'The new normal' has to be the most telling phrase of the year. It speaks convincingly, given the state of the public finances and tax rises to come over and above this week's pre-Budget report of the notion that, rather than a temporary blip in consumer confidence, our new-found frugality and fear of debt are here to stay, and the days of conspicuous consumption will not return for years to come, if ever.
Yet the interesting thing is, it's been a far better year than I think most retailers imagined. I'm not saying it's been great. Far from it. But it's staggering to think that, while discounter sales have ground almost to a halt, Waitrose is currently the fastest-growing supermarket in the UK. It's off a lower base, and on the back of a new 'value' range, but half the products have simply (and cleverly) been repackaged and repositioned, while actually increasing in price. Similarly counterintuitive is the fact that premium sales are growing, while value sales are falling. Green shoots? A return to normality? Perhaps. But then again, as the Titanic went down, the band played on.
Adam Leyland, Editor
Our man of the year
Full Marks for seizing Somerfield
When The Co-operative Group merged with United Co-operatives in 2007, the society found itself marching to the beat of a different drummer: the drummer of Bradford-based rock 'n' roll outfit Last Orders to be precise. It didn't take Peter Marks long to prove it wasn't just a drum kit he could beat into shape.
His influence since taking up the helm has spread not just through the society, but through the wider co-operative movement and the big four are now starting to look over their shoulders at a rejuvenated and confident Co-op.
Last year, at the height of the credit crunch, Marks secured the £1.57bn financing needed for the society to snap up Somerfield, transforming The Co-op Group overnight into the UK's fifth-largest grocer. Most CEOs would have taken a well-deserved break after bagging such a big deal, but in January Marks was announcing yet another deal a merger with Britannia Building Society to create a 'super mutual' with assets of £70bn, nine million customers, 12,000 staff and 300 branches. The deal was completed in August, just five months after Marks was handed the keys to Somerfield.
Since taking on Somerfield, the society has taken a tougher stance on suppliers as it makes the most of its increased buying power. The Grocer revealed in May that The Co-op Group was asking suppliers for backdated trading terms to coincide with the Somerfield deal. And its buying power was more than evident two weeks ago when it unveiled Christmas price cuts and a promotional package worth over £200m, as well as its first-ever triple dividend. It's also been overhauling logistics, with up to 400 jobs set to be axed from Somerfield depots.
Despite all the distractions, the society has maintained impressive trading figures, with half-year like-for-like food sales up 7.3%. By comparison, Tesco managed just 2.7%.
The society's largest refurbishment programme in UK corporate history has also continued at breakneck speed, and Somerfield stores are beginning to reopen under The Co-operative fascia. With double-digit sales growth in refurbished stores, it's no surprise further co-op societies, including Midcounties and Southern, have chosen to adopt the branding this year. Plymouth & South West went one further by merging with The Co-op Group, taking Marks one step closer to his dream of a unified co-operative movement.
No wonder then that Marks picked up The Grocer Cup for Outstanding Business Achievement in October and, with a high-profile vacancy waiting to be filled not a million miles from his Bradford home, all ears will be listening out for the drummer's next beat.
The Pot Noodle award for student gratification
Instant food becomes even more... instant
There may be no jobs for them, but where food is concerned students have never had it so good. A new era of microwave technology dawned on the humble fish finger this year with the launch of Young's Micro Fish Fingers. Pop 'em in the microwave for two minutes, straight from frozen, and let the "susceptor technology" do the rest. Genius.
Made with Alaskan pollock and launched in September, these new "techie" fish fingers have a specially formulated crumb to prevent moisture from the fish spoiling that crispy coating. They taste pretty good, to boot.
But while Young's may have spawned the concept of 'fast fish', the real progenitors in idle cuisine were the men in white coats at Oakland Farm Eggs. In June, they came up with the frighteningly innovative concept of putting fresh liquid egg into a carton, thus creating an instant, healthy supper in the time it takes to solve the Countdown conundrum.
