Back to warmwell.com website


Tesco to control newspaper distribution

 

Newspaper and magazines are delivered to 55,000 retail outlets across the country by wholesalers who have territorial exclusivity.

 

The wholesalers have a monopoly position in their region, so the major supermarkets are unhappy that they cannot negotiate prices down.

 

As a result, the Competition Commission now aims to create a ‘free market’ of national wholesalers to compete for contracts. This will enable the major supermarkets to negotiate national tie ups and it is feared that this will make it ‘uneconomical’ for wholesalers to supply independent newsagents.

 

The Periodical, Publishers Association (PPA) who represents the magazine industry, believes that this will result in 10,000 to 20,000 independent retail outlets going under. The closure of many local stores. This is exactly what Tesco wants.

 

Tesco and Sainsburys have entered the convenience store sector (c-store sector). The daily newspaper is one of the main reasons for shopping at a local newsagent or convenience store. These shoppers also pick up a pint of milk, loaf of bread and bar of chocolate. Tesco wants this market share.

 

Last year Tesco bought 870 T&S stores and entered the c-store sector. The Association of Convenience Stores (ACS) lobbied the Competition Commission to stop this from going through to protect local shops. But the Competition Commission divided the food and grocery market into a ‘top up’ shop and the ‘main shop’, saying this deal would only give Tesco 5% of the top up shop market. This enabled Tesco to buy the stores.

 

The OFT then back tracked and said this definition was a flaw, but it was too late. The Association of Convenience Stores were furious could not find the money to make a legal challenge.

 

Pharmacists

In the 1990’s, Tesco was allowed to introduce pharmacists in-store. The pharmacist was seen as one of the key reasons for visiting Boots or an independent chemist. Shoppers would then pick up their toiletries and other goods. Tesco wanted this business. Once Tesco introduced the pharmacists in-store this knocked out the independent chemists and enabled Tesco to steal market share from Boots.

 

Milk

Milk is another core product. People visit supermarkets to pick up a fresh pint of milk. When supermarkets started to sell milk in their stores it knocked out the milkman. But in 1999, the supermarkets were unhappy that Milk Marque was able to resist their downward pressure on price negotiations. Milk Marque was a farmer owned co-op with 39% market share. It purchased milk from farmers and negotiated the sale of this milk to processors.

 

The Competition Commission forced Milk Marque to be broken up and form three farmer owned co-ops, now called, First Milk, Dairy Farmers of Great Britain and Milk Link. The co-ops are no longer able to stand up to the dairy processors or supermarkets to negotiate a fair price for the milk. They are unable to withstand the downward pressure on price. As a result, dairy farmers are now being paid at below the cost of production and dairy farmers across the country are going out of business. The 2004 UK parliament EFRA select committee found that ‘the dairy sector is complex and there is a lack of transparency in the supply chain. Moreover, despite our best efforts in this inquiry to determine who takes what share of the retail price of liquid milk, we were unable to account for 18p.’

 

In 2003, the RABDF commissioned a report to look at the true cost of production to sustain the industry. It was found that farmgate price of 20 p per litre was needed to cover costs of production and 23p to sustain a farm business. Since 2000, average farmgate milk prices varied between 16p per litre and 20p and are below the cost of production. Small dairy farmers to the largest dairy farmer in Britain, Farmcare (the Co-op) are going under. We have already lost some of the finest dairy herds in the country. This is not about production efficiency, this is about market dominance.

 

At the 2004Tesco AGM, Sir Terry Leahy, Tesco Chief Executive said that dairy farmers were struggling to make a living in this country because they were inefficient. Derek Mead, Somerset dairy farmer replied that UK dairy farmers were not inefficient. It is just that supermarkets are paying farmers below the cost of production.

