UK Retail Briefing - February 2006

ANALYST COMMENT
 SUPERMARKETS IN THE FIRING LINE – AGAIN
Small stores
Figure 1: Supermarkets, sales and outlet numbers, 1999-2004
Delivered wholesale growing
Figure 2: Grocers – outlets numbers and leading players, 1999-2004
Concentration being led by the small stores?
THE MONTH IN UK RETAILING
 CLOTHING RETAILING
Topshop launches kids collection
Green’s Arcadia enters jewellery market
QS
…puts 50 stores up for sale
…but succumbs to administration
Ethel Austin receives cash boost
Kookaï
…bought by Bennett brothers
…and deal details released
Moss Bros ends year on a high
Oasis launches ethical line
No buyer for Sock Shop
 MULTI-SECTOR RETAILING
Boots
…gets go ahead to form Alliance
…while easy lines removed
HMV
…receives preliminary approach
…with Waterstone waiting to pounce
…but Permira bid rejected
…as Ottakar’s investigation continues
Marks & Spencer
…looks for ethical pound
…while Davies steps in for kidswear
Baugur ups Woolworths stake
‘Electric City’ debuts
 DEPARTMENT STORES
Beale posts “unacceptably low” profit
Harvey Nichols to branch into fashion
House of Fraser gets cash boost
 DIY RETAILING
Kingfisher
…to expand Trade Depot
…but B&Q restrains results
…and fire ruins B&Q offensive
 ELECTRICAL RETAILING
DSG International
…drops Dixons XL
…but looks to pick up Dabs.com
Powerhouse
…pulls out of Scotland
…and announces CVA to drop shops
 CARPET RETAILING
Sales edge up at Carpetright
 FURNITURE RETAILING
Homestyle loss increases in first-half
MFI
…sells Hygena
…and receives £21.8m boost
Solid growth at Land of Leather
Strong start for ScS
 HOME SHOPPING
N Brown sales continue to grow
 BOOK AND STATIONERY RETAILING
Books etc on the block
WH Smith
…suffers over Christmas
…and looks to bounce back with books
 SPORTS AND LEISURE GOODS RETAILING
Ashley continues sports retailing advance
 GARDEN CENTRES
Sales flat at Dobbies
Wyevale to sell-off 31 stores
EXECUTIVE APPOINTMENTS
Pilling leaves Asda
M&S appoints property director
Harvey Nichols hires legal director
Dreams management reshuffle
Blank to leave GUS after demerger
Fagan stays at DSG
Somerfield poaches B&Q man
Mr Smith goes to Somerfield
Smith in at Floors 2 Go
Ross quits Iceland unexpectedly
Instore hires retail and operations director
Blackwell's appoints Connolly
Brantano UK MD exits
Matalan beefs up board
Halfords appoints new chairman
New operations director at Kingsley Cards
Brasher to replace Mason at Tesco
Waterstone’s buying manager quits
New MD at Kwik Save
McIntyre hoping to be the Ex factor
Gap's international president to leave
Shipwright new retail director at Coast
HoF hires new womenswear development manager
Former Claire's boss joins Shoefayre
Asda supplements property team
All change at Burton and Evans
PRODUCT DEVELOPMENT – MEALS & MEAL CENTRES
 TESCO
 MARKS & SPENCER
 WAITROSE
 SOMERFIELD
 ASDA
 LIDL
 SAINSBURY’S
 WM MORRISON
ADVERTISING NEWS
 NEW CAMPAIGNS
Harrods
…launches brand-led ad campaign
…and hosts Fiat
Waterstone’s launches Spring promo
Borders rewards customers for feedback
Spring rocks according to Blue Inc
M&S retains celebrity models
B&Q spring offensive goes up in smoke
Superdrug forms 'model net' with Storm
French Connection launches marketing offensive
Avon to sponsor Footballers Wives
WH Smith offers HC paperbacks for 99p
Sainsbury's starts another Active Kids scheme
Burton launches cash machine ads
HMV to push online
Specsavers links up with Countdown
 ACCOUNT GAINS/LOSSES
Tesco
…hands non-foods brief to Cow PR
…and opts for DHL over Royal Mail
Co-op ditches DM rethink
New Look hires Euro RSCG Biss Lancaster
Thorntons searches for Dm agency
DFGW wins TK Maxx business
Somerfield drops Cardew for Gainsborough
RETAIL ADVERTISING REVIEW
 ADVERTISING EXPENDITURE
Figure 3: Total advertising expenditure by all advertisers (£m), Dec 2001-Dec 2005
Figure 4: Total advertising expenditure by all retail advertisers (£m), Dec 2001-Dec 2005
 USE OF MEDIA
Figure 5: Use of media by retail and all advertisers (%), Dec 2004 and Dec 2005
Figure 6: Use of media by retail and all advertisers (£m), Dec 2004 and Dec 2005
 TOP 25 RETAIL ADVERTISERS
Figure 7: Top 25 retailers by adspend (£), Nov 2005-Dec 2005
Food
Variety stores
Furniture
Other
Nielsen Media Research/Definitions
RETAIL SALES AND INFLATION
