Examination of Witnesses (Question Numbers
1200-1219)
MR PAUL
KELLY, MR
NICK GRANT
AND MR
GILES FISHER
15 OCTOBER 2009
Q1200 Mr Scott: In the spirit of
transparency, I feel I ought to declare I shop in Tesco, Waitrose,
but I have nothing against Sainsbury, Asda, Morrisons or anyone
else! Mr Kelly, you mention in your submission that alcohol promotions
do not result in increased sales. If that is the case, why do
you do it? If it is not going to add to your profits and sales,
why do it?
Mr Kelly: It is a drive. I think
we have explained previously, alcohol promotion is popular with
customers but they are part of what we do to attract customers
in to shop the whole store.
Q1201 Mr Scott: So it is purely to
give the word "loss leader", to get people into the
whole store?
Mr Kelly: Not all promotions are
loss leaders by any stretch of the imagination.
Q1202 Mr Scott: What percentage would
be, roughly?
Mr Kelly: I do not have that figure
to hand, but I am happy to provide it.
Q1203 Mr Scott: Okay. A question
for all three of you. What proportion of your total alcohol sales
come from promotions? Mr Grant.
Mr Grant: I do not have that information
to hand. I will supply that to you.
Mr Kelly: Likewise.
Mr Fisher: I am sorry, I am going
to do the same. We will send it in.
Mr Scott: Let us move on then, Chairman.
Q1204 Charlotte Atkins: Lee was asking
about the proportion of sales that come from promotions. I would
be interested to know, not just the general promotions but the
actual impulse buy stacks. You will have a general promotion perhaps,
but you will also have promotions which are on stacks. Would you
differentiate between those? How would your figures be broken
down in terms of looking at your overall sales in terms of promotions?
Mr Fisher: We cannot measure where
in the store people are buying various products from. The vast
majority of our alcohol is sold from the beers, wines and spirits
area, which in Waitrose is a distinct area: it has got a different
colour floor, different walls and it looks different. We also
do site alcohol on what we call gondola ends, so in other places
around the store, at different times throughout the year. That
does not happen every month, we change the cycle periodically,
but we have got no way of measuring which bottle is purchased
where in the store.
Mr Kelly: Likewise for us. We
would not be unable to tell what is bought where in store and
where it is displayed in store will change dependent upon the
season, dependent upon what the promotion plan is. We will have
times where we will have alcohol displayed with food because we
want to make that link between food and alcohol, but we could
give you an indication of the categories of wine, spirits, beers
and lagers in terms of what is on promotional sale and what is
not.
Q1205 Charlotte Atkins: Mr Grant,
I am assuming that is the same for yourselves.
Mr Grant: Yes.
Q1206 Charlotte Atkins: But in your
submission you said that locating all alcohol in one area would
incur significant costs. Why is that?
Mr Grant: I think that is working
from the Scottish experience. Moving to an aisle only location
for alcohol has led to an increase, a burden, in terms of how
you train staff, how you organise the store, how you organise
the point of sale, how you mark off various areas. I did not want
to overstate that burden, but I think that there is a financial
cost to organising the store differently.
Q1207 Charlotte Atkins: Presumably
you organise your stores differently all the time. You are constantly
looking at the design of your stores and how you can make them
look more attractive to the consumer, and one assumes that you
are shifting products around all the time. I do not understand
why it would incur additional costs?
Mr Grant: I am happy to supply
the committee with an estimate of the cost.
Q1208 Charlotte Atkins: Would you?
That would be fantastic. Obviously, we know that from September
this year in Scotland all alcohol has to be placed in a single
part of the store. Have you had any indications about what impact
that has had, or is it too early?
Mr Fisher: From our point of view,
we had a look and it is too early. We just cannot make any sense
of the numbers so far. So there is no trend there.
Q1209 Charlotte Atkins: When do you
think you might be able to maybe give the committee some indication
of what impact that has had?
Mr Fisher: After a three-month
period, I think, we will probably be able to measure it.
Q1210 Charlotte Atkins: That would
be very helpful. Nick, what is the general purpose of placing
stacks of alcohol at random throughout the store. Waitrose, you
said you do it at the end of aisles.
Mr Fisher: We do not have pallets
of alcohol either in the foyer as you walk in or throughout the
store. We do position alcohol at different places around the store
at different times, and that is done for two reasons. Firstly,
shopper convenience. Whilst we have got a lovely wine area, some
people find it a little bit intimidating and do not like to cross
the threshold onto the wooden floor, so by putting wine around
the store it enables people—
Q1211 Charlotte Atkins: A bad move
by Waitrose then, if you are intimidating customers so they cannot
walk down your aisles.
Mr Fisher: We have had those conversations,
yes. So, that is one reason why we do it, from a convenience point
of view, and, secondly, like other retailers, we would try and
promote the alcohol with food link at times, and obviously the
best way of doing that is by placing it with food.
Q1212 Charlotte Atkins: Mr Kelly,
I assume that your stores do, in fact, randomly place promotions
throughout the store. What is the purpose of that from your point
of view?