 

So once supermarkets control the distribution of newspapers, there’s no telling what they will dictate with 30% of sales. Tesco is a volume player. It limits shelf space to products that guarantee sales throughput. Newspapers such as The Daily Mail and The Daily Telegraph might be OK. But specialist newspapers such as the FT, special interest magazines and regional papers would be on their way out. But what’s wrong with that. This is simply the rationalization and consolidation that we have seen in food production for the last 10 years.  Supermarkets have destroyed our local supply system and killed off smaller food producers.  According to their industry thinking, smaller players are inefficient. Tesco is simply providing what the majority of its customers want. Tesco will then push down the price of a newspaper to compete with other outlets and newspapers will be forced to reduce their costs. Away go expensive overheads like investigative journalism. Further down the line Tesco will bring out its own brand newspaper.

 

Who would have thought ten years on that the mighty P&G and Unilever would be struggling to compete with Tesco own label products. But today that is the case.

 

Government

There’s no point lobbying the politicians as they haven’t got a clue what is going on or the financial muscle to act. The Fair Deal Group tried to curb the power of the supermarkets with the introduction of the supermarket code of practice to protect grocery suppliers, but the supermarkets spent millions on legal fees to ensure that this wouldn’t have any teeth.

 

Breaking the Armlock, an alliance of 14 organisations, which includes Friends of the Earth, Oxfam and farming organisations is now lobbying for a tightening of this code. But again, this is unlikely to get anywhere if the OFT lacks any political will to act.

 

Supermarket spin

The Institute of Grocery Distribution (IGD), the supermarket research and education arm, and the British Retail Consortium (BRC), the supermarket lobbying and PR machine will feed us with press releases how this is all good news for the consumer. These press releases are lapped up by the journalists working to tight deadlines with no time to dig behind the scenes. Supermarket insiders infiltrate the trade associations who are there to protect the interests of supplier organisations. To the surprise of many, the NFU is actually working against the introduction of a tightening of the Supermarket Code of Practise. Leading this is Robin Tapper, NFU Head of the Food and Farming, ex. Sainsbury’s.

 

So the final battle is the control of our daily newspaper. We need to save our local and independent shops. Start praying that the newspaper industry wake ups to what is actually going on soon.

 

 

 

 

Source: The Grocer

 

Rae asks for OFT rethink - 19/06/2004

Association of Convenience Stores chief executive David Rae appeared before MPs this week as his organisation stepped up a campaign for curbs to be placed on the multiples’ power.

Rae called on the group of MPs to ask the OFT to review its two-market definition of the grocery market, which divides it into one-stop and top-up.

Rae also called for a ban on below-cost selling and transparency of pricing from manufacturers.

At the briefing, arranged to coincide with Tesco’s agm, the multiple was criticised for damaging communities, putting local shops out of business, and threatening the livelihoods of many UK farmers. The session was organised by Friends of the Earth and sponsored by LibDem MP Andrew George.

 

Grimsey blasts Tesco’s power - 03/07/2004


Big Food Group boss Bill Grimsey has launched another stinging attack on Tesco – and the failure of the competition regulators to limit its moves into convenience retailing.


Speaking at the Booker Prize for Excellence awards night, Grimsey said that the power of the big supermarkets continued to grow and that the dominance of Tesco – “which was there for all to see” – was being fuelled in part by acquisitions of convenience stores.

He slammed the regulators’ insistence that grocery should be defined as two distinct markets: one stop and convenience.

Grimsey warned: “If that is not addressed then consumer choice will become one choice: Tesco, Tesco, Tesco.”

He pointed to comments from John Bridgeman, the former director general of the OFT, who admitted that there were problems with the way the Competition Commission defined the market in 2000 (The Grocer, June 12, p5), saying this was further proof that the regulators were making decisions that were based on flawed logic.



Definition was a ‘huge flaw’ - 12/06/2004


The former director-general of the
OFT has admitted there is a “huge flaw” in the way the Competition Commission defined the grocery market in its 2000 supermarkets review.


Speaking at a workshop this week on Lancaster University’s ‘Retail Competition and Consumer Choice’ research, Professor John Bridgeman said that the commission had misunderstood the changing nature of the c-store sector and the bearing it would have on the two-market definition, which treats the convenience and one-stop shop sectors as separate.

