UK Retail Briefing - July 2006

ANALYST COMMENT
 HOW BAD IS IT OUT THERE?
Sales trends
Figure 1: Clothing Retailers: Year on year sales growth 2005-06
M&S
Demanding consumers
Morgan
Fashion retailers under pressure
More casualties to come
THE MONTH IN UK RETAILING
 BAKERS (RETAIL)
Thorntons woes continue
 CO-OPS (RETAIL)
Co-op extends pharmacy branch network
 GROCERS
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
 OTHER FOOD SPECIALISTS
Holland & Barrett announces expansion plans
 MIXED GOODS RETAILING
Wilkinson posts profit drop
 MULTI-SECTOR RETAILING
GUS
…rejects offers
…as Argos and Experian see sales rise
…but Blackstone and KKR join for GUS bid
Laura Ashley makes progress
Marks & Spencer sees form continue
Woolworths
…set to open Ladybird in UK
…but suffers like-for-like fall
 DIY RETAILING
Kingfisher
…plans B&Q facelift
…and sells stores
Topps like-for-likes flat in third quarter
 ELECTRICAL RETAILING
DSG completes e-retail investment
Virgin Mobile to hit high street
Kesa sees World Cup sales boost
 MUSIC AND VIDEO GOODS RETAILING
HMV sees full-year profit fall
 CARPET RETAILING
Carpetright sees profits fall 11%
Sales continue to suffer at Floors 2 Go
 FURNITURE RETAILING
MFI posts loss amid disposal talks
 HOME SHOPPING
Asos see profits rise
Dream Direct disappointed with results
N Brown buys Gray & Osbourn
Otto launches online electricals business
White Company sales grow, appoints MD
 HEALTH & BEAUTY RETAILING
Boots
…UniChem merger gets investor go-ahead
…and plans instore hospital consultants, GPs
 BOOK AND STATIONERY RETAILING
Waterstone’s/Ottakar’s merger detailed
WH Smith details demerger plans
 SPORTS AND LEISURE GOODS RETAILING
JD like-for-likes up
Like-for-likes fall at Blacks Leisure
JJB to drop Icon
 GARDEN CENTRES
No spring cheer for Blooms
Dobbies
…profits edge up
…and buys Grovelands
 TOYS AND GAMES RETAILING
GameStop considers UK Gamestation chain
Sales on the up at Game
Games Workshop sees profit slide
Hamleys confirms Eastern expansion
 MISCELLANEOUS SPECIALIST RETAILING
FTD buys Interflora UK
Retail Variations to be liquidated
Pets at Home posts full-year success
EXECUTIVE APPOINTMENTS
Ex KFCer, CHC, joins Boots
Macpherson joins Hot Tuna board
Wilkinson appoints Mitchell
MK One appoints chief executive
Jaeger on the hunt for a marketing director
Webb appointed UK group commercial director at Otto
Borders searching for UK marketer
Kensington poaches Kingfisher finance chief
Marketing director parts company with French Connection
Waterstone's poaches Smith
Adams gets Europe at Kingfisher
Morrisons loses Hutchinson
Arcadia hires Miss Selfridge creative director
Kesa loses Fox
HMV appoints Fox as chief executive
PRODUCT DEVELOPMENT – BEVERAGES
 TESCO
 WAITROSE
 MARKS & SPENCER
 SOMERFIELD
 ASDA
 SAINSBURY’S
ADVERTISING NEWS
 NEW CAMPAIGNS
Sainsbury's to encourage family meals
Littlewoods hires Lee for fashion revamp
Asda attempts World Cup foul play
Grattan to sponsor Bradford Bulls stadium
Virgin Poker campaign
West End to get Shop refit
 ACCOUNT GAINS/LOSSES
IKEA appoint Agency.com for online task
Craik Jones to handle Arcadia credit card DM task
Ravel seeking creative agency
Evans talking to agencies about ad account
Beattie breaks French Connection
John Lewis appoints Lowe
Cheeze scoops Duck.co.uk digital marketing account
Fenix retained by Debenhams
Carat wins Littlewoods media account
Lovefilm appoints All Response Media
Bathstore.com appoints WFCA
Robert Dyas hands over brief to MPG
Hamleys appoint Digby & Co for £1.2m brief
Build-A-Bear hire M2M for media task
Arthritis Research hires Creative Juice
Severn Communications to handle Thresher task
DFS shifts bulk of ad account to Uber
Blockbuster looks to Resonate with renters
RETAIL ADVERTISING REVIEW
 ADVERTISING EXPENDITURE
Figure 2: Total advertising expenditure by all advertisers (£m), May 2002-May 2006
Figure 3: Total advertising expenditure by all retail advertisers (£m), May 2002-May 2006
 USE OF MEDIA
Figure 4: Use of media by retail and all advertisers (%), May 2005 and May 2006
Figure 5: Use of media by retail and all advertisers (£m), May 2005 and May 2006
 TOP 25 RETAIL ADVERTISERS
Figure 6: Top 25 retailers by adspend (£), Apr 2006-May 2006
Furniture
Food
DIY
Other
Nielsen Media Research/ Definitions
