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Insider View: June 2016

Insider View: June 2016

…..with June’s UK launch of AmazonFresh threatening yet another shake up in Britain’s grocery sector.

At the time of writing the results of the EU Referendum had just been announced, adding a surreal context to the febrile atmosphere in the UK grocery sector.  Change is in the air at every level.

Food price deflation continues to drag on the sector with price inflation barely moving above zero this year. Whilst this can only be good news for the consumer in terms of average grocery spend, it reflects a strategic shift for the major retailers, particularly as slashing prices alone clearly isn’t enough to win back customer loyalty.  Costs have to be cut, strategic initiatives revisited in the search for a new market positioning.  Tesco have offloaded Giraffe restaurants, Harris + Hoole and now Dobbies in a reversal in their utilisation of Superstore space, whilst Sainsbury –already Britain’s biggest grocer in vinyl – are about to acquire Argos in a ‘transformational’ deal.  Then there is Amazon, the largest internet retailer in the world, who confirmed the launch of AmazonFresh in a London pilot this month in conjunction with Morrison’s.  The tie-up had already sent Ocado shares tumbling by a third, but it has wider implications across the grocery trade.  An established fast delivery service combined with an extensive range and the promise of low prices could prove a very enticing proposition, despite the charges levied to join Amazon Prime, although even internet shoppers still visit a supermarket for certain foods/occasions.

Our recent Shopper Survey[i] showed that not being able to physically choose fresh produce to see and feel the fruit/veg before buying’ remains a key barrier to shopping on-line. While arguably Ocado has the most to lose from AmazonFresh, with Morrisons set for the biggest gain, there is little doubt that all the supermarkets will be affected as they fight for market share.  Smartening up their own on-line delivery services is the obvious response, but offering a reason to visit their stores is a more compelling strategy. It comes back to focussing on what consumers want to buy at given times. Efficient, high quality and easy- to-shop grocery stores to attract convenience buyers, a smaller range of low priced staples for value seekers and a pleasant and inviting place to shop with a wide range of merchandise for those with more time to browse the store. Then there is the role of a continuing flow of exciting and innovative new products to meet those occasion needs…

Showcase your product through Fast Foodfax. Contact Ann Moore on 01223 492069 to find out more – you don’t need to be a subscriber.

At a time of focus on Europe, the range of new products tested in June had a very global feel:

  • Not quite as popular, but still achieving a top quartile score of 41 was Homepride’s All American Sticky, Smoky, Cajun Cooking Sauce, with a ‘good kick’ in the flavour.
  • Iceland added a touch of Eastern promise to its frozen Butternut Squash, Sweet Potato, Fig, Red Pepper & Feta; Review 160617 achieving a rating of 41 for its ‘rich and sweet tasting’
  • Whilst Asda brought a bit of Californian sunshine to the frozen Pizza Aisle: California Market Garden Sourdough Pizza, Review 160618, at 49, the highest rated new pizza of 2016 to date.
  • M&S looked to Spain to liven up its pack of New Potatoes, Review 160621, (46) and added a touch of Mexican chilli to its Spirit of Summer Cookies to enrich the indulgent’ Ecuadorian single origin dark chocolate, Review 160623 rating 44.
  • Closer to home, Tesco remained in comfortable British territory with its Breaded Smoked Haddock Fishcakes (rating 47). A simple concept, but well executed and great value at £2. Review 160602.

[i] May 2016, (Sample size: 243). Reasons for not shopping for fresh produce on-line:  62%: ‘I like to see and feel the fruit/veg before buying’

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