“It was a huge flaw that has affected policy stance,” he said. “What we missed in 1998, 1999 and 2000 was the fact that supermarket development sites were drying up and the market was going to grow in the convenience sector. Looking back, if we’d thought more carefully we’d have expanded the market definition in a way many people now think we should look at it.”

There would be an opportunity to look at the definition again when another major acquisition was referred to the commission, he said.

The Lancaster research strongly supports the case for a one-market definition.

Bridgeman’s comments provoked an angry reaction from Big Food Group chief executive Bill Grimsey.

He said: “I represent 30,000 colleagues, shareholders and thousands of businesses that are coming under pressure because of this definition.”

He said a number of deals had already been referred to the commission yet not prompted a redefinition of the market.

 

OFT dismisses Proudfoot gripes about Tesco’s pricing - 19/06/2004

The Office of Fair Trading has dismissed a complaint by independent supermarket Proudfoot against Tesco’s trading tactics in Withernsea, Yorkshire.

The OFT said there were no reasonable grounds to suspect Tesco of breaching the 1998 Competition Act or of “abusive” trading.

It said that a one-off four-week promotion, in which Tesco offered shoppers £8 off £20 worth of shopping in one week at its underperforming store, was not evidence of anti-competitive behaviour. Proudfoot had an established presence in Withernsea and had competed strongly with Tesco since it opened there last summer, the OFT said.

Joint MD Ian Proudfoot had also complained that Tesco had reduced prices at Withernsea to below normal levels for its stores. But the OFT said: “The use of local pricing would not raise any concerns under the Act in the absence of any evidence of anti-competitive behaviour.”

Ian Proudfoot, whose chain is ranked 41 in The Grocer’s Top 50 independents, described the OFT’s letter as “woolly”. “It says, ‘we’ve got no teeth and we can’t do anything’.”

 

Tesco aims to grow convenience market in the UK


According to the Category Director Convenience Foods of Tesco, John Burry, the retailer is targeting the £20 billion convenience market as a key sector for UK growth. Mr Burry said Tesco has a 5% share of this market following its acquisition of 870 T&S stores. The company plans to convert 450 to its format at a rate of 150 pa. The original chain of Express stores is to be expanded from 108 to 250 stores - at a rate of 80 openings pa to give a total chain of 800 outlets by 2005. UK sales at Tesco increased by 7.9% to £23.4 billion in the year to 22 February, 2003, with like-for-like growth of 4.1%. It more than trebled non-food sales.

Source: Checkout 01/05/2003

OFT frees way for Tesco acquisitions


The OFT has said it sees no reason to refer Tesco's bid for Adminstore to the Competition Commission, effectively approving Tesco's £53m acquisition of 45 London grocery shops.

Source: Financial Times 06/03/2004

OFT to re-think supermarkets and c-stores distinction


Now that convenience store group Bells Stores has been acquired by Sainsbury, the Office of Fair Trading could face pressure to re-think its decision that supermarkets and c-stores operate in separate markets. Sainsbury's acquisition of Bells Stores follows the announcement from the UK's largest supermarket group Tesco that it plans to buy Adminstore, owner of Harts, Europa and Cullens.

Source: The Times 19/02/2004

 

Tesco to offer help with funeral expenses


Britain's largest supermarket group Tesco is negotiating a deal that would allow shoppers to make plans for death. Tesco is in talks with Britain's largest group of undertakers the Co-op to allow Tesco
shoppers to use points built up through the supermarket's Clubcard loyalty scheme to help meet their funeral expenses.

Source: thisislondon.co.uk 08/08/2004

Tesco moves 420 jobs to India


Retail giant Tesco has reported that is moving 420 jobs to Bangalore, India, from its Cardiff, Dundee and Welwyn Garden City centres in the UK. Tesco has stated that its UK employees would be offered new jobs within Tesco, if they were flexible.

Source: Reuters 23/07/2004

 

Tesco lays down the law


Tesco, the UK's leading grocer, has announced that consumers can now purchase basic legal products and services on the company's website tesco.com. The products and services are offered in partnership with the legal publishing firm Lawpack and include DIY law kits, downloadable legal forms and a directory of solicitors.

