the majority of people in Munich did not drive to buy groceries by car. Nevertheless, it has been shown that parking spaces are still important, especially for older people. It is surprising that both bicycles and cars as well as local public transport were lost as a means of transport during the alarm phases. While it was expected that the car gained in importance during the crisis, the opposite was the case. Public transport is currently still being avoided. The bicycle, on the other hand, has grown in importance late but massively. Shopping on foot is the clear winner, however, and according to the respondents, it will stay that way. The frequency of shopping in food retail has been falling for years - shoppers who shop on foot come more often than car shoppers. During the alarm phases, however, the number of respondents who only go shopping once a week also increased significantly in Munich. In the opinion of the shoppers, the value will not return to the initial level even after the alarm phases. The average basket purchase has consequently grown. When asked what criteria the shoppers used to select their local supplier during the alarm phases, all classic factors (e.g. the accessibility of the store) took a back seat. Shoppers were more concerned about the size and density of shoppers in the stores, probably mainly because they were afraid of infection. At the same time, however, many people were shopping in their own neighborhood, so they did not drive to the largest available store through the city. Figure: Particularly important safety aspects when shopping for food among the respondents: "What makes you feel safer / more insecure when shopping?" This was also noticeable in the choice of farm types. Large-area concepts such as hypermarkets could not benefit during the alarm phases. Instead, shoppers preferred their “good neighbors”, which was also due to the fact that providers such as Lidl communicated the hygiene measures in the shops to shoppers very well. Conclusion Despite the massive COVID restrictions, no significant changes in shopper behavior can be determined in terms of local supplies. The stationary trade remains by far the most important channel for grocery shopping in our inner cities. Online grocery retailing was increasingly in demand during the crisis, but was often unable to meet expectations. During the alarm phases of the pandemic, it can be seen that price sensitivity has increased. In the long term, however, it is becoming apparent that price alone is not the decisive purchasing criterion. Another thing that remains unchanged is that shopping on foot is becoming more and more important to Munich residents. The close proximity to the customer is a decisive success factor and a quality feature of good local supply. Wide corridors, a spacious entrance area, many cash registers and a large area are important to customers for their sense of security. These factors will also play a major role after COVID. In summary, it can be said that people in Munich want to buy their groceries as close as possible to their home on foot. The shop should then be as large as possible. Resolving this conflict of goals remains the exciting challenge for cities and the real estate industry. Click here for more: https://www.bbe.de/de/publikationen/standort-und-immobilie/auswirkungen-der-corona-krise-im-muenchener-lebensmittelhandel

Digital Marketplaces were characterised as a platform where the Retailer managed the customers sale but didn’t own or fulfil the stock. The Digital marketplace is winning the retail growth race in recent years; exceeding the average for all On-line growth by more than double, and it was consultancy firm OC&C who reported marketplaces have grown by +30.4% (CAGR) between 2013-2019. This growth performance is rivalled only by the discount value retail sector; accelerated by the financial crash of the ‘noughties’, discount retailing has reached a critical mass, stealing share from the ‘mediocre’, with mass market consumer acceptance in physical retail, but their on-line sales are almost non existent. A snapshot of the UK’s largest value retailers shows that they substantially lag the market in digital commerce. Only Aldi, Home Bargains and the Range are leveraging their brand equity by exploiting the On-line Sales channel. So why have the other players not caught on so far? In exploring this inertia I have summarised my findings. The most common mis conceptions I have heard about Digital marketplaces is. It..... “Will dilute the sales within the existing store estate”. “is not part of our core ‘competency.” “can’t be financially viable for a Discounter." “Will require big changes to our Distribution model." “Will require extra investment in Technology." It is this lack of appreciation of the emerging technologies and these myths, the fears and the war stories, combined with aggressive and successful Store expansion programmes that have put development into the digital channel way down the priority list. There are also some failings in leadership for not horizon scanning for sustainable strategic advantage. Ironic when you consider the single largest driver for digital commerce is price (ONS). An inherent strength of the discounter. Furthermore, the biggest benefits are achieved in digital retailing when brand reputation and economies of scale are