Table of Contents
Introduction
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- Definitions
- Consumer research
- Lifestage and Special Groups
- ACORN
- Abbreviations
Executive Summary
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- Economic and social environment
- Discount and price-led retailing in grocery
- Discount and value-led retailing in non-food
- Loyalty and store card developments
- The relative importance of price to grocery shoppers
- Use of grocery discount formats
- Price, promotion and the non-food shopper
- Participation in loyalty schemes
- Attitudes towards loyalty card schemes
- The impact of relationship marketing initiatives
- Loyalty cards – are the benefits worth the costs?
- Participation in schemes is not indicative of loyalty to scheme issuer
- Do loyalty cards offer the key to better customer relationship management?
- Why is Tesco one of the few retailers to make a success out of its standalone loyalty card scheme?
- Data distribution and interrogation
- Coalition schemes versus standalone schemes
- Is Nectar delivering benefits to its sponsors?
- Is there room for another major coalition scheme?
- Price loyalty versus incentivised loyalty
- The role of new technology in CRM and customer loyalty schemes
- Store cards – time for a new operating model?
- Brand franchise development through database marketing
- More shoppers want lower prices
- Unfocused schemes deliver poor results – schemes need to be more than just sales promotion activity
- Using information in a structured way produces measurable benefits
- Anticipating behaviour – more considered data interrogation will help shape future communications
- Retailers need to get better returns from schemes
- Expansion of coalition schemes
- Encouraging crossover use of coalition partners
- Store cards – rethink to revive
- Loyalty clubs – a win/win alternative?
Economic and Social Environment
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- Prosperity for many
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- Figure 1: PDI, at current and constant 1998 prices, 1998-2008
- Figure 2: Consumer expenditure, at current and constant 1998 prices, 1998-2008
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- Figure 3: Growth rates for consumer expenditure and PDI, 1998-2008
- Growth in household debt
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- Figure 4: Lending to individuals, 2004
- Distribution of unsecured debt
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- Figure 5: Unsecured debt, by income, 2003
- Asset value meltdown or soft landing?
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- Figure 6: Trends in house prices, by region, 2000-04
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- Figure 7: Mortgage equity withdrawal, 2002-04
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- Figure 8: Gross mortgage lending, by type of advance, 2000-03
- Figure 9: Gross mortgage lending, by type of advance, 2004
- Favourable employment prospects
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- Figure 10: Trends in full-time and part-time employment, by gender, 1998-2008
- Regional inequality in income distribution
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- Figure 11: Average weekly household income, by region, 1997-2000 and 1999-2002
- Figure 12: Distribution of income liable to assessment for tax, by region, 2000/01
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- Figure 13: Weekly household expenditure, by selected commodities, by region, 2000
- Age profile increasingly weighted to pensioners
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- Figure 14: Trends in the UK population, by gender and age, 1998-2008
- Changing social structure – households
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- Figure 15: Household working patterns, 1999-2004
- Age and household inequality in income distribution
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- Figure 16: Distribution of disposable income, before deduction of housing costs, by family type, 2001/02
- ABC1s within the socio-economic structure
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- Figure 17: Trends in socio-economic groups, 1998-2008
- Changing social structure – ACORN Groups
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- Figure 18: ACORN group classification, 2004
- Conclusions and issues for the future
- Economic uncertainty associated with house prices
- Demand for value growing
- Well-off need value for money too
- Debt under the microscope
Discount and Price Retailing in Grocery
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- Discount-led grocers
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- Figure 19: Grocery discounters store numbers, 1999-2004
- Kwik Save
- Aldi
- Lidl
- Netto
- Other price-led food and drink formats
- EDLP pricing strategy
- Mixed pricing strategy
- Discounting and value-led food retailing – conclusions and issues for the future
- Discounters need to offer more than just low prices
- More marketing communications
- All aspects of the offer have to appeal
- Getting the right sites
- Flexible price strategy gives most scope in today’s market
Discounting and Value-led Retailing in Non-Food
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- Value clothing and footwear specialists
- Matalan
- Primark
- The Peacock Group
- Peacocks
- TK Maxx
- Ethel Austin
- MK 1
- QS
- Sports World
- TJ Hughes
- Other value clothing retailers
- Low-price assortment retailers
- Wilkinsons
- Poundstretcher/Instore
- Poundland
- Home Bargains
- B&M Retail
- Other value-led variety stores
- QD Stores
- Other non-food discount and value-led formats
- Grocers and non-foods
- Off-price retailing locations
- Discounting and value-led retailing in non-food – Conclusions and issues for the future