Source: Mintel 22/06/2004

Thousands of retailers must be saved, says PPA

Source: www.PPA.co.uk

Announcing plans for a New Deal for Retailers of newspapers and magazines to avoid the closure of thousands of smaller independents under government changes to competition law on 1 May next year, PPA has called for retailers to engage on this vital agenda.

Under the plans, supported by wholesalers and leading national newspapers, the New Deal for Retailers will deliver changes designed to address the main concerns of retailers while at the same time ensuring the continuance of the universal service guarantee to eligible retailers throughout the country.

"It is deeply concerning for magazine publishers that the supposed champion of the independent newsagents, the NFRN, is proposing the dumping of a system guaranteeing inclusion of eligible retailers where the economic case is overwhelming that if the existing system goes, anywhere between 7,000 and 20,000 small independent news outlets will be lost.

"These are the shops with news bills of less than £275 per week - many of whom, far from gaining choice of wholesaler, will be left with either a source of supply which is too expensive to be viable - or none at all.

"There is a mistaken assumption by some retail associations that in an open market the independent retailer will have a louder voice. Well perhaps someone should ask the thousands of independent local greengrocers, fishmongers, butchers and bakers whose cries for help were drowned out by the screaming commercialism of the supermarkets, whether this is in fact the case?"

British shoppers spend 33p in the pound at supermarkets

By Graham Hiscott

Source: The Independent 10th August 2004

Shoppers now spend 33p out of every £1 in the big supermarket chains, according to a report published yesterday.

The finding from a leading grocery think-tank illustrates the growing dominance of Britain's major chains.

Consumers spent £115bn in grocery stores of all types last year, of which £80.8bn was spent in Britain's nine biggest supermarkets, the study by IGD (formerly the Institute of Grocery Distribution) found.

Groceries are now the third biggest outlay for households after housing and transport, despite the fact that average food prices are rising at a slower rate than inflation.

The IGD has calculated that grocers take 49p of every £1 spent by Britons at retail outlets. Some 33p of that is spent in large supermarket chains ­ up from 30p in 2002, according to the think-tank's report.

It identified the big chains as: Tesco, Asda, Sainsbury's Morrisons, Safeway, Waitrose, Somerfield, Marks & Spencer and Iceland. One of the reasons why big supermarket chains like these have prospered was their move into new product lines such as homeware, including toasters and kettles.

A separate report published in The Grocer trade magazine shows that supermarket "non-food" sales soared by 12.2 per cent to £11.6bn in the 12 months up to 3 July this year.

A major area of growth was in sales of electrical goods, which rose 28 per cent to £879.6m, according to the study from the analyst Information Resources. Computer games also sold well in the big supermarket chains, with sales up 11.8 per cent to £88.9m, while homeware sales increased 10.7 per cent to £769m.

Experts at the IGD believe that the grocery market will be worth £118.1bn by the end of the year, growing by 2.5 per cent a year to £133.5bn in 2009.

The think-tank's report predicts further expansion by supermarket chains into the small convenience store sector, which would be at the expense of family-run corner shops. It says that the number of independent convenience shops will fall from 28,220 to 24,284 over the next five years.

The number of small-scale outlets, such as Tesco's Metro chain, is predicted to increase from 2,213 to 2,333.

While there may be fewer fully independent stores, it seems many could decide to opt for the benefits of joining a "symbol" group such as the Spar chain.

Some 14,358 grocers will be affiliated to one of the groups, which supply grocers and offer marketing ­ up from the current figure of 12,780.

David Gordon, business manager of IGD, said that recent trends had been good news for the consumer: "With food price inflation consistently below background inflation, food is cheaper than ever and consumers have been offered better value in terms of quality, choice and price.

"Against this background the food industry has still achieved growth and this is testament to the very strong retailing skills in our sector," Mr Gordon said.