achieved. So, how significant could the discount value retailing sector be within the next five years if the key players start to compliment their existing operating models with digital marketplaces? The digital market place could help to double the size of the discounter growth wave; capitalising on the customer loyalty that has been established to sell products not previously found in those Stores that are carefully selected by the retailer yet fulfilled by their vendors. The best operators are able to leverage their market place to generate substantial return on investment. Their on-line marketplace offerings are designed to compliment and not cannibalise the Store sales; they can be highly proficient at growing to scale whilst protecting investment in stock and people. They don't have to remodel their distribution, nor invest heavily in new technology, and they don't need to use up cash. The growth trajectory can climb where the retailer has already established its reputation for value and attained high levels of customer trust. In this scenario digital customer acquisition costs are kept low as the emphasis is focussed on supplementing the customers store visit with a website visit. In a recent piece of research I did for a major player the return on sales was nearly 10% pts higher than its traditional model. Though, many of the discounters are enjoying market beating growth. Market Penetration through rapid roll-out is forefront on their agenda, not digital but this response lacks courage. The growth in the discount value retailing sector may be at risk of being under optimised by; an inherent lack of understanding of the digital marketplace and it’s own relentless re-production of the formula that brought today’s success, but could this be about to change? As retailers prepare to re-align their operating models to the Economic and Consumer threats boosted by the pandemic. Is their a discount value retailer and the digital marketplace operator poised to disrupt, and then shakeout those that are neither value focussed nor can differentiate. At this point it seems like Aldi is starting to make some progress; currently trialling a tie up with Deliveroo to compliment the on-line sale of wine and some special buys; Home Bargains have a 'barely present' on-line offering of grocery by the case and some Homewares, and B&M have developed a non transactional App. All represent some progress but they are missing the real growth catalyst. It is yet to emerge who will adopt the digital marketplace model to accelerate Sales with enviable returns on investment. Watch this space..... By: Julian Grindey Sources:- *Matt Coode. International Head of Retail OC&C March ’19 speech to Retail Week Live. **Office for National Statistics - Consumer motives for E-commerce

According to new research by IGD an analytical company providing information and forecasts for the global retail grocery trade the discount channel is responsible for 43%. retail sales growth in Europe, and will increase sales by EUR 34 billion (US$41billion) in 2020-2022. Local leaders like Biedronka, Lidl, Aldi, Penny, Netto, BIM etc. are contributing to the growth across the channel. According to IGD, the discount channel will be a major contributor to growth until 2022, and leading discounters Lidl and Aldi will increase sales more than most major European retailers. The seven Lidl stores are expected to grow by over EUR 900 million (US$1,100million) each in the next few years. The discount store will become the first European retailer with a turnover of more than EUR 100 billion (US$120billion). This number may be reached in 2021. Discount store is the second largest and fastest growing food retail channel in Europe. While it has been consistently gaining market share in recent years, the increased focus of buyers on price, accelerated by COVID-19, and the development of emerging markets in Eastern Europe, will place the channel at the center of the entire region, says Jon Wright, Head of EMEA, IGD. Among the fastest growing discounters, the Russian Pyaterohcka (X5 Retail Group) is to be responsible for over 15% of the sales channel growth in the region. It is expected that in France, the increase in Lidl sales will be greater than in Germany, due to the limited number of direct competitors. In turn, for Aldi South, Great Britain will become the main factor contributing to the development of the group. While growth in this sales channel is slowing down in several mature markets such as Germany and the Netherlands, other countries such as Turkey, Russia, Poland and Romania could see double-digit growth, thus creating new opportunities for food and drink suppliers, says Maxime Delacour, Senior Retail Analyst at IGD. In addition to large players, there are several market-leading small and medium-sized operators, such as Mercadona, Biedronka and several Scandinavian discount stores such as Kiwi, Tokmanni, Europris. These "local leaders" play a key role not only in their regional markets, but also create the conditions for growth throughout the channel, he adds. See here for more: https://www.dlahandlu.pl/detal-hurt/wiadomosci/igd-dyskonty-wkrotce-moga-zdominowac-europejski-rynek-fmcg,97830.html?utm_source=gravitec&utm_medium=push&utm_campaign=

