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Property demand in UK grocery sector ‘remains strong’

Property investor demand for UK grocery assets has remained strong even in the face of wider retail sector uncertainty, the proposed Sainsbury’s-ASDA merger and Amazon’s anticipated entry into the sector, according to research.

In its latest UK Grocery Real Estate Review, Colliers International reports that £1.06 billion of supermarket assets were traded in 2018, with most demand coming from UK institutions.

Amazon is believed to be planning to open 200 UK convenience stores and is about to start testing the market with a series of small, in-town stores with the first units in Central London rumoured to be under contract.

The supermarket sector is also awaiting the Competition and Markets Authority’s decision on the Sainsbury’s-ASDA merger.  Whatever the result, the main beneficiaries of the outcome may be Amazon.

James Watson, Head of UK Retail Capital Markets at Colliers International, said: “In stark contrast to mainstream retail, the grocery sector is performing well with the main operators reporting solid trading figures.

“Consequently, 2018 was largely business as usual for property investment in the sector with volumes only marginally down and returns in line with the 10-year average.”

“Even if Amazon do enter the market it looks like their offer will be predicated on physical stores rather than a predominantly online offer. As such, this may – in time – create a further pipeline of investable assets.”

Writing in the report, Fraser McKevitt of Kantar Worldpanel, said: “Groceries are to some degree insulated from the worst challenges from online competitors. There is something inherently physical about the food, drink and toiletries people buy.

“In the last quarter of 2018, 20 per cent of households bought at least some of their groceries online – this was barely changed from the year before. Where growth did come, it was from the already converted shoppers spending more.

“When shoppers do choose to buy online, their decision is highly influenced by where they do their bricks and mortar shopping.”

“If the CMA blocks the ‘SASDA’ takeover then it will leave the two businesses worse equipped to deal with an increasingly competitive market. The CMA needs to look one step ahead and consider what this means should Amazon make a meaningful incursion in to the grocery market”.

Shoplifting is up – and self-service checkouts are the cause

Figures collected by 27 police forces from across the UK and released under the Freedom of Information act has revealed an increase of shoplifting of more than 7% over the past four years.

The shocking statistic found there were 78,110 shoplifting incidents in 2017 compared to 74,662 in 2016, 74,124 in 2015 and 72,423 in 2014.

The rise of self-service checkouts at supermarkets is attributed as a major factor.

Other incomplete figures show there were a further 46,973 shoplifting incidents along with an additional 1,659 thefts at supermarkets during 2018 until the end of the summer period.

“These figures indicate that, despite the best efforts of our members, criminals are increasingly targeting supermarkets,” said James Martin, Crime and Security Adviser at The British Retail Consortium.

“Ultimately, the costs are borne by everyday shoppers and those who rely on retail for their livelihoods. We acknowledge the difficult resourcing and prioritisation decisions which police forces face, but it is clearly time that every police force gives retail crime the strategic priority it deserves.”

Data shows that there were over 400,565 shoplifting incidents between 2014-2018 made to the police to England and Wales, with a further 59,121 call-outs recorded by police from supermarkets, such as pickpocketing, bicycle theft and raiding coin meters.

John Apter, national chairman of the Police Federation of England and Wales said: “The sad fact is that as forces struggle to meet 999-call demand, incidents such as these are increasingly likely not to be attended by officers at all which, as a serving police constable with 26 years’ service, I find quite shocking.”

Brits to spend £25bn shopping on their phones in 2019

Price comparison website uSwitch has found that Brits are likely to spend a whopping £25 billion pounds on their phones and tablets in 2019.

30 million Brits are predicted to use their phones or tablets for shopping over laptops or desktop computers this year – a massive rise of 66% – than in 2018.

Other stats reveal that half of those polled (58%) would buy online using a smart device rather than make a journey to a shopping centre (56%), with two thirds (66%) admitting shopping on smart devices was convenient and 36% saying it saved them money.

