UK Retail Briefing - Household Goods Focus - September 2007

Table of Contents

• Analyst Comment
• Green? Who cares
• 1990s
• 2000s
• A media event
• The Month in UK Retailing
• Bakers (retail)
• Thorntons profits on the rise
• Co-ops (retail)
• Co-op
• ...launches ethical consultation
• ...and sells struggling Shoefayre to rival
• ...as it reveals that food business was strong in H1
• Grocers
• Asda
• ...appoints former M&S director to run George
• ...as boss disagrees with Tesco' s green policies
• Morrisons' profits jump in H1
• Sainsbury' s
• ...opens books to Delta Two
• ...before Delta Two enters talks with Sainsbury' s trustees
• Supermarkets accused of milking customers by OFT
• Tesco
• ...to launch Express in Hungary and Czech Republic
• ...as CC makes provisional ruling against Slough acquisition
• ...as Tesco plans to double Homeplus stores
• ...and pay farmers more for milk
• ...before launching car insurance comparison site
• ...and sustainable consumption institute
• Waitrose to invest £800m in new stores
• Clothing retailing
• Alexon reports jump in H1 profits
• Fat Face sees jump in profits
• French Connection loss narrows in H1
• Primark and Mothercare investigate sweatshop allegations
• Footwear retailing
• Stylo narrows loss in H1
• Third of Qube stores to convert into Office
• Co-op sells struggling Shoefayre to rival
• Mixed goods retailing
• Woolworths
• ...LFLs edge ahead in H1
• ...as Commission clears Woolworths-Bertram merger
• Multi-sector retailing
• Alexon reports jump in H1 profits
• HMV reports promising start to financial year
• Mixed Q2 results for Home Retail
• Next profit up, LFLs down in H1
• Department stores
• Debenhams predicts 5% drop in LFLs
• John Lewis
• ...ramps up online offer
• ...as H1 profits jump 51%
• Strong FY figures for Selfridges
• Electrical retailing
• Kesa sees profits fall in H1
• DSG reports sales growth in first quarter
• Home shopping
• Findel acquires Choices UK wholesale arm
• Health & beauty retailing
• Body Shop founder dies
• Book and stationery retailing
• Borders' UK stores sold to private equity firm
• Sports and leisure goods retailing
• Solid H1 performance for JD Group
• JJB issues profit warning
• Sports Direct
• ...sees trading remain ' difficult'
• ...and acquires Nevisport
• Jewellers
• Signet profit inches in H1
• Garden centres
• Hunter ups ante in garden centre battle
• Toys and games retailing
• Game Group back into the black in H1
• Executive Appointments
• Allkins to leave Beales
• Ann Summers head of marketing quits
• Asda appoints former M&S director to run George
• Asos appoints marketing director
• Game appoints Axon
• Jessops' finance chief quits
• Littlewoods to shed staff
• Morgan appoints managing director
• Morrisons appoints marketing chief
• Sainsbury' s loses head of corporate affairs
• Tesco
• ...sees Robinson quit Direct
• ...and appoints IT chief as operations director
• Threshers appoints new chief
• Product Development -- Meals and meal centres
• Asda
• Marks & Spencer
• Morrisons
• Sainsbury' s
• Somerfield
• Waitrose
• Advertising News
• New Campaigns
• B&Q to launch Colours campaign
• Banderas to be star of M&S
• Borg and McEnroe star in Tesco queue ad
• Burton links up for store-card promotion
• Comet nationwide computer care and repair campaign
• D&A TV campaign to raise awareness of personal advice service
• Debenhams to launch ad assault
• Greggs unveils online activity
• HMV.com email campaign
• Ian Wright latest Asda signing
• JJB launches holiday competition
• Kidd axed by M&S
• M&S showcases new advert
• MFI sponsors Hell' s Kitchen show
• New Look press campaign
• PC World to offer free online security
• QS links with Gala Bingo
• QS rebrands into Store21
• Ruby Stewart to front Asda lingerie ads
• River Island promotion with Look
• Somerfield launches local grocer campaign
• Spar launches press campaign
• Staples launches back-to-school campaign
• Sweaty Betty looks to increase online retail
• Take That new faces of M&S
• Tesco Direct signs McCutcheon
• Tesco named as green partner of LFW
• Tube bans Ann Summers ads
• Waitrose backs farmers with new campaign
• Account gains/losses
• Carphone Warehouse tasks Kitcatt Nohr with DM
• Thorntons appoints Shop
• Magnet hires MediaVest Manchester
• Retail Advertising Review
• Advertising expenditure
  • Figure 1: Total advertising expenditure by all advertisers (£m), July 2003-July 2007
  • Figure 2: Total advertising expenditure by all retail advertisers (£m), July 2003-July 2007
• Use of media
  • Figure 3: Use of media by retail and all advertisers (%), July 2006-July 2007
  • Figure 4: Use of media by retail and all advertisers (£m), July 2006-July 2007
• Top 25 retail advertisers
  • Figure 5: Top 25 retailers by adspend (£), June 2007-July 2007
• Food
• Furniture
• Optical Retailers
• DIY
