Table of Contents
Executive Summary
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- Impact of COVID-19 on grocery retail sales
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- Figure 1: Short-, medium- and long-term impact of COVID-19 on all retail and grocery retail sales, December 2020
- The market
- Spending on in-home food and drink soars as a result of COVID-19
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- Figure 2: Consumer spending on and growth in core in-home food and drink categories, Q1 2019-Q2 2020
- Grocery retail sales hit record high, although hit to non-foods depresses growth
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- Figure 3: All grocery retail sales (including VAT), 2015-25 (17 November 2020)
- Online to claim over 10% of spending for the first time
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- Figure 4: Estimated breakdown of all grocery retail sales, by channel, 2011-20
- Leading Retailers
- The big four still account for two thirds of all sales
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- Figure 5: Leading grocery retailers: share of all grocery retail sales, 2019
- Online sales to near double in 2020
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- Figure 6: Online Grocery market size (including VAT), 2015-20
- Underlying trends remain key
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- Figure 7: Asda Sustainability store, Middleton October 2020
- Amazon’s innovation differentiates it, but Tesco outperforms on trust
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- Figure 8: Attitudes towards and usage of selected brands, November 2020
- The consumer
- COVID-19 drives bigger baskets… and less frequent shops
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- Figure 9: How grocery shoppers typically shop, 2015-20
- …and less frequent shops
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- Figure 10: Frequency of grocery shop, 2018 and 2020
- Despite bigger baskets, the shift of spending away from larger-format stores continues
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- Figure 11: Store format where the most is spent in a typical month, 2016-20
- Tesco is the most popular retailer
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- Figure 12: Grocery retailers used for primary and secondary shops, August 2020
- Overall satisfaction levels are high, but more clarity on sourcing is key
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- Figure 13: Key drivers of overall satisfaction with supermarkets, September 2020
- Goodwill towards retailers is high, but will be lost if not invested in
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- Figure 14: Attitudes towards grocery shopping, August 2020
Issues and Insights
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- COVID-19 Reset: Defining the food and drink offer in supermarkets
- COVID-19 Reset: Driving the multi-mission benefits
The Market – Key Takeaways
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- COVID-19 drives confidence down and sees consumers cut back
- Spending on in-home food and drink soars as a result of COVID-19
- Online to claim over 10% of spending for the first time
Market Drivers
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- Confidence dives with onset of COVID-19 and remains volatile
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- Figure 15: Financial confidence index, January 2015-November 2020
- COVID-19 polarises finances
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- Figure 16: Current financial situation compared to a year ago, by household income, November 2020
- Wages take a pounding after COVID-19 triggers economic downturn
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- Figure 17: Average weekly earnings, by consumer price index, January 2017-September 2019
- Retail sales drop sharply during COVID-19 lockdown
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- Figure 18: Monthly UK retail sales (excluding fuel), by value, January 2017-October 2020
- Food and drink prices fell in wake of relaxation of first COVID-19 lockdown restrictions…
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- Figure 19: Food and drink inflation, October 2019-October 2020
- …however a tick up in the first half of the year is expected
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- Figure 20: Origins of food consumed in the UK, 2019
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- Figure 21: UK trade, value of import and export by food groups, 2019
- Figure 22: food and drink, percentage of total imports accounted for by the EU, 2015-20 (Oct)
- Home ownership is rising and renting is falling
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- Figure 23: UK household tenure status, 2014-19
Consumer Spending on Food and Drink
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- Growth slows in 2019 but COVID-19 will bring a record year for spending on food and drink
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- Figure 24: Consumer spending on and growth in core in-home food and drink categories, Q1 2019-Q2 2020
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- Figure 25: Consumer spending on core in-home food and drink categories, 2015-20
- Spending on food to top £100 billion for the first time
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- Figure 26: Annual % change in consumer spending, value and volume, and inflation in food, 2014-20
