UK Retail Briefing - April 2007

ANALYST COMMENT
 TESCO
Effective use of the media
Tesco’s success
So what are the complaints?
Effective lobbying
What do the complainers want?
THE MONTH IN UK RETAILING
 BAKERS (RETAIL)
Thorntons rebounds in Q3
 CO-OPS (RETAIL)
Co-op profits across full-year
 GROCERS
Cooltrader expansion on the cards
Grocers talk green but abuse workers, claims ActionAid
Iceland CEO rewarded for turnaround
Sainsbury's
…reports full-year sales rise
…gets Asda interest
…as CVC ignores pension trustees in bid
…then raises offer
…before consortium breaks up
…and bid collapses
…as Tchenguiz calls for split
…while plastic bags ditched for a day
…and £750m investment is announced
Supermarket enquiry delayed
Tesco
…revealed as fastest growing mobile operator
…hits back
…holds on to Green, improves milk deal
…announces record FY profits
 CLOTHING RETAILING
Alexon suffers difficult year
Burberry H2 sales up 19%
Moss Bros FY LFLs, profit down
Mothercare
…sees full-year sales rise
…and looks to enter China
Primark H1 profits up 28%
'Vanity sizing' hits Britain
Warburg Pincus joins New Look race
 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
 HOME SHOPPING
Findel posts full-year sales surge
Ideal chairman to step down
Otto reveals Oli plans
 HEALTH AND BEAUTY RETAILING
The Body Shop Q3 LFLs up 6.4%
 BOOK AND STATIONERY RETAILING
Branson considers Borders' bid
Clinton Cards posts solid H1
WH Smith high street woes continue in H1
 SPORTS AND LEISURE GOODS RETAILING
JJB reports strong year
Sports Direct poised to buy M and M
 JEWELLERS
Signet posts record FY profits
 GARDEN CENTRES
Dobbies H1 sales blossom
 TOYS AND GAMES RETAILING
ELC plunges further into the red
 MISCELLANEOUS SPECIALIST RETAILING
Halfords reports another strong year
Pets at Home sees FY success
EXECUTIVE APPOINTMENTS
Adams Kids shakes up senior management team
Adili recruits former Miss Selfridge director
Greenbee takes on Camelot man
Ideal chairman to step down
Menswear heads quit
Monsoon chief takes early exit
Nesbitt quits Asda
New Look HR boss leaves
PC World hires marketing boss
SRG hires former Argos CEO as chairman
Tesco loses master of wine
PRODUCT DEVELOPMENT – DESSERTS
 ASDA
 ICELAND
 MARKS & SPENCER
 MORRISONS
 SAINSBURY’S
 SOMERFIELD
 TESCO
 WAITROSE
ADVERTISING NEWS
 NEW CAMPAIGNS
Boots
…to ramp up in-store marketing
…and launches discount spot
Claire's launches campaign promoting retail
French Connection launches online community push
Greggs
…gets Phoenix Nights star
…but looks for Jovovich
Harrods launches Spring marketing campaign
John Lewis
…reveals spring press campaign
…and capitalises on backlash against size-zero models
Jane Seymour new face of Debenhams
Littlewoods Direct launch TV ads
Marks & Spencer
…to sink Ferry?
…as EIA brands campaign misleading
Primark decides on quiet launches
Selfridges launches Shop Like a Man promotion
Superdrug signs Mischa
Tesco launches F&F campaign
Threshers repeats voucher offer
Woolworths slump prompts marketing cutbacks
 ACCOUNT GAINS/LOSSES
Austin Reed in agency hunt
Debenhams turns to Steel
ELC seeks agency for £2m advertising task
Fat Face seeks integrated agency for brand communications
Ikea shortlists four for ATL account
Ilva to review £5m account
John Lewis
…hands Circus brand brief
…and appoints Kitcatt Nohr for direct work
Next talking to media agencies about £2m account
Saatchi & Saatchi wins HMV and QVC digital briefs
TK Maxx in £5.4 million media review
Waitrose seeks new marketing direction for ethical sourcing
RETAIL ADVERTISING REVIEW
 ADVERTISING EXPENDITURE
Figure 1: Total advertising expenditure by all advertisers (£m), February 2003-February 2007
Figure 2: Total advertising expenditure by all retail advertisers (£m), February 2003-February 2007
 USE OF MEDIA
Figure 3: Use of media by retail and all advertisers (%), February 2003-February 2007
Figure 4: Use of media by retail and all advertisers (£m), February 2003-February 2007