Supermarkets shop for convenience
(Filed: 22/08/2004)

Source: The Sunday Telegraph

Sales in local grocery stores are rising fast - small wonder that the giants are slugging it out to corner the market, writes James Hall

Convenience stores used to be family-run businesses - a combination of newsagent, off licence and grocer selling a limited and often pricey range of goods. But the humble local shop is now the battleground for Britain's supermarket giants which are controversially expanding into the sector.

Last week, J Sainsbury bought Jacksons Stores, a 114-strong chain in Yorkshire and the Midlands, for an undisclosed price. The deal, which was thought to be worth about £100m, was thrashed out by Angus Oughtred, the managing director of Jacksons, and Jim McCarthy, the head of convenience for Sainsbury's. It is just the latest acquisition by a major supermarket of a convenience store chain. In the past two years Tesco has been on a buying spree and now has 6 per cent of the market.

It is easy to see why convenience stores are so attractive to the supermarket giants. People's changing lifestyles and purchasing patterns have driven rapid growth in the sector.

Last year sales in convenience retailing - selling food from stores of 3,000 sq ft or under - grew by 7.3 per cent, outpacing the 3.3 per cent growth in the wider grocery market, according to IGD, a food and grocery think-tank. Verdict Research, the retail consultancy, says the market is worth £22.5bn a year, around 20 per cent of all grocery sales, and is expected to grow to nearly £30bn by 2009.

For the big supermarket chains convenience retailing offers an enticing prospect to grow. The market is fragmented and the large chains have a mere 9.8 per cent share of the sector.

Tesco, the UK's largest grocer, with a 28 per cent share of the total market, has led the shopping spree. In 2002, it bought the 1,200-strong chain T&S Stores and earlier this year it took over Adminstore, a London-based group with 45 stores trading under the Cullens, Europa and Harts brands. Analysts predict Tesco's appetite for local shops will make it the market leader by 2008.

Meanwhile, Musgrave, the Irish wholesale and distribution group which owns the Budgens chain, has snapped up Londis for £60m. Sainsbury bought Bells Stores, a chain with 54 shops, earlier this year and now has 2 per cent of the market. In the past two years chains such as Alldays, Balfour and Morning, Noon and Night, have all been bought by supermarket rivals.

The rapid expansion by supermarkets, which mainly trade from out-of-town superstores, into the convenience sector has become an emotional and controversial issue. Smaller chains and suppliers fear they could be squeezed out of the market.

One of the other attractions for the supermarkets is that buying convenience stores has so far not raised competition issues. The Office of Fair Trading argues that the sector is effectively a separate market to supermarket retailing, because it offers a different shopping experience.

This is deeply controversial. Trade bodies and senior industry figures, including Bill Grimsey, the chief executive of Big Food Group, owner of Iceland, and John Bridgeman, the former director general of the OFT, are calling for competition authorities to alter their definition of the grocery market.

The current definition is based on an exhaustive Competition Commission investigation into supermarkets in 2000. The report distinguished between the large "weekly shop", typically in superstores, and the more spontaneous "top-up shop" in convenience stores.

However, critics argue that customers don't distinguish between the types of shopping, and that the OFT's distinction is meaningless.

What is clear is that convenience store shopping has already changed radically. Les Bell, the 71-year-old former chairman of Bells Stores, remembers when customers' needs were simple.

"If you had told me 30 years ago that we'd be selling three different types of water in a shop, I'd have said 'You're barmy, young man'," he says.

But three types of water, not to mention an array of fresh fruit and a pre-prepared moussaka, are exactly what customers want when they pop into their local convenience store.

There are other powerful factors driving the big players into convenience retailing. Planning restrictions make it hard for food retailers to open new stores in out-of-town locations, forcing them into town centres.

Changing demographics and people's evolving lifestyles have also made the sector attractive. The number of single-person households in the UK is projected to grow to more than 8m by 2021 from around 6m in 2000, while the number of married households is expected to fall by just under 10 per cent. In short, fewer people will need to do the "weekly shop" in a big store.