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- Figure 27: Breakdown of consumer spending on food, 2019
- In-home consumption major boost to tea and coffee
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- Figure 28: Annual % change in consumer spending, value and volume, and inflation in non-alcoholic drinks, 2014-20
- In-home alcohol sales get big boost from COVID-19
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- Figure 29: Annual % change in consumer spending, value and volume, and inflation on alcoholic drinks, 2014-20
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- Figure 30: Breakdown of value spending in the alcoholic drinks category, 2019
Sector Size and Forecast
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- Greater in-home demand boosts basket sizes and grocery sales
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- Figure 31: Short-, medium- and long-term impact of COVID-19 on all retail and grocery retail sales, December 2020
- Growth to reach record high in 2020
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- Figure 32: All grocery retail sales (including VAT), 2015-25
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- Figure 33: All grocery retail sales (including VAT), 2015-25
- Supermarkets see strong growth, but growth in online holds back store-based sales
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- Figure 34: Supermarket market size and forecast (including VAT), 2015-25
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- Figure 35: Supermarket market size and forecast (including VAT), 2015-25
- Market drivers and assumptions
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- Figure 36: Key drivers affecting Mintel’s market forecast, 2015-25
- Learnings from the last recession
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- Figure 37: Annual % change in all grocery retail sales (excluding VAT), and by broad category, 2007-12
- Forecast methodology
Channels of Distribution
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- Supermarkets still the largest channel within the grocery sector…
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- Figure 38: Estimated channels of distribution for grocery retail sales, 2019
- …however share of spending is likely to fall below 50% for the first time
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- Figure 39: Estimated breakdown of all grocery retail sales, by channel, 2011-20
The Consumer – Key Takeaways
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- COVID-19 drives up basket sizes as consumers reduce frequency of shop
- Bigger basket shopping not necessarily to the benefit of supermarkets
- Appreciation of the grocery sector at a high
How They Shop
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- There remains a gender imbalance in the responsibility for grocery shopping
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- Figure 40: Responsibility for grocery shopping, August 2020
- COVID-19 helps to bring bigger basket shops back in vogue
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- Figure 41: How grocery shoppers typically shop, 2015-20
- There is fluidity in these habits
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- Figure 42: How grocery shoppers typically shop, by quarter, Mar-2016, Sep-2020
- COVID-19 hits frequency of shop
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- Figure 43: Frequency of grocery shop, 2018 and 2020
Types of Store Used
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- Despite bigger baskets, the shift of spending away from larger-format stores continues
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- Figure 44: Store format where the most is spent in a typical month, 2016-20
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- Figure 45: Mintel Grocery Tracker: Format where the most is spent in a typical month, Mar-Sep 2020
- Older shoppers spend the most in supermarkets, but are increasingly shifting spend to other channels
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- Figure 46: Store format where the most is spent in a typical month, by age, August 2020
- Significant shift in both lower and higher income households’ spend to online and discounters
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- Figure 47: Store format where the most is spent in a typical month, by household income, August 2020
Retailers Shopped With
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- Tesco remains top of the pack
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- Figure 48: Grocery retailers used, August 2020
- Tesco has been losing shoppers for the last three years
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- Figure 49: Trend of grocery retailers used, 2018-20
- Morrisons most likely to be used for a top-up shop over a main shop
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- Figure 50: Grocery retailers used for primary and secondary shops, August 2020
- Just 7% of shoppers stick to one retailer
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- Figure 51: Repertoire of secondary retailers used, August 2020
- Nearly 50% of Lidl shoppers are topping up at Tesco
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- Figure 52: Where leading retailers’ primary shoppers also shop, August 2020
Retailer Demographic Comparison
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- Tesco gains more 16-24 year old primary and secondary shoppers