 TOP 25 RETAIL ADVERTISERS
Figure 5: Top 25 retailers by adspend (£), January 2007-February 2007
Furniture
Food
DIY
Variety
Other
Nielsen Media Research/Definitions
RETAIL SALES AND INFLATION
 RETAIL SALES
Office for National Statistics
Figure 6: Retail sales trends: March 2006-March 2007
Figure 7: Non seasonally adjusted % value change on previous year, March 2006-March 2007
Figure 8: Seasonally adjusted % volume change on previous year, March 2006-March 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: March 2006-March 2007
Figure 10: Annual percentage change in retail price index for selected product groups: March 2006-March 2007
Retail Prices Index
Consumer Prices Index
British Retail Consortium: Shop Price Index
SECTOR ANALYSIS – MIXED GOODS
 SALES TRENDS
Figure 11: Mixed goods retailers, sales trends, 1997-2006
Figure 12: Mixed goods retailers as % of all retail sales: 1997-2006
 RETAIL PRICE INFLATION
Figure 13: Indices of retail prices for product categories, Jan 2000-Jan 2007 (Jan 1987=100)
 SALES BY SUB-SECTOR
Figure 14: Mixed goods retailers, breakdown of sales by sub-sector, 2000-06
 CONSUMER EXPENDITURE
Figure 5: Consumer expenditure on selected product categories (£m), 2000-06
 MIXED GOODS RETAILERS: LATEST TRENDS
Figure 15: Mixed goods retailers’ sales (£m), 2003-06
Figure 16: Mixed goods retailers’ operating profits (£m), 2003-06
Argos
John Lewis
Woolworths
Debenhams
House of Fraser
Harrods
SECTOR NEWS REVIEW: MIXED GOODS RETAILING
 NOVEMBER
 MIXED GOODS RETAILING
Instore slides further into the red
 MULTI-SECTOR RETAILING
Alliance Boots unveils first results
Home Retail group
…is potential takeover target
…reveals interim sales growth
John Lewis announces expansion
M&S
…set to trial homewares store
…growth continues
…launches wedding dresses
 DEPARTMENT STORES
Harvey Nichols sees sales, profit rise
 DECEMBER
 MIXED GOODS RETAILING
Instore sales fall short in November
Woolworths sales suffer in recent months
 MULTI-SECTOR RETAILING
Alliance Boots
… to host first NHS GP surgery
… plans online overhaul
M&S announces extended Xmas hours
 DEPARTMENT STORES
Debenhams disappoints with pre-Christmas figures
Harrods
… withdraws fake Xmas 'must-have'
… records excellent year
HoF card deal in doubt
Selfridges records full-year success
 JANUARY
 MIXED GOODS RETAILING
Instore recovers momentum over Christmas
Wilkinson extends RightPrice range
Woolworths
…posts dismal festive results
…and may close up to 200 stores
 MULTI-SECTOR RETAILING
Alliance Boots reports Q3 profits
Online sales soar at Virgin Megastores
HMV reports operating loss
Home Retail reports disappointing Christmas trading
Sales rise at John Lewis
Laura Ashley sees sales slow in H2
Next suffers difficult Christmas on the High Street
Marks & Spencer
…reports a good Christmas
…aims to become carbon-neutral
…and adds £500m to pension funding
 DEPARTMENT STORES
Beales suffer tough Christmas
Debenhams down at Christmas
Harrods ditches store cards
House of Fraser enjoys best ever Christmas
 FEBRUARY
 MIXED GOODS RETAILING
Woolworths
…launches online travel site
…and wins supply deal with Virgin
…but faces OFT investigation
 MULTI-SECTOR RETAILING
John Lewis
…plans huge expansion
…and joins chase for the green pound
M&S
…hires food police
…launches bottle jacket
…and wins tax ruling
 DEPARTMENT STORES
Former HoF deputy to get Monsoon trial
 MARCH
 MIXED GOODS RETAILING
Home Retail
…expands in India, Ireland
…and ends the year in style
 MULTI-SECTOR RETAILING
Alliance Boots
…receives preliminary approach
…but snubs KKR bid
…as Merrill quits to work for Pessina
…as Boots signs up to Carbon Trust label
…while second suitor emerges
HMV
…set to close 20 stores
…but sees recovery plan marred by profit warning
M&S rules out Sainsbury's bid
Next
…gets a makeover and a new range
…as like-for-likes fall
 DEPARTMENT STORES
Beales gives warning for 2007
Debenhams
…to get Baugur bid?
