FDBusiness.com

Big Four UK Grocery Retailers’ Profit Margins to Shrink Further

 Breaking News
  • Royal Unibrew Completes Acquisition of French Lemonade Business Royal Unibrew, the Denmark-based beverages group, has completed the acquisition of Etablissements Geyer Fréres for an enterprise value of DKr660 million (€88.5 million) financed by bank debt. The acquisition of Etablissements Geyer Fréres will give Royal Unibrew increased access to the French soft drinks market and will further strengthen its export portfolio. Employing about 100 [...]...
  • Private Label Outperforms FMCG Brands in Europe Private label continues to grow across Europe and is now outperforming brands in the majority of markets measured by big data and technology expert for consumer FMCG industries, IRI in its analysis of private label performance across eight major Western economies markets (UK, France, Germany, Greece, Italy, Spain, Netherlands and the US) during 2017. Growing +4% year on [...]...
  • Meat & Poultry – Future-proof For Success The meat market remains fast-moving and competitive. As part of this processors and retailers are always looking for a point of differentiation. As well as new product development, this can mean new pack formats. Convenience remains a major driver here but this has to be matched by the ability to maintain product quality and freshness [...]...
  • Ready Meals – Not Ready For the Future New research (1) published by Eating Better, a powerful alliance of more than 50 organisations, shows that supermarkets need to shake up their ready meal ranges. They are not catering for the growing number of flexitarian customers who are cutting back on their meat eating for their health and the health of the planet (2). [...]...
  • Top 100 Largest Spirits Brands Revealed The world’s most popular alcoholic drink in 2017 was the South Korean soju brand Jinro, owned by Hite-Jinro, according to the IWSR Real 100, the definitive ranking of the world’s largest spirits brands by volume. Selling almost 76m nine-litre cases, Jinro retains its number one position from last year, and once again by a staggering [...]...

Big Four UK Grocery Retailers’ Profit Margins to Shrink Further

Big Four UK Grocery Retailers’ Profit Margins to Shrink Further
October 22
09:34 2014

Operating profit margins of the big four UK grocery retailers – Tesco, J Sainsbury, Asda and Wm Morrison Supermarkets – are likely to shrink further over the next 12 to 18 months, as they cut prices to reverse declining sales and curb the losing battle of market share to discounters, says Moody’s Investors Service in a Special Comment report published recently.

“Further price cuts could be particularly credit negative for Tesco and Morrison as their cost cutting and efficiency measures are unlikely to fully offset the negative impact of lower prices on their margins,” says Sven Reinke, a Moody’s Vice President, Senior Analyst and author of the report.

Moody’s notes however that Morrison is better positioned than Tesco and Sainsbury to adapt, through store portfolio and cost structure adjustments, to the changing environment in which discounters have a larger market share. Morrison’s store network comprises smaller supermarkets and only a very few are larger than 50,000 square feet and thereby most exposed to declining footfall. Morrison’s centralised online distribution network may also be more scalable if online growth continues as expected.

Moody’s notes that discounters Aldi and Lidl are now entrenched and their combined market share could reach 10% over the next couple of years from 8.3% today. Over time, their UK market share could be similar to that in other European countries at around 12%-15%. Moody’s projects that discounters’ 20%-30% annual like-for-like UK sales growth will slow, but some of the anticipated lower like-for-like growth could be offset by new store openings. This will put additional pressure on the Big Four’s large stores, where footfall continues to decline.

Moody’s report, entitled “UK Big Four to Suffer Further Margin Declines as Discounters Take Bigger Slice”, is available on www.moodys.com.

About Author

mike

mike

Related Articles



Food & Drink Business Conference & Exhibition 2016

Upcoming Events

  • September 5, 2018Int'l Food Products and Processing Technologies Exhibition (WorldFood Istanbul)
  • September 15, 2018iba
  • September 25, 2018PPMA Show 2018
  • September 27, 2018Int'l Fruit Show (eurofruit)
AEC v1.0.4

find food jobs

The Magazine

F&D Business Preferred Suppliers

New Subscriber





Subscribe Here



Advertisements