• There was a degree of market over-reaction to Dixons Carphone’s profit warning. The business said its annual profits would be in the £360m - £440m range, down from £501m in 2016, blaming slow take-up/renewal of mobile phone handsets. It also took a hit from new EU law which has removed roaming charges. Sales in Q1 were nevertheless robust, with like-for-likes across the group up 6% and the UK up 4%.
  • Convenience operator McColl's posted a second quarter of positive like-for-like growth for the 13 week period ended 27 August 2017. Total revenue was up 31.1% for the quarter, and up 15.8% for the year to date following the successful integration of 298 c-stores from the Co-op. On a like-for-like basis, sales grew by 0.7% in c-stores and 0.3% in newsagents. McColl’s recently announced a new supply partnership deal with Morrisons that will see them exclusively supplied with the formerly defunct Safeway brand. 
  • WH Smith hailed a strong performance in its travel business in a pre-close update, adding that it has continued to improve high-street margin. Its travel business achieved “good sales across all channels” in the 12 months to 31 August and its new stores programme in both the UK and internationally was in line with plans.


Stephen Springham, Head of Retail Research:


No sooner than Amazon’s takeover of Whole Foods was finalised did the two newly-weds seek to wreak havoc across the UK retail industry. That certainly seems to be the view in the media and indeed some in the City seem to have also bought into the notion, judging by subsequent share price movements of the Big 4. A bit premature on all counts.

Certainly, Amazon has wasted no time in scoring a few PR points, simply by pushing through a few gentle price cuts in Whole Foods outlets and trumpeting them loud and clear with plenty of in-store POS. Unsurprisingly, Amazon lockers are already being installed and Amazon Echos heavily promoted. Let the disruption begin…

In truth, Amazon never seems to have any trouble generating positive PR. The media love it to the point of being unable to maintain any objective perspective on any other aspect of the retail market. What are little more than gentle promotions have been already been magnified as “huge price slashes” and those of a more sensationalistic persuasion are already heralding a “price war”. Quite frankly, this is one of the most ludicrous suggestions I’ve read in a long time (and believe me, competition on this is strong).

We are as far away from a full-on grocery “price war” as I can imagine. The trouble is, the term “price war” has become so over-used that its true meaning has been diminished, if not lost completely. There isn’t a hard and fast definition for what constitutes a real “price war” – unbudgeted haemorrhaging of gross margin and undermining of financial backbone in a vain attempt to remain price-competitive is a fair summary. But it’s probably far easier to assess what doesn’t constitute a real “price war” – the odd promotion, a strategic shift to EDLP (Everyday Low Pricing) or pre-budgeted investment in price. And these are all we have seen for many years now – in fact, the purists would argue that there hasn’t been a true “price war” in the UK grocery market since the mid 1970s.

To suggest that Amazon/Whole Foods are going to turn the pricing architecture of the UK grocery market on its head from the off are ridiculously wide of the mark. Above all, both are still of miniscule scale in the UK grocery market. If they were minded to launch an all-out attack on price, it wouldn’t have much of a knock-on effect across the market. A few price cuts on High Street Kensington (and the other eight locations) are hardly a call for Tesco and Asda to slash prices in Aberdeen.

For all this scepticism, the Amazon/Whole Foods deal is a long-term play. In the meantime, the media would do well to take a less fawning and more balanced view on Amazon generally, recognising what it is very good at (understanding its core customer base and locking them into its ecosystem under the guise of Amazon Prime), what it is best in class at (non-food supply chain fulfilment, although Argos may beg to differ), but also acknowledging what it is still a complete novice at (grocery retailing, online food retailing and store-based retailing generally). On these aspects, it has much to learn and the journey will be a long one.