Variety Discount Retail Chain Poundland (managed by PepCo and owned by Steinhoff International) has applied to trademark ‘Poundland Local’ and ‘Poundland Go!’, pointing to its latest plans for new convenience store formats. Poundland Local is to apply to stores in small towns and close to urban neighbourhoods, while Poundland Go! is for a new convenience format near transport hubs. Each of the trademarks includes a banner-style logo. Poundland first announced plans to split its estate into new store formats in July last year, as part of what it called the biggest transformation programme in its 30-year history. The plans have been refined since that announcement, which said there would be three types, called ‘core’, ‘convenience’ and ‘destination’. “We expect to trial a small number of convenience store formats in the coming months,” a spokesman told The Grocer today. “Poundland Local will be primarily in small towns and retail clusters close to residential and urban neighbourhoods. “Poundland Go will be a convenience format adjacent to transport hubs.” He said more details including the first locations would be announced within weeks. “The initial pilot stores will be smaller than a typical Poundland and we believe there is potential for a smaller format to support our growth,” he added. Poundland Go! is a new convenience format for stores next to travel hubs Poundland’s transformation programme has seen it expand grocery and fmcg, add new price points and roll out frozen and chilled ranges. Earlier this month it said stores were getting more “day-to-day brands such as Nutella, Marmite and Old El Paso”. Today, the retailer also announced the latest 46 stores to get frozen and chilled, following its acquisition of Fultons Foods last year. It brings the offer to a number of branches in the south of England, including in London, Worthing and Southampton. They are among 175 stores to gain frozen and chilled so far, a number set to rise to 500 over two years. The most recent developments include tweaking store layouts and reconfiguring the self-checkout area to streamline the shopping experience. “The past year has shown how important Poundland stores are to their local communities and providing a range of chilled and frozen food means our customers can get more of what they need in one shopping trip,” said retail and transformation director Austin Cooke. “Where we’ve given stores a makeover, the feedback has been tremendous. Shoppers love the extended ranges, and not just in chilled and frozen, and they really like the store layouts and the work we’ve done to make it easier to shop and check out.” Poundland has also been working on an online launch using a former Cannock store as a fulfilment centre. The plans were announced last July, when Poundland said the service would launch early this year. See here for more: https://www.thegrocer.co.uk/poundland/poundland-planning-new-formats-poundland-local-and-poundland-go/655273.article

Discount retail chain Trader Joe’s (owned by German Aldi Nord group), a brand synonymous with friendly human interaction and wildly popular private label available exclusively in-store, technology historically hasn’t been at the forefront of operations. Grocers today are as much in the technology business as they are purveyors of food, beverage and household goods. From Albertsons Cos.’ recent partnership with Google to Kroger’s KroGo smart cart and delivery drone testing to Walmart’s Intelligent Retail Lab, the pulse of grocery is racing in tandem with the latest technology. Trader Joe’s Chief Information Officer Ron Glickman recently gave listeners to the first episode of "The Breakthrough" podcast a rare look into the Monrovia, Calif.-based grocer’s relationship with technology, as well as how to create powerful breakthroughs in business. With the notion that in the new paradigm, “all companies are becoming technology companies,” Theorem LLC, a software engineering firm, recently launched "The Breakthrough," a technology podcast featuring technology leaders across a variety of industries. The podcast is hosted by Theorem VP of Operations Alison Dean. Network Problems Though the company would begin to scale rapidly, when Glickman joined Trader Joe’s in 2013, the business was “a very small, boutique kind of an organization under the current CEO Dan Bane,” Glickman told Dean. And while employees felt “quite comfortable” with the status quo of solid sales, adoring customers and good products, “there were still opportunities to think differently about how we might make IT services better and position us for the future,” said Glickman, who added that his job was to approach these opportunities in an evolutionary rather than revolutionary way. “When I got to Trader Joe's, a lot of the people in my group were saying, ‘Hey, we never spend money on technology. And that’s one of our biggest challenges,’ ” said Glickman. When he asked the team for an example, he learned the stores’ network switches were aging and causing a high number of problem tickets. “The business implications of having network problems in a grocery store are your customers can’t pay with their debit and credit cards. If your network is down, right, your stores can’t order to get product on the shelves in order to be ready when the customers come,” he said. At the time, added Glickman, about 85% of Trader Joe’s customers were able to pay with a credit card every time they came to the store. He went to the president of Trader Joe’s with this issue and the problem of store employees sometimes having to go to another store to place orders due to the aging network. But with a company as devoted to the customer experience as Trader Joe’s, Glickman knew he had to present a narrative that would resonate with the president and company culture. “You know, one of our values is a 'wow' customer experiences. How do you feel about making that 'wow' even better?” he asked the president at the time. “And you know, what did you think the answer was? Of course, ‘How do we do that?’ Well, now let’s talk about what we need to do to, you know, invest in technology to deliver that business outcome,” Glickman explained. The decision as to whether to replace aging, obsolete equipment and software or not shouldn’t be proposed to a business as if they’re optional, said Glickman: “Those should be technology-driven decisions.” Trader Joe’s president agreed and the company’s systems were updated. Transformational Leadership Later in the podcast, Glickman shared his philosophy on breakthroughs and being a “transformational leader.” “When somebody tells me, they think it’s impossible … that’s how I know I’m in breakthrough land,” he said. “When we think something’s impossible, fear sort of takes over … so the first thing you have to do when you’re going for breakthroughs is get people to a place where they cannot feel fear and think more broadly about what we’re trying to get done,” Glickman told Dean. If people know they can’t fail—that they won’t get fired or be destitute as a result of decision making, continued Glickman, the floodgates to creativity open. “And once people think what you want to do is possible, then you can start thinking about options and implications for making that happen. So for me, transformational leadership is about the conversations that are required to get people from impossible to possible—to get nailed down a nonnegotiable outcome. That’s big. And then work with people to figure out what is required.” Technology Breakthroughs in a People Business At Trader Joe’s, which Glickman describes as a “super humble” culture that is “all about the brand,” including the stores, the crew members and the customers, language like "breakthroughs" isn't bandied about. So what does a “customer-facing breakthrough” look like at Trader Joe’s? “The breakthrough is getting people who have been doing the same thing the same way for a long time to think differently,” and creating wow experiences as a result, said Glickman. While building a portal to help its buyers purchase differently and get to an in-stock position, was “game-changing for Trader Joe’s,” he said, “for another company … an Amazon or a tech-oriented company, that might be considered very mundane and sort of everyday, sort of blocking and tackling. “We don’t lead with technology. We want a human interaction. We want our people to spend as much time talking to customers about products as they possibly can,” continued Glickman. As to customer-facing breakthroughs, Glickman pointed to Trader Joe’s transition from paper to computerized ordering. “We’ve replaced 7 million pages of paper with a tablet and we’ve given the people making orders more insights to get that done effectively and quickly so they can put the technology down and spend more time with customers.” But don’t ask about Trader Joe’s “digital transformation.” Glickman, who has been using modern technology to improve businesses’ performance and profitability for 30 years, doesn’t want to answer that question. Instead, “ask me, ‘How am I helping my business to deliver wow customer experiences, have amazing products in the stores at the lowest possible cost, give our crew members what they need to engage in really awesome experiences and relationships with their customers?’ “Now, if there’s technology that can help to drive that, we’re going to do it.” See here for more: https://www.winsightgrocerybusiness.com/retailers/how-trader-joes-embracing-technology-human-interaction?utm_source=Marketo&utm_medium=email&utm_campaign=NL_GRO_Daily_05-07-21&LID=12534257&mkt_tok=NTYxLVpOUC04OTcAAAF85Xc4DQzmqKWRBypiYJixBT24ogyayYVGk5g_myCvP22XNjDRyq3rwaqgRsPmLz1TCVwmWLP6qvGx-waOC4SlbzMH6o6GWEOOvfjFzFvczPXgRw

Discount Retail Chain BİM (publicly listed and Turkish largest discount chain and market leader) announced that the sale of 35% shares in its affiliate in Morocco was completed with a price of US$83.2 million. The profit to be generated as a result of the sale was increased from the 455 million lira (US$55 million) level announced in December to 587 million lira (US$71 million). The sale of 35% of BIM Stores Sarlau, which carries out its Moroccan activities, announced in December in BİM's statement, has been completed. The shares were sold to Blue Investment Holding, which is managed by the UK-based private equity fund Helios Investment Partners, which is an expert in investing in African countries, as previously explained. See here for more: https://www.ortakalan.org/gonderi/42161

