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.

UK: Aldi sales rise 12% to £7.7bn, UK

The discount grocery operator has reported a 12% rise in UK and Ireland sales, reaching £7.7bn in the year ended 31 December 2015. Like-for-like sales were not disclosed; however, the retailer reported a 1.8% decline in operating profits to £255.6m as the business continues to invest in price.

“Aldi’s UK performance continues to be hugely impressive in a grocery market that declined 0.2% in 2015. However, the growth rate is slower than it has been for Aldi since 2010. There is still capacity for Aldi to continue opening more stores and this will drive its growth in the coming years but, increasingly, the challenge will be to differentiate itself from its perennial competitor, Lidl. Research from Mintel’s Food and Non-Food Discounters UK 2016 report shows that UK consumers find very little differentiation between the two German discounters. While this helped when taking on the grocery multiples, to continue growing both operators will increasingly find that their store catchments overlap and new customers will have to be attracted from each other rather than relying on customers continuing to ditch the grocery multiples which are increasingly upping their game.”


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France: Vivarte may sell 100 La Halle stores

Vivarte is looking to divest around 100 La Halle stores as it seeks to renegotiate debt with its shareholders. Vivarte has given two months for potential buyers to come forward.

These have been tough times for clothing retailers in continental Europe with a string of companies going into administration or closing down altogether. All have done so for basically the same reason; they have been unable to respond to the growing demand for more fashionable merchandise from more exciting stores that their target markets are now demanding. Vivarte is in a similar position in France: it is struggling. This slimming down of the footwear chain is another symptom of its problems. People want more fashionable shoes and, increasingly, clothing specialists like Primark (which is beginning to develop in France) and Kiabi are providing them.”


UK: The Co-operative convenience business drives growth

Like-for-like sales in The Co-operative’s Food division grew 3.1% during the 26 weeks to 2 July 2016, following six consecutive quarters of growth. The core convenience division grew 4.3% on a like-for-like basis during the first half of this same time period.

With the Co-op looking to refocus its grocery business on the convenience sector it is encouraging that its convenience arm continues to be one of the best performing in the market. Mintel’s Convenience Stores UK 2016 report forecasts the convenience grocery market to grow by around 1.9% in 2016, with stronger growth at the leading grocery multiple chains offset by lower growth and consolidation among the symbols and smaller chains. With the convenience arm growing on a like-for-like basis of 4.3% in the first half, this represents a clear over-performance of the Co-op in its now core market.”


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2016-09-28

Switzerland: Sempione Retail AG makes cash offer for Charles Voegele

Sempione Retail AG, owned by OVS S.p.A, has made an all cash public offer to acquire the publicly held bearer shares of Charles Voegele Holding AG. Upon completion of the deal, which is dependent on the approval of regulatory and merger control authorities, Sempione Retail plans to delist Charles Voegele from the SIX Swiss Exchange.

“In Germany we have seen Wohrl, Sinn Leffers and Promod all get into difficulties or close down, and MS Mode in the Netherlands is in the same trouble. Voegele is typical of a European clothing retailer with an older and more conservative target market. But even in Switzerland consumers are now looking for elevated fashion and more exciting outlets. So the consortium faces a major challenge; it needs to transform the product offer and the outlets, and it has to move quickly because the business is hemorrhaging cash.”


UK: Amazon Fashion launches first UK television campaign

As Amazon Fashion ramps up its activity in the UK, the online retailer has launched its first television campaign within Europe with the tagline “Delivering Fashion.”

“Amazon is rapidly growing its share of the clothing market and the launch of this TV ad campaign will help to convince consumers that Amazon is a serious player in the world of fashion. Mintel’s latest research shows that Amazon has become the fifth most popular retailer for clothes by number of shoppers, moving up from its previous position in ninth place a year ago. This highlights the strength of Amazon and how its trend-led product offering combined with its delivery infrastructure are helping to set it apart from other clothing retailers.”


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UK: Waitrose unveils ‘Organic Kitchen’ campaign

Supporting the Soil Association’s Organic Month, Waitrose has revealed a new campaign highlighting its organic producers. The Organic Kitchen campaign will feature gardening expert and brand Ambassador Alan Titchmarsh alongside broadcaster Ellie Harrison.

There is growing demand in the market for organic products, but there is also a sense that what constitutes an organic or ethically sourced product is often confusing in the mind of the consumer. The new campaign from Waitrose helps alleviate these confusions by explaining which products are organically sourced, and where they come from, along with information on how to use them in everyday cooking. How ethical food options impact where consumers shop will be explored in detail in Mintel’s upcoming Supermarkets UK 2016 report.”

Spain: Zara launches sustainable clothing collection

Zara has launched a sustainable clothing collection, called Join Life, which is made using environmentally-friendly materials such as organic cotton, recycled wool and Tencel®, marking the first time the brand has pushed an ethically-sourced collection with its own dedicated marketing activity.

“Mintel consumer research consistently shows that environmental considerations are low on the priorities of women when shopping for fashion. Just 8% of UK women selected “sustainable clothing” when asked which factors are important to them in choosing one retailer over another for clothes. Yet as the conversation around sustainability in the fashion industry gets louder, Zara could no longer ignore its own environmental impact. And although there is an increasing feeling of responsibility among young consumers around how their purchasing habits are impacting the environment, we are unlikely to see a dramatic change in their fashion purchasing habits unless brands like Zara take the initiative.”


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UK: Boohoo revenues surge 40%

Online fashion retailer Boohoo has released its interim results for the six months ended 31 August 2016. The accounts reveal a 40% surge in revenue, rising from £90.8m in 2015 to £127.3m in 2016.

“This represents a classic example of the way operational gearing can work for a retailer. With volume growth like this, it is hardly surprising that profits grew so fast. Like Primark, its high street counterpart, this ultra-low price but fashionable merchandise is what younger people are looking for. Beyond that, the business has used data to help understand fast changing trends in both product and pricing, helping the retailer to stay competitive against other value fashion brands. Such insights have helped Boohoo move into new categories, extending its reach. As Mintel’s Customer Satisfaction and Brands UK 2016 report shows, despite having relatively small customer numbers compared to some of the more established fashion retailers, consumers positively endorse the brand, placing the retailer amongst the top brands in the UK. This kind of brand trust places the retailer in a good position to continue its growth.”

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