But convenience retailing is not just about flogging ciabatta to "cash-rich, time-poor" urban singletons. The nation's council estates were the birthplace of the convenience store and typically 80 per cent of customers still live within a one-mile radius. The relaxation of rules regulating the opening of new pharmacies last week has given retailers a further incentive to open small stores for long hours in towns nationwide.

Anyway, the supermarket giants have plenty of possible targets, given the fragmented nature of the market. Chains such as Tates, the 187-store group owned by the Spar wholesaler AF Blakemore, Waynes Foods, which has 99 stores, and Smile Stores, which has 75 outlets, are all growing rapidly.

Nigel Mills, the managing director of Mills Group, a 84-store, £53m turnover group based in the North East, Yorkshire, the Midlands and Wales, says the expansion by the supermarkets into convenience retailing is a double-edged sword."The positive is that the industry is booming," he says, "The multiples are setting very high standards, especially for fresh and chilled food. But they are making it more expensive to stay in the game. We are having to reinvest quicker."

However, some commentators question whether the supermarkets can make convenience store retailing as profitable as selling goods out of larger stores.

"You need probably 40 convenience shops to make the same profit as you do out of a hypermarket. Therefore it makes it much more difficult to manage," says Bell.

Bell also believes that supermarkets may be overpaying. The £100m Sainsbury apparently paid for Jacksons, equates to £870,000 a store.

"That's a lot of money per shop to get your money back," Bell says, pointing out that in the US, large retailers such as Wal-Mart have steered clear of convenience retailing, a strategy echoed by Asda, its UK arm.

The more pressing issue for the independent convenience stores which remain is whether the regulators will limit the supermarket giants' expansion in the future.

David Rae, the chief executive of the Association of Convenience Stores, which represents 30,000 shops, is lobbying the OFT to rethink its market definition. "With every acquisition in the convenience sector the definition becomes less relevant," he says.

But that looks like wishful thinking - the OFT says there are no plans to review the guidelines unless a deal is referred to the competition authorities. And Sainsbury's acquisition of Jacksons is unlikely to be the trigger.

 

Panic on the high street

Source: The Grocer 14/08/2004

The supermarkets’ increasing ability to provide shoppers with convenient and cheap non-food is cranking up the pressure on high street retailers. According to Verdict Research, the multiples pushed their share of the £111bn UK non-food market up from 8.6% in 1998 to 11.3% by April 2004. Rod Addy pinpoints how the multiples are hurting six key high street names

Boots
 The relaunch of Boots’ Shapers own label range in January, which won it Best Own Label Retailer award at The Grocer Gold Awards in June, was a coup. It reversed the brand’s falling sales, resulting in a year-on-year increase of 29% by June.

However, Boots has had to contend with initiatives such as Tesco’s Baby & Toddler Club, which helped it win Multiple Grocer of The Year at the same awards. Boots has also faced a raft of recent Tesco price cuts on health and beauty and baby products.

Boots retaliated with its Lower Prices You’ll Love campaign, which saw prices cut by 16% on 3,000 products.

The introduction of its Basics range of competitively priced health and beauty products from mid-April has also helped. But IGD’s Shopper Insight Report on non-food paints a bleak picture with two-thirds of 1,000 consumers asked preferring supermarkets to specialists when it comes to toiletries. >>p33 Focus on Toiletries

Dixons
 According to IGD’s Shopper Insight Report last month, consumers choose retailers such as Dixons above supermarkets for buying electrical goods. Verdict’s Non-Food in Grocers report in April showed Dixons as leading grocery multiples in its share of non-food with 4.2% share versus Tesco’s 3.6% and Asda’s 3%.

Analysts say one thing giving the retailer an edge is the quality of aftercare it provides. However, most multiples are incorporating customer help desks in the electrical goods zones in new stores.

Annual results show times are tough. Dixons Group sales are up, but sales at Dixons outlets themselves fell 6% to £798m in the year to May. It has closed 106 unprofitable stores and is trialling a new xL store format to improve performance. But Verdict says that if Tesco repeats its 1.2% growth in non-food share in the last five years, it could pass Dixons in the next five.