Clothes are the most popular item bought online (69%), followed by books (51%) groceries (47%) and theatre/cinema tickets (43%).

Amazon and eBay topped the polls for the most popular website destinations for shoppers at 89% and 63% respectively, followed by Argos (41%), Tesco (35%), M&S (25%), Asda (25%), Sainsbury’s (22%), John Lewis (20%) and Curry/PC World (17%).

Being comfortable is a major factor too, with 78% of those polled admitting to shopping on their phone in the living room. 14% admitted using the phone to shop at work, along with 8% on the daily commute.

Surprisingly, the bathroom is the preferred place of phone shopping for those under the age of 35, with 14% admitting they did so over the kitchen as a location (13%).

Ru Bhikha, mobiles expert at uSwitch.com, said: “For so many of us now, our smartphone is an extension of our hand and we have it with us at all times, meaning that we can shop whenever and wherever we like. Our handsets allow us to window shop all the time, and if we see something we like, it is right there at our fingertips.

“With smartphone and tablet shopping now a £25 billion industry, it’s hardly surprising that major retailers have long adopted a mobile-first approach to their websites and have even introduced their own apps to make the user experience as easy as possible. Cleaner user journeys and the ease of one-click purchasing will only add to the number of people shopping on their phones and tablets.

“Providing your phone has a decent connection to either a good broadband supply or 3G or 4G, you can shop any time and any place – and this year more Brits than ever look set to take advantage of that.”

UK retailers ‘struggle to keep up with eCommerce’

That’s the conclusion of a new report, which says that many retailers are attempting to tackle expansion of their online business without the right technology or partners.

Omnia surveyed 150 retailers across the UK as part of its Retail Pricing Wars report, with the top line data indicating retailers struggle to keep up with the rapid pace of e-commerce, with many fighting the tide without the proper technological tools.

This reflects recent findings from Microsoft that UK retailers fall behind in integrating AI and automation into business.

Key findings of the Omnia research include:-

  • 96% of the top UK retailers have a pricing strategy, but almost half base that strategy on their competition’s prices
  • 88% of those surveyed carry out price checking, but less than 50% react when their competitor changes the price of a product
  • 34% of retailers feel pressure to change their prices regularly, but only 15% make those changes frequently
  • UK retailers lose roughly 1.97 million hours (that’s 246,000 working days) each week on competitor price checking

Click here to download the full Retail Pricing Wars for free.

Footfall increases in the run up to Christmas, but remains down YoY

Retail footfall is rising from week to week in the run up to Christmas, increasing by +3.1% last week from the week before, according to Springboard.

However, despite being higher week-on-week, footfall is significantly reduced from last year, with an annual decline of -4.5%.

Springboard data says that in High Streets and shopping centres – which make up the majority of destinations – the drop in footfall was even more severe at -5.2%, with a lesser drop of -2.2% in retail parks.

Footfall was down annually on every day last week apart from Sunday, when it rose by a huge +26.3%. However, Springboard says this was in comparison with Sunday last year when the weather was extremely cold with treacherous travelling conditions.

The results are a continuation of the poor performance in November and in the first two weeks of the month, and are a clear indicator that consumers are railing back on spending.

Whilst some of the trips previously made to bricks and mortar stores are likely to have been diverted online, the vast majority of spending remains in store; and so the significant decline in footfall is clear evidence that spending this year is constrained.

This conclusion, says Springboard, is reinforced by the fact that footfall declined in all areas apart from Northern Ireland, and was in excess of -2% in every UK geography and more than -5% in five geographies.

Brits to spend seven times their weekly grocery budget on festive food

Brits are likely to go Christmas bonkers on festive indulgences this year, spending an average of £166 per person on groceries for the period, more than seven times the average weekly spend on household food and drinks.

According to research from Give As You Live, London leads the charge, with an average spend of £199 per person. Bristol comes close to the top spot with £188 per person, just edging ahead of Southampton on £187 per person.