 RETAIL SALES
Office for National Statistics
Figure 8: Retail sales trends: January 2005-January 2006
Figure 9: Non seasonally adjusted % value change on previous year, Jan 2005-Jan 2006
Figure 10: Seasonally adjusted % volume change on previous year, Jan 2005-Jan 2006
Significant features of the latest ONS statistics
Confederation of British Industry
British Retail Consortium/KPMG
 RETAIL PRICE INFLATION TRENDS
Figure 11: Annual percentage change in retail price index for selected product groups: Jan 2005-Jan 2006
Figure 12: Annual percentage change in retail price index for selected product groups: Jan 2005-Jan 2006
Retail Prices Index
Consumer Prices Index
British Retail Consortium: Shop Price Index
SECTOR ANALYSIS – FOOD AND DRINK RETAILING
Sales trends
Figure 13: Food and drink retailers, sales trends, 1997-2005
Figure 14: Food and drink retailers as % of all retail sales: 1997-2006
Retail price inflation
Figure 15: Indices of retail prices for product categories, 2001-Jan 2006 (Jan 1987=100)
Breakdown of sales by sub-sector
Figure 16: Food and drink retailers: Breakdown of sales, by sub-sector, 1999-2005
Consumer expenditure
Figure 17: Consumer expenditure on selected product categories (£m), 1999-2005 Q3
Latest trends
Figure 18: Food and drink retailers’ sales, 2002-05
Tesco
Sainsbury’s
Asda
Marks & Spencer
Somerfield
Morrisons
SECTOR NEWS REVIEW: FOOD AND DRINK
September
 BAKERS (RETAIL)
Thorntons admits MBO rumours
 CONVENIENCE STORES
Tesco makes play for 30 BP sites
 GROCERS
Tesco
…creating jobs and looking to US
…as it mulls furniture move
…drops Norwich Union for Direct Line
…and is called into question by Wal-Mart
Asda
…begins rebrand of NI Safeway stores
…hits back at Tesco
…and weighs in with more price cuts
…as the two respond to petrol concerns
…moves ahead with In-store TV
…and online photo shop
…and notches up success with DIY
Sainsbury’s
…to increase media range
…and launches “Try something new” campaign
Somerfield
…posts slight dip
…issues bid deadline
…and sells 12 stores
Whittard
…blames downturn on terrorists
…and confirms mixed year
…as takeover approaches fail
Wm Morrison
…threatened with strikes
…as internal document angers staff
 OFF-LICENCES
Unwins to expand wine retail concept
October
 BAKERS (RETAIL)
Sales slide at Thorntons
 CO-OPS (RETAIL)
Co-op
…hits tough times
…as it exits department store market
 CONVENIENCE STORES
M&S trials food at forecourts
 GROCERS
Tesco
…swaps assets with Carrefour
…as sales soar
Asda
…slashes toy prices
…and questions its staff
Sainsbury’s
…repositions online shopping
…as campaign gets off to a flyer
…and recovery remains on track
Wm Morrison
…disposes of forecourts
…while workers strike in doubt
…and interim sales slump
Somerfield
…finally secures consortium bid
…and challenges sell-off ruling
Whittard updates like-for-likes
November
 BAKERS (RETAIL)
Greggs continues good progress
 GROCERS
Asda
…knocks down prices
…expands George
…and launches travel service
…while plotting challenge with small store format
…as sales rise in 2004
…and staff numbers to grow in 2005
Sainsbury’s
…to bring IT back in-house
…as it hits recovery road
Tesco increases online focus
 OFF-LICENCES
Majestic delivers H1 results
December
 GROCERS
Asda reveals mini store plans
Sainsbury’s
…welcomes Tchibo
…and speeds up pharmacy programme
Whittard
…receives takeover approach
…and is bought out by Baugur
Julian Graves posts excellent year
Tesco
…retains strength in Q3
…and opens telecoms centres
Safeway leaves the retailing stage
 OFF-LICENCES
Unwins
…sale puts future in doubt
…as it teeters on the brink
January
 BAKERS (RETAIL)
Greggs solid in H2
Thorntons
…posts poor first-half performance
…and gets festive boost
 CONVENIENCE STORES
M&S eyes BP for expansion
 GROCERS
Iceland
…turnaround inspired by Walker
…and reveals superb figures
Sainsbury’s
…plans January sale
…with recovery in full swing
Morrisons
…offloads further stores
…and gets mixed bag at Christmas
Tesco reports strong Christmas/New Year
 OFF-LICENCES
Sales sparkle at Majestic
Unwins appoints administrator
Thresher
…buys 200 Unwins stores
…and franchises one-third of stores
February
 BAKERS (RETAIL)
Bid and Burnett end at Thorntons
 GROCERS
Asda
…slashes prices in first-quarter
…rolls out Living stores
…and offers value on Valentine’s Day
