“MICHAEL LUSCOMBE: I think it’s a tragedy that we are talking about anybody losing their job let alone 1800 people. We have worked very closely with Pacific Dunlop because, you know, this has been a business that has not been without its challenges for a number of years.”

Give me a break, it is Woolworths and Coles who brought these job losses about. The vast majority of PacBrands products are sold through these two retailers and their subsidiary outlets.

Coles’ and Woolworth’s buyers have continued to put pressure on prices, both everyday and promotional deals as well as adding to the costs of doing business. Increase in trading terms, pushing logistics costs back onto suppliers, reduced ranging, increase in Home Brands etc.

It is a tragedy that people all over the country are losing their jobs, but take some responsibility Mr Luscombe, don’t start crying crocodile tears.

Tim

Request is probably not the correct word though is it?!

Any Comments, anonymous of course – use a  name like Idi Amin or Robert Mugabe.

Tim

Buyers are not exempt and Wesfarmers are not happy with the buying performance. Buyers have reacted by not accepting price rises and pushing more terms for less activity.

Tim

Look we all know it is bad out there but these things become a self fulfilling prophecy after a few weeks.

With major orders being canceled and open to buy cut back there will be many importers and distributors doing it very tough in the next 2-3 months. I would expect many to go to the wall as their cash flow dries up and they cannot repay their trade lines. This will result in job losses and lower spending and the cycle continues.

The milk scandal in China has got their government very worried. With more stringent checks being done on food items leaving Chinese ports, expect many supermarket shelves to be empty in the lead up to Christmas as stock is unavailable.

Major FMCG manufacturers have already held crisis meetings and are advising Coles and Woolworths that these issues will hit hard as stock run out in 2-3 weeks. With their heavy reliance on China for their own brands, this should not come as a big surprise, but I doubt it will stop them from raising loss of profit claims.

Any thoughts?

Tim

“If you’ve got a CEO (Brian Quinn) that ends up in jail and you end up firing your merchandise director (Peter Scott) for corruption, it’s a bit tricky for people to actually have belief in the leadership,” he said.

What about an MD with no retail experience and a mustache (John Fletcher), a director who is a major supplier (Sol Lew) and no wonder there have been some issues at Battlestar Galactica.

The canny Scot described the business as “fundamentally broken” when he took over, with management just looking at the next quarters sales/profit cycle and not long term.

So supplier such as Nestle and Unilever are now being asked for more trading terms to cover Coles’ poor management and lack of reinvestment in Fixtures and Fittings.  That makes sense!

How about Coles suck it up and actually offer the suppliers a decent business to deal with before they start screwing the account managers for more funds.

Any thoughts Ian?

Tim

Profit pressures have started a new drive on Trading Terms and Waste Reduction. Measures include deleting some of the best sellers because their waste figures are above the trading terms contribution.

Unilever and Nestle have been amongst those who have been poked and prodded to give more. 9% was a number whispered in my ear from one supplier.

Any idea where this increase in trading terms is supposed to come from, I would have thought they should be handing some back given Coles poor performance of the past 5 years.

Tim

• Woolworths cheapest on total grocery basket in 59 of 61 regions (up from 21 last month)
• Nationally, the price difference between Coles, Woolworths and Independents has narrowed
• ALDI cheapest on basic staple products

By the way this is what they do;(from the web site)

“Price information is obtained from an independent monthly survey of approximately 500 products from 600 supermarket outlets across Australia. The results of each monthly survey will be made available on the GROCERY choice website on the first business day of the following month.”

So lets examine the news from this month.

Woolworths Cheapest in 59 of 61 regions

This is a massive turnaround from last month where they were cheaper in only 21 of the total regions. Does it mean anything though? Coles won the first two surveys and now Woolworths has won this one.

The flaws in the survey are many, and not limited to the points below;

• No individual supermarket is measured
• The data is not dated so it might be 3-4 weeks old even on the day it is released and by the end of the month it could be 8-9 weeks old.
• Promotional price points change week to week and have a massive impact on the basket price
• Like for like product comparison are difficult to make with retailers ranging exclusive products and increasing numbers of Home brands.

Nationally the price difference has narrowed

It is nice of the ACCC web site to tell us this analysis on the front page headline, but there is no link through to the detail or the comparison number, just the Headline.

We may believe them, but;

• We don’t know how much it has narrowed by
• Was it uniform across the states
• How does each state as a total vary

Unless you printed off the results for each region for the past two months you can’t do any analysis. The website just shows the current data. How hard would it be for them to do that, not very.

The government is trying to push Unit Pricing to make the supermarkets more transparent with their pricing, but the governments own website on pricing isn’t even being transparent and doesn’t give access to the history. Bit of a double standard here.

ALDI cheapest on basic staple products

Well blow me down with a feather. Was it an economic guru at the ACCC that came up with this revelation. I thought this was rule number one on the ALDI business model, but no we needed the insight from the ACCC to let us into this secret.

I personally don’t hold out much hope for the future of Grocery Watch in its current format, but have a read of these headlines and decide yourself;

Grocery Choice a big flop – SKY NEWS Oct 1, 2008

Grocery Choice still a farce: Expert – Smartcompany.com.au Sept 3, 2008

Rural consumers not helped by grocery choice site – ABC.net.au Sept 4, 2008

Grocery Choice website does nothing – Channel Seven News Oct 1, 2008

Any one using it, or any other comments?

Tim

“Woolworths, Coles, and Franklins have joined the Australian Food and Grocery Council (AFGC) in a push to make nutrition labeling more transparent and meaningful for Australian consumers by adopting the Daily Intake Guide.”

The Daily Intake Guide is a set of front of packaging labels that give a percentage of daily nutrient and energy that a standard serve of that product will provide the average adults intake.

Who decides on the average serve? Is it realistic? Does anyone take any notice?

So why do they all agree? Australian Food News reported yesterday that a survey commissioned by groups including the Cancer Council and Choice in the Sydney and Newcastle areas, showed that only 64% of shoppers surveyed could recognise healthier foods using the Daily Intake Guide. The survey showed that

the “Traffic Light” labeling system was more effective with 81% of shoppers being able to identify healthier foods using these labels.

The Australian Food News article puts the AFGC’s side of the argument through its CEO Kate Carnell, who states;

“The fact that CHOICE’s survey results contradict a large portion of
the data produced by reputable international organisations leads us to
question their approach.”

Well Well, what is the story here. Lots of axes to grind, big corporates and high profile interest groups. I’m none the wiser but I am suspicious.

Any one know what is going on?

Tim

Mitre 10 has been struggling for the past decade to have an impact in the Hardware channel, particularly in metropolitan areas. The Australian Financial Review has reported that Mitre 10 and Woolworths are in discussions regarding a capital injection or outright purchase of entity.

The AFR also indicates that Mitre 10 will be holding a shareholders meeting during its National Convention next week on the Gold Coast. With the vast majority of shareholders in attendance this is an ideal opportunity to present a restructure or buyout proposal.

Hardware should not pose any ACCC issues for Woolworths as this is one of the few areas that WOW do not participate in in the Australian market.

Tim

After looking at the Tesco emails, I thought it would be a good experiment to see if any Australian retailers/supermarkets are doing emails well. Coles is probably the best place to start as they have recently revamped their emails and also repositioned Coles Online to be Coles.com.au (I think that’s a great thing – one umbrella brand without any sub-brands, so easy for the consumer to remember when they are going online).Dominique Hind’s Collective, Sep 2008

You should read the whole article.