• Other
• Nielsen Media Research/ Definitions
• Retail Sales and Inflation
• Retail sales
• Office for National Statistics
  • Figure 6: Retail sales trends: Aug 2006-Aug 2007
  • Figure 7: Non seasonally adjusted % value change on previous year, Aug 2006-Aug 2007
  • Figure 8: Seasonally adjusted % volume change on previous year, Aug 2006-Aug 2007
• Significant features of the latest ONS statistics
• Confederation of British Industry
• British Retail Consortium/KPMG
• Retail price inflation trends
  • Figure 9: Annual percentage change in retail price index for selected product groups: Aug 2006-Aug 2007
  • Figure 10: Annual percentage change in retail price index for selected product groups: Aug 2006-Aug 2007
• Retail Prices Index
• Consumer Prices Index
• British Retail Consortium: Shop Price Index
• Sector Analysis -- Household Goods
• Sales trends
  • Figure 11: DIY and furniture retailers, Sales trends, 1997-2007Q2
  • Figure 12: DIY and furniture retailers as % of all retail sales: 1997-2007(e)
• Retail price inflation
  • Figure 13: Indices of retail prices for product categories, Jan 2001-Jun 2007 (Jan 1987=100)
• Sales by sub-sector
  • Figure 14: Household goods retailers: Breakdown of sales by sub-sector, 1999-2007(e)
• Consumer expenditure
  • Figure 15: Consumer expenditure on selected product categories (£m), 1999-20067Q1
• Household goods retailers: latest trends
• DIY retailers
  • Figure 16: Outlet numbers operated, by leading hardware/DIY retailers, 2003-06
• B&Q
• Homebase
• Focus
• Topps Tiles
• Wickes
• Furniture retailers
  • Figure 17: Outlet numbers operated, by leading furniture, homewares and floorcoverings retailers, 2003-06
• Homestyle
• Carpetright
• MFI
• Dreams
• Land of Leather
• ScS
• ILVA
• Ikea
• Sector News Review: Household Goods Retailing
• April
• DIY retailing
• Kingfisher FY profits fall 11%
• Topps Tiles H1 sales rebound
• Carpet retailing
• Carpetright struggles in H2
• Furniture retailing
• Land of Leather H1 sales up 22%
• ScS records like-for-likes fall
• May
• DIY retailing
• US DIY giant set to save Focus?
• Home Retail reports mixed FY results
• Wickes LFLs storm ahead
• Carpet retailing
• Carpetright grabs smaller rival
• Furniture retailing
• Land of Leather Q3 LFLs fall
• ScS H1 profits slump
• June
• DIY retailing
• Focus buyer looks to Wickes' saviours
• Home Retail reports "strong start" to year
• Kingfisher Q1 sales boosted by warm weather
• Carpet retailing
• Lord Harris mulls Carpetright bid
• July
• DIY retailing
• Kingfisher announces push in Russia
• Carpet retailing
• Carpetright FY LFLs slip
• Furniture retailing
• Ikea to axe 300 managerial jobs
• ILVA lost £11.5m prior to UK launch
• Homewares retailing
• Dunelm reports strong FY
• August
• DIY retailing
• Kingfisher sales hurt by UK rainfall
• Wickes H1 LFLs surge ahead
• Carpet retailing
• Solid start to the year for Carpetright
• Furniture retailing
• Strong H1 for Dreams
• Land of Leather increases FY LFLs
• ScS LFLs still down
• September
• DIY retailing
• Mixed Q2 results for Home Retail
• Kingfisher
• ...posts strong H1
• ...as B&Q small stores review signals U-turn
• ...before Kingfisher announces B&Q revamp
• Furniture retailing
• Land of Leather increases FY profit
• Steinhoff reveals Harveys, Cargo results
• Ikea reports strong FY sales growth
• Homewares retailing
• Dunelm FY profit up 7.8%
• Sector Advertising Review -- Household Goods
• Advertising expenditure
  • Figure 18: Total advertising expenditure by household goods retailers, July 2003-July 2007
• Use of media
  • Figure 19: Use of media by household goods retailers and all retailers (%), July 2003-July 2007
  • Figure 20: Use of media by household goods retailers and all retailers (£), July 2003-July 2007
• Top ten household goods retail advertisers
  • Figure 21: Top ten household goods retailers by adspend, July 2006-July 2007
• Retailer focus
• DFS
  • Figure 22: DFS, media use by adspend and as share of total, July 2006-July 2007
  • Figure 23: DFS, top brands by adspend, July 2007
• MFI
  • Figure 24: MFI, media use by adspend and as share of total, July 2006-July 2007
  • Figure 25: MFI, top brands by adspend, July 2007
• B&Q
  • Figure 26: B&Q, media use by adspend and as share of total, July 2006-July 2007
  • Figure 27: B&Q, top brands by adspend, July 2007
• Homebase
  • Figure 28: Homebase, media use by adspend and as share of total, July 2006-July 2007
  • Figure 29: Homebase, top brands by adspend, July 2007
• Nielsen Media Research/ Definitions
• Report Focus: Photographic Retailing
• Camera market now dominated by digital
  • Figure 30: UK consumer expenditure on photographic and optical equipment, 2002-07
  • Figure 31: UK consumer expenditure on photographic and optical equipment, 2002-07
• Demand driven by new product development
• DSLRs are highly prized
