Specialist
Former Director at Wm Morrison Supermarkets plc
Agenda
- Growth, shopping frequency, pricing and inflationary trends for Q4 2021 vs Q3 and Q2
- Competitive landscape and market share movements given current consumer shopping habits, highlighting growth of non-food retailers such as B&M (LON: BME) and Amazon’s (NASDAQ: AMZN) emergence in the market
- Food price and labour inflation impacts in addition to supply chain challenges
- Q1 2022 outlook, highlighting continued PE interest in the sector
Questions
1.
What are your Q4 2021 sales growth or decline expectations for UK grocery retail vs Q3?
2.
How has average spend and frequency of shop trended so far in Q4 2021 vs Q1-Q3 2021 and vs 2020?
3.
Could you elaborate on Q4 2021 performance across convenience, supermarket and discounters vs prior quarters?
4.
How has online penetration evolved across Q4 2021 vs Q3? Is there still a slight retraction?
5.
In a previous Third Bridge Interview a rise in the rapid-delivery grocers was discussed. I read that this trend might be beneficial for the wider industry, in that it gets consumers more used to online purchasing and creates habits that might translate to big weekly shops at the bigger players. Do you agree with this sentiment? Do you think this is playing out?
6.
How would you describe the Q4 2021 level of pricing and promotion across the industry vs previous quarters?
7.
Which retailers have led pricing promotion changes in Q4 2021? Is it anyone in particular or industrywide?
8.
The prints on cost inflation came through this morning. Are there any cost buckets or food categories where cost inflation is accelerating vs decelerating? What might this do for the total basket?
9.
How might the next few weeks play out as we go into Christmas? What dynamics should we monitor?
10.
What do you think the dynamics we’ve discussed mean for Q4 2021 industry margins?
11.
Could you outline the market share developments you’ve noticed during the last couple of months? What are you expecting from the remainder of Q4 2021?
12.
What is your H1 2021 like-for-like sales outlook? How might the next 6-12 months play out and what factors might drive like-for-like sales?
13.
What levers might enable players to grow like-for-like sales through improved frequency or average basket size such as digital strategies, range change or assortment?
14.
Is labour still an issue? When might that get resolved? You mentioned you expect inflation to return to normal in H2 2022.
15.
Which players are ahead of the curve in implementing digital strategies? I’ve heard Sainsbury’s and Tesco are well-equipped in this regard. Is that a fair assessment?
16.
Do you expect Amazon to enter the market more aggressively than previously? It has introduced some Go stores and there were rumours about a white paper circling indicating the potential introduction of 200 stores over the next three years. Do you think this is a possibility? How seriously should we take the threat of Amazon?
17.
Who do you think Amazon would compete against most? Could it fall into that big four segment quite well? Which player might the company most threaten if it does enter the market?
18.
M&S has been in the news recently due to its partnership with Ocado and there are indications that it might want to take over with a 100% stake. What are your thoughts on that relationship and maybe bringing Ocado into the market? How might it fit in? Do you expect it to benefit further?
19.
Do you think Ocado will remain the go-to online retailer longer term, or have you noticed serious
improvements from Tesco and the other players that could help them breach that gap?
20.
How is Morrisons trading? What might happen to the value-add to the business now that the deal has gone through? Do you expect any property sales? We know that’s something it vowed not to do, but it’s realistic.
21.
Do you think Morrisons’ operation using a vertical supply chain is a reason why it’s slightly more
challenged by the supply chain issues which have plagued the industry? Alternatively, is it more sheltered given that this provides control?
22.
Do you think Morrisons can claw back lost market share in the long term or is a lot of work required?
23.
Non-food retailers such as B&M have experienced substantial growth, and you mentioned they seem to be opening stores very close to the big four players. Do you expect further growth in these players? What does this growth mean for the big four?
24.
What might happen to a player such as McColl’s? It has a good relationship with Morrisons, but seems to be trading very cheap. There seems to be some value there. How might the evolution of the market impact the company? Do you expect growth? Does it make sense as a potential acquisition target?
25.
Do you think players such as Tesco and Sainsbury’s are too big and too complex for a leveraged buyout and acquisition?
26.
If Tesco or Sainsbury’s did become a target for a PE company, do you think the CMA [Competition and Markets Authority] would be concerned if more ownership were bought up or more supermarkets became owned by PE players?
27.
Are there any other factors or points of interest you would advise we monitor?