Demonstrating an acute appreciation of its target audience, Oakland said Egg In An Instant was perfect for the "massively lazy" student population, presumably well versed in the principle of 'simply open and pour'.
Liquid egg, two-minute fish fingers, not to mention the launch earlier this year of aerosol cheese has cooking really come to this? We may not have put a man on Mars, but when it comes to feeding the nation's young brains, let us ne'er say the spirit of human endeavour is dead.
A month's grace on price labels
The moral argument can be easier to win than the political one. The Grocer's summer Push Back the Tax! campaign urged the government to delay its VAT hike to avoid disruption and extra costs during crucial end-of-year trading. The industry rallied to the cause, and The Grocer succeeded in winning retailers a month's grace to change labels after VAT returns to 17.5% on 1 January.
The Katie Price award for make-up application
Why the FSA is a bit thick
Proving it is in no way a puppet of the Department of Health, in March it took the FSA's Scientific Advisory Committee on Nutrition just 40 minutes to recommend the board disregard the advice of the FSA's Nutrient Profiling Model review panel of experts and retain the protein cap.
The four members of the 14-strong SACN panel who found time to attend the telephone conference dismissed the exhaustive two-year findings of the review panel on the grounds that although there was "scientific justification for removing the protein cap", wider public health arguments for maintaining the status quo were "more persuasive". Just weeks later the quango was praised by the government's chief scientific adviser for "impressive" use of science.
So will the same "persuasive" argument lead the SACN to reject its own report (see opposite), which found calorie limit guidelines to be wrong? In the meantime, the FSA's scaremongering ads laid it on with a trowel.
While Change4Life talked up the merits of exercise, the FSA graphically exposed cereal, bread and soup suppliers for their high salt levels, and the depiction of a fridge oozing satfats was as subtle as Jordan's makeup.
Human error award
What does this button do?
In a world where computers predict demand and shoppers scan their own items, it's comforting to know one human being can bring a supermarket chain to a standstill. In May an IT type at Tesco HQ "pressed the wrong button", causing a till breakdown that led to several store closures and cost up to £5m. Presumably the same button was pressed when Tesco paid £1m for six bikes.
Stock of the year
Bounce back for Booker
Share prices fell off a cliff in September 2008 but, with the FTSE 100 recovering much of the ground since, a number of supermarkets and manufacturers made impressive gains.
One stock's gone a step further, however, and more than doubled in value. A year ago, Booker was trading at 19p per share. Now, it's above 45p and the darling of analysts everywhere.
Back in 2007, the wholesaler was criticised for being "under leveraged". How times change. Booker's seemingly over-cautious strategy in the raucous years of the credit boom looks far better with hindsight a rare thing in the current economic gloom.
Initiative of the year
A label working for everyone
The BRC's on-pack recycling label is that rare beast a worthwhile initiative that's simple to implement and easy to understand. The label, replacing a muddle of symbols and diagrams with standardised recycling information, is now used by more than 90% of local authorities. Launched in March, last month it added its 50th member, and all the major retailers are signed up.
Scoop of the year
We need to eat... more
Funnily enough, most 210-page draft government reports don't attract a large readership. But thanks to The Grocer, more than 115 million people worldwide are aware of the bombshell tucked away on page 50 of the Scientific Advisory Committee on Nutrition's draft report on the UK's energy requirements.
The page contained the revelation that the calorie limits used in the UK since 1991 may be considerably too low due to inaccuracies in recording how much energy we use "pottering about". As a consequence, guideline intakes could increase by as much as 400 per day the same as a medium-sized cheeseburger.
If the report's findings are ratified, the ramifications are huge. Energy requirements form the basis of almost all nutritional policy, hence traffic lights, GDAs and even which products can be advertised to children could all change.
Both the SACN and the FSA were quick to stress that these revised figures on energy did not mean that people should increase their calorie intake, especially in light of the report's headline figure that 60% of adults in the UK are overweight. Nevertheless, an early warning for industry on what could become a major shifting of the nutritional goalposts over the next year is a useful thing.