• Single-use becoming redundant
• Camera phones not yet the main camera
• Very challenging conditions for retail
• Distribution patterns swing to generalists
• Film sales nosedive
• Kiosks for the future
• Online also growing
• Home photo printing has grown
• Many choose not to print photos
• Internet sharing of photos increases among youth
• Three main consumer types
  • Figure 32: Main consumer typologies, June 2007
• Main cameras used are digital now
• Spending on photographic and optical equipment
  • Figure 33: UK consumer expenditure on photographic and optical equipment, 2002-07
• Digital now dominates
• Total market volumes begin to slide
  • Figure 34: Annual UK retail sales of cameras, by volume and value, 2002-07
• Whirlwind changes in digital market
  • Figure 35: UK retail sales of digital cameras, 2002-07
• DSLRs at higher prices
• Film cameras become history
  • Figure 36: Annual UK retail sales of film cameras, 2002-07
• Single-use falling away
• ...compacts are so much cheaper
• ...because mobile phone cameras are handy
• ...but innovative marketing is shoring up volumes
  • Figure 37: The annual UK market for single-use cameras, 2002-07
• Film market also slumps
  • Figure 38: The UK market for film, 2002-07
• Camcorders similar to digital cameras
  • Figure 39: Annual UK market for camcorders and video cameras, 2002-07
• Consumers: who, where and why
• Digital dominates cameras used
• A third snap with their mobiles
• Film is still significant
  • Figure 40: Types of cameras used, June 2007
• Half the population use digital
  • Figure 41: Users of digital and analogue cameras, June 2007
• Film compacts have an older profile
• Digital SLR users catch up with film
• DSLR users are younger
• Digital compacts used by the masses
• Camera phones popular with youth
• Death knell for compacts?
• Disposables used most by 16-24s
• Non-users older and poorer
• Digital videos appeal to family age groups
  • Figure 42: Cameras used, by gender, age and socio-economic group, June 2007
• Age and affluence key factors
  • Figure 43: CHAID analysis of camera users, June 2007
• Where they buy cameras
• Currys shares top slot with Argos
• Larger and wider audience
• Scope for developing niches
  • Figure 44: Outlets used for buying cameras in the last three years, 2003-07
• Currys and Argos for the masses
• Jessops attracts well-heeled shoppers
• Internet shoppers under 45 and affluent
• Youth favour mobile phones
• Non-buyers are older
  • Figure 45: Where consumers buy cameras, by gender, age and socio-economic group, June 2007
  • Figure 46: Where consumers buy cameras, by gender, age and socio-economic group, June 2007
• More outlets used for cameras
  • Figure 47: Where consumers buy cameras, by gender, age and socio-economic group, June 2007
• Where photo processing is done
• Home prints are popular
• 9% use digital storage
  • Figure 48: Where film/digital processing/printing is done, 2005 and 2007
• Where film/digital photo processing is done
  • Figure 49: Where film/digital processing/printing is done, June 2007
• 35-44s favour home printing
• Boots attracts better-off 16-34s
• Youngsters opt for supermarkets
• Upscale choose not to print
• Ds use ' other chemists'
  • Figure 50: Where film/digital processing/printing is done, by gender, age and socio-economic group, June 2007
• Other sources of digital and film processing
  • Figure 51: Where film/digital processing/printing is done, by gender, age and socio-economic group, June 2007
• Where the camera users process photos
• Film users favour Boots, specialists and photo processors
• Film SLR users process digital photos at home
• Digital camera users opt for home prints
• Digital camcorder users favour supermarkets and home
  • Figure 52: Outlets used for processing photos, by type of camera used, June 2007
  • Figure 53: Type of camera used, by outlet used for processing photos, June 2007
• Profiles of leading Photographic Retailers
• Specialists
• Jessops
• Financial performance
  • Figure 54: Jessops UK, group financial performance, 2002-06
• Store portfolio
  • Figure 55: Breakdown of Jessops stores, by type of location, November 2006
  • Figure 56: Jessops, outlet data, 2002-06
• Retail offering
  • Figure 57: Jessops Plc, breakdown of turnover, 2004-06
• Operational issues
• Advertising and marketing
• Other camera specialists
• Industry Insights
• Overview of photo retailing
• The state of independents
• Rise of the general retailers
• Explosion in Internet sales
• Internet as an information source
• Many types of online retailers
• Fashion will be a key driver
• Retailers need to look more modern
• Overview of photo processing
• What will youth demand from photos?
• The future
  • Figure 58: UK consumer expenditure on photographic and optical equipment, 2007-12
• Outlook