HMV
As if adjusting to people downloading music and films from the internet isn’t enough, HMV and similar retailers are seeing their market share threatened by the supermarkets. According to Millward Brown, by October 2003, 1,900 grocery multiple outlets were selling music compared with less than 1,000 in 1996. By November, Tesco said it was selling more chart CDs than Woolworths or Virgin Megastores. And by June this year it was claiming 60% growth in DVD sales.

Yet HMV sales were up 7.2% to £930.1m in the UK and Ireland in the year to April. CEO Alan Giles said: “HMV’s success is underpinned by a specialist retail proposition.” The retailer maintains its strength lies in its extensive back catalogue whereas the multiples can only stock more popular products.
HMV claims this is paying off, enabling it to remain the market leader in UK music sales by volume.

Next
The biggest threat from grocery chains to clothing retailers such as Next has been Asda’s George. By June this year, the brand had become so successful that Asda had opened four standalone trial George stores.

The multiple announced in May that George would become a global brand, available in all 11 countries in which Wal-Mart operates. According to TNS Fashion Trak data in the 12 weeks to April, George had overtaken Debenhams to become the UK’s third largest clothing retailer, with sales topping £1bn, and is widely tipped to take the top spot by the end of the year.

Next has held up well, with sales of the Next brand up 14% to £2.34bn in the year to January. Group pre-tax profit was up 23% to £353m.

According to Verdict’s Maureen Hinton, it offers well made work wear and evening wear which is reasonably priced, but perceived as stylish.

WH Smith
Like Boots, WH Smith began the year by announcing job cuts – not a good start. It acknowledges the inroads the multiples have made into sales of CDs, DVDs and console games have hit it hard, with its entertainments category hit the most.

With retail sales down 1% according to half-year results in April, group chief executive Kate Swann said the way forward lay in providing more specialised CDs, magazines and DVDs which the multiples would not sell. “The percentage of sales and profit from lines where we overlap with supermarkets varies materially and by category. Success is driven by a strong customer offer.”

WH Smith is focusing on its availability, store offer and ranges. Verdict’s Gavin Rothwell says that there are promising signs at the retailer: “WH Smith has doubled its range of greetings cards to 3,500.” He also said it was broadening DVDs to include less mainstream items.

Woolworths
The last year could have been better for Woolworths, which scrapped Big W in March and announced the downsizing of the existing 21 outlets which would revert to the standard fascia. Sales only rose 0.3% to £2.14bn in the year to March.

However new store formats such as 10/10, since conversions in autumn 2003, have shown steady growth.

Entertainment felt the pinch of competition from the multiples. But Woolworths succeeded in fending off the competition with aggressive pricing which helped it to win market share. Yet in confectionery it saw a reduction in share.

Woolworths has adopted a growth strategy consisting of a £14.7m IT spend, the pursuit of a ‘kids and celebrations’ proposition, restructuring and NPD.

In its full-year results, the company noted establishing product offerings the multiples are not already involved in had been “a major undertaking”.

Publisher folds after magazine row with Tesco
By David Litterick (Filed: 18/08/2004)

A small independent publisher has been forced into administration with the loss of 26 jobs after a row with Tesco which has left both sides claiming to be out of pocket.

Gregor Rankin, managing director of Fox Publishing, accused the supermarket giant of "bully boy tactics" after Tesco allegedly failed to adhere to an agreement to distribute and promote its magazine Healthy Living.

The popular magazine was owned by Tesco and published by Fox until the end of last year, but after the supermarket group decided to stop publication Fox acquired it and agreed that Tesco would continue to distribute Healthy Living in 630 of its stores.

Fox claims that after the first monthly issue was published in January it was inundated with calls from readers and advertisers who could not find the magazine on the shelves. Fox then refused to pay Tesco a final tranche of advertising income from the previous arrangement until the matter was settled.

But the row escalated until Tesco delisted the magazine in June, forcing Fox into administration. A Tesco spokesman disputed that the group had broken any agreement. He said: "We too are disappointed Fox Publishing have gone into administration but we are not to blame."

 

 

******