New world order
Craving spuds? Not the Irish
The old certainties can no longer be relied upon, it seems. First came news that the Irish had fallen out of love with the potato, with sales values 19% down as consumers switched to rice and pasta. Then it emerged the Welsh were running out of lambs, with breeding ewe numbers falling below four million for the first time. Finally the ultimate insult - historians claim the haggis is English.
Deal of the year
Can Cadbury see off the Kraft bid?
It's a saga with more attitude than a drumming gorilla. Kraft's plans to acquire Cadbury prompted glorious verbal tennis between the 'global powerhouse' and the 'national treasure'.
Cadbury chairman Roger Carr blasted Kraft's initial offer of £9.8bn as "derisory" and reiterated the board's belief that Cadbury was stronger as an independent business. Kraft CEO Irene Rosenfeld responded with textbook condescension: "Given the complexion of the market and the global landscape, we believe it would be difficult for them to go it alone."
Rival chocolatiers Hershey and Ferrero toyed with a joint bid for Cadbury in early November but to no avail, and speculation persists that Nestlé could make a joint offer with Hershey. Cadbury boss Todd Stitzer has made no secret of the fact he would favour Hershey, which, as the maker of Cadbury chocolate in the US, would offer a better cultural fit than Kraft, the company behind cheese in an aerosol. It remains, though, the bookies' favourite.
Cadbury issued its formal defence against the bid on December 14 and, as The Grocer went to press, none of the other parties had yet tabled any formal proposals to counter Kraft's offer.
First Foley then Burger leave Aldi
Six months ago, Aldi and its loyal, likeable, MD Paul Foley were being welcomed into the grocery establishment, joining the BRC and, on the back of an astonishing growth in sales in 2008, scooping Grocer of the Year at The Grocer Gold Awards.
Yet two months later Foley was out of a job. No one knows whether it was Foley's open, charismatic leadership or Aldi's growth grinding almost to a halt that caused the fallout, but even more unexpected was the departure of Foley's successor, Armin Burger, a top-ranking Aldi HQ boss, in December. Burger had been brought in to steady the ship. Instead, he too has gone.
Hughie Green award
Bold new kids on the block
You wait 21 years for a new independent supermarket chain to open and two come along at once. Asco and Haldanes opened late in the year with plans for 50 and 30 stores respectively by 2014. Meanwhile, Alworths, the brainchild of Woolies veteran Andy Lathan, is hoping to recreate the magic of Woolies, but with a twist ... not going bust, presumably.
M&S lands the flying Dutchman
He's a suave, sophisticated Aston Martin-driving retail chief with a taste for the finer things in life, so surely Marc Bolland was always going to top M&S's shopping list when looking for a successor to Sir Stuart Rose and yet no-one tipped him as frontrunner.
While all eyes were on Asda's Andy Bond, Sainsbury's Justin King and the three internal candidates, it was the smooth Dutchman who bagged the prize. It was reported that Bolland might shun the advances of M&S because he felt Morrisons was the bigger retailer. It now looks like M&S gave Bolland five million reasons why it was the better option.
Bolland did a great job at Morrisons and his personal stock has risen considerably. Morrisons shares nose-dived while M&S stock rocketed in the hours after his appointment. But while Bolland is well equipped to reverse M&S's falling food sales, other challenges, such as re-energising its clothing business, will push him outside his comfort zone.
He will also be subject to intense scrutiny. In his Bradford bunker, Bolland was pretty much left alone. At M&S, the poster boy will have to get used to being the centre of attention.
Nisa, Costcutter and Bibby
Divorce papers in the post?
Barely a year goes by without some issue between Nisa-Today's and its biggest member, Costcutter. But this year the gloves came off. First Nisa dissed Costcutter's owner, Bibby Line Group, by awarding a rival its distribution contract. Bibby responded with a hostile takeover bid for the buying group to which Nisa said clear off and we don't need you lot anyway. Anyone got a number for Relate?
