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UK Retail Briefing - August 2006

ANALYST COMMENT
 SOME NEW IDEAS IN FURNITURE
Asda
Ilva
Large stores
Competitive market
Two other negative points
Will they succeed?
THE MONTH IN UK RETAILING
 CO-OPS (RETAIL)
Midland, Ilkeston Co-ops in merger talks
 CLOTHING RETAILING
Alexon sees troubles continue
Marchpole acquires luxury clothing company
Matalan
…founder given six weeks to bid
…and increases offer
Mexx to go online
Moss Bros experience challenging first-half
 MIXED GOODS RETAILING
Instore like-for-like sales up 7.3%
Woolworths launches delivery service
 MULTI-SECTOR RETAILING
GUS expects Experian to raise £800m
McLaughlin steps down at HMV
M&S healthy range drives growth
 DEPARTMENT STORES
Debenhams buys nine Roches stores
Christmas comes early at Harrods
House of Fraser
…sees Baugur bid imminent
…and decides to recommend it
 DIY RETAILING
Kingfisher report mixed results
Wickes
…sees retail suffer
…as Bird flies the nest
 ELECTRICAL RETAILING
PRG decides on administration for Powerhouse
 CARPET RETAILING
Carpetright sales hit by heatwave
 FURNITURE RETAILING
Land of Leather continues good run
MFI
…close to sale
…to MEP
 HEALTH AND BEAUTY RETAILING
Alliance Boots completes merger, updates trading
Superdrug
…sees sales rise in 2005
…and sees sales success to June
 BOOK AND STATIONERY RETAILING
Borders to axe 50 managers
 SPORTS AND LEISURE GOODS RETAILING
Blacks Leisure suffers like-for-likes fall
JJB
…sees Ashley up stake
…as Rangers deal and World Cup boosts sales
 JEWELLERS
Signet
…reveals strong results
…and may face takeover bid
…which shareholders resist
 TOYS AND GAMES RETAILING
Profits soar at Early Learning Centre
 MISCELLANEOUS SPECIALIST RETAILING
Sales success continues at Halfords
EXECUTIVE APPOINTMENTS
Esprit
…appoints new global directors
…and gets Gerry Weber MD
Spitz leaves Shoe Studio Group
Ayres returns to Selfridges
Warehouse Express management appointments
Thorntons shuffles board
Burberry appoint menswear chief
Littlewoods Shop Direct appoints sales and marketing director
John Lewis hires two external directors
Alliance Boots creates new positions
Benjys CEO suspended
Frank Usher director exits
Travis Perkins appoints marketing director
McLaughlin steps down at HMV
McCarthy to be HoF chairman?
Mosaic shakes up Oasis team
Borders to axe 50 managers
PRODUCT DEVELOPMENT – MEALS AND MEAL-CENTRES
 ICELAND
 MARKS & SPENCER
 MORRISONS
 SAINSBURY’S
 SOMERFIELD
 TESCO
 WAITROSE
ADVERTISING NEWS
 NEW CAMPAIGNS
Littlewoods to sponsor Trinny and Susannah
Play.com links with popcorn
Staples to launch TV campaign
Homebase ties with cancer charities
British luxury goods brands boost image
M&S signs Elizabeth Jagger for autumn campaign
Jeremy Guscott appointed brand ambassador of Austin Reed
Roxy music to hit M&S
Laughing Cow hits Sainsbury's
Fullcircle launches anniversary campaign
Ann Summers signs Lawler
Topshop launches Lens at flagship
 ACCOUNT GAINS/LOSSES
HMV
…hires Quiet Storm
…and appoints Concango for hmvdigital.com task
Spalding appoints for UK promotion
Yellow Door open for French Connection
Billington Cartmel to handle Threshers task
WCRS wins Littlewoods ad brief
Hobbs appoint Exposure for brand extension task
Boots takes on e-Dialog
Draft FCB picks up carpet brief
Asda reappoints Carat to handle media account
John Lewis drops Burkitt
Co-op looks to Rapier
Golley Slater wins Neal's account
New Look holds brand review
Basler womenswear ups London presence
Fila to roll out store openings
Baugur adds to small label portfolio
QS Discount goes online
Owen Owen sells store freehold
Burberry looks to digital agencies
Travis Perkins looks for CRM agency
Evans pumps for Leith
Mamas & Papas appoints Neutralize
BD-NTWK to handle Tesco local store marketing
OKA appoints Tequila to DM task
IC Companys pulls out of UK concessions
Majestic Wine Warehouses reappoints Haygarth