The resilience of the groceries sector and the stability of income is attracting rising investor interest. Property investors show confidence in the physical foodstores While investors are becoming more cautious about retail, the ongoing resilience of the food sector has provided a secure investment alternative. Last year, investment volumes in supermarkets, hypermarkets and discount stores were remarkably strong, considering the disruption to the wider commercial real estate market caused by the pandemic. Investor shift in this market segment was already noticeable for a number of years now. Since 2017, transaction activity has been steadily rising by 46% pa on average. In 2020, investment in the food and groceries sectors of the 16 markets that we monitor was close to €6.5bn, 102% up YoY and 169% above the five-year average. This corresponded to 224 deals, which was 21% below the five-year average. Evidently, the activity was driven by larger portfolio transactions (50 deals). The average deal size was €28.9m compared to an average of €8.6m over the past five years. Germany was the largest market at €3.1bn, followed by the UK at €1.7bn and Spain at €675m. The markets that experienced the sharpest rise compared to their five-year average were Germany (217%), and Spain (145%). According to RCA, up to the end of March, the total volume of grocery-anchored retail transactions (completed and pending) was close to €1.33bn across 346 properties, which is equivalent to 28% of the total retail investment turnover since the beginning of the year. Renewed lockdown restrictions across Europe have limited investor mobility and thus market activity, which is more than 50% down compared to Q1 2020. Spain, the UK and Germany have driven the activity since the beginning of the year. The share of investment in foodstores reached a historic high Last year, investments in supermarkets, hypermarkets and food discount stores accounted for the first time on record for 21% of the total retail activity, up from a five-year average of 7%. Although parts of the retail property market are losing their core status in the eyes of many investors, conversely, the strength of the food sector attracts an increasing number of buyers. The food sector has proven its defensive characteristics during the pandemic, capturing a higher share of consumer spending, as non-essential shops, cafés and restaurants have remained closed in most countries for prolonged periods of time. While we could assume that the reopening of the hospitality industry might mean that this growth could partly reverse, we expect that some of the new consumer habits will remain. The operational resilience of the sector, even during times of uncertainty, has largely eliminated the risk of deferred/unpaid rent payments, offering security to investors. Historic UK rental growth data highlights how the decline in rental value growth for supermarkets has been much less severe than for other areas of the retail market during periods of economic downturn. During the recent cycle, which is also driven by structural change, MSCI reports average YoY rental value growth of -1.6% for foodstores in 2019, whereas it stood at -4.0% for the rest of retail. 2020 repeated this pattern, but the margin had grown, recording a -1.8% YoY rental decline for grocery stores, much more in line with ‘all property’ types, and significantly less than -7.0% for all of retail. Similar trends have been recorded in other European markets too. Furthermore, grocery real estate leases typically offer annual indexation and longer terms, often without break clauses, while major grocery chains generally provide strong covenants. This makes grocery real estate attractive to investors looking for longer and more secure income streams. A stable to moderate rental growth outlook, in comparison with other retail asset classes, provides security in a more volatile retail market. Sales and leasebacks drive activity, but supply still does not meet investor demand The market continues to be dominated by established retail sector specialists, however, diversification away from commercial market segments with increased occupier risk creates more competition. Moreover, the rising allocations in real estate by institutional investors, who look for long-term income streams to match their liabilities, creates further investment pressure in crisis-proof sectors that offer stable cash flows, such as supermarkets and discount stores. It may prove challenging for supply to meet demand during the course of this year. Some product could come on to the market in the form of sale and leaseback opportunities, which allow food retailers to raise capital to reinvest in order to meet the demands of a changing consumer environment, often to scale their online and click & collect business. These investments are decisive from a real estate perspective too, as they determine the underlying covenant strength of the tenant. Last year saw a number of such transactions, such as Mercadona and Eroski in Spain, Waitrose in the UK, Jumbo in the Netherlands, Netto/Coop in Sweden, Esselunga in Italy, and others. Investor demand for food markets is expected to continue to rise. In view of the further intensifying bidding war, some established players are also increasingly taking new approaches and securing their acquisition pipeline early on via framework agreements with project developers. Prime yields in the food sector are compressing in markets with strong activity Transaction evidence from last year shows that the average achieved initial yield across the markets we monitor was at 5.9%, 80 bps below 2019 