- Differentiation through fashion not just value
- Tighter supply chain management delivers competitive advantage
- Fast-moving companies expose weaknesses of bigger companies
- Improving perceptions of competitiveness
- Convenience of grocers for non-food shopping
- Leisure shopping helps drive outlet centre footfall
Background Developments in Loyalty Card-led Retail Marketing
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- Loyalty cards – Grocery
- Tesco Clubcard
- Co-op Dividend
- Somerfield Saver Card
- Other grocery schemes
- Position on loyalty cards by other leading grocers
- Loyalty cards – non-food
- Boots the Chemists Advantage Card
- Homebase Spend & Save
- WH Smith Clubcard
- Other non-food retailer schemes
- The Body Shop
- Game
- The Peacock Group
- Other retailer loyalty programmes
- Edinburgh Woollen Mill
- Multi-issuer schemes
- Store card payment cards with reward points features
- Marks & Spencer
- Asda Store Card and Asda Credit Card
- John Lewis Partnership card
- Bhs Goldcard with Choice Reward Points
- House of Fraser Recognition FraserCard and Recognition Card
- River Island Account Card with Reward Points
- Principles Account Card with Privilege Points
- HMV
- Argos Card
- Loyalty and store card developments – conclusions and issues for the future
- Loyalty schemes alive and kicking
- Clear and simple offers work best…
- …but most take rewards as discount
- Paid-for discounts has its drawbacks
- Store cards under scrutiny
The Relative Importance of Price to Grocery Shoppers
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- Figure 20: Reasons for choosing grocery stores, September 2004
- Accessibility and proximity key drivers in store location decision-making
- Multi-format presence to improve brand representation and penetration
- Cost-conscious shoppers a sizeable opportunity
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- Figure 21: General factors influencing choice of grocery store, 2000-04
- Detailed research findings
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- Figure 22: Convenience of access factors influencing choice of grocery store, by gender, age and socio-economic group, September 2004
- Figure 23: Convenience of access factors influencing choice of grocery store, by lifestage, presence of children and Mintel’s Special Groups, September 2004
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- Figure 24: Convenience of access factors influencing choice of grocery store, by region and ACORN categories, September 2004
- Figure 25: Convenience of access factors influencing choice of grocery store, by media usage, commercial TV viewing and store used for grocery shopping, September 2004
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- Figure 26: Price and value factors influencing choice of grocery store, by gender, age and socio-economic group, September 2004
- Figure 27: Price and value factors influencing choice of grocery store, by lifestage, presence of children and Mintel’s Special Groups, September 2004
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- Figure 28: Price and value factors influencing choice of grocery store, by region and ACORN categories, September 2004
- Figure 29: Price and value factors influencing choice of grocery store, by media usage, commercial TV viewing and store used for grocery shopping, September 2004
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- Figure 30: Service and offer factors influencing choice of grocery store, by gender, age and socio-economic group, September 2004
- Figure 31: Service and offer factors influencing choice of grocery store, by lifestage, presence of children and Mintel’s Special Groups, September 2004
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- Figure 32: Service and offer factors influencing choice of grocery store, by region and ACORN categories, September 2004
- Figure 33: Service and offer factors influencing choice of grocery store, by media usage, commercial TV viewing and store used for grocery shopping, September 2004
- Variation in behaviour by main shoppers of named stores
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- Figure 34: Stores used for main grocery shopping, September 2004
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- Figure 35: Motivational factors influencing store used, by main shoppers of named grocery stores, September 2004
- Leveraging loyalty
- Convenience-based loyalty easy to break
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- Figure 36: Reasons for choosing grocery stores, by most popularly used grocery stores, September 2004
- The relative importance of price to grocery shoppers – conclusions and issues for the future
- Convenience is king
- More stores equals more choice equals greater disloyalty
- Building emotional loyalty
- Low prices alone may not be enough
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Use of Grocery Discount Formats
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- Figure 37: Use of grocery discounters, 1998-2004
- Detailed research findings
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- Figure 38: Usage of grocery discounters, by gender, age and socio-economic group, September 2004
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- Figure 39: Usage of grocery discounters, by lifestage, presence of children and Mintel’s Special Groups, September 2004
- Figure 40: Usage of grocery discounters, by region and ACORN categories, September 2004
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- Figure 41: Usage of grocery discounters, by media usage, commercial TV viewing and store used for grocery shopping, September 2004
- Use of grocery discount formats – conclusions and issues for the future
- Discounters need more than low prices
- Developing convenience attributes
- Is there room for all discounters?