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- Figure 53: Leading grocery retailers used for primary and secondary shops, by age, August 2020
- Aldi still skews towards younger customers
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- Figure 54: The discounters: primary and secondary shoppers, by age, August 2020
- Tesco’s convenience store estate creates strong secondary usage
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- Figure 55: Leading grocery retailers used for primary and secondary shops, by location, August 2020
- Lidl pulls ahead of Aldi in London
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- Figure 56: Leading retailers’ primary shoppers, by region, August 2020
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- Figure 57: Leading retailers’ secondary shoppers, by region, August 2020
- Big four supermarkets attracting the same demographics
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- Figure 58: Leading grocery retailers used for primary and secondary shops, by household income bracket, August 2020
- Aldi appealing to higher income households for top-up shops
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- Figure 59: Aldi and Lidl, primary and secondary grocery shoppers, by household income bracket, August 2020
Satisfaction With The Shopping Experience
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- Most are satisfied with the COVID-19 measures put in place
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- Figure 60: Satisfaction levels with the grocery retailer where the most is spent in a typical month, August 2020
- Product sourcing information still an area that needs work
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- Figure 61: Key drivers of overall satisfaction with supermarkets, September 2020
- Satisfaction by retailer
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- Figure 62: Overall satisfaction with the retailer where the most is spent in a typical month, August 2020
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- Figure 63: Satisfaction with the retailer where the most is spent in a typical month, by factors, September 2020
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- Figure 64: Satisfaction with the retailer where the most is spent in a typical month, by factors, September 2020
- Methodology
The Short and Long-term Impact of COVID-19 on the Grocery Sector
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- Stockpiling drove initial peak demand, but longer-term points to more ‘prepared-ness’
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- Figure 65: COVID-19 Tracker: stockpiling and availability, Feb – Nov 2020
- A short-term rowing back of trends which remain key longer-term
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- Figure 66: COVID-19 Tracker: Attitudes to grocery shopping and COVID-19, 18-24 June 2020
- COVID-19 may accelerate the integration of more technology in-store
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- Figure 67: Use of self-scan since COVID-19, August 2020
- Appreciation for grocery retail is at an all-time high…
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- Figure 68: Attitudes towards the importance of grocery retailers, August 2020
- …but this opportunity will be lost unless it is shown to be a two-way street
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- Figure 69: Attitudes towards local and British sourced products, August 2020
- Value high on the agenda but customers want help to cut back
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- Figure 70: Attitudes towards food waste and promotions, August 2020
- Opportunities for own-brand in a more value conscious market
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- Figure 71: Impact of COVID-19 on own-brand purchasing, by household income, October 2020
Leading Retailers – Key Takeaways
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- The big four still account for two-thirds of sales within the grocery sector
- COVID-19 has changed much, but the underlying trends in the sector remain
- COVID-19 has further blended the channels
Leading Retailers – Key Metrics
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- Sales
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- Figure 72: Leading grocery retailers, sales, 2015-19
- Stores
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- Figure 73: Leading grocery retailers: Store numbers, 2015-19
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- Figure 74: Leading grocery retailers: Annual sales per outlet, 2015-19
- Sales areas and densities
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- Figure 75: Leading grocery retailers: Total sales area, 2015-19
- Figure 76: Leading grocery retailers: Annual sales per square metre, 2015-19
- Operating profits and margins
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- Figure 77: Leading grocery retailers: Operating profits, 2015-19
- Figure 78: Leading grocery retailers: Operating margins, 2015-19
Market Share
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- Discounters continue to grow market share
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- Figure 79: Leading grocery retailers: share of all grocery retail sales, 2019
- Market concentration continues to drop
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- Figure 80: Leading grocery retailers: Share of all grocery retail sales, 2015-19
- A note on our market share
Online
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- Online shopping is ubiquitous and here to stay