level, in contrast to the wider retail market, which has been experiencing outward yield movements. The average prime achievable retail yield has moved out from 4.43% in 2019 to 4.75% at the end of 2020, while the average prime achievable yield for supermarkets moved in from 5.7% to 5.53% over the course of 2020. Last year, yields compressed in Spain -100bps, Poland -100bps, Germany -40 bps, UK -25 bps, Czech Republic -25 bps, while the rest have not experienced significant yield movements yet. In the first quarter of 2021, strong investor interest in the supermarket sector of Germany, France, Italy and the Netherlands has led to further hardening of prime yields (-50 to -60 bps). In the remaining markets, prime achievable yields remained stable, mainly due to lack of transaction activity, while some experienced some yield softening in line with the overall retail trend (Norway, Hungary). The lowest yields can be found in France (3.5% for urban store), Germany (3.9%), Spain (4.5%) and the UK (4.5%). Yields are still at 6% or higher in CEE markets. We expect the operational strength of the sector and the quality of income streams to result in sustained investor appetite and to continue to put downward pressure on yields. SUMMARY AND KEY TAKEAWAYS As the vaccination programme continues across Europe and lockdowns begin to ease, consumer spend is expected to increase slightly, driven by record-high savings and pent-up demand. Despite the sharp decline of retail sales growth across Europe in 2020 (from 3.9% in 2019 to 1.7% in 2020), food and grocery sales increased by 7.5%. Forecasts indicate that growth will normalise over the next five years to 2.2% pa, compared to an overall average of 2.7% pa (Forrester, Western Europe). The online growth rate of the grocery sector went up from 19.5% in 2019 to 56.1% in 2020. The online share of Food & Beverage jumped from 3.4% to 5.3% on average across Western Europe and is projected to reach 12.6% by 2025 (Forrester). The immediate post-GFC period showed that if consumers swing into belt-tightening mode, then it is the value end of the spectrum that benefits most. This suggests that post-pandemic, the strong growth in demand from the value retailers will very likely be sustained. Unlike much of the rest of retail, online grocery orders are typically serviced by the stores themselves, making the true value of the store much greater than is initially obvious. During the pandemic, large food retailers were only able to meet the surge in online demand because of their network or stores. Established pure players have grown and new e-grocers models have emerged during the pandemic, differentiating themselves by the types of products and services they offer and their method of fulfilment and delivery or order. Although they do not require physical stores, these companies depend on near-instant delivery – and rely on urban warehouses to compete. Traditional grocery retailers are solving the last-mile delivery challenge through micro-fulfilment centres and dark supermarkets, which are mini-logistics hubs located in high-density urban centres. As shopping migrates online, physical stores will need to focus on the in-store experience, quality of service, convenience and trust. Location and broad store network will continue to matter. Innovation in design and fit-out, lighting and communal spaces will be required to accommodate the new trends that focus on customer experience. The food sector is becoming the new core in retail property investment. Last year, investments in supermarkets, hypermarkets and food discount stores accounted for the first time on record for 21% of the total retail activity, up from a five-year average of 7%. The defensive characteristics and the operational resilience of the sector will continue to attract an increasing number of buyers. Some product may come on the market through sales and leasebacks, but overall supply may not meet the level of demand. Competition has led to yield compression, with the prime average supermarket yield in Europe moving in from 5.7% to below 5.5% by Q1 2021. In view of the further intensifying bidding war, we expect prime yields to move in further. See for more info: https://www.savills.co.uk/research_articles/229130/313664-0

Discount Retail Chain MERE (owned by Russian Svetofor) plans to open its first UK location in a former store location of Nisa in Preston. A food discounter founded in Russia with a claimed 3,200 stores internationally is gearing up to open its first stores in the UK this summer. Svetofor was founded in Krasnoyarsk in Siberia in 2009 and has been opening stores in Europe since 2018 under the name Mere. The business has stores in Germany, Poland, Romania, Lithuania, Latvia and Ukraine, with plans for more soon in Italy, Spain, Greece and Bulgaria as well as the UK. Suppliers are being approached about four planned UK stores, including two in Wales, in Mold and Caldicot, and two in the north of England, in Preston and Castleford. The first, in a former Nisa in Preston’s Ribbleton, is scheduled to open next month, according to Mere UK head of buying Pavels Antonovs. The no-frills discount model sees suppliers expected to deliver directly to stores, which also act as the business’ warehouses. Each will be about 10,000 sq ft, and will include a walk-in chiller room and “huge