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Price, Promotion and the Non-Food Shopper
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- Figure 42: Attitudes towards price when shopping for non-foods, 2000-04
- Detailed research findings
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- Figure 43: Popular attitudes towards non-food promotions, by gender, age and socio-economic group, September 2004
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- Figure 44: Popular attitudes towards non-food promotions, by lifestage, presence of children and Mintel’s Special Groups, September 2004
- Figure 45: Popular attitudes towards non-food promotions, by region and ACORN categories, September 2004
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- Figure 46: Popular attitudes towards non-food promotions, by media usage, commercial TV viewing and store used for grocery shopping, September 2004
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- Figure 47: Other popular attitudes towards non-food promotions, by gender, age and socio-economic group, September 2004
- Figure 48: Other popular attitudes towards non-food promotions, by lifestage, presence of children and Mintel’s Special Groups, September 2004
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- Figure 49: Other popular attitudes towards non-food promotions, by region and ACORN categories, September 2004
- Figure 50: Other popular attitudes towards non-food promotions, by media usage, commercial TV viewing and store used for grocery shopping, September 2004
- Variations in responses by shoppers of named non-food retailers
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- Figure 51: Sources of regular non-food shopping, September 2004
- Mixed goods retailers
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- Figure 52: Attitudes towards price when shopping for non-foods, by mixed goods retailers used, September 2004
- Health and beauty retailers
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- Figure 53: Attitudes towards price when shopping for non-foods, by health and beauty retailers used, September 2004
- Clothing chain stores
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- Figure 54: Attitudes towards price when shopping for non-foods, by clothing chain stores used, September 2004
- Department stores
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- Figure 55: Attitudes towards price when shopping for non-foods, by department stores used, September 2004
- Household goods retailers
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- Figure 56: Attitudes towards price when shopping for non-foods, by household/DIY/furnishings goods retailers used, September 2004
- Entertainment retailers
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- Figure 57: Attitudes towards price when shopping for non-foods, by multimedia retailers used, September 2004
- Price, promotion and the non-food shopper – conclusions and issues for the future
- Growing promotional culture among shoppers
- Dangers of over-promotion
- Lower-cost environment fuelling competition
- Optimising the power of promotions
- Use of online by store-based retailers
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Participation in Loyalty Card Schemes
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- Figure 58: Regular use of loyalty and store cards, 1999-2004
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- Figure 59: Number of loyalty cards held, 2002 and 2004
- Detailed research findings
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- Figure 60: Numbers of loyalty cards held, by gender, age and socio-economic group, September 2004
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- Figure 61: Number of loyalty cards held, by lifestage, presence of children and Mintel’s Special Groups, September 2004
- Figure 62: Number of loyalty cards held, by region and ACORN categories, September 2004
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- Figure 63: Number of loyalty cards held, by media usage, commercial TV viewing and store used for grocery shopping, September 2004
- Participation in named schemes
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- Figure 64: Regular users of loyalty cards, by named schemes, 1999-2004
- Detailed research findings
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- Figure 65: Most popularly used loyalty card schemes, by gender, age and socio-economic group, September 2004
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- Figure 66: Most popularly used loyalty card schemes, by lifestage, presence of children and Mintel’s Special Groups, September 2004
- Figure 67: Most popularly used loyalty card schemes, by region and ACORN categories, September 2004
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- Figure 68: Most popularly used loyalty card schemes, by media usage, commercial TV viewing and store used for grocery shopping, September 2004
- Figure 69: Regular use of loyalty cards, by regular source of grocery shopping, 2002 and 2004
- Tesco Clubcard and Nectar Card participants
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- Figure 70: Tesco Clubcard holders and use of other retailers’ schemes, 2002 and 2004
- Figure 71: Nectar Card holders and use of other retailers’ schemes, 2002 and 2004
- Participation in loyalty card schemes – conclusions and issues for the future
- Tesco increasing penetration
- Opportunities to expand issuer base for Nectar
- Sainsbury’s and Nectar in future
- Using loyalty card information to win back shoppers
- Store cards under review
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Attitudes Towards Loyalty Card Schemes
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- Figure 72: Attitudes towards loyalty schemes, 1999-2004
- Detailed research findings
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- Figure 73: Most popular attitudes towards loyalty card schemes, by gender, age and socio-economic group, September 2004
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- Figure 74: Most popular attitudes towards loyalty card schemes, by lifestage, presence of children and Mintel’s Special Groups, September 2004
- Figure 75: Most popular attitudes towards loyalty card schemes, by region and ACORN categories, September 2004
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- Figure 76: Most popular attitudes towards loyalty card schemes, by media usage, commercial TV viewing and store used for grocery shopping, September 2004
- Attitudes towards loyalty card schemes among participants
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- Figure 77: Participant behaviour in loyalty card schemes, September 2004
- Detailed research findings
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- Figure 78: Participant behaviour in loyalty card schemes, by gender, age and socio-economic group, September 2004
