Success: Business growth

Showing posts with label Business growth. Show all posts

Aldi growth

German-owned Aldi has overtaken the Co-operative as Britain's fifth biggest supermarket, industry data shows.

Aldi's sales rose 12.4% year-on-year in the 12 weeks to 29 January, taking its market share to 6.2% and ahead of the Co-op's 6%, according to research firm Kantar Worldpanel.

It underlines the challenge the big retailers have faced from discounters such as Aldi and its German rival Lidl.

Sales at Lidl rose 9.4%, taking its market share to 4.5%.

"Underpinned by an extensive programme of store openings, the past quarter has seen Aldi attract 826,000 more shoppers than during the same period last year," said Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel.

Building your reputation

What makes a brand attractive to customers? And how can small businesses grow their public profile? From offering excellent customer service to choosing a memorable name for your company, our experts gave a range of valuable advice on boosting your business reputation in our recent live Q&A.

One of the first questions came from reader Sonia Trehan. She asked: “What’s the best way for a young business to get the attention of press in our field?”

Tesco - does everyone win?

There is, in fact, something for everyone in the merger announcement. Green lobby? Tick. The deal will, we are told, reduce waste. Suppliers? Tick. It will present a “broader market opportunity” whatever that means.

And at the bottom of the announcement, consumers are there again. As well as delighting us the merger will “create attractive innovation opportunities” to serve us.
Mustn’t forget shareholders. They get synergies and some blah about Tesco retaining market leading retail and wholesale expertise. Tick!

Yep, this £3.7bn cash and share deal is a win, win, win! And Tesco is trying very hard to make you believe it.

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Tesco deal

According to the Euromonitor data, if the merger completes, almost every third pound spent in convenience stores throughout the UK would flow into the pocket of the newly merged company, potentially drastically changing the landscape for those kinds of outlets.
In 2016, Tesco already had a market share of close to 17 per cent in the convenience stores sector, beating second-placed Co-operative Group, which had a 14.9 per cent hold.

Spar held 9 per cent of the market, with big brands Sainsbury’s and Marks & Spencer clocking it at around 8.5 per cent and 7.5 per cent respectively. Thanks to its ownership of brand like Budgens and Londis, Booker already boasted a market share of 10.7 per cent.
“The position of Booker as a supplier to so many of Tesco’s rivals may raise some difficult questions about the retailers power to potentially set wholesale prices and control the flow of goods to a number of smaller competitors,” he said. In order to avoid complications, the combined group may be forced to sell some parts of the business, like the Londis or Budgens chains, he added.

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The good times cannot last

Profit warnings are on the up as British companies show the first signs of pressure from the falling pound, according to figures from EY.

Listed firms issued 73 profit warnings in the final three months of 2016, up from 68 in the previous three quarters.

Another 27 have issued warnings in January, including major businesses such as BT, Pearson, Mitie and Premier Foods

Analysts at EY believe this could be a sign the period of steady corporate performance may be nearing an end.

“A strong end to 2016 represents the calm before the storm. The headline numbers show the UK economy weathering the initial impact of the Brexit vote remarkably well. But, we expect 2017 to be a very different year and for many companies a much tougher one,” said Alan Hudson, EY’s head of restructuring for UK and Ireland.

“There is a gap between winners and losers, one which in many cases predates the Brexit vote and stems from ongoing structural weaknesses that will leave companies exposed to the significant changes and new challenges that lie ahead.”

That includes a disparity between companies which suffer from the fall in the pound and those which benefit from a weaker sterling.

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Merger is 'low risk'

The UK's biggest supermarket group, Tesco, has agreed to buy UK’s biggest food wholesaler, Booker Group, in a £3.7bn deal.

Tesco's chief executive Dave Lewis told the Today programme the two businesses had a complementary set of skills and he saw the merger as "low-risk" and something that would "enhance choice, quality and value".

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CMA and Tesco

Will the competition watchdog back the deal?

Tesco already controls nearly 30% of the UK grocery market – nearly twice as big as its closest rival, Sainsbury’s. It operates about 1,750 Tesco Express convenience stores and 780 One Stop outlets in the UK as well as more than 900 supermarkets.

The merger would give Tesco access to 5,400 more convenience stores in Booker’s brand groups and a further 2% share of the UK grocery market.

Tesco already has a 17% share of the convenience store sector, according to Euromonitor, and the merger with Booker would take that up to 27%. The Co-op, its nearest rival, has a 15% market share.

Tesco believes the merger will get the green light from competition authorities because it will not own the thousands of stores supplied by Booker. In theory, it would not be able to control prices in these stores as they are run and owned by independent operators.
It may also be hoping that the regulator will look at the grocery market as a whole, rather than separating out the convenience sector. When Tesco bought T&S Stores, the owner of the One Stop chain, in 2002, the deal was cleared because regulators judged the convenience store market to be separate from the supermarket business. But its view may have changed.

However, the deal would add to Tesco’s already massive power with food manufacturers, farmers and brands.

What does it mean for shoppers?

In theory, Tesco’s better buying clout and more efficient operations should lead to lower prices for shoppers.

However, in some areas Tesco could control the supply of groceries and alcohol, not only to its own local supermarket and Tesco Express but to dozens of local independent convenience stores, cinemas and cafes. Such widespread power could reduce competition and keep prices high.

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Why is Tescos buying Budgens owner?

What is Booker?

Booker is a grocery wholesaler supplying 125,000 independent convenience stores as well as 468,000 restaurants, pubs and leisure facilities such as cinemas.
The group employs 13,000 people, had sales of £5bn and made £155m in operating profit in the year to March 2016.