…as H1 like-for-likes drop
John Lewis reports stunning FY results
Liberty reports £2.2m loss
 APRIL
 MIXED GOODS RETAILING
Argos launches Christmas savings club
Woolworths
…sees woes continue
…and is referred to CC over Bertram purchase
 MULTI-SECTOR RETAILING
Alliance Boots
…says trading is on track
…as Pessina raises offer
…while Blackstone mulls bid
…and Celesio considers joining hunt
…as ‘900 Boots pharmacies’ plan emerges
…as the retailer gets Chinese yes; reassures over OFT
…and opens door to rival bidders
…as Celesio looks to strike deal with KKR
…before bid battle royale kicks off
…and KKR raises Boots bid to £11bn
Laura Ashley FY profit doubles
Next CEO ends bid speculation
 DEPARTMENT STORES
HoF plans small store chain
Profit rise masks Debenhams' woes
Tillman looks to resurrect Allders
SECTOR ADVERTISING REVIEW – MIXED GOODS
 ADVERTISING EXPENDITURE
Figure 17: Total advertising expenditure by mixed goods retailers, February 2003-February 2007
 USE OF MEDIA
Figure 18: Use of media by mixed goods retailers and all retailers (%), February 2003-February 2007
Figure 19: Use of media by mixed goods retailers and all retailers (£M), February 2003-February 2007
Top ten mixed goods retail advertisers
Figure 20: Top ten mixed goods retailers by adspend, February 2006-February 2007
 RETAILER FOCUS
Argos
Figure 21: Argos, media use by adspend and as share of total, February 2006-February 2007
Figure 22: Argos, top five brands by adspend, February 2007
Next
Figure 23: Next, media use by adspend and as share of total, February 2006-February 2007
Figure 24: Next, top five brands by adspend, February 2007
Boots
Figure 25: Boots, media use by adspend and as share of total, February 2006-February 2007
Figure 26: Boots, top five brands by adspend, February 2007
Debenhams
Figure 27: Debenhams, media use by adspend and as share of total, February 2006-February 2007
Figure 28: Debenhams, top five brands by adspend, February 2007
Nielsen Media Research/Definitions
REPORT FOCUS: HOUSEWARES RETAILING
 CONSUMERS: WHO, WHERE AND WHY
Premiumisation is shoring up values
Fashion is shortening replacement cycles
Figure 29: Consumer spending on housewares items, 2001 and 2006
Figure 30: Consumer spending on housewares items, 2001 and 2006
Distribution dominated by large general retailers
How the specialists are faring
Lifestyle retailers find the going tough
Kitchen-based success story
Non-specialists
Several general retailers struggling
How housewares fit with furniture
A natural for DIY shops
The relentless rise of the supermarkets
Grocery multiples have made gains in the sector
Figure 31: Housewares share, by sector, 2004 and 2006
Figure 32: Estimated market shares, by leading retailers, 2003 and 2006
Household textiles
Figure 33: Consumer spending on household textiles, 2002-12
Figure 34: Main components of household textiles markets, consumer spend, 2001-06
Figure 35: Main components of household textiles markets, consumer spend, 2001 and 2006
Kitchen and dining
Figure 36: Consumer spending on china and earthenware, cookware, glassware, cutlery/plastic, kitchen gadgets, 2001 and 2006
Other housewares
Figure 37: Consumer spending on lighting, candles, artificial/dried flowers and bathroom accessories, 2001 and 2006
Figure 38: Consumer spending on lighting, candles, artificial/dried flowers and bathroom accessories, 2001 and 2006
Prints and pictures
Utility
 WHO SHOPS WHERE?
Trends from 2004-06
Figure 39: Outlets used for any housewares purchase, 2004 and 2006
Department and variety stores
Figure 40: Outlets used for housewares in the last 12 months – department and variety stores, by gender, age and socio-economic group, November 2006
Figure 41: Outlets used for housewares in the last 12 months – IKEA, M&S, Next, Woolworths, Wilkinson’s, by gender, age and socio-economic group, November 2006
Supermarket shoppers
Figure 42: Outlets used for housewares in the last 12 months – Dunelm, Other housewares specialist, DIY superstore, Sainsbury’s, Tesco, by gender, age and socio-economic group, November 2006
Figure 43: Outlets used for housewares in the last 12 months – Asda, Morrisons, other supermarkets, market stalls, Matalan, by gender, age and socio-economic group, November 2006
Garden centres – not just for the gardener
Multichannel important in attracting older customers
Figure 44: Outlets used for housewares in the last 12 months, market stalls, garden centres, Internet, mail order and elsewhere, by gender, age and socio-economic group, November 2006
 PROFILES OF HOUSEWARE RETAILERS
Figure 45: Strategic summary of main housewares retailers, 2006
IKEA UK
Background
Financial performance
Figure 46: IKEA UK, group financial performance, 2001-05
Figure 47: IKEA UK, outlet data, 2001-05
Product offer
e-commerce and home shopping
Rosebys
Background
Financial performance
Figure 48: Rosebys UK, group financial performance, 2002-06
Figure 49: Rosebys, UK outlet data, 2002-06
Product offer
e-commerce and home shopping
Dunelm
Background
Financial performance
Figure 50: Dunelm Plc, group financial performance, 2002-06
Figure 51: Dunelm, UK outlet data, 2002-06
Product offer
e-commerce and home shopping
Laura Ashley
Background
Financial performance
Figure 52: Laura Ashley, group financial performance, 2002-06
Figure 53: Laura Ashley, UK home, 2002-06
Figure 54: Laura Ashley, UK, outlet data, 2002-06
Product offer
e-commerce and home shopping
The Pier Retail Group
Heal’s
Muji
 WHAT DOES THE FUTURE HOLD FOR HOUSEWARES RETAILING?
Figure 55: Market history and forecast of household textiles, at current and constant prices, 2002-12
Figure 56: Market history and forecast of glasswares, tablewares and household utensils, at current and constant prices, 2002-12