Oct 5, 2010

Promotional sales key to retailers remaining competitive

Government support needed to reduce crippling costs – Londis Retailers

Intense competition within the marketplace and the need to increase the value offering of promotional and private label products for consumers were some of the key issues highlighted by ADM Londis plc, following a survey of its retailer members as part of the Group’s 2010 Annual Retailer Conference.  Retailers also identified the need for the Irish Government to provide more support to address business input costs such as wage costs and local government charges.

62% of retailers surveyed detailed intense competition within the marketplace as the biggest challenge facing Irish grocery retailers with customer retention, cash flow management and additional cost reduction identified as the three most important areas of focus for independent retailers. As an example of how highly competitive the grocery retail marketplace currently is, almost all of the retailers surveyed (96%) revealed that consumers are purchasing a higher percentage of grocery shopping ‘on promotion’.

Supporting its own retailers, ADM Londis plc has introduced a number of market leading consumer price points across its ranges throughout 2010, as well as providing extensive promotional support across TV and Radio aimed at encouraging increased footfall in stores. Almost two thirds of Londis retailers surveyed called for Government support on the issue of wage costs. Reinforcing the points made by the RGDATA report ‘The Economic & Financial Significance of the Local Shop’ released earlier this year which highlighted the need for the abolition of the Joint Labour Committee mechanism for fixing wages in the grocery sector. The existing JLC system raises retail wage rates by up to 25% higher than the national minimum wage.

Picking up on this Stephen O’Riordan, Chief Executive, ADM Londis plc said, “In our survey almost 90% of retailers believe that it will be the second quarter of 2011 and beyond before the Irish economy returns to growth. In a retail industry where the fall in value of overall retail sales in Ireland is estimated to be in excess of 20% since market peak it is essential that the Government addresses the needs of small business by abolishing inflationary JLCs, reducing local authority charges and purging the excessive amounts of ‘red tape’ and regulations imposed on independent retailers.”With price identified as the most important driver for consumers it is unsurprising that over half of retailers referenced the availability of private label goods as being very important for their businesses to remain competitive.  79% of retailers believe that the range of private label goods available will increase in 2011 with 85% stating that the quality of these products had increased in 2010.

Peter Foley, Commercial Director, ADM Londis plc outlined how the Business is working closely with a range of suppliers in Ireland and internationally supporting Londis retailers and consumers. “A major development in 2009 was the establishment of a strategic alliance with UK wholesaler, Nisa Today’s. This alliance delivers in excess of €6 billion buying power to retail members, whilst also bringing one of the most credible Private Label offerings in the sector, to Londis’ consumers. We have broadened the Heritage Private Label range to over 100 lines with the addition of a chilled and frozen range now available in our larger stores which is proving particularly popular with our consumers. Combined with our long standing commitment to our Irish supplier base, we are delivering excellent consumer price points across our store network, whilst sustaining retailer businesses.”

Over 300 delegates from Londis stores all over the country attended the Londis Conference in Galway. Delegates were treated to a range of retail orientated presentations from Gerard O’Neill, Chairman of Amarach Research and James Burke, Leading Consultant and Retail Advisor. Other speakers included successful UK retailer David Sands and Sir Ranulph Fiennes who is undoubtedly one of the world’s greatest living explorers. Sir Ranulph Fiennes gave an inspiring speech based on his experience on over 20 expeditions across the world, illustrating just want it takes to achieve outstanding goals.