Aberdeen makes the top five position, with the average person spending £181 per person on festive food.

Nottingham and Norwich are more modest when it comes to spending on food, with both cities spending an average of £122 per person, the lowest spend of the cities surveyed.

The survey also revealed that men are likely to want a few more pigs in blankets than women, as they are expected to splash out an average of £177 per person on food during the festive season, above women’s £154 per person.

The research also revealed that Brits will change their usual shopping habits based on Christmas advertising influencing the way they shop, with 44% saying that adverts will help them decide where to buy Christmas goodies from.

Online recipes (37%), cooking TV programmes (29%), and videos on Facebook and YouTube (18%) are also top sources of inspiration when it comes to Christmas shopping.

Greg Hallett, managing director at Give as you Live, said: “Whether it’s cooking for the family on Christmas day, eating out with friends or hosting festive dinner parties, food at Christmas time brings people together.

“But it is also expensive, which is why it’s important to budget and plan during the festive season, such as with pre-paid grocery cards, online deals, and bulk buying. These can all help keep the costs down and ensure everyone can enjoy indulging without worrying about the cost too much.”

Black Friday + Cyber Monday 2018 = £7bn

The combined revenue to UK retail from Black Friday and Cyber Monday is predicted to have reached £7 billion, according to industry forecasts.

However, there have also been reports that the focus on online has been associated with a decrease in store footfall overs the sales weekend.

The British Retail Consortium (BRC) told The Guardian that Black Friday were expected to be up on 2017, which itself saw revenue rise 8% year on yeah.

“Black Friday and Cyber Monday have become a staple fixture of the calendar year and an important one for many retailers,” a BRC spokesman said. “While it is too early to say how retailers have fared on Black Friday itself, we expect the weeks surrounding Black Friday to show some growth on last year. Whether the day itself breaks records will depend on how consumers have responded to the promotions offered this year.”

Deals comparison website Finder.com said it expected punters to spend an estimated £7bn on Black Friday and Cyber Monday purchases, combined.

And a survey by F&C Investment Trust said Britons would be spending £7.7bn over the extended shopping weekend (on top of an eye watering £19.2 million on sales so far this year).

Meanwhile, market analyst Springboard said that Black Friday and the weekend that follows do very little to help the beleaguered High Street.

It anticipated that footfall would drop by -3.7% YOY compared to Black Friday 2017 and by -2.7% over the weekend as a whole.

This follows a decline in footfall on Black Friday 2017 of -3.6%, and -1.1% over weekend, revealing the UK’s appetite for this pre-Christmas spending spree may be wavering.

“Whatever happens on Black Friday, our data over the past few years has established that it brings Christmas spending forward,”| Diane Wehrle, Marketing & Insights Director at Springboard. “This creates a magnet of spending activity at the beginning the peak trading period which then suppresses spending until the final week before Christmas, when consumers take advantage of last minute deals that are likely to be introduced by retailers to drive sales in what is a highly challenging trading climate.”

Global m-commerce ‘to take over desktop shopping by 2023’

UK consumers are on an endless mission for convenience as mobile continues its ascent to dominance as the most popular shopping channel.

Growing at a rate of 16 percent annually in the UK, m-commerce is set to be worth £88.1bn by 2022, according to new data from Worldpay.

In its annual Global Payments Report, Worldpay found the total eCommerce market in the UK is set to grow by 40 percent between now and 2022 to £240bn (9 percent CAGR).

E-wallets in particular are favoured when purchasing via mobile, currently making up 23.2 percent of online payments in the UK.

This is set for rapid growth driven by increased smartphone ownership, faster mobile networks and consumers continually looking for a more seamless payment experience. The predicted rise in mobile commerce is a strong vote of confidence for the security and convenience of the UK’s digital payments.