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- Figure 81: Online Grocery market size (Including VAT), 2015-20
- Figure 82: Estimated breakdown of all grocery retail sales, by channel, 2011-20
- Online grocery shopping up significantly in just 4 months of 2020
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- Figure 83: Products purchased in the past year, 2019-20
- 25% of consumers doing all or most of their grocery shopping online
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- Figure 84: Online Grocery usage, December 2019
- Key players in the online grocery sector
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- Figure 85: Leading online grocery retailers’ estimated market shares (excluding VAT), 2019
Launch Activity and Innovation
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- A greener way to shop for food
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- Figure 86: Asda Sustainability store, Middleton October 2020
- Taxi business launches into grocery delivery market
- Appointment supermarket shopping to avoid the queues
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- Figure 87: Sparks Book & Shop, October 2020
- Sainsbury’s new local store concept to meet the demand for convenience shopping
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- Figure 88: Sainsbury’s Neighbourhood Hub, November 2020
- ...when all you want is the bare necessities
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- Figure 89: Bother, November 2020
- One-stop multi-shopping mission destination for shoppers who want to limit time in-store
- Pop-up supermarkets to support frontline healthcare workers during COVID-19 crisis
- Expanded food-to-go options and in-store pub
- Aldi’s ‘secret bargain hour’ makes the low-cost food retailer even cheaper
- Unique on-demand grocery delivery service
Advertising and Marketing Activity
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- Total sector advertising up 1.7% year-on-year in 2019
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- Figure 90: Recorded above-the-line, online display and direct mail total advertising expenditure by UK supermarket and online grocers, 2016-20*
- Tesco is the biggest advertising spender for the third consecutive year
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- Figure 91: Recorded above-the-line, online display and direct mail total advertising expenditure, by leading UK supermarket and online grocers, 2016-19
- Advertising spend increases around key seasonal events
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- Figure 92: Recorded above-the-line, online display and direct mail total advertising expenditure by UK supermarket and online grocers, by month, 2018 and 2019
- Advertising spend shifting to press, outdoor and radio
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- Figure 93: Percentage media type split of recorded above-the-line, online display and direct mail total advertising expenditure by UK supermarkets and online grocers, 2016-20*
- What we’ve seen so far in 2020
- COVID-19-themed campaigns
- Asda reboots iconic ‘pocket tap’ jingle
- Aldi challenges shoppers to re-evaluate their preconceptions of its quality offering
- Waitrose & Partners commitment to sourcing high-quality ingredients
- Nielsen Ad Intel coverage
Brand Research
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- Brand map
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- Figure 94: Attitudes towards and usage of selected brands, November 2020
- Key brand metrics
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- Figure 95: Key metrics for selected brands, November 2020
- Brand attitudes: Tesco retains most trusted retailer status
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- Figure 96: Attitudes, by brand, November 2020
- Brand personality: Sainsbury’s more ethical than competitors
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- Figure 97: Brand personality – macro image, November 2020
- Amazon - cutting edge but profit focused
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- Figure 98: Brand personality – micro image, November 2020
- Brand analysis
- Tesco the most trusted retailer
- Sainsbury’s considered more ethical than big four rivals
- Asda is better value than Morrisons and Sainsbury’s
- Morrisons has the lowest lifetime usage of the big four retailers
- Aldi’s experience and value ahead of rival Lidl
- Co-op is considered ethical by consumers
- Lidl considered the most basic of the retailers
- M&S offers an excellent experience
- Iceland is basic but good value
- Waitrose trust lower than many competitors
- Amazon leading the way in innovation
- Ocado exclusive and expensive
Asda Group
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- What we think
- Now under British ownership
- Plugging the gap in convenience grocery shopping
- One-stop multiple shopping mission destination
- Hygiene-centric shopping experience in wake of COVID-19 pandemic
- Avoiding queues during COVID-19 crisis
- Rapid online order fulfilment and ‘greener’ home deliveries
- Sustainability test store and ‘green’ price pledge
- Supporting the elderly and vulnerable during the COVID-19 crisis
- Company background
- Company performance
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- Figure 99: Asda Stores Ltd: Financial performance, 2015-19
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- Figure 100: Asda Stores Ltd: Outlet data, 2015-19
- Retail offering