Mr Kelly: There are a number of
factors, some of which Giles has just outlined, but also flowing
goods into the store to make sure that they are available for
customers, particularly at peak times. Christmas is a good example
where stores have traditionally a lot bigger, larger stock holdings
because of that. Actually being able to put it out on to the floor
makes sure it is available for customers, makes it easier for
colleagues. One of the feedbacks we do get from customers is that,
if we are restocking at busy periods, they find that irritating
to say the least. So part of it is actually about the operation
and the flow of the store at particular times of the year.
Q1213 Charlotte Atkins: I do not
go into supermarkets very often, but when I do there always seem
to be booze promotions going on the whole time. Any reason to
promote alcohol seems to be taken up with enthusiasm.
Mr Kelly: There will be always
be promotions going on in store. The visibility of those promotions,
where they are sited in store, will change from time to time.
You talked earlier about the beer stacks. That will be around
particular times of the year when sales are higher because people
are socialising together, or it is Christmas and they are going
to have parties and flowing the goods into the stores is an important
part of making sure we satisfy the customer and have the availability,
and that will be a driver of it as well.
Mr Grant: Most of our alcohol
is in the BWS (beers, wines and spirits) aisle. Normally that
is at the back of the store, a different part of the store, away
from the front. At the front of the store there is space. It is
so important to us that when a customer comes in that is their
first impression. You will typically find our fresh produce will
be very close to the front of the store as well. We think it is
important to have that impact, that you are in a shop which has
values around food and freshness. You will also find things like
nappies on promotion. There will be a whole range of things. Floral,
for example, is typically in our stores right at the front. Why?
Again, because there is colour, theatre and people can see it
straightaway. So there is space, there is impact and customers,
as soon as they come in, need to know that they are in safe hands
in terms of the ultimate basket or trolley they are going to buy,
and alcohol is a key part of what people look for, so it needs
to be in front of them that we have a value offer.
Q1214 Charlotte Atkins: So, basically,
it is to increase footfall.
Mr Grant: It is not to increase
footfall. It is when the customer is there, the first thing they
see of the store is that "this is a store which understands
the sort of things I am going to be looking for", and that
includes discounts.
Charlotte Atkins: Thank you.
Q1215 Mr Scott: The Office of Fair
Trading has told us that if supermarkets agreed voluntarily to
restrict the in-store promotions, it would be viewed by the EU
to be anti-competitive. If the OFT is correct, would you agree
that in this case the public health interest should outweigh any
commercial consideration? Mr Grant.
Mr Grant: It is not something
that we would ever do. We are talking about a competitive market.
It would be completely against the grain even to think that we
would entertain the idea of agreeing such a straightforward commercial
matter. Is the law wrong? It is debatable.
Q1216 Mr Scott: I will take that
as a "no". Mr Kelly.
Mr Kelly: I think one of the things
that will probably frustrate all retailers is that this is a megaphone
conversation in some ways, because actually it is not possible
for us to get together and have those kinds of discussions under
the current competition laws.
Mr Fisher: Similarly, it would
be anti-competitive to sit down and discuss it.
Q1217 Mr Scott: In one word, do you
think the rules need changing? Yes or no, Mr Fisher.
Mr Fisher: No.
Mr Kelly: No.
Mr Grant: No.
Mr Scott: Thank you.
Q1218 Dr Taylor: Turning to social
responsibility, you have all mentioned education being terribly
important. We have been given a list of donations to the Drink
Aware Trust, and it seems that Waitrose are really the most stingy.
From the figures we have been given for this year, Tesco appears
to be the most generous, then Sainsbury, then Asda and, following
far behind, Waitrose. Is that a proportion of turnover? How do
you decide how much you give to the Drink Aware Trust?
Mr Fisher: Historically donations
to the Drink Aware Trust have been discussed with the Drink Aware
Trust. We have been putting point of sale on our shelves around
alcohol education for many years. We were the first to do it.
We did it long before discussions with the Drink Aware Trust.
It is something that we feel is important. We have worked closely
with the Drink Aware Trust to move that point of sale material
onto a platform which is the same across all supermarkets, so
we are very proud of that and we do work closely with them. We
donate a lot of money to charity in lots of different ways. One
of the ways we do that is through our in-store green coin scheme,
where customers can select what local charities they want to support,
and those local charities will get £1,000 at the end of that
month—across 216 stores, that is over two and a half million
pounds a year, so it is quite considerable—but our customers
choose where that money goes. Historically one of the issues with
the Drink Aware Trust has been that there is not a sliding scale
around turnover per se and what level donations should
be; those discussions have always been slightly fluid. However,
I understand in the future that is going to be much more rigid
and based upon turnover. On those new criteria our investment
will be £100,000 a year, and, depending on what the Drink
Aware Trust are going to announce with their business plan in
the forthcoming week, we would be happy to support that.
Q1219 Dr Taylor: So it is going to
be related to turnover?
Mr Fisher: It is in the future,
yes.
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