In the papers this week 2 – 8 Jan 2010
Salt sales triple at Superquinn; supermarkets ramped up advertising spend in 2009; ASA rejects RGDATA's complaint on 'misleading' Tesco adverts
Print7 January 2010
Cereal manufacturer Kellogg’s confirmed it was facing “significant challenges” in obtaining supplies for the Irish market this week after its main warehouse in Manchester was snowed-in. However The Irish Times reveals the company has denied shortages on supermarket shelves and said fresh deliveries were expected into Ireland at the weekend.
Superquinn also claimed it had not experienced much disruption as a result of weather conditions, while both of Tesco’s Irish depots, at Ballymun and Donabate, were operating normally, and Marks and Spencer reported “no issue” with its British imports.
Consumer brands reined in advertising spend in 2009, according to The Irish Times, but retailers raised spend considerably, with SuperValu leading the charge. Nielsen media research covering January to October 2009, shows the rate card advertising spend by Ireland’s top 25 advertisers declined by 5.6% to €284 million. However, SuperValu increased its spend by 19% to €18 million, Dunnes Stores rose by 10% to €12 million, and Tesco cut its spend by 22% to €16 million. Lidl maintained its advertising spend at €7 million.
The Advertising Standards Authority of Ireland has rejected claims by RGDATA that Tesco advertisements misled consumers about the extent of its price-cutting campaign. The Irish Times reports the watchdog backed up Tesco’s assertions that it cut the prices of over 12,500 goods last year. RGDATA had complained the adverts were inaccurate because many of the claimed price cuts related to items not previously stocked, but substitutes imported from the UK.
Sales of salt are booming as customers attempt to grit icy paths and driveways, reports The Irish Times. Superquinn found its salt sales almost tripled in the past week, compared with the same period last year, and almost 40% more firelogs and firelighters were sold. Meanwhile Tesco claimed its salt sales had increased by 90% in the past two weeks, compared with the first two weeks of December. RGDATA’s Tara Buckley also noted a tendency among customers to stock up on items such as bread, milk and fuel, through concern they might not be able to get to a shop in the following days.
The Irish Farmers Association has said retailers must respond to the cold snap which wiped out some €15m of potato crops, by paying farmers a viable price for pototoes. The Irish Independent reports that while enough potatoes are in store to keep shops supplied for weeks to come, Ireland’s 500-600 commercial potato growers will suffer significant losses, as a result of 75% of crops on an unharvested 6,000 acres, freezing solid in the ground and subsequently turning to mush. Tesco confirmed there was no problem with potato supplies at the moment and it would always seek to buy Irish vegetables.
Food group Glanbia has said profits may increase by as much as 8% this year as economies strengthen and demand for its dairy products improves. The Irish Independent reveals that following the introduction of price-cuts to boost demand and effective cost-cutting measures at its consumer products division, the Irish multinational has said it plans further cost-cutting measures within its dairy business this year, but has not provided details.
The number of consumers shopping around has dropped from 75% to 67% since the summer, latest market research from the National Consumer Agency reveals. The Irish Examiner states a report conducted by Amárach Research shows convenience is becoming more of a determining factor in where to shop, up from 13% to 17%, while price, still the most important influencing factor, has fallen back slightly from 70% to 65%. However, over a third of consumers also claimed they are shopping at more discount stores such as Aldi and Lidl.
The greatest change recorded by the NCA, is the increase in shoppers taking advantage of special offers and using coupons, which is up 15% since the middle of last year. The Irish Examiner states the report also shows more than three-quarters of Irish consumers would prefer to see supermarkets offering more long term lower prices rather than promotions and special offers though. The NCA’s Fergal O’Leary also believes in terms of price-cuts retailers still have “a way to go."
The IFA has urged the Department of Agriculture to follow Britain’s example and introduce a code of practice for labelling pork products, in a bid to end misleading claims over so-called ‘Irish’ meat. The Irish Independent reports the voluntary British code is being drawn up after consultation with producers, processors and major retailers and will see the retail chains and processors display the the pork’s origin on the front of packets. The IFA claims Ireland needs a similar code to prevent inferior imports displacing quality Irish produce.
Profits at the Irish arm of Heinz dipped 11% last year as flagging sales of the firm’s iconic baked beans and ketchup drove an 8% fall in revenue. The Irish Independent quoted company directors who stated the poorer figures came "despite volume growth year on year", citing "significant sales pricing activity and commodity cost inflation" as reasons for the drop. They also pointed to “pressures on the availability of space in store … as retailers continue to expand beyond traditional grocery," and increased competition from own brand ranges. Heinz is nevertheless "confident" its Irish business, which employed an average of 39 people last year, can be "sustained".
Recent extreme weather has delivered one advantage for retailers however, in prompting people to forego northern shopping sprees in favour of spending their money closer to home. Maureen Gibbons, manager of the Courtyard Shopping Centre in Letterkenny, told the Donegal News that business picked up before Christmas as a result. She also noted the UK VAT increase which came into effect from New Year’s Day would benefit retailers in Donegal, but stressed political will was needed to acknowledge the problems faced by businesses in border counties.
Marks and Spencer has posted its first rise in quarterly underlying sales for over two years, reports Business World. Sales at UK stores open at least a year rose 0.8% in the 13 weeks to 26 December. However this was below analysts’ average estimate of 1.2% and contrasts with forecast-beating numbers reported by retailers Next and John Lewis. Chairman Stuart Rose also said new chief executive Marc Bolland, poached from grocer Wm Morrison in November, was unlikely to start until the end of Spring, later than investors had hoped.
The British chain’s sales figures also reveal the extent of the damage from fierce supermarket competition in the build-up to the festive season, according to The Irish Examiner. The paper claims Tesco in particular took on Waitrose and M&S with heavy promoting on its Finest premium ranges before Christmas. The outlook also appeared optimistic for Sainsbury’s, with the chain hailing its best-ever Christmas a year ago, and recording 22.6 million customers in the final week before Christmas.
Ireland’s downturn in consumer spending caused 201 companies in the retail industry to collapse in 2009. The Irish Times reports that across all business sectors, over 1,400 Irish companies were declared insolvent in 2009. The figures compiled by InsolvencyJournal.ie reveal an increase of 82% on the previous year, and 287% on 2007; with the greatest impact felt in the construction, services and retail sectors.
The Irish Independent reports retailers are expecting a tough year in 2010, as a result of high rents and price inflation. Speaking to the paper just before Christmas, Superquinn executive chairman Simon Burke said that he saw no real signs of any improvement in consumer spending. Elsewhere, in the four weeks to the end of November, Dunnes Stores saw its share of the grocery sector decline 1.6 percentage points to 22.9%, while discounters Aldi and Lidl boosted their combined share to 8.2% from 7.5%, according to data from TNS Worldpanel.
Developer Frank Gilmer has signed up 10 retailers for the €100m shops and office development he is planning for Glenageary in south Dublin. Superquinn is one of the retailers who have signed up to take some of the retail accommodation, which was recently given the green light by Dun Laoghaire Rathdown County Council. The Irish Independent reports Gilmer is also hoping that NAMA will also support him in proceeding with the development before the end of the year.
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