Taste the dif­fer­ence This pan­demic could be the mak­ing of the big four su­per­mar­kets

A com­bi­na­tion of good for­tune and adept ma­noeu­vring have al­lowed the ma­jor su­per­mar­kets to thrive in the coro­n­avirus cri­sis ‘There has been an on­line gro­cery rev­o­lu­tion dur­ing lock­down’

The Daily Telegraph - Business - - Front Page - Ben Mar­low

It may seem in bad taste to talk about the winners from the cri­sis when the death toll is still ris­ing, and thou­sands of peo­ple are be­ing laid off ev­ery day, but it is an un­com­fort­able fact that some com­pa­nies will emerge stronger from this. The big su­per­mar­kets are ob­vi­ous con­tenders, hav­ing come tan­ta­lis­ingly close to bol­ster­ing both their rep­u­ta­tions and busi­ness mod­els after be­ing thrust on to the Covid-19 front line.

Sadly, a spate of old-fash­ioned board­room greed threat­ens to dam­age much of the good­will that had been built up by en­sur­ing the na­tion didn’t starve and peo­ple could still go to the lava­tory in a dig­ni­fied man­ner.

Still, thanks to a com­bi­na­tion of good for­tune and adept ma­noeu­vring, the gro­cers have sailed through lock­down on the trad­ing front, post­ing bumper sales and beef­ing up op­er­a­tions both in store and on­line to keep up with de­mand.

After steadily sur­ren­der­ing mar­ket share over the last decade, the Big Four su­per­mar­kets are fi­nally fight­ing back. Sains­bury’s says it has been win­ning back cus­tomers, not only from Aldi and Lidl, but also chief ri­vals Tesco, Asda and Mor­risons. Sales have jumped 8.5pc over the last four months. Gro­cery sales were up 10.5pc and non-food jumped 7.2pc.

So much for the claims of for­mer boss Mike Coupe, who in­sisted that a mega-merger with Asda was the only way to com­pete with the spec­tac­u­lar growth of the discount kings. Tesco has taken the fight right to Aldi with its price match ini­tia­tive and is also win­ning back cus­tomers on a scale not seen for a decade.

There has been an on­line gro­cery rev­o­lu­tion dur­ing lock­down. The es­tab­lished names have al­ways been woe­fully ret­i­cent about dig­i­tal in­vest­ment, grum­bling that it is im­pos­si­ble to make money with de­liv­er­ies. But the cri­sis has forced their hand. In­ter­net or­ders at Sains­bury’s surged from 370,000 a week in March to 650,000 June. Half of all those cus­tomers are new ones.

It is a sim­i­lar story at Tesco. The much-de­rided store-pick­ing model of the es­tab­lished play­ers has gone from sup­posed Achilles’ heel to a ma­jor strength as they have been able to quickly ramp up ca­pac­ity.

Iron­i­cally, dig­i­tal pioneer Ocado has been held back by a re­liance on gi­ant ware­houses manned by ex­pen­sive ro­bots, lead­ing to long waits for slots. Founder Tim Steiner has re­mained stead­fast in his be­lief that there would al­ways be de­mand for on­line gro­ceries. Now, his prob­lem is ful­fill­ing it.

Even Ar­gos has splut­tered back to life, a sure sign that we are liv­ing in unique times. The takeover of the chain, with its non-food of­fer­ing and lo­gis­tics ca­pa­bil­i­ties, was meant to be trans­for­ma­tive for Sains­bury’s but it has been a dis­ap­point­ing flop. Yet, sales leapt nearly 11pc dur­ing the quar­ter. At this rate, the div­i­dend could make a quick re­turn.

It may be a stretch to say the pan­demic could be the mak­ing of the su­per­mar­kets. The boom may even prove to be short lived but for the first time in years there is plenty for them to cheer. And at the very least it’s a help­ful dis­trac­tion from all those un­com­fort­able bonus rows.

Food to go has gone

From hero to zero, coro­n­avirus has turned rep­u­ta­tions up­side down in a heart­beat, and no more so than at SSP, the ter­ri­ble cor­po­rate name be­hind such es­teemed air­port and train sta­tion eater­ies as Up­per Crust and Ri­tazza.

A £300m fundrais­ing at the end of March was sup­posed to steady the ship but it hasn’t stopped SSP from an­nounc­ing 5,000 job cuts, more than half its 9,000-strong work­force.

The “food to go” mar­ket has evap­o­rated. The real ques­tion is will it re­turn? The high street will ex­pe­ri­ence some­thing of a resur­gence but air­ports and train sta­tions are likely to re­main at a frac­tion of their ca­pac­ity for the fore­see­able fu­ture. The ma­jor air­lines are pre­dict­ing a down­turn last­ing any­where be­tween three and five years.

WH Smith is the ob­vi­ous other big ca­su­alty but even the likes of Pret a Manger and Greggs must be wor­ried, hav­ing tar­geted travel hotspots too. The ma­jor su­per­mar­kets on the other hand will be rub­bing their hands with glee at an op­por­tu­nity to sell more take­away food to the masses.

The smart move would be to quickly build as many hot coun­ters in ex­press and con­ve­nience stores as pos­si­ble. Sand­wiches and sal­ads could even be­come a loss leader like milk and bread to woo cus­tomers. Maybe the daily shop could trig­ger the re­vival of the weekly shop. Not at Lidl or Aldi though. No one goes there for a sand­wich.

V-shaped or pear-shaped?

Has some of the Prime Min­is­ter’s ebul­lience rubbed off on Andy Hal­dane? The Bank of Eng­land’s chief econ­o­mist has been talk­ing up the prospects of V-shaped eco­nomic re­cov­ery.

But how does that square with the thou­sands of lay-offs tak­ing place ev­ery day and the gloomi­est jobs out­look for 30 years? An­swer: it doesn’t.

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