Top 14 UK retailers: multiple opportunities

10th October, 2016 by Arabella Mileham - This article is over multiple pages: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Retailers are battling not just each other, but also a 2% fall in wine volume sales in the UK. Arabella Mileham looks at how the top 10 store chains are coping.

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Feature findings

  • Ranges seem to have stabilised after large-scale cuts over the past 18 months, but did they get it right? Some warn of further “tweaks” and consolidation to come.
  • Competition remains fierce, and wine is a key area for the multiples to boost footfall and grow market share.
  • EDLP may be the new norm across BWS, but uncertainty over the impact of Brexit will continue to affect wine prices and consumer confidence.
  • Own label looks likely to be a new focus, attracting consumers with value and interest.
  • Consumer behaviour has evolved, with more frequent top-ups and growing convenience. Online is likely to play an increasingly important part in the offer.
  • Multiples and specialists alike are increasingly looking beyond the wall of wine to introduce an element of the “experiental” to wine merchandising, from getting consumers’ attention through crossmerchandising to blurring the lines between off-trade and on-trade.

NO ONE enjoys the weekly shop. Whether it’s topping up on your way home or an organised planned weekly outing, it can be catatonically dull and we can all think of things we would rather be doing.

Choosing wine should be a far more exciting prospect than picking up a tin of baked beans in the supermarket, and after a tumultuous 18 months of range consolidation and change, the retailers are starting to respond with ideas to make sure it is, instead of relying on pure pricing.

Own label appears more prominently in these new initiatives, a canny move when many agree price rises are inevitable in the wake of the Brexit referendum

Although positive news on the retail front in the past few weeks has calmed fears of an economic Brexit-apocalypse, it is still a fiercely competitive and tough market. Wine volume sales have fallen by around 2%, Nielsen’s MAT to 18 June 2016 shows, with values down 1.5% over the same period. This is largely due to a contraction in the entry-level £4-£5 bracket, which makes up 35.6% of the market, and the £5-£6 bracket, down nearly 7%. So far, the 2.9% growth of the smaller £6-£8 bracket has failed to offset these wider losses, but it is a promising sign for the future.

The year started well, but Andy Crossan, consumer insight director at Kantar Worldpanel, says growth slowed across the category, and, despite falling prices, household penetration dipped below 70% for the first time since December 2014. But not all retailers are equal: Crossan points to Aldi, Waitrose and Marks & Spencer, who have all reported gains in penetration over the past year.

Simon Doyle, general manager at CYT UK, argues that the evolution over the past 18 months was “painful but with the right objectives.” He says: “Shoppers were finding the wine category confusing and difficult to navigate. Fewer SKUs and more facings make navigation easier and present fewer availability challenges for suppliers. But the jury is still out on how that will eventually pan out.”

Retailers are looking to make the choice for customers more straightforward in terms of how they set up and communicate the fixture. But Nielsen analyst Marc Aston argues that one problem is that with every-day low pricing (EDLP), consumers do not understand the value so clearly.

“Before, consumers said they didn’t know how much they were getting off a bottle as it was always half-price, but almost the opposite has happened now.

“People who aren’t educated in wine go in looking for the mark-down as the indication of value, and aren’t getting that in EDLP, which makes it difficult for them.”

Which is, perhaps, why retailers are working hard to make the consumers’ task easier, and increasingly looking beyond the wine aisle for inspiration to better connect with customers and reinvigorate the category.

‘Experiential’ merchandising is on the rise, as evidenced by Lidl’s pop-up shop in Shoreditch, east London to promote its online wine range, Tesco’s Soho pop-up wine bar, Waitrose’s first consumer two-day wine festival and a new tasting club that has recently rolled out at Majestic.

Grocery retail share: supermarkets

Retailers Grocery value share Wine* value share Overtrade index Wine % chg y-o-y
Tesco 25.3 25.7 101.6 1.7
J Sainsbury 14.6 17.8 121.9 -0.6
Asda 14 13.3 95 1.8
The Co-Op 5.1 9.4 184.3 7.1
Morrisons 10.2 9 88.2 0.8
Waitrose 4.9 6.6 134.7 15.2
Aldi 4.7 5.3 112.8 5.8
Lidl 3.6 4.1 113.9 12
Marks & Spencer 3.3 3.4 103 10.2
Source: KantarWorldpanel, 52 w/e 3 January 2016

Own-label appears more prominently in these new initiatives, a canny move when many agree price rises are inevitable in the wake of the Brexit referendum because of the subsequent tumble in exchange rates (at the time of writing the pound is down 10% on its pre-referendum value against the euro), as retailers can control the price more tightly.

Whether we see more consolidation or not, it looks like the resetting and renewing across the wine aisles has prompted a discussion beyond promotional mechanics.

Read on for our round-up of the biggestselling multiple wine retailers. Sales figures are based on a combination of data provided by the retailers, with retail market share of total wine (including Champagne) provided by KantarWorldpanel for the 52 w/e 3 January 2016, covering the supermarkets.

 

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