A round-up of supermarket news and gossip
BRITAIN’S supermarket chains dramatically increased their advertising budgets in 2007, seeking help of celebrities from Lulu to Antonio Banderas to boost sales. According to figures compiled by Nielsen Media Research, Morrison increased its advertising spend by £18m, or 61%. The group’s advertising spend to November 2007 was £46.5m. Tesco increased its advertising spend to £71.2m, as Britain’s largest chain bought in the Spice Girls for a TV campaign. Asda was well down the league of spenders with £39.5m.

Internet shopping could account for half of Britain’s £300bn+/yr retail market by as early as 2018, after coming of age this Christmas. James Roper, chief executive of Interactive Media Group, the retail internet monitor. said that the pace of change could be unprecedented over the next decade, as stores have been left with little choice but to improve significantly their online offering to protect sales. IMRG believes that consumers have spent a record £53bn online during 2007. There is a considered thought that if online retailers are to be as successful as the IMRG are predicting, the effect on the high streets of Britain will be seismic. Many stores would be uneconomic and whole shopping districts could wither away. Yet online retailers are going to have to improve their game if shoppers are to be persuaded to defect to the web in such large numbers. Complaints about delivery and incorrect goods are on the rise.

An article by Patrick Hosking indicated what a compelling business model the shop is. Consumers do the work. They visit the store. They take the goods off the shelves. In some supermarkets consumers even scan it through the checkouts. And they operate their own home delivery service.

Thousands of tonnes of apparently fresh poultry meat as sold in supermarkets and catering outlets is imported and often months old. The amount of poultry imported from Brazil and Thailand is expanding and more of it is weeks old. Meat in ready meals could be many months old, and may have been thawed and frozen a number of times. EU rules give no time limit for use of the word “fresh” on poultry. Chicken may not be frozen then thawed and sold as “fresh”.

The price of food is rising at its fastest rate for 14 years. Prices of food have been pushed up by specific factors in 2007. For example a poor global wheat harvest produced the increase in bread prices. But food inflation is primarily caused by underlying structural factors, notably an imbalance between growth in demand and growth in supply. Another approach is to look at retailer’s customers. Some demographic bands have higher debt burdens than others.

Mark Price the md of Waitrose has made two new year predictions.The first that all of its larger rivals will announce massive price reductions in 2008. The second is that Waitrose gross margin will be higher at the end of the year than at the start. He further goes on to state “The British consumer has been duped into thinking that value means cheap”. His comments come shortly after Sainsbury’s, Asda and some dairy groups were fined for price fixing. The OFT is still investigating Tesco, and Morrison.

In what was potentially costly error, tax officials had insisted that a Marks and Spencer chocolate tea cake was really a biscuit. Chocolate biscuits are subject to standard rate VAT, whereas cakes are zero rated. This may have landed the Treasury with a £3.5m bill. The advocate-general of the European Court of Justice, Juliane Kokott ruled that the traders were entitled to the correct application of national VAT rules. Marks and Spencer now wants all its money back. Asda has joined the fight against Tesco’s £400m joint development with Everton Football in Kirby.

GEMINI