Worldpay’s report, which examines online shopping in 36 countries across five continents, found that m-commerce currently accounts for 38 percent of the £990 billion in global eCommerce sales, and global m-commerce is set to grow a staggering 19 percent over the next five years.

The largest markets in the world for m-commerce are China (£0.57 trillion), U.S. (£0.16 trillion), UK (£48.8 billion), Japan (£26.4 billion) and South Korea (£22 billion).

Motie Bring, general manager for the UK, Global Enterprise eCommerce, at Worldpay Inc. said: “The UK in particular is a highly-developed market, and with 99 percent of the population connected to the internet[1], e-wallets are clearly the future of mobile commerce for shoppers – but this is only the beginning. The latest innovations in device hardware, from voice recognition to facial scanning, are helping make payments more seamless and secure than ever before, prompting consumers to ditch desktop in favour of their smartphone or tablet.

To stay ahead UK merchants should invest in their own apps, building a seamless shopping and checkout experience across every device, and support the most popular payment methods.”

Worldpay has published guidelines for merchants to help capitalise on the global mCommerce opportunity:

  1. Consider developing a branded app. We know that 71 percent of shoppers prefer apps over mobile browsers when shopping on their smartphone, and many say they won’t buy from a business that doesn’t have an app.[2] It’s no longer enough to just have a mobile-optimised website – if you’re not prioritising a transactional app for your brand, you’re not putting your best foot forward.
  1. Make it easy and use biometrics to speed up the journey. Shoppers are becoming increasingly familiar with the concept of fingerprint scanning and facial recognition, so they do not shy away from using these methods as a form of authentication. Biometrics place payments at the back of the user’s mind, giving them a faster and friction-free experience, making the payment seem ‘invisible’.
  1. Identify the most popular payment methods in each territory in which you operate. There are huge differences in payment preferences across the world, and alternative payment methods are gaining share over traditional credit and debit cards. There’s no one-size-fits-all in any region so you’ll need to understand the best options for your company.

Online retailers ‘not using own data to improve performance’

Online sellers are using eCommerce solutions to gather better data insights, yet many are failing to use it to make better business decisions, according to new research.

Whilst 42% are using data to improve customer service, only 24% are using data for buying behaviour analysis and two thirds are not using it to improve the user experience.

The survey of 559 global B2B organisations by Sana Commerce found that many are still only focused on using e-commerce for sales and improving online shopping for customers – traits associated with e-commerce 1.0 and 2.0.

48% identified driving sales as the top priority for their e-commerce solution and 38% said it was to improve the user experience.

Despite having data available at their fingertips, online sellers are not using their data to achieve desired business performance outcomes. The main response to tackling competition is competing on price (47%) and increasing the online customer experience (38%) rather than enhancing the proposition.

Only a third said they would use data to improve personalisation and 26% said they would use data to improve targeting and account-based marketing.

Sana says many online sellers seem to be overlooking the true value of e-commerce 3.0 and improving integration with key business systems such as the ERP to drive broader business benefits.

Michiel Schipperus, CEO and managing partner at Sana Commerce, said: “It’s encouraging to see online sellers building on their digital transformation strategies and considering the implementation of these advanced technologies, but it’s important to first establish how they can be implemented strategically. E-commerce 3.0 has enabled better integration between internal systems as a growth strategy and way to improve businesses agility. M2M and other forms of automation represent a significant investment, so e-commerce businesses need to ensure they’re being used to their full potential and improving key business drivers.”

The survey of B2B organisations in Europe and the US was undertaken by independent market research company Sapio on behalf on Sana Commerce. You can download the report here.

Modest Christmas cheer for UK retail with £99bn ‘golden quarter’ sales forecast

Bucking the current gloomy trends, GlobalData has forecast that total UK retail sales in Q4 will rise by 2.0% to £98.8bn.

Food & grocery spend is set to drive this, as food inflation leads to a 2.5% increase in this category, while Non-food spend is forecast to grow at 1.6%, with health & beauty predicted to be the best performing retail sector.