RETAIL ADVERTISING REVIEW
 ADVERTISING EXPENDITURE
Figure 1: Total advertising expenditure by all advertisers (£m), June 2002-June 2006
Figure 2: Total advertising expenditure by all retail advertisers (£m), June 2002-June 2006
 USE OF MEDIA
Figure 3: Use of media by retail and all advertisers (%), June 2005 and June 2006
Figure 4: Use of media by retail and all advertisers (£m), June 2005 and June 2006
 TOP 25 RETAIL ADVERTISERS
Figure 5: Top 25 retailers by adspend (£), May 2006-June 2006
Food
Furniture
DIY
Other
Nielsen Media Research/Definitions
RETAIL SALES AND INFLATION
 RETAIL SALES
Office for National Statistics
Figure 6: Retail sales trends: July 2005-July 2006
Figure 7: Non seasonally adjusted % value change on previous year, July 2005-July 2006
Figure 8: Seasonally adjusted % volume change on previous year, July 2005-July 2006
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: July 2005-July 2006
Figure 10: Annual percentage change in retail price index for selected product groups: July 2005-July 2006
Retail Prices Index
Consumer Prices Index
British Retail Consortium: Shop Price Index
SECTOR ANALYSIS – FOOD AND DRINK RETAILING
 SALES TRENDS
Figure 11: Food and drink retailers, sales trends, 1997-2006 Q2
Figure 12: Food and drink retailers as % all retail sales: 1997-2005
 RETAIL PRICE INFLATION
Figure 13: Indices of retail prices for product categories (food & drink), Jan 2001-Jan 2006
 SALES BY SUB-SECTOR
Figure 14: Food and drink retailers: Breakdown of sales by sub-sector, 1999-2005
 CONSUMER EXPENDITURE
Figure 15: Consumer expenditure on selected product categories (£m), 1999-2005
 FOOD AND DRINK RETAILERS: LATEST TRENDS
Figure 16: Food and drink retailers’ sales, 2002-05
Figure 17: Food and drink retailers’ operating profits, 2002-05
Tesco
Asda
Sainsbury’s
Morrisons
Waitrose
SECTOR NEWS REVIEW: FOOD AND DRINK
March
Greggs continues form but warns on future
Thorntons profit figures confirm first-half problems
Asda
…considers property move
…while looking to expand
…via George essentials collection
…and homewares range
…but loses ad case
Supermarkets make pricing pledge
Sainsbury’s
…pulls out of BRC
…and makes kids health move
…re-signing kids champion Oliver
Kwik Save snapped up by BTTF
Waitrose makes Scottish debut
Tesco
…launches lighting range
…and eyes contract phone market
Wm Morrison posts annual loss
April
Expansion looms for 99p Stores
Asda Essentials store launched
Sainsbury's
…completes refinancing plan
…as sales continues to grow
…and marquees roll out
May
Greggs sales fail to rise
Convenience stores set to merge
Asda
…set to sell houses
…ditches 'buy one get one free' offers
…and overhauls in-store marketing
Tesco
…ponders estate agency move
…reveals record full-year
…makes community pledge
…gets £200m investment
…and will sell halal food in London stores
Sainsbury’s
…calls on regional suppliers
…and sees recovery on course
Somerfield
…turns its back on ethical alliance
…but aim to 'give you what you want'
Competition Commission to investigate grocers
Waitrose eyes Scottish expansion
Morrisons chairman to retire by 2008
June
Members delay Nisa/Costcutter merger
Aldi offers American food range
Tesco
…sees growth continues in Q1
…and expands computer offering
Asda
…sees George Home beat expectations
…as it battles with strike action
…as staff vote in favour
…and considers bussing in workers
Sainsbury’s
…receives World Cup boost
…and is launching men only zones
Spar plans international expansion
Waitrose launches ugly fruit range
Another Majestic year
July
Thorntons woes continue
Asda
…plans high court action to block strike
…but avoids strike action
…begins property service trial
…and promises 'zero waste' by 2010
Iceland distribution strike suspended
Sainsbury's to encourage family meals
Kwik Save appoints new MD
Somerfield to host Dyas concessions
Tesco
…aims for 100 US stores in first year
