Following the recession a decade ago, consumers are increasingly value-conscious. This led to smaller-average basket sizes and reduced consumer loyalty as consumers spend across a wider range of store options.
The Irish economy continues experiencing rapid growth and is close to full employment. Despite rising global uncertainty, strong economic momentum is maintained. However, there are significant threats to further growth, including the uncertainty around Brexit and its possible impact. The political uncertainty relating to Brexit continues to undermine consumer confidence in Ireland.
Continued deflation across food products remains a broad trend. Although deflation benefits consumers, it represents a significant challenge to retail and wholesale business, particularly as this trend is evident over an extended period.
Our view of the economy and food industry challenges were informed and confirmed by the BWG Group’s food industry leadership study.
Show more…BWG Group completed a food industry leadership study this year to gather key stakeholder perspectives on the main opportunities, challenges and considerations for the food industry over the coming years. We aimed to identify the key issues affecting the retail, wholesale and foodservice sectors along with the potential solutions for overcoming these shared challenges.
Survey results will help inform future decision-making across areas such as store innovation, sustainability, new product development and importantly, retailer support services. The survey also provided an opportunity to engage with a strong cohort of our primary stakeholders, demonstrating senior thought leadership across the Irish food industry.
The survey was undertaken with senior executives across the food supply chain in Ireland and responses were received from over 53 companies who together employ thousands of people in Ireland and generate multi-billion euro annual revenues.
The results were presented to over 300 food industry representatives at a briefing, marking the commencement of BWG Foods’ annual tradeshow; the largest food industry event of its kind in Ireland.
The research findings highlighted that the food industry is optimistic about the outlook for Ireland’s economy, with 91% of respondents expecting their turnover to grow over the next 12 months. Similarly, in relation to the Irish grocery sector, 98% of respondents felt that the market would perform similar or better over the next 12 months, meaning that very few (2%) expect the various challenges facing the sector to result in negative turnover performance.
Respondents also revealed where they see the biggest challenges, calling out rising business costs, followed by price discounting, insurance costs and labour shortages as the key issues to be addressed.
In terms of immediate threats to consumer demand, not surprisingly Brexit is the number one concern, followed by the increased cost of living and price inflation.
Extensive design and refurbishment works were completed over the past year at several EUROSPAR stores. The refurbishments focused on improving retail sales and retailer profitability by expanding the range and profile across fresh food departments, with bakery as hero. Grocery and alcohol value credentials and range offering also improved, and the refurbished stores can deliver a consistent, high-standard retail shopping experience.
Show more…Further store improvement initiatives includes the trial of electronic shelf edge labelling (eSEL) and integrated digital signage. Implementation increases sales and drives profitability in specific store locations or areas within stores. In 24-hour locations, prices can, for example, be lifted after 23:00 and adjusted for high footfall events or days, such as sports matches.
Deployed sites anticipate labour cost savings as price increases are digital. The number of promotions can be increased and implemented with improved execution and consistency.
The eSEL solution highlights lines in store cheaper than our largest supermarket competitor. A new variable pricing model is being developed to provide eSEL as a service, which would eliminate capital investments and potentially deliver much faster adoption across retail estates.
Promotional activity and discounting remain prevalent. Therefore, loyalty programmes continue gaining a bigger share of consumers’ wallets. The consumer loyalty app and BWG Group’s loyalty and rewards programmes continue supporting sales.
Show more…The two most tangible benefits from the retailer benefit programme are that it increased wholesale sales and retailer loyalty to BWG Group and delivered a unique (supplier funded) mechanism which drives increased profitability to retailers for implementing best practice range management in stores.
The consumer loyalty app delivers significant insights about consumer behaviour and ordering patterns and is currently in place in selected SPAR, EUROSPAR, MACE and Londis stores. The SPAR smart rewards programme is in place at 92 SPAR stores (2018: 90) and has more than 79 000 fully registered members.
At EUROSPAR we use our rewards programme information to engage in consumer profile marketing.