It is the UK’s largest cash-and-carry operator via its 172-store Booker chain and Makro, which has 30 outlets. Booker also controls the Premier, Londis, Family Shopper and Budgens symbol groups which make up about half of the retail clients it supplies.
Premier is the largest branded group with 3,358 outlets, while Londis has 1,903, Budgens has 150 and Family Shopper 52. Booker doesn’t own these stores – they are all independently run and owned – but it sells them a large proportion of their stock and assists with marketing, IT and a whole range of other services making for a close relationship.
The group’s Booker Direct service also delivers grocery supplies to most of the major cinema chains, including Odeon and Cineworld, the national prison service and provides the limited array of non-own label food sold in Marks & Spencer.

Booker also supplies 450,000 caterers including major chains such as Wagamama, Carluccios and Byron burgers and 700,000 small businesses.

Booker opened its first store in Mumbai in 2009 and now has six wholesale outlets in India, where it also runs the Happy Shopper brand.

Why does Tesco want to buy Booker?

There are four main reasons:

• Shoppers are moving away from big supermarkets and locating suitable new sites for its Tesco Express and One Stop chains has become more difficult. Tesco wants to extend its reach by supplying thousands of independent convenience stores.
• Buying Booker would also take Tesco into catering supplies – a new fast-growing market as people increasingly opt to dine out or eat takeaways rather than cook at home.
• If the deal goes through Tesco will have access to more than 5,000 corner shops where customers can pick up goods ordered online or access Tesco services such as banking and its mobile phone network.
• The merger will give it more clout with suppliers and cut costs by merging distribution and other operations. Analysts estimate Booker will add about £2bn-£3bn to Tesco’s current £45bn of buying power. Meanwhile, Tesco estimates it will save £175m a year in costs, £96m of which will come from improved procurement.

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Ideas are easy but execution is difficult

Speaking after they judged Notonthehighstreet.com’s Make Awards, Simon Belsham tells Matthew Caines about his experience of leading the online marketplace.

What’s your business background?

My parents had a small toy shop when I was growing up, which, as a kid, was the coolest thing. My brother and I used to pick Star Wars figures out when we went to the cash and carry. Then Toys R Us came to town in the mid-Eighties and forced the shop to close.

I’ve always been interested in technology. My brother and I used to code computer games growing up, by which I mean basic ones. I always have to caveat this for people who can really code.

I did an internship early on at Boots, before a stretch at Tesco. From about 2010 onwards I’ve been focused on online retail. I spent a couple of years at [online supermarket] Ocado, then went back to run Tesco Online, before joining Notonthehighstreet.com (NOTHS).

What turns a good idea into a great business?

One thing I’ve definitely learnt in my career is that ideas are easy, but execution is difficult. There’s a big difference between businesses that have a good idea and those that make it. Outcomes are often determined by how good a leader is at motivating others, and their ability to make good decisions around technology.

Working for Tim Steiner, [chief executive] at Ocado, was a great example of that. The business was entering a market dominated by the big four brands. Against all odds, it was able to grow, because of his approach.

I ask myself now, as chief executive, three things. First, do I know what we need to do? That means keeping perspective. Second, can I get my team to deliver what I know we need to do? That requires constant clear communication and decisions. And finally, are we delivering on results? That means going back to the first question and testing outcomes against it.

How would you describe NOTHS and what it does?

I think of NOTHS very much as a modern day high street. Thirty years ago, the high street was the centre of the community – people knew who you were. You could go there for excellent service.

We’re bringing some of those same values that make a local high street special and combining it with a modern retail approach. We’re a curated marketplace for 5,000 small businesses, offering jewellry, homeware, food and more. We bring SMEs from across the UK to customers around the world. Last year had more than 2.7m people shop with us, with SMEs shipping to more than 150 countries.

People such as [Tesla and SpaceX founder] Elon Musk think that technology is going to take away a lot of jobs, but I believe in it augmenting people, rather than replacing them. NOTHS is a great example of that. Technology can augment traditional craft and business skills.
Personalisation is something we do a lot of and it brings an empathy back into the product in a post-globalisation world. And we don’t allow just any small business to come on the site. Their produce has to be unique, innovative and high quality.

What have you learnt from working with NOTHS’s partner small businesses?

More people than ever are becoming self-employed. I think that trend will continue to grow in the next 10 years. There will be a shift of people who work for big companies, leaving to work for smaller ones.

About 90pc of our partner small businesses are founded by women

Part of the reason for that is technology, which makes is far easier to start a business than ever before. That’s across the board, from raising finance, to marketing, to manufacturing. Technology means that micro businesses can access tools that only used to be available to large companies.

What that fuels is a means for people to have a different kind of working life. About 90pc of our partner small businesses are founded by women, and NOTHS was founded by entrepreneurial women.

It’s about flexibility and blending work and life together. And people can live where they want; they don’t have to be based in London anymore. It’s all part of a long-term societal shift.

What’s next for the company?

Our focus this year will be on further building our core gifting business in the UK, by expanding our categories and bringing more innovative products to the site. Experiences are one of the fastest growing gift categories at the moment, so bringing more of those to the site – gin-making, canal boat stays and so on – will be key.

Another focus is international growth. About 7pc of our sales are international. It’s the fastest growing area of the business, despite the fact that we do no marketing outside of the UK. We want to keep exploring ways to expand our global reach.

But there’s more that we can do in the UK. We recently joined up with University of the Arts London for the “Passion for Pattern” project, which takes an old retail idea – own-label products – and applies modern thinking.

We worked with a graphic design graduate from the Chelsea College of Art, who created a series of prints. We bought and gave them to our partner SMEs to turn into products. They interpreted and used the designs to create exclusive items – everything from stationery to phone cases. Our future lies in that kind of product innovation.

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