freezer”, allowing multi-temperature ranges to be sold directly from the pallets on which they arrive. The business prides itself on the extreme simplicity of the model, which it likens to a Costco but with no membership fee and no in-store service. It said this allowed it to undercut even the cheapest UK supermarkets by a claimed 20%-30%. Each store is to have a maximum of 1,200 SKUs and only eight staff, including a director, four cashiers and three to handle deliveries. “We are the gap in the market,” said Antonovs. “We don’t have any competitors. “Our model is no service and no marketing.” The business’ terms and conditions for suppliers say stock is bought on a “sale or return basis”, meaning Mere “pays only for goods sold, returning those that are unsold to the seller”. It’s a condition that has made some wary of signing up, with one potential supplier describing the arrangement as “extremely rare in a large-scale food retail setting”. The payment terms leave suppliers “effectively funding shrinkage”, added the source. Antonovs said: “Some will understand us, some won’t. There are already around 30 business that will 70% fill my shops. I have just now met with a manufacturer with a turnover of £150m and we signed for eight SKUs. On 13 March, we opened a store in Latvia and the queue outside was 570 customers. In Germany, when we opened our first store, it had been bought out [of stock] in two days.” See here for more: https://www.thegrocer.co.uk/discounters/russian-founded-discounter-giant-gearing-up-to-open-four-uk-stores/655814.article?utm_source=Daily%20News%20(The%20Grocer)&utm_medium=email&utm_campaign=2021-05-06&c=&cid=DM965120&bid=1583158710

Discount Retail Chain ALDI Australia (family owned) says it will send zero waste to landfill by 2025, a milestone the multinational discount retailer says it will reach by first focusing on food, with a goal to achieve zero food waste sent to landfill by 2023. The program will see ALDI expand its segregated waste collection at stores; double its food donations, and identify closed loop recycling opportunities, according to an online statement. ALDI said its commitment would put it in step with the Australian government’s ‘National Waste Policy Action Plan’, which aims to reduce the total waste generated in Australia by 10% per person and to halve the amount of organic waste sent to landfill by 2030. According to Australia’s Minister for the Environment, Sussan Ley, Australia wastes more than 7.3 million tonnes of food every year, costing the economy over AU$20 billion (US$15.5 billion) annually. “ALDI Australia’s commitment to reducing waste and improving sustainable practices will hopefully have an immense flow-on effect across its supply chain, and through to consumers,” Minister Ley said. “Significant commitments like ALDI’s ‘zero waste to landfill’ show that Australia’s national waste targets are attainable if business and shoppers get behind them. With innovative solutions and practical measures we really can work to a future with less waste.” ALDI Australia’s corporate responsibility director, Daniel Baker, added: “Every present and future action taken to achieve our zero-waste commitment has been carefully considered to ensure the solution is both viable and impactful. “Our commitment will see the business reduce the amount of waste created and reuse or recycle materials to cease unnecessary waste from being sent to landfill. “It is our intention that collectively these actions will make a difference.” In an interesting development, ALDI’s food rescue program will expand to reuse food for animals, once the food is deemed not suitable for human consumption. ALDI stores around the country are already linked to one or more food rescue charities and in 2020 ALDI donated over 10 million meals, along with more than 66,000 kilograms of non-food items to charity partners. ALDI has also launched a new range called ‘Market Buy’, which will feature seasonal fruits and vegetables that have minor imperfections. ALDI said the Market Buy range would empower farmers to sell more of their crops and avoid edible produce going to waste. ALDI will also work to investigate closed-loop opportunities with its business partners, including sending broken pallets to be chipped into garden mulch and then sold as ‘Special Buys’ to its customers. In addition, the discounter is rolling out new uniforms for their store employees this year, with the old garments sent to a textile site to be recycled into apparel and furnishings. Foodbank Australia chief executive Brianna Casey said: “It is admirable to see ALDI Australia take conscious measures to double the amount of surplus food donated to food rescue partners such as Foodbank.” “ALDI has been a long term and reliable partner to Foodbank over the last 11 years and their latest commitment to zero waste will allow the growing number of Australians facing food insecurity to have even greater access to food.” ALDI is trialling how customers can reduce their waste footprint through in-store recycling services in which common materials, including coffee capsules and soft plastics, can be recycled. This is in addition to ALDI’s battery recycling service, which has been available at every ALDI store since 2013 See here fore more: https://www.bandt.com.au/aldi-australia-commits-to-send-zero-waste-to-landfill-by-2025/