Callander McDowell
Callander McDowell
reLAKSation no 420
Sales push: If there is one guiding principle to our view of the marketplace, it is that ‘what we hear or read is usually not what we see’. This is probably because most retail sector commentators seem to spend more time at their desks than out in the stores. Thus their conclusions are based on paper research instead of what is really happening in the marketplace. This is very much apparent from a recent IntraFish article which describes the services of Kurt Salmon Associates, a global management consultancy specialising in retail and consumer products.
In their latest report, KSA say that a grocer such as Lidl in Germany is able to succeed with its focus on price but whilst price is also important for others such as Morrisons in the UK, other factors such as the range or service can create differentiation.
This is rather stating the obvious. The discount chains such as Lidl can offer keen prices by stocking a limited range of products. These smaller stores have much lower overheads and thus can offer much keener margins across their whole range. They also have a strategy of buying in one-off, never to be repeated, purchases which they sell cheaply and so continue to attract customers back to their stores.
Price, especially in the current economic climate is also important to the larger retailers but they are unable to slash prices across all their range due to the much greater selection of products stocked. Instead, they attract customers to the store by competitively priced staples and lots of special deals. This competitive pricing can be illustrated by the price of sirloin steak in the big four UK retailers: Asda £15.47/kg, Morrison’s £15.47/kg, Tesco £15.47/kg, Sainsbury’s £15.47/kg.
Are these prices a co-incidence? Clearly, supermarkets are conscious that if their pricing is not competitive, customers will simply vote with their feet. Even top of the range supermarket, Waitrose has shaved its prices with the launch of its new essential range. Sirloin steak remains competitively priced at £16.49/kg.
KSA say that the UK retailers are the most advanced with competitive insight and initiatives to develop the customer experience whereas this is less developed in other European markets. It is difficult to translate KSA’s view into the retail environment since it is rather vague. However, we would not disagree that the UK retail sector is one of the most advanced, although we would say that this is more apparent in product development and some of the services offered. Yet at the same time, we are not convinced that France is now so far behind. KSA suggest that apart from Casino, there is little sign of innovation in the French retail market but we would disagree. We have seen some clear signs of innovation in a number of French retailers but we are not so sure that we would put Casino amongst them.
In both the UK and France, one of the areas where some stores have tried to differentiate themselves from the others is with their demonstration of corporate responsibility. This includes sustainable sourcing and respect for the environment. One UK supermarket trying to lead the way is Sainsbury’s.
A report in IntraFish this week said that Sainsbury’s is to switch all salmon lines to ‘responsibly sourced’. Sainsbury’s now wants to use ‘responsibly farmed’ salmon in all categories including ready meals, sandwiches and salads but are currently unable to do so because sales of the ‘responsibly farmed’ fish have rocketed and they don’t have enough fish available.
IntraFish say that Sainsbury’s Freedom Food accredited, ‘responsibly sourced’ labelled salmon is already used in all fresh pre-pack, counters and smoked farmed salmon in the retailer, adding that ‘the company only sells Scottish salmon.’
The Scottish origin of the salmon they sell is reinforced in their corporate website. They pose the question by asking ‘what’s special about our salmon?’
However, despite such an extensive description of their salmon, all is not what it seems. The problem is in the understanding of what is meant by statements such as ‘the company only sells Scottish salmon’ and ‘what’s special about our salmon’. The implication is very much that Sainsbury’s only sell farmed salmon of Scottish origin when the reality is actually very different.
When a supermarket says that ‘we only sell…’ most customers would take this to mean that they refer to all the products in their store. This is not the case with Sainsbury’s and Scottish salmon. What Sainsbury’s actually mean by ‘our’ are their own-label products and not those that are branded. So while Sainsbury’s are happy to take an ethical and or locally supplied stand with their own products, they appear equally happy to offer their customers products that don’t meet these requirements.
Thus, shoppers at Sainsbury’s this week are able to buy salmon from Norway sold under the SeaStar label. This salmon is being offered as part of a major 3 for £10 promotion running across all their stores. It also means that the Norwegian salmon is being placed on a key aisle end that is regularly used for promotions and where it can be seen by most shoppers as compared to the own-label Scottish salmon which is positioned with the rest of the chilled fish products.
Prior to this current promotion, Norwegian salmon was also available on promotion in a different sized pack for most of the month of September. Norwegian salmon has formed part of several promotions in Sainsbury’s ever since the Sainsbury’s own-label Scottish salmon was first launched as confirmed by our regular survey of the UK retail sector.
Whilst Sainsbury’s try to push their Scottish Freedom Food ‘responsibly farmed’ salmon as part of their attempt to differentiate themselves from their competitors (although Morrison’s also only sell Freedom Food accredited Scottish salmon as does Marks & Spencer’s), there is still a very clear focus on price.