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- Figure 79: Participant behaviour in loyalty card schemes, by lifestage, presence of children and Mintel’s Special Groups, September 2004
- Figure 80: Participant behaviour in loyalty card schemes, by region and ACORN categories, September 2004
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- Figure 81: Participant behaviour in loyalty card schemes, by media usage, commercial TV viewing and store used for grocery shopping, September 2004
- Attitudes towards loyalty card schemes by participants in named schemes
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- Figure 82: Attitudes towards loyalty schemes among regular users of named loyalty cards, September 2004
- Figure 83: Attitudes towards loyalty schemes among regular users of named loyalty cards, September 2004
- Attitudes towards loyalty card schemes – conclusions and issues for the future
- Prices versus points
- Margin pressure for retailers with loyalty cards
- Limited influence on behaviour
- Locking high spenders into schemes
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The Impact of Relationship Marketing Initiatives
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- Figure 84: Response to relationship marketing initiatives, 1999-2004
- Detailed research findings
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- Figure 85: Response to relationship marketing initiatives, by gender, age and socio-economic group, September 2004
- Figure 86: Response to relationship marketing initiatives, by lifestage, presence of children and Mintel’s Special Groups, September 2004
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- Figure 87: Response to relationship marketing initiatives, by region and ACORN categories, September 2004
- Figure 88: Response to relationship marketing initiatives, by media usage, commercial TV viewing and store used for grocery shopping, September 2004
- Awareness and responsiveness to relationship marketing initiatives by participants in named schemes
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- Figure 89: Response to relationship marketing initiatives, by participants in named schemes, September 2004
- Relationship marketing – conclusions and issues for the future
- Personal communication a powerful opportunity…
- …but absent for point-of-purchase schemes
- Increasing emotional loyalty
- Managing the database effectively
- Reaching men through online
- Interactive technology needs new uses
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Implications for the Future
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- Loyalty cards – are the benefits worth the costs?
- Participation in schemes is not indicative of loyalty to scheme issuer
- Do loyalty cards offer the key to better customer relationship management?
- Why is Tesco one of the few retailers to make a success out of its standalone loyalty card scheme?
- Data distribution and interrogation
- Coalition schemes versus standalone schemes
- Is Nectar delivering benefits to its sponsors?
- Is there room for another major coalition scheme?
- Price loyalty versus incentivised loyalty
- Future drivers for a value-led shopping culture
- The role of new technology in CRM and customer loyalty schemes
- Store cards – time for a new operating model?
- Brand franchise development through database marketing
Conclusions
-
- More shoppers want lower prices
- Unfocused schemes deliver poor results – schemes need to be more than just sales promotion activity
- Using information in a structured way produces measurable benefits
- Anticipating behaviour – more considered data interrogation will help shape future communications
- Retailers need to get better returns from schemes
- Expansion of coalition schemes
- Encouraging crossover use of coalition partners
- Store cards – rethink to revive
- Loyalty clubs – a win/win alternative?
Appendices
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- Figure 90: Reasons for choosing grocery stores, 2000-04
- Figure 91: Main sources of grocery shopping, by gender, age and socio-economic group, September 2004
- Figure 92: Main sources of grocery shopping, by lifestage, presence of children and Mintel’s Special Groups, September 2004
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- Figure 93: Main sources of grocery shopping, by region and ACORN categories, September 2004
- Figure 94: Main sources of grocery shopping, by media usage, commercial TV viewing and store used for grocery shopping, September 2004
- Figure 95: Sources of regular non-food shopping, 2000-04
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- Figure 96: Most popular sources of non-food shopping, by gender, age and socio-economic group, September 2004
- Figure 97: Most popular sources of non-food shopping, by lifestage, presence of children and Mintel’s Special Groups, September 2004
- Figure 98: Most popular sources of non-food shopping, by region and ACORN categories, September 2004
- Figure 99: Most popular sources of non-food shopping, by media usage, commercial TV viewing and store used for grocery shopping, September 2004
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- Figure 100: Other popular sources of non-food shopping, by gender, age and socio-economic group, September 2004
- Figure 101: Other popular sources of non-food shopping, by lifestage, presence of children and Mintel’s Special Groups, September 2004
- Figure 102: Other popular sources of non-food shopping, by region and ACORN categories, September 2004
- Figure 103: Other popular sources of non-food shopping, by media usage, commercial TV viewing and store used for grocery shopping, September 2004
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- Figure 104: Additional sources of non-food shopping, by gender, age and socio-economic group, September 2004
- Figure 105: Additional sources of non-food shopping, by lifestage, presence of children and Mintel’s Special Groups, September 2004
- Figure 106: Additional sources of non-food shopping, by region and ACORN categories, September 2004
- Figure 107: Additional sources of non-food shopping, by media usage, commercial TV viewing and store used for grocery shopping, September 2004
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- Figure 108: Additional sources of non-food shopping, by gender, age and socio-economic group, September 2004
- Figure 109: Additional sources of non-food shopping, by lifestage, presence of children and Mintel’s Special Groups, September 2004
- Figure 110: Additional sources of non-food shopping, by region and ACORN categories, September 2004
- Figure 111: Additional sources of non-food shopping, by media usage, commercial TV viewing and store used for grocery shopping, September 2004
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