The bakery chain Greggs has released disappointing financial results, prompting shares to fall more than 7%.
The company reported that like-for-like sales were down 2.9%. Furthermore, half-year profits were down £4.6 million with the group warning that annual profits would be significantly lower (about £3 million) than expected.
It attributed the disappointing figures to the cold weather at the beginning of the year and the most recent heatwave in July.
However, using YouGov’s brand perception tool, BrandIndex, we can analyse Greggs’ performance amongst consumers over an extended period of time.
This analysis reveals that Greggs’ has a problem with declining consumer sentiment, which it must address if the chain is to effectively turn around its fortunes.
If we look at Greggs’ overall Index score for the previous two years, we can see that it has fallen from 16.0 on 5 August 2011 to its current score of 12.8.
Furthermore, we can see that Greggs’ Buzz score (a net measure of whether consumers have heard something positive or negative about the brand) has fallen significantly from 13.8 to 3.8 over the same period.
The chain has also underperformed in some crucial areas. For example if we look into the specific consumer measures of ‘value’ and ‘recommendation’ the same pattern emerges.
Greggs’ Value score has fallen from 26.7 on 5 August 2011 to 18.8, while its Recommendation score has fallen from 20.8 to 12.3.
In today’s statement, Greggs announced its intention to launch a customer loyalty scheme to win more customers. By looking at the chain’s declining consumer perception scores over the last few years, a customer-focused strategy would seem a good place to start.
While the weather may be partly to blame for Greggs’ recent financial performance, its declining status amongst consumers over the last two years perhaps provides another explanation for the challenges facing the brand.
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