…announces revamp of Express store-fronts
…and prepares Direct catalogue team
Waitrose buys six stores from Morrisons
August
Greggs posts profit fall
Thorntons shuffles board
Nisa approves improved Costcutter offer
Aldi plans £200m Scottish expansion
Asda
…to revamp entertainment departments
…as local produce sales thrive
…signs dairy deal
…targets Ikea
…and trials farm-to-store delivery
…while it aims to corner the 'chav' market
Sainsbury's
…launches organic delivery service
…buys Somerfield stores
…and agrees mail deal with TNT
Tesco
…fails to meet CC deadline
…joins organic delivery battle
…rewards carrier cutbacks
…plans Vegas stores
…aims to take on Argos
…and transfers in-store TV contract
Morrisons
…posts positive like-for-likes
…and gives Delaney £37m reasons to shop there
SECTOR ADVERTISING REVIEW – FOOD AND DRINK
 ADVERTISING EXPENDITURE
Figure 18: Total advertising expenditure by food retailers, June 2002-June 2006
 USE OF MEDIA
Figure 19: Use of media by food retailers and all retailers (%), June 2005 and June 2006
Figure 20: Use of media by food retailers and all retailers (£), June 2005 and June 2006
 TOP TEN FOOD RETAIL ADVERTISERS
Figure 21: Top ten food retailers by adspend, June 2005 and June 2006
 RETAILER FOCUS
Tesco
Figure 22: Tesco, media use by adspend and as share of total, June 2005-June 2006
Figure 23: Tesco, top brands by adspend, June 2006
Asda
Figure 24: Asda, media use by adspend and as share of total, June 2005-June 2006
Figure 25: Asda, top brands by adspend, June 2006
Sainsbury’s
Figure 26: Sainsbury’s, media use by adspend and as share of total, June 2005-June 2006
Figure 27: Sainsbury’s, top brands by adspend, June 2006
Wm Morrison
Figure 28: Wm Morrison, media use by adspend and as share of total, June 2005-June 2006
Figure 29: Wm Morrison, top brands by adspend, June 2006
Nielsen Media Research/Definitions
REPORT FOCUS: CAR RETAILING
 CONSUMERS: WHO, WHERE AND WHY
Figure 30: Private new car registrations, 2000-06
Figure 31: Total new car registrations, by private, fleet and business sales, 2000-06
Consumer expenditure
Figure 32: Consumer expenditure on car purchasing, at current and constant 2001 prices, 2001-06
Figure 33: Consumer expenditure on car purchasing, at current and constant 2001 prices, 2001-06
Consumers and car retailing
Competitive market drives dozens out of business
Small dealers feeling the heat
Franchised dealers increasing
The Magnificent Seven
Pendragon snaps up closest rival
Pendragon’s rivals strengthen chains
New regulations favour multiples
Location clause removed
 PROFILES OF CAR RETAILERS
Figure 34: Number of UK franchised dealer outlets, by marque, 2001-05
Figure 35: Top ten UK franchised car dealers, by turnover, number of outlets and market share, 2005
Pendragon plc
Figure 36: Pendragon Plc, financial performance, 2001-05
Reg Vardy plc
Figure 37: Reg Vardy Plc, financial performance, 2001-05
Arnold Clark Ltd
Figure 38: Arnold Clark Ltd, financial performance, 2001-05
Sytner Group Ltd
Figure 39: Sytner Group Limited, financial performance, 2003 and 2004
Inchcape Retail Ltd
Figure 40: Inchcape UK*, financial performance, 2001-05
Lookers plc
Figure 41: Lookers Plc, financial performance, 2001-05
Camden Motor Group Ltd
Figure 42: Camden Motor Group Ltd, financial performance, 2001-05
Jardine Motor Group plc
Figure 43: Jardine Motors Group Plc, financial performance, 2004-05
 INDUSTRY VIEWS
Used car market thriving
New regulations favour larger dealerships
Is multi-franchising the way forward?
Customers still like to purchase cars in person
Government’s green initiative fail to impress
 WHAT DOES THE FUTURE HOLD FOR CAR RETAILING?
Cars an integral part of everyday life
The impact of the Block Exemption
Multi-franchising fails to take off
 INFLATION MASKS STRUGGLING SALES
Figure 44: Forecast of car sales, by value, 2006-11

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