Specialist Food & Drink Retailers - UK - March 2017

OVERVIEW
What you need to know
Products covered in this Report
EXECUTIVE SUMMARY
The market
Two strong years of growth but tough times ahead
Figure 1: Market size and forecast: retail sales of specialist food and drink retailers (Excl. VAT), 2011-21
Bakers/Confectioners grow while butchers decline
Figure 2: Estimated share of total sales through specialist food and drink retailers, 2015
Food deflation continues in 2016
Figure 3: CPI annual rate of change, 2011-16
Meat accounts for the largest share of consumer spending on food
Figure 4: Share of total household expenditure on food, by product category, 2012-16
Companies, brands and innovation
Greggs sidesteps a declining category by shifting focus
Few chains of butchers
AmazonFresh gives specialists a new route to market
The consumer
Nearly two thirds shop at specialists
Figure 5: Specialist retailers used in the last three months, December 2016
Quality and discovery the key drivers
Figure 6: Reasons for shopping at specialists, December 2016
Butchers should leverage their position at the heart of the community
Figure 7: How they view selected specialist food and drink retailers, December 2016
Britishness an important factor
Figure 8: Factors important when buying food and drink, December 2016
Quality is important for health
Figure 9: Attitudes towards food and drink, December 2016
What we think
ISSUES AND INSIGHTS
AmazonFresh is offering a new way into e-commerce for specialists
The facts
Implications
The risk from inflation
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Two years of growth but challenging times ahead
Bakeries, confectionery shops and off-licences see strongest growth
Number of enterprises falls for fifth year in a row
Deflation continues through 2016
Consumer confidence stays strong
MARKET SIZE AND FORECAST
Consecutive years of growth for the specialists…
…but tougher times could be ahead
Figure 10: Market size and forecast: retail sales of specialist food and drink retailers (Excl. VAT), 2011-21
Figure 11: Market size and forecast: Retail sales of specialist food and drink retailers (excl VAT), at current and constant prices, 2011-21
Forecast methodology
MARKET SEGMENTATION
Bakers/confectioners see strong growth
Off-licences outperform the wider drinks industry
Butchers’ sales fall between 2011 and 2015
Figure 12: Turnover in the leading categories, 2011-15
Enterprise numbers continue to fall
Figure 13: Number of UK enterprises, by type of specialist food and drink retailer, 2011-15
MARKET DRIVERS
Food deflation throughout 2016
Figure 14: CPI annual rate of change, January 2016-January 2017
Figure 15: CPI, annual percentage change, by detailed product category (food), August 2016-January 2017
Consumer spending on food and drink
Figure 16: Annual % growth in consumer spending on food and drink, 2011-16
Figure 17: Composition of consumer spending as a % of total spending on food, 2012-16
Consumer confidence
Figure 18: Consumers’ perceived financial health, January 2015-January 2017
Figure 19: Trends in consumer sentiment for the coming year, January 2015-January 2017
Supermarket price wars
KEY PLAYERS – WHAT YOU NEED TO KNOW
Greggs repositions to avoid a declining category
Few chains of butchers
AmazonFresh gives specialists a new route to market
Chocolatiers the biggest advertisers of 2016
Holland & Barrett partners with Tesco
COMPETITIVE STRATEGIES
Greggs repositions to avoid a declining category
Few large chains of butchers
A long tail of independents
Figure 20: Key financials of the leading food and drink specialist retailers, 2014-16
Greggs continues to expand
Holland & Barrett rolls out More stores
Thorntons’ store numbers continue to decline
Figure 21: Outlet numbers for the leading store-based specialists, 2014-16
ADVERTISING AND MARKETING ACTIVITY
Chocolate retail brands battle it out online with Easter campaigns
Home food and drink delivery services
Figure 25: Selected leading UK specialist food and drink retailers: Recorded above-the-line, online display and direct mail total advertising expenditure, 2012-16
Press attracts the greatest percentage of advertising spend
Figure 26: Selected leading UK specialist food and drink retailers: % of recorded above-the-line, online display and direct mail total advertising expenditure, by media type, 2016
Nielsen Ad Intel coverage
INNOVATION AND LAUNCH ACTIVITY
Bakeries and confectioners
Butchers, greengrocers and farmers’ markets
Health food stores
Drinks retailers
THE CONSUMER – WHAT YOU NEED TO KNOW
Nearly two thirds shop at specialists
Specialists attract the young and affluent
Visits to specialists driven by quality and discovery
Young more persuaded by practical concerns
Butchers and bakeries seen as part of the community
British-made is a key driver when shopping for food and drink
Localism presents an opportunity for specialists
SPECIALIST FOOD AND DRINK RETAILERS USED
Nearly two thirds shop at specialists
Figure 27: Specialist retailers used in the last three months, December 2016
Butchers have the oldest customer base
Figure 28: Specialist food and drink retailers used in the last three months, by average age and affluence, December 2016
Morrisons shoppers most likely to use specialists
Figure 29: Proportion of those doing the majority of their grocery shopping at the leading supermarkets who have visited any specialist food or drink retailer in the past three months, December 2016
Frequency of visits
Figure 30: How frequently they visit specialists, December 2016
Young visit more specialists
Figure 31: Repertoire of specialist food and drink retailers visited in the past three months, December 2016
REASONS FOR SHOPPING AT FOOD AND DRINK SPECIALISTS
Trading on quality and excitement
Figure 32: Reasons for shopping at specialists, December 2016
Young more persuaded by practical concerns
Figure 33: Reasons for shopping at specialist food and drink retailers, by average age and socio economic group, December 2016
Reasons for shopping by specialist retailer used
Figure 34: Attitudes towards shopping at specialists, by where they shop, December 2016
HOW THEY VIEW SPECIALIST RETAILERS 
Butchers need to leverage their community credentials
Figure 35: How they view selected specialist food and drink retailers, December 2016
Figure 36: How they view selected specialist food and drink retailers, December 2016
IMPORTANT FACTORS WHEN SHOPPING FOR FOOD AND DRINK
British-made
Figure 37: Factors important when buying food and drink, December 2016
Women are more concerned with welfare factors
Figure 38: Factors important when buying food and drink, by gender, December 2016
Sugar concerns cross all social segments
Figure 39: 1st rank factor important when shopping for food and drink, by profile, December 2016
Specialist shoppers prioritise local sourcing
Figure 40: Factors important when buying food and drink to those who have shopped at specialist food and drink retailers in the last 3 months, December 2016
Figure 41: Factors important when buying food and drink, percentage point difference from the average of all specialist shoppers, December 2016
ATTITUDES TOWARDS SHOPPING FOR FOOD AND DRINK
The importance of localism
Figure 42: Attitudes towards food and drink, December 2016
Millennials are more concerned about sourcing information
Figure 43: Any agreement with selected attitudes, percentage point difference from the average, by generation, December 2016
Attitudes of those who don’t shop at specialists
Figure 44: Attitudes towards shopping for food and drink by those who haven’t shopped at a specialist food or drink retailer in the past three months, December 2016
Delicatessens and fishmongers appeal to those looking for cooking advice
Figure 45: Attitudes towards shopping for food and drink, by the specialist they used in the last 3 months, December 2016
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX – CORRESPONDENCE ANALYSIS
Methodology
Figure 46: How they view selected specialist food and drink retailers, December 2016
Figure 47: How they view selected specialist food and drink retailers, December 2016
APPENDIX – MARKET SIZE AND FORECAST
Forecast methodology