Sainsbury’s
…trials GP surgeries
…ditches Blue Parrot
…but extends SMS loyalty scheme
Tesco
…buys Edeka stores in CR
…teams up with Apple
…goes on recruitment drive
…and announces American adventure
Ocado decides to defer float
Morrisons extends Best range
MPs come out for smaller stores
Waitrose faces chip-and-pin trouble
 OFF-LICENCES
Threshers discards Wine Cellar bid
SECTOR ADVERTISING REVIEW – FOOD AND DRINK
 ADVERTISING EXPENDITURE
Figure 19: Total advertising expenditure by food retailers, Dec 2001-Dec 2005
 USE OF MEDIA
Figure 20: Use of media by food retailers and all retailers (%), Dec 2004 and Dec 2005
Figure 21: Use of media by food retailers and all retailers (£), Dec 2004 and Dec 2005
 TOP TEN FOOD RETAIL ADVERTISERS
Figure 22: Top ten food retailers by adspend, Dec 2004 and Dec 2005
 RETAILER FOCUS
Tesco
Figure 23: Tesco, media use by adspend and as share of total, Dec 2004-Dec 2005
Figure 24: Tesco, top brands by adspend, Dec 2005
Sainsbury’s
Figure 25: Sainsbury’s, media use by adspend and as share of total, Dec 2004-Dec 2005
Figure 26: Sainsbury’s, top brands by adspend, Dec 2005
Wm Morrison
Figure 27: Wm Morrison, media use by adspend and as share of total, Dec 2004-Dec 2005
Figure 28: Wm Morrison, top brands by adspend, Dec 2005
Asda
Figure 29: Asda, media use by adspend and as share of total, Dec 2004-Dec 2005
Figure 30: Asda, top brands by adspend, Dec 2005
Nielsen Media Research/Definitions
REPORT FOCUS: OPTICIANS
 OPTICAL RETAILING SLOWS DOWN
 CONSUMERS: WHO, WHERE AND WHY
Figure 31: UK population, by age group, 2000-10
Figure 32: Percentage of consumers who wear glasses and contact lenses, by age, 2005
Figure 33: UK retail sales of optical goods and eyecare products, at current prices, 2000-05
Figure 34: Retail sales of glasses, at current and constant 2000 prices, 2000-05
Contacts outperform glasses
Figure 35: Retail sales of contact lenses, at current and constant 2000 prices, 2000-05
Figure 36: Trends in wearing of glasses and contact lenses, 2000-04
Glasses, contacts, neither
Figure 37: What consumers wear, November 2005
Who wears glasses?
Who wears contact lenses?
Figure 38: Consumers wearing glasses and/or contact lenses, by gender, age, socio-economic group and ACORN categories, November 2005
People do go to Specsavers
Figure 39: Trends in usage of main opticians, 1999-2005
Figure 40: Where consumers have bought glasses or contacts in the last 12 months and if bought, November 2005
Figure 41: Where consumers have bought glasses or contacts from in the last 12 months and if bought, by gender, age, socio-economic group and ACORN categories, November 2005
Retail Market Shares
Figure 42: Estimated market shares of optical goods and eyecare sales, 2001-04
Figure 43: Estimated market shares of optical goods and eyecare sales, 2005
Figure 44: Leading optical retailers, 2005
Retailer Profiles
Specsavers
Bare facts
Financial performance
Figure 45: Specsavers, sales and profit performance, 2000-04
Figure 46: Specsavers, trends in store numbers, 2000-05
Product mix
The future
Dollond & Aitchison
Bare facts
Financial performance
Figure 47: Dollond & Aitchison, financial performance, 2001-04
Figure 48: Dollond & Aitchison, trends in outlet numbers, 2000-05
Product mix
The future
Boots Opticians
The bare facts
Financial performance
Figure 49: Boots Opticians, financial performance, 2000-05
Product mix
The future
Vision Express
The bare facts
Financial performance
Figure 50: Vision Express, financial performance from owned shops, 2000-04
Product mix
The future
Optical Express
Bare facts
Financial performance
Figure 51: DCM (Optical Holdings) Ltd, financial performance, 2001-05
Product mix
The future
Supermarkets
Asda
Tesco
Smaller multiples
 INDUSTRY VIEWS
Advertising
Figure 52: Main media advertising, by opticians, by retailers, years to September 2001-05
Market background
What will the supermarkets do?
Can independents survive?
Diversification
Pharmacy supply/Internet supply of contact lenses
Outlook
 LONG-TERM FUTURE LOOKS GOOD
Market
Figure 53: Forecast sales of optical goods and eyecare products, at current prices, 2005-10
Figure 54: Forecast sales of optical goods and eyecare products, at constant prices, 2005-10
Figure 55: Indexed growth of optical goods and eyecare products, 2000-10