Rest in peace
Dairy and offie chain casualties
The dairy industry's worst-kept secret was out in May when £560m farmer-owned co-op and dead-man-walking Dairy Farmers of Britain folded, leading to welcome consolidation. There was a major casualty in the off-trade, too, after First Quench Retailing collapsed in October. Farewell then to Threshers and the other fascias, and welcome to new Costcutters, Greggs and bookies.
Making life's luxuries affordable
Perhaps the most unlikely story of the recession in 2009 has been the return to form of the upmarket Waitrose, which is growing sales at a giddy 14.8% at the moment. The success of Waitrose in 2009 and the collapse in sales experienced by discounters Aldi and Lidl suggests that, to compensate for staying in, consumers want to treat themselves, and conspicuously so.
It's not just Waitrose that's benefiting from this trend. Across the board, it is premium ranges as opposed to value lines that are up (see p5). Even upmarket lingerie retailer Rigby & Peller cites "more people staying in" for its recent strong sales. And in May Durex maker SSL reported a 7.3% increase in condom sales, supporting the assertion by Ocado's Jason Gissing that couples were staying in and making their own entertainment.
The success of Waitrose clearly owes a great deal to the launch of its 'new' Essential range, but though attractive new packaging has contributed, value engineering here and across the market has been just as critical, with price points and pack sizes adjusted not just to engineer 'round pound' deals (see below) but also to make luxury more affordable.
The Hercule Poirot award
A bit of bother over butter
In the Google age, most mysteries can be solved with a click. Unfortunately, the gap between the price growers received and what shoppers paid at the checkouts is not one of them. Farmgate butter prices fell 35% but retail prices leapt up 20%. The same was seen with cheese, rice and potatoes. Want a Poirot-style dénouement?
You're in luck: EU sleuths are on the case.
Asda goes bananas
When prices went round the bend
The banana has always been a loaded weapon in retailers' holsters when it comes to a showdown over who is cheapest. Asda drew first this summer when it slashed the price to a 14-year low.
Beginning in late August, it made a succession of price cuts that took the cost of the biggest single-selling line in supermarkets from 84p/kg to 47p/kg by early October. Even as the chorus of disapproving voices, which ranged from rival CEOs to importers and Fairtrade advocates, reached a crescendo, Asda defiantly continued to drop the price until it reached a paltry 38p/kg, all the while insisting it was just trying to help hard-up consumers. Experts suggested the stunt had cost Tesco and Sainsbury's millions to price-match. Tesco sells twice as many bananas as Asda, while the wisdom of Sainsbury's 100%-Fairtrade policy was brought into focus as it swallowed huge margin reductions.
Producers were equally unimpressed, arguing banana price promotions had never shifted volumes, and warned that if the price wars continued, there would be no point supplying the UK market. But their calls for the price to go over £1/kg look set to fall on deaf ears.
Rambo survival award
Fairtrade goes truly mainstream
In a recession you might have expected Fairtrade, like organic produce, to suffer. Not a bit of it. Fairtrade sales have increased by 5.5% in the past year, according to recent TNS figures. While markets for Fairtrade tea, coffee, bananas and confectionery are well established, this year it was the turn of major brands to join the cause.
Ben & Jerry's has embraced Fairtrade to some extent since 2001 but it was the deal to take Cadbury Dairy Milk, the giant confectionery brand, 100%-Fairtrade across the globe that caught the eye. Starbucks coffee has also been Fairtrade-certified since September in the UK. And earlier this month the four-finger variant of Nestlé's Kit Kat went Fairtrade, too.
Everyone's a pound shop now
You know the world's turned upside down when the big multiples start aping Poundland. In June, Asda declared itself Britain's biggest pound shop and Tesco opened pound shops in its Extras. Round pound lines accounted for 7.4% of total grocery sales in June, compared with 4.5% last June [TNS], while the growth of 99p Stores and other pound shops continued unabated.
The Grocer review of the decade: the Noughties in a nutshell - 12 December 2009