We also expanded our shopper assurance programme on regular, non-promotional retail selling prices for groceries. The programme advises consumers on the price competitiveness of more than 800 non-promotional grocery products and about 150 non-promotional ambient and fresh products. This was supported by point-of-sale and social media marketing videos, which were well received by our independent retailer base.
Consumer and economic pressure can impact retailer growth, profitability and loyalty. Therefore, we continue investigating and rolling out support projects for retailers, and exploring opportunities to develop new revenue streams.
Show more…The most notable innovation for the year was the installation of large advertising screens in-store, which were used to market content to more than one million weekly customers at the Newhill group of stores.
Product advertising is generating a new revenue stream for the BWG Group and its retailers. One hundred units were deployed, with a planned expansion into the independent retail estate in 2020.
The EUROSPAR team created a series of well-attended social media marketing training programmes for retailers, resulting in more innovative grocery and fresh foods social media marketing activities emanating from store level.
We expanded our support service to EUROSPAR retailers by developing a comprehensive bakery training programme. The training is delivered in store by our retail operations advisory (ROA) team, with an online version in production. We are developing a comprehensive range of “how to” videos for store employees, focused on manufacturing and/or assembling EUROSPAR’s core range of fresh food products. To date, we uploaded 110 videos for employees to view on their mobile or static electronic devices. This innovative programme greatly supports our retailers in employee turnover challenges within the sector.
We have upweighted the EUROSPAR ROA team over the past year, introducing two dedicated Fresh Foods ROAs to the team. This additional resource will support our ambition to position EUROSPAR as Famous for Fresh in the Irish retail food sector.
BWG Group owns and operates 190 ATMs as a retail solution under the brand “Your Money Kiosk”. The ATM units are retail-focused, customised and skinned according to the five BWG brands: SPAR, EUROSPAR, Londis, MACE and XL. Each ATM features a digital display of the store brand and product advertising in line with store promotion cycles.
Show more…The ATMs drive footfall with an industry leading 99% average service uptime. Visa and Mastercard scheme cards are accepted.
ATM units are confined within the BWG branded retail store and cash is handled by a cash-in-transit company which limits any risk to the retailer.
Read more on: www.yourmoneykiosk.ie
As a food retailer, the BWG Group implements best practice to ensure product safety and quality. This is measured according to six key areas: industry standards, emerging issues and liaising with government bodies; allergens; supplier approval; retail employee training; store audits; and food safety manuals.
Show more…This past year we significantly upweighted the food safety audit element of our EUROSPAR group standards programme, called Customer First @ EUROSPAR.
In July 2019, BWG Group launched a new advertising and social media campaign: SPAR Always Changing. The campaign supports our SPAR brand essence of never standing still.
Show more…The SPAR Always Changing campaign positions SPAR as a retailer with a worldly outlook, strong international roots and a local touch. We use the SPAR symbol of a tree to enforce that we never stop growing and our branches reach out to protect and nurture our community and energise us towards a common goal.
To view the advert, please visit https://www.youtube.com/watch?v=t8tjtgQGsEs
How our stores performed in 2019
Overall, BWG retail brands showed growth in 2019 and either maintained or grew their market share. MACE was the strongest performer among the BWG Group brands in a year when all retail brands delivered year-on-year growth. There is no empirical record of market share for wholesale or cash and carry channel sales. However, based on volume and value sales growth over the last 12 months, combined with supplier feedback, we are confident that the market share of Value Centre and BWG Foodservice continues to increase.
Read about Ireland’s financial performance here.
Retail turnover increased by
3.2%
€1 314 million
(2018: €1 273 million)
Wholesale turnover increased by
3.2%
€628.5 million
(2018: €609.1 million)
New stores opened
12
(2018: 14)
Stores closed
9
(2018: 15)
Stores refurbished
43
(2018: 33)
EUROSPAR operates in the medium-sized, independently owned supermarket sector. It mainly targets consumers doing weekly family shopping. The sector remains highly competitive and is also heavily impacted by continued, compound food and beverage deflation. Notwithstanding the tough environment, EUROSPAR continued achieving modest sales growth, supported by more aggressive marketing campaigns in national and social media, the continued store investment programme and the nimbleness, ingenuity and loyalty of our independent retailer base. Significant refurbishments were undertaken at several EUROSPAR stores to deliver a comprehensive and innovative fresh foods offering to shoppers.
