Blog: Katy AskewUK grocers face mounting pressure

Katy Askew | 6 June 2014

Management at the UK's largest retailers are seeing the pressure mount. As sales continue to disappoint and market share continues to be eroded, some serious questions are being asked about the strategic direction pursued by the likes of Morrisons and Tesco.

Earlier this week, Tesco booked its worst sales result for 40 years as it emerged that million shoppers a week may be abandoning them for rivals.

The group's CEO Phillip Clarke is facing some tough questions over the Tesco's strategic direction, which is focusing on "leading the retail revolution" and developing an unparalleled omni-channel offering. While the firm is investing in price, is it investing enough - and shouting about it loudly enough?

Tesco is far from being the only UK retailer under fire. At the company's AGM in Bradford this week, Sir Ken Morrison - founder of the Morrisons chain - struck out at the strategic direction being pursued by current CEO Dalton Phillips as "bull***t".

Sir Ken has been a vocal critic of Mossisons' drive online and work to revamp its store base, suggesting that the group is losing touch with its value-conscious core customer.

Supermarkets at the value end of the market are losing sales to the likes of Aldi and Lidl, who seem on an almost unstoppable march that has again see them grow market share, according to figures from Kantar Worldpanel also released earlier this week.

Aldi and Lidl benefit from a price message that is crystal clear - and one that has seen them move into the mainstream of UK grocery retail. They are also opening shops at a faster pace than the country's major supermarkets, another factor boosting their market share performance.

What defence can UK grocers mount?

Sainsbury's alone has refused to enter the race to slash prices.

Rather than fending off the threat of the discounters by playing them at their own game, the company believes it can use the footfall that a new Aldi or Lidl store might bring to its own advantage. While the company would expect to lose sales on some products that the discounter is known to offer cheaply, by focusing on what Sainsbury's does best - and what the discounters don't stock - the company believes it can see a net gain.

Sectors: Retail

Companies: Lidl, Aldi, Morrisons, Tesco, Sainsbury’s

BLOG

Nestle, ConAgra ditch "diet" for "wellness" in frozen food push

As the importance of health has grow in consumers' minds, frozen food has been left out in the cold. But two major manufacturers in the US are looking to heat up the sector by claiming frozen food mea...

NEWS

Editor's choice: the highlights on just-food last week

Nestle came under investor scrutiny last week after its sales missed analyst expectations - with China a central factor. Elsewhere, we looked at the international strategy of one of China's largest fo...

BLOG

Danone tight-lipped over Mead Johnson link rumours

Some analysts might be breathing a sigh of relief at news Danone is rejecting speculation it is about to swoop for infant-formula giant Mead Johnson. ...

BLOG

SIAL 2014: New UK food minister pledges action

Liz Truss, the UK's recently-appointed Secretary of State for Environment, Food and Rural Affairs, went on a whistlestop tour of the country's exhibitors at the SIAL trade show in Paris yesterday, bef...

BLOG

SIAL opens in Paris

It is an unseasonably mild and bright morning here in Paris as this year's SIAL expo gets under away. Will the mood of exhibitors match the sunnier weather?...

just-food homepage



Forgot your password?