Christmas 2017 - Clearance

4 January 2018

Subscribe today

Grocery Insight deliver emails like this twice per week typically, offering deep insight in to the sector and a unique perspective beyond the 'headlines' elsewhere. Join today to stay ahead of the pack!

Clearance post Christmas

It was always a sign that Tesco had blown Christmas in the darker days, aisle upon aisle of Christmas stock and very little reduction applied. All part of the 'saving money' initiatives of course...

However in recent times, with their sales uptick and improvement in the Extra format at Christmas, clearance has been well managed and indeed, generally out of the door in January with a number of well timed cuts to enable store to trade through their excess stocks.

Sainsbury's were another retailer who were very sharp on markdowns, happily applying their 90% labels to products that they had a boatload of, sometimes, buyers just get it wrong....

The common theme around the marketplace is one of clearance, and whilst there isn't necessarily a 'huge' amount, it does seem to follow a general pattern around what's left.

A surprise in Tesco, and Sainsbury's (larger stores doing strong trade seemingly) is the volume of Tins of Chocolates that remain around the store. Surprising when you consider Tesco were reasonable on price too, doing 2 for £7 and also £4 at regular periods too.

The larger tin of Quality Street, very much a 'here's what you could have won' tin of days gone by has been sighted everywhere too. Did customers decide not to bother with the traditional 'tub' of Chocolates this year, given their budget tightening?

Gift sets under pressure?

Another area of interest in stores yesterday was the gift sets, those gifts that can be bought by well meaning relatives, or for secret santa but quickly you work out the items, well, are worth about 1/3 of the gift set itself.

Customers I think thought about this in 2017, they didn't opt for the easy gift sets and instead thought about gifting in a controlled manner. Of course, Tesco and the like will have sold millions of products, but I always find it's better to look at what didn't sell, rather than what did......

Celebrate success, but identifying what didn't work is important. One area that Tesco got wrong versus 2016 was their strategy on Health/Beauty gift sets. In 2016, they went in at half price straight away and flooded the stores with the pallets / shippers. Customers knew the price and this built loyalty.

However in 2017, they traded at Save 1/3 with a couple of 'weekly helps' at half price (or better) to boost trade.

However Asda had a huge 3 for 2 deal on their respective gift sets which targeted Boots and drove footfall their way. It was another example of how the market becomes quite fragmented in other areas, aside from Food.

The end of big pack sizes and part baked Bread?

The market doesn't appear to have moved with the trends around less food waste and more focus on smaller families, or smaller portion sizes when it comes to Desserts within the Fresh ranges.

The M&S product 'served 9' for example. I don't even know 9 people who would attend my gathering!

Christmas remains important but the trends of 'upsizing' everything could becoming olde worlde.... Giant Trifles are one thing, but there is rarely anything for the customer who perhaps wants a smaller portion, thus customers know that it may be wasted...

Prices are higher, the price of Cream impacted and customers may have looked at fresh desserts and felt money could be better spent elsewhere?

Part bake bread is another older trend that appears to have died away, clearance levels aplenty in numerous retailers once again.

Christmas in Review

Grocery Insight produce numerous Christmas documents for clients within retail, supply and the investment community. With thousands of images from the stores and unique takeaways from our countless store visits.

For more information, please reply to this email to discuss your requirements.

Multibuys or not? Party food price cuts at Sainsbury's

The Sainsbury's stance on multibuys remains intriguing as whilst it does boost the 'value for money' argument around every day low prices, it also harms volumes as there's no incentive for customers to buy more.

Party Food remained outside the multibuy framework, despite there being activity everywhere else in the market, however this year, Sainsbury's ran two separate 20% off deals, pre and post Christmas....

Planned? Or did sales not come in party food as expected? In addition, all retailers appeared to have plentiful stocks of Party Food heading in to New Year, whereas the opposite was true of 2016, where you'd struggle to find a battered Prawn or miniature Burger beyond the 30th December.

The wider strategy is admirable but it's still unclear whether it works on all categories, all of the time. There is little doubt that some multibuys were becoming too expensive, but not every deal is a bad deal....

Effective 'self help' with space management

We must never forget how basic retailing can be, it's a simple business and sometimes, saving markdown can be a simple case of 'self help' in store.

There is a lot of focus on centralisation in retail these days, reducing variability in standards by ensuring that the head office has far more control over what happens in stores.

Waitrose were also trading individual decorations until New Year's Eve. That's space that could be used far more effectively to trade Confectionery and other lines. There has to be a level of capability at a store level where an instruction doesn't come for example, or where an event like Christmas can see a different picture store by store...

One M&S store had traded hard and had little left on 23/12, yet gifting boxes for Christmas (usual bottled Beer and a glass / Chocolate at £8 etc) were still hidden at the back of store........

Re: the M&S example, gifting will never sell there, most likely end up marked down.... Just money 'lost' essentially.

Woes pre and post Christmas for M&S?

M&S were strong on food, but their woes in both Clothing and Non-Food were brought sharply back in to focus on the 22nd December when visiting a busy food hall at around 10am.

Utter carnage, staff doing their best but the aisles were packed, across in Clothing, despite there being just 3 days to Christmas, barely any trade. Despite the plethora of core gifts like Scarves etc, alongside a decent Health/ Beauty range too. Then looking at the sale stock in a busy city centre store post Christmas, given the colder December and general demand for Coats.... It was a surprise to see just how many were left.

Not just variety, but every size imaginable... Food struggling is the last thing the business needs, given the relative success there. Yet both Clothing and Home are perennial strugglers and focus is once more needed in these areas.

A few customers in the distance here, but not many around the Clothing area.

Plenty of sale stock around post Christmas, compare that to Next who clear their ranges out so quickly with their 'big sale'. It's not pretty, but it does work.....

Technology leading to clearance

The move to LED lights with their lower power requirements and longer bulb life has seen a reduction in Bulb use and many retailers adopting the technology to save cost with their Electricity bills too.

This technology has also expanded to Christmas lights, with many products now solely powered by Batteries, rather than awkward 'plug in' lights. The new LED bulbs don't fail as often and work year on year... All that's needed is new Batteries.

This means that customers don't need to buy more and more each year, add in Brexit concerns and customers were even less likely to invest where they didn't need to.

Retailers are still selling 'plug in' lights of course and most of clearance around was plug in lights.... However this is another reminder that customers didn't indulge where they didn't need to.....

That was a theme for 2017, customers didn't indulge where they didn't need to. As evidenced by the results from Aldi this morning, their growth was all in premium (the range was huge this year though)....

A difficult results period ahead one would think, Christmas used to be an easy 5/6% like for like increase but post discount and then with Brexit and the associated inflation and stalling wages / frozen benefits means that the marketplace continues to be a very difficult place indeed.....

Looking beyond the results at the detail is vital, to pick up the signs that a retailer is on the right track and not just boosting their like for like via deals, or merely bobbing along on a like for like basis with little sign of progression....

Full Christmas Reviews

For more information, on how Grocery Insight can help with your requirements. Please send us an email.

From the Grocery Insight newsletter archive, first sent to subscribers on 4 January 2018. Steve now writes at read.groceryinsight.com. See also the blog archive and briefings.