RETAIL SALES AND INFLATION
 RETAIL SALES
Office for National Statistics
Figure 7: Retail sales trends: June 2005-June 2006
Figure 8: Non seasonally adjusted % value change on previous year, June 2005-June 2006
Figure 9: Seasonally adjusted % volume change on previous year, June 2005-June 2006
Significant features of the latest ONS statistics
Confederation of British Industry
British Retail Consortium/KPMG
 RETAIL PRICE INFLATION TRENDS
Figure 10: Annual percentage change in retail price index for selected product groups: June 2005-June 2006
Figure 11: Annual percentage change in retail price index for selected product groups: June 2005-June 2006
Retail Prices Index
Consumer Prices Index
British Retail Consortium: Shop Price Index
SECTOR ANALYSIS – CLOTHING AND FOOTWEAR
 SALES TRENDS
Figure 12: Clothing & footwear retailers: Sales trends, 1996-2006 Q2
Figure 13: Clothing and footwear retailers as % all retail sales: 1998-2005
 RETAIL PRICE INFLATION
Figure 14: Indices of retail prices for product categories (clothing and footwear), Jan 1997-Jan 2006
Figure 15: Indices of retail prices for product categories (clothing and footwear), Jan 2005-June 2005
 SALES BY SUB-SECTOR
Figure 16: Breakdown of clothing retailers’ sales by sub-sector, 1994-2006 (estimated)
 CONSUMER EXPENDITURE
Figure 17: Consumer expenditure on selected product categories, 1995-2006 Q1, (£m current prices including VAT, not seasonally adjusted)
 CLOTHING RETAILERS: LATEST TRENDS
Figure 18: Clothing retailers, 2005
Footwear Retailing
Figure 19: Footwear retailers, 2005
SECTOR NEWS REVIEW: CLOTHING RETAILING
February
SECTOR ADVERTISING REVIEW – CLOTHING
 ADVERTISING EXPENDITURE
Figure 20: Total advertising expenditure by clothing retailers, May 2002-May 2006
 USE OF MEDIA
Figure 21: Use of media by clothing retailers and all retailers (%), May 2005 and May 2006
Figure 22: Use of media by clothing retailers and all retailers (£m), May 2005 and May 2006
 TOP TEN CLOTHING RETAIL ADVERTISERS
Figure 23: Top ten clothing retailers by adspend, May 2005 and May 2006
 RETAILER FOCUS
Marks & Spencer
Figure 24: Marks & Spencer, media use by adspend and as share of total, May 2005-May 2006
Figure 25: Marks & Spencer, top six brands by adspend, May 2006
Matalan
Figure 26: Matalan, media use by adspend and as share of total, May 2005-May 2006
Figure 27: Matalan, top three brands by adspend, May 2006
Burton
Figure 28: Burton, media use by adspend and as share of total, May 2005-May 2006
Figure 29: Burton, top Four brands by adspend, May 2006
H&M
Figure 30: H&M, media use by adspend and as share of total, May 2005-May 2006
Figure 31: H&M, top five brands by adspend, May 2006
Nielsen Media Research/Definitions
REPORT FOCUS: WOMENSWEAR RETAILING
Big get bigger as competition intensifies
Figure 32: Sales through clothing retailers, at current and constant 2000 prices, 2001-06
Figure 33: UK retail sales of all womenswear, at current and constant 2000 prices, 2001-06
Figure 34: UK retail sales of all women's outerwear, at current and constant 2000 prices, 2001-06
Figure 35: Top retailers where women have bought clothing in the last 12 months, by region, marital status and working status, March 2006
Specialists
Arcadia Group
Figure 36: Arcadia Group, financial performance. 2001-05
Baugur Companies
Mosaic
MK One (MK)
Jane Norman
Shoe Studio Group/Rubicon Retail
New Look
Figure 37: New Look, UK financial performance, 2002-06
Alexon Group
Figure 38: Alexon brands and Bay Trading: turnover and operating profit, by segment – womenswear, 2003-06
Monsoon
Figure 39: Monsoon plc, financial performance, 2001-05
Non- Specialists
Figure 40: Leading non-specialist womenswear retailers, 2006
Marks & Spencer
Figure 41: M&S UK retail sales, by merchandise category, 2004/05 and 2005/06
Next
Figure 42: Next, financial performance, 2002-06
Matalan
Figure 43: Matalan, financial performance, 2002-06
 INDUSTRY VIEWS
The market in 2005
A challenging time ahead
Strong fashion is the winning strategy
Price vs. value
Absence of fashion trend
Managing space growth
The importance of store design
 MINTEL FORECASTS CONTINUED GROWTH…
Figure 44: Forecast of women’s outerwear, 2006-11
Figure 45: Forecast of women’s outerwear, at curfrent prices, 2001-11