GlobalData says that while it has been a year of retail failures, profit warnings and store closures so far, the ‘golden quarter’ offers retailers the opportunity to gain sales from consumers who are finally ready to prioritise shopping.

However, it cautions that low consumer confidence and confusion over Brexit will inhibit big-ticket spend, and that trading down to value retailers is becoming more widespread, due to the rapid store expansion of players such as B&M and Home Bargains.

Food & grocery

GlobalData says growth within food & grocery will slow to 2.5% this Christmas, against an inflation-driven comparative in Q4 2017 (3.6%), as food inflation falls.

Both food and alcoholic beverages will see a significant fall in volume growth compared to Q4 2017, as consumers trade down in both of these categories.

However, it says food is more resilient to low consumer confidence than other retail sectors due to its essential nature. Expected trends that retailers will focus on over Christmas include alcohol-free beverages (e.g. flavoured tonic waters), specialist teas, and plant-based protein side dishes (e.g. lentils, quinoa, chickpeas & tofu).

Fashion & beauty

It has been a less than stellar year for many clothing retailers and Q4 will be no different, according to GlobalData. Midmarket players are expected to be left out in the cold once again as shoppers trade up for enhanced quality, making it yet another challenging Christmas ahead for clothing market leader M&S.

Giving shoppers a reason to make wants-driven purchases, and forgo spending on other categories, through compelling product and value for money will be the key to a successful festive season. Online pureplays such as ASOS and boohoo are likely to be the biggest winners this Christmas given their potent mix of discounts, and fast and convenient fulfilment.

Health & beauty remains a ‘winner’ at Christmas and shoppers are expected to splurge on premium lines for both gifting and self-treating. This is helped by a wider choice of brands and greater shopper knowledge, especially in terms of ingredients. With the appeal of department stores on the wane, we expect online pureplays to take advantage, luring shoppers in with discounts and loyalty schemes.

Electricals & entertainment

With Q4 accounting for a third of annual electricals spend, GlobalData says the period offers retailers the best opportunity to capture spend as shoppers benefit from discounting periods such as Black Friday and early Boxing Day sales. Less generous discounting last year deterred shoppers from splurging on these occasions, but volumes are forecast to grow this year as cost prices level.

Mobile phones, laptops and tablets will offer the greatest growth potential for retailers, with Apple releasing its budget-friendly iPhone XR and MacBook Air in the period. While Apple is still much more expensive than its competitors, these new releases offer retailers an opportunity to entice less-affluent shoppers to trade up when buying gifts during the festive season.

In entertainment, the release of Red Dead Redemption 2 this month has been highly anticipated and is likely to drive spend in Christmas gifting. More Nintendo Switch games are available this year which is necessary to mitigate the lack of a stand-out new console.

Home

The home category, which includes furniture and floorcoverings, homewares, and DIY and gardening is forecast by GlobalData to grow 0.6% in the final quarter of 2018 compared with the previous year. Much of this growth will come from homewares (+1.4% year-on-year), which has been more resilient in 2018 than other home categories; consumers have sought to refresh their homes, and interest in interior design has grown through social media and fashion retailers’ own home collections. The effects of the latter should be particularly notable over the seasonal period.

Online

Capping off a strong year for the UK online market in which multichannel retailers have consistently reported robust digital growth, Christmas is set to be the icing on the cake with more consumers than ever choosing to buy online for the festive period, according to GlobalData.

It says online pureplays will prove popular again this year thanks to their best-in-class shopping experience. Amazon is set to remain a top choice for gift purchases as its broad product range appeals, and as Amazon Prime subscribers turn to the retailer as their first port of call.

Online spend will be bolstered this Christmas by Instagram’s shopping function, which launched this year, as well as Pinterest featuring direct links to retailers’ product pages. The ease of purchase through social media will drive impulse purchases of partywear as well as gifts across sectors.