Total SPAR wholesale sales increased by 3.2%. Twelve new SPAR stores started trading during the year.
A new lifestyle flagship store for Dublin
SPAR Millennium Walkway in Dublin is the first flagship store to apply the lifestyle store concept. It features new and exclusive SPAR concessions enhancing the customer experience:
- Food Junction (time-of-day offer)
- 6th Avenue Street Bar (ethnic food)
- New hot and cold deli solutions
- I Scream (ice cream)
- Shakers (donuts and cookies)
An extensive seating area responds to the consumer’s lifestyle store requirements, and customer-facing digital technology solutions also cater to customers’ on-the-go needs. The store was collaboratively designed by SPAR International and SPAR Ireland.
Retail turnover increased by
3.36%
€341.0 million
(2018: €329.9 million)
Wholesale turnover increased by
3.36%
€163.3 million
(2018: €157.9 million)
New stores opened
8
(2018: 5)
Stores closed
5
(2018: 6)
Stores refurbished
5
(2018: 8)
Overall sales performance at Londis was 3.36% ahead of the prior year. New and revamped stores delivered 10% growth on the prior year. More than 50% of the Londis estate will be revamped to align with the new Londis brand identity by December 2019.
Retail turnover increased by
5.07%
€268.1 million
(2018: €255.2 million)
Wholesale turnover increased by
5.07%
€128.3 million
(2018: €122.1 million)
New stores opened
8
(2018: 6)
Stores closed
9
(2018: 9)
Stores refurbished
15
(2018: 6)
MACE showed 5.1% growth in another strong year. We continued rolling out new store formats and now have more than 18% of the store estate converted to the new image. Performance of the refurbished stores exceeded expectations and resulted in continued brand growth. Although growth in store numbers is a challenge, nine new stores opened this year.
In terms of category performance, fresh foods including retail food service, soft drinks and coffee to go, saw strong growth. Alcohol sales also increased well ahead of the market.
Retail turnover increased by
4.36%
€154.0 million
(2018: 147.6 million)
Wholesale turnover increased by
4.36%
€73.7 million
(2018: €70.6 million)
New stores opened
13
(2018: 14)
Stores closed
12
(2018: 8)
Stores refurbished
12
(2018: 14)
XL sales increased by a satisfactory 4.4%. This followed the recruitment of 13 new stores and 12 closures. The latter consisted of mostly smaller unviable stores. There is increasing competition for new stores, but the XL proposition continues to be an attractive option for smaller independent stores.
Retail turnover increased by
155%
€59.5 million
(2018: €23.3 million)
Wholesale turnover increased by
155%
€28.5 million
(2018: €11.1 million)
New stores opened
5
(2018: 35)
Stores closed
3
(2018: 1)
Stores refurbished
4
(2018: N/A)
4 Aces was successfully integrated into the BWG Group portfolio with 2019 as the first full year of trading. It was an excellent acquisition yielding enhanced shareholder value. Customer retention is strong with strong sales growth across key categories.
Growth at Value Centre Cash and Carry (excluding Corrib Foods) was modest in 2019. Total growth of 8.35% was inflated by the acquired 4 Aces business. This sector experienced some challenges, particularly in the licensed trade, where smaller rural pubs continue declining and concurrently being targeted by major multiple retailers. A weaker pound exchange rate also resulted in increased competitive activity from northern Ireland-based wholesalers. On the positive side, strong growth in XL and the hospitality and foodservice sectors continues.
BWG Foodservice sales grew by 4.9% in 2019. While the growth rate slowed compared to recent years, we continue gaining market share. Economic uncertainty, particularly Brexit, has had a negative impact on this sector but it remains a sector where the prospects are for continued market growth.
The Corrib Foods acquisition was completed in November 2018 and proved to be an excellent acquisition for BWG Group. Anticipated synergies were delivered and sales growth is extremely strong, exceeding expectations. Customer retention is strong with no unexpected losses. A slowdown in the foodservice sector was challenging but the outlook for this business is extremely positive.