Mintel’s Month in Retail highlights the stories that have made headlines in the European retail markets over the past four weeks, with exclusive analysis from Mintel’s expert retail team on potential implications.

International: Amazon Prime sales beat Black Friday & Cyber Monday records

Amazon had its biggest ever shopping event this month. Prime Day, an online sales event exclusively available to Amazon Prime members, has taken place annually since 2015, but this year’s event was the most successful yet – with growth of 60% compared to 2016. The most popular purchases on the day included Amazon’s own brand electronics such as the Amazon Echo.

“With 23% of UK consumers currently Amazon Prime members, there was clearly a smaller market for Prime Day than Black Friday. However that does not seem to have stopped the event from racking up the sales. It was notable that the spotlighted deals provided by Amazon were all of its own products.”


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UK: Ebay matching prices with Amazon

Ebay is launching a price-match guarantee with Amazon and other online companies on its UK site. Ebay will guarantee to match the prices of over 20,000 products from Amazon, Argos, Currys, Asda, Tesco and John Lewis. This feature will be first launched in the UK, before being rolled out across Germany, France, Italy and Spain.

87% of eBay’s turnover comes from full price sales and with the core auction side of the business declining steadily, eBay is very much in competition with the likes of Amazon and Argos as much as it is with other auction sites. With eBay’s UK growth at around 6% in 2016 and the online market overall growing by over 20%, it is clear that eBay needs a stimulus to re-inspire its growth. The scheme is small scale at launch, but represents a solid step for the company as it looks to transition further away from its auction-site roots.”


UK: Sports Direct fall in profit

British retailing group Sports Direct has reported a fall in profits for the year ending 30 April 2017. Profit before tax fell by 58.7% down to £113 million, with underlying EBITDA falling by 28.5% down to £272 million. Group revenue increased by 11.7% up to £3,245 million, driven by the strong growth in International Sports Retail at 38% up to £665 million. Chairman Mike Ashley talked of his desire to turn Sports Direct into the ‘Selfridges’ of sport by showcasing its third party brand partners instore and cited the devaluation of the pound for the fall in profit.

“What is one to make of Mike Ashley’s assertion that he wants to make the business “The Selfridges of Sport“? As Sports Direct stands for low prices on branded and own brand merchandise, taken at face value that would be a quick way to harm the business and the company quotes figures with these results that show that even the worst performing latest superstore is at least as profitable as the rest of the chain. Segmenting the stores more by brand may work, but not if it makes the stores look too smart because that sends over a message of costing more.”


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Italy: Carrefour Italia suffers €400 million loss in three-year period

Supermarket Carrefour Italia has recorded losses of €203 million last year and €400 million in the three-year period between 2014-2016. While the supermarket sector in Italy has been in growth, hypermarkets are in decline. In order to mitigate losses, Carrefour has converted 32 of their hypermarkets into Supeco discount stores, the first of which was opened in July 2017. Carrefour has seen positive growth in the first half of 2017 – with revenues rising by 2%.

“The Italian grocery retailers have been seeing flat sales over the last few years, and the market is highly fragmented. The discounters have been growing strongly, and, as in France, the hypermarket format is in decline, with consumers shopping less frequently and shifting more of their non-food spending online.”


Spain: Dixons Carphone disposes of The Phone House Spain

Dixons Carphone has entered an agreement to dispose of its entire holdings in The Phone House Spain for €55 million. Global Dominion Access SA will acquire the brand, and the deal is likely to be completed by Dixons’ second quarter. Dixons’ most recent financial update for the 12 months ending 29 April 2017 showed a group growth of 9%, driven mostly by its 20% growth in Southern Europe.

“While the Spanish operation had been profitable, the goal from the creation of Dixons Carphone had been to slim down the portfolio. It is a little surprising given the retailer had been investing into the operations by launching the new format Smart House, which was ‘gaining traction’. It is likely to be the last of the international businesses that is sold off, with the Nordic operation strong and the turnaround in Greece well underway.”


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2016-09-28

UK: Tesco launches same day delivery nationwide

Tesco has extended its same day delivery service nationwide to cover 99% of UK households. This service was initially trialled in London and South East England before being fully launched and comes soon after the launch of its Tesco Now one hour delivery courier service for London.

“Mintel research shows that over half of current online grocery shoppers feel it is important that retailers offer the ability to have online grocery orders delivered on the same day. This is an important move by Tesco as it erodes one of Amazon’s key USP’s in the grocery market and does so without the need to be entered into Tesco’s Delivery Saver scheme, making the service much more accessible to consumers than Amazon’s services, which require Prime.”

 


UK: Lidl to open 60 new stores a year in UK expansion

German discounter Lidl has announced plans to open between 50 and 60 new stores in a £1.45bn expansion within the UK. The supermarket’s UK chief executive, Christian Härtnagel, has said the move will fill gaps where customers do not currently have access to a Lidl store and is the fastest rate Lidl has ever grown in the UK. However, there will be no move to operate online.

“Lidl is currently the UK’s eighth largest grocer by market share and there is still further room to grow. Further stores will only help the retailer do this particularly in areas such as the West Midlands and the South East, where usage of Lidl is lower than average. It is interesting, although unsurprising, to hear Härtnagel quash rumours of an online launch. There is certainly demand in the market for an online service according to Mintel’s Online Grocery Retailing UK 2017 report.”


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