Retail Round-Up January 28th 2011
John Lewis suffers as consumer morale dips
John Lewis has reported a slow down in sales as consumer confidence plummets. The department store chain reported a 2.2% dip to £50.1m in the week to 22 January, a slowdown from the previous week’s 4.1% growth. Lesley Ballantyne, director of operational development, says that it was a “quieter week” but comparisons against last year are difficult because snow affected sales in January 2010. John Lewis emerged from the Christmas trading period in a strong position, outperforming many of its rivals on the high street with a 9% sales increase for the five weeks to 1 January.
Amazon sales leap as e-books outsell paperbacks
Amazon reported a 36% jump in sales for the fourth quarter as sales of its Kindle e-books outsold paperbacks in the US for the first time. Sales surged to $12.95bn (£8.2bn) in the three months to December, up from $9.52bn (£8.09m) in the fourth-quarter of 2009, and profit rose 8% in the three months to December to $416m (£353.4m).Amazon’s reported profit was slightly lower than analysts’ predictions largely due to the retailer offering discounts and free delivery over the Christmas period to attract customers.
Cadbury Dairy Milk to donate 20% of sales to Fairtrade
A fifth of the profit from sales of Fairtrade-branded Cadbury Dairy Milk products during Fairtrade fortnight will go towards funding solar power projects in Ghana. The initiative will be supported by an integrated marketing campaign from Cadbury designed to drive awareness of Fairtrade for the fortnight (28 February to 13 March) and beyond. The marketing activity will include digital and PR activity and in-store point of sale material. The materials stress that buying Fairtrade Cadbury products will result in solar panel funding for Ghanaian farming communities.
Record fall in family spending power as inflation takes toll
Inflation combined with widespread freezes on pay has led to a record fall in the average family’s spending power, new data suggests. UK families have £8 a week less discretionary income than this time last year, according to Asda’s monthly Income Tracker. The average family now has £172 a week to spend on non-essential items, down from £180 in January 2010. The dip represents the biggest monthly fall since Asda launched the tracker, which is compiled by the Centre for Economics & Business Research, in January 2007.
Soaring costs ‘will turn orange juice into a luxury’
Fruit juice prices are set to rise sharply this year as spiralling raw material costs turn orange and apple juice into luxury items for many households. Poor weather in key growing areas coupled with burgeoning demand from countries such as China have sent raw material costs soaring, with experts predicting factory prices could rise by as much as 80% for orange juice and 60% for apple juice in 2011. Over the past year, the price of a one-litre carton of Tropicana fresh orange juice across the big four and Waitrose has risen 22%, from an average of £1.80 to an average of £2.19 [BrandView.co.uk].
Tesco shoppers will save the planet, says Leahy
The drive to make the world a greener place will be spearheaded by the likes of Tesco and its shoppers, according to Sir Terry Leahy. The outgoing supermarket boss told the World Economic Forum in Davos that private companies such as Tesco would lead the to greener economies. Announcing the opening of two new zero-carbon stores, in Thailand and the Czech Republic, Leahy said: “As economies develop, we need to do our best to make their growth as green as possible.
Hamleys up for sale
Frozen food chain Iceland also up for sale as Landsbanki sells off assets as part of winding up process. A ‘for sale’ sign has been raised over iconic toy store Hamleys by Icelandic bank Landsbanki, in the same week as advisers are poised to be appointed for the sale of sister frozen food chain Iceland. The bank’s head of communications Páll Benediktsson said while Landsbanki has not yet started a formal sale process for Hamleys, in which it has a 65% stake, he said it will consider approaches. It has not yet hired advisers to sell Hamleys.
Poundworld to roll out multi-price store format
Single price point retailer Poundworld is to roll out it multi-price format, Discount UK, as it opens its second store in Stevenage. The retailer opened the first Discount UK store in Leeds in October as a way to widen its product base and increase its average value transaction. The news comes as the group revealed it is on track to clock up a £135m turnover in the year to March 2011, and expects turnover to exceed £200m next time.
Directors leave Comet in the wake of dire trading update
Two Comet directors are to exit the business and redundancy consultations have begun with other head office staff as the electricals specialist battles to recover after disastrous Christmas trading. Services director Toby Lousada and business support director Richard Boult are both leaving as part of restructuring to cut costs as Comet heads into the red following a 7.3% like-for-like sales fall in the peak trading period.
Keri Link is a consultant on the Interim team at FreshMinds