As part of their effort to attract customers from across a wide economic band, Sainsbury’s produce a wide range of ‘value products’ under their basic label. They have been pushing the basics range with a Switch and Save campaign in which they say that ‘everyone likes to save a few pounds on their shopping. By making a few slight changes to your shopping and switching to Sainsbury's own-brand products, you could save up to 20% compared to the market leading brand.’ This includes the basics salmon and Sainsbury’s have even used Jamie Oliver in TV advertisement to boost sales. The ad can be seen at:
Sainsbury’s basics salmon Freedom Food, ‘responsibly farmed’ Scottish salmon fillet is currently priced at £7.98/kg although as the pack clearly states the fillet size and colour may vary. By comparison, the premium, ‘Taste the Difference’ salmon fillets are priced at nearly double the price of the basics salmon at £14.25/kg although this week, the packs are discounted by half to £7.10/kg, less than the packs of basic salmon. This clearly demonstrates that whilst the origin and ethical production are considered important, price is still everything. Interestingly, the savviest Sainsbury shopper will have concluded that Sainsbury’s TTD salmon fillet represents a much better buy than that from Norway which when priced as party of the deal is still £11.11/kg. Bought individually, the packs are an eye-watering £13.33/kg.
Pack bought before the most recent price increase
As we indicated at the start of this comment, everything in the retail sector is not always what it seems. This is why one of the services that are offered by Callander McDowell is our retail surveys. In our salmon report, we list all the salmon (& trout) products found in the UK retail sector, together with pricing and pack information. We also send out a weekly update giving details of all current promotions that can be found in UK supermarkets. We also produce a similar monthly report of the French retail sector. Please contact us for details of all our retail surveys. We can also let you know where to buy the latest new salmon product to hit the UK market this week - responsibly farmed salmon fillets with teriyaki & orange dressing 270g for £4.00… and despite the ‘responsibly farmed’ tag, its not Sainsbury’s.
Two sides: Given the interest in the US market shown by the Norwegian salmon industry, we were struck by the difference in two very similar stories from the US this week regarding the need to eat a healthy diet.
PR Newswire reported the results of a survey commissioned by the SeaPak Shrimp Company that found that 91% of parents with young children up to the age of 12 confirmed that their kids are not eating the recommended amount of two servings of seafood a week. In addition, nearly half the parents surveyed (42%) were unaware that seafood was even a good source of protein. More worryingly, the survey also found that 65% of parents who fed seafood to their children less than twice a year reported that they rarely ate seafood when they were children.
Clearly, seafood consumption could be on a downward spiral. If kids don’t get into the habit of fish and seafood when they are young they are unlikely to continue doing so when they are older and as this survey shows, if parents don’t feed seafood to their children, then those children will not pass on the seafood eating habit to their children.
We, at Callander McDowell, have argued repeatedly that the seafood industry find it easier to target existing consumers to eat even more fish and seafood than it is to convince those who have never eaten fish and seafood to start doing so. As older consumers pass on, there is an increasing chance that they will not be replaced.
This presents a major opportunity to the Norwegian industry to target their salmon at new young consumers. Laying the groundwork now will help expand the market, not just for Norwegian salmon, but also for other fish and seafood.
The second story is that celebrated Norwegian chef, Sven Eirk Renaa, is to volunteer his time and talents to the New York charity God’s Love We Deliver. This is the charity whose aim is to improve the health and well being of men, women and children who are living with HIV/aids, cancer and other serious illnesses through the provision of nutritious healthy meals. Chef Renaa will demonstrate his recipe for baked salmon with apple, horseradish yogurt and dill to staff who will then prepare the recipe in 2000 meals to distribute to their clients using salmon donated by the Norwegian Seafood Export Council.
We do not intend to discuss the merits of this specific charity but can see how this association with a worthy cause would be a useful way to promote Norwegian salmon in the US. Yet, whilst this event will undoubtedly receive positive publicity back in Norway, we wonder how much it will influence the average member of Joe public, and especially those 91% of children who don’t eat fish or seafood to start doing so.
This venture might be viewed as a way to boost Norwegian salmon in the US. Yet, even God’s Love We Deliver doesn’t consider it worthy of a mention. Their website seems more interested in selling tickets to their 3rd Annual Golden Heart Celebration on October 19th with tables costing up to $50,000 each and tickets at up to $2,500. We wonder what they’ll be serving for dinner!!!
The End of the Line: This week saw that start of the 12th Manchester Food and Drink Festival and one of the events is a special showing of the film the End of the Line. What struck us, at Callander McDowell, about this event was not the film but the venue. We wondered whether the festival’s organisers were trying to tell us something. The film is to be shown on Monday night at ‘The Comedy Store’!!!!.
The End of the Line
at The Comedy Store on Monday 05th Oct, 2009
Due to
huge public demand. The End of the Line will be screening at The Comedy Store,
Manchester on 5th October
To book tickets please visit the below official website.
www.endoftheline.com
Producer Claire Lewis is available for interviews.
Tickets cost £6/£5 concessions. To book, visit www.endoftheline.com
Venue Details
The Comedy
Store
Arches 3 & 4 Deansgate locks
Whitworth Street West, Manchester
M1 5LH