Marks & Spencer (UK food)
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- What we think
- Entire range of food finally available to buy online
- Shifting to contact-free shopping with expansion of checkout-free service
- Appointment grocery shopping service to avoid COVID-19 lockdown queues
- Debunking high price myth
- Food-to-go vending machine
- Helping customers back on wasted food and reduce plastic pollution
- Helping NHS staff and the vulnerable during the COVID-19 pandemic
- Company background
- Company performance
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- Figure 101: Marks & Spencer (UK food): Group financial performance, 2015/16-2019/20
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- Figure 102: Marks & Spencer (UK Food): Food outlets, by format, 2015/16-2019/20
- Figure 103: Marks & Spencer (UK food): Outlet data, 2015/16-2019/20
- Retail offering
J Sainsbury
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- What we think
- One-stop multiple mission shopping destinations
- Neighbourhood store expansion to meet the demand for top-up grocery shopping
- On-demand grocery delivery service
- Exploring new locations to bring food and household products to customers
- Accelerating roll-out of scan and go
- Ramping up loyalty scheme promotions amid the toughening trading conditions
- In-store product refill stations to cut back on the use of plastic
- Supporting communities and the most vulnerable during pandemic
- Company background
- Company performance
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- Figure 104: J Sainsbury: Group financial performance, 2015/16-2019/20
- Figure 105: J Sainsbury: Estimated Ex-VAT Retail financial breakdown, 2017/18-2020/21
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- Figure 106: J Sainsbury: Outlet data, 2015/16-2019/20
- Retail offering
Spar International
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- What we think
- Expanded ecommerce operation to meet online demand
- Store format innovation to meet specific community needs
- Making in-store shopping safer, quicker and more convenient
- A one-person concept shop with scalable pop-up opportunities
- Helping customers avoid queueing for stores
- Reducing food waste at both store and consumer level
- Supporting local communities throughout the COVID-19 pandemic
- Company background
- Company performance
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- Figure 107: Spar International: Western Europe and Central & Eastern Europe retail sales, by country, 2015-19
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- Figure 108: Spar International: Western Europe and Central & Eastern Europe stores, by country, 2015-19
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- Figure 109: Spar International: Western Europe and Central & Eastern Europe retail sales area, 2015-19
- Retail offering
Tesco
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- What we think
- Boosting price competitiveness when value is uppermost in shoppers’ minds
- Cashless store experience aimed at shoppers in a hurry
- On-demand grocery essentials delivery service by drones
- Cutting down on food and plastic waste
- Pop-up stores offering 24-hour access to essential grocery products
- Supporting struggling local producers during COVID-19 crisis
- Company background
- Company performance
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- Figure 110: Tesco Plc: Group financial performance, 2015/16-2019/20
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- Figure 111: Tesco Plc: Outlet data, 2015/16-2019/20
- Retail offering
Waitrose & Partners
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- What we think
- Expanded delivery service to support more people shopping online
- Virtual shopping services to make online shopping easier for customers staying away from stores
- One-stop shopping convenience
- Making grocery shopping more affordable during these uncertain times
- Company background
- Company performance
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- Figure 112: Waitrose: Group financial performance, 2015/16-2019/20
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- Figure 113: Waitrose: Outlet data, 2015/16-2019/20
- Retail offering
Wm Morrison Group
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- What we think
- Speedier online grocery deliveries
- More reasons for shoppers to visit stores
- Slashing prices to be more competitive
- 1,000 new local products to meet demand for more locally-produced products
- Saved 100 tonnes of food from going to waste
- Company background
- Company performance
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- Figure 114: Wm Morrison Group: Group financial performance, 2015/16-2019/20
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- Figure 115: Wm Morrison Group: Outlet data, 2015/16-2019/20
- Retail offering
Appendix – Data Sources, Abbreviations and Supporting Information
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- Data sources
- Financial definitions
- Abbreviations
- Consumer research methodology
Appendix – Key Driver Analysis
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- Interpretation of results
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- Figure 116: Overall satisfaction with supermarkets - key driver output, September 2020
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- Figure 117: Satisfaction with supermarkets, September 2020
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