Table of Contents
Executive Summary
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- Impact of COVID-19 on supermarket sector
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- Figure 1: Short-, medium- and long-term impact of COVID-19 on supermarket retail, 2020-25
- The market
- Market size and forecast: all grocery retail sales
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- Figure 2: Market forecast for all grocery retail sales (including VAT), 2016-26
- Market size and forecast: supermarket sector size
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- Figure 3: Market forecast for supermarket sales (including VAT), 2016-26
- A third remain hesitant to come into store
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- Figure 4: COVID-19 Tracker: Impact on online shopping behaviour and time spent in-store, 2020-21
- Footfall sees a recovery
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- Figure 5: Google COVID-19 Community Mobility Reports: UK (National), average monthly change from baseline, 2020-21
- Supermarkets to have regained some ground in 2021
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- Figure 6: Estimated channels of distribution for grocery retail sales, by channel, 2011-21
- Confidence shakes on rising inflation and new variant fears
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- Figure 7: Future Financial Confidence Index, 2015-21
- Inflation in grocery currently under-indexing…
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- Figure 8: CPIH and core components of inflation, 2021
- …however greater spending in other areas will put pressure on non-discretionary areas
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- Figure 9: Financial Confidence Tracker, confirmed spending in the last three months, 2019-21
- Leading retailers
- Online strength helps to boost big four in a competitive market…
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- Figure 10: Leading grocery retailers: share of all grocery retail sales, 2020
- …however newer entrants point to a diversification of mission online
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- Figure 11: Getir, IMAX Waterloo advertisement, 2021
- Checkout-free hits convenience sector, but could be truly disruptive in the large-format sector
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- Figure 12: Amazon Fresh, Wembley, 2021
- Sustainability drives a refill revolution
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- Figure 13: Asda’s draught beer refill station, 2021
- M&S leads on store-based experience stakes
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- Figure 14: Key metrics for selected brands, 2021
- The consumer
- Big-basket remains heightened
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- Figure 15: How grocery shoppers typically shop, 2015-21
- Although for some frequency of shop is reverting to pre-pandemic
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- Figure 16: Frequency of grocery shop, 2018-21
- Tesco’s dominance in core channels means over half shop with the retailer
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- Figure 17: Grocery retailers used, 2021
- Shopper losses in the supermarket channel stabilise…
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- Figure 18: Store format where the most is spent in a typical month, 2016-21
- …and intention across the next year is positive
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- Figure 19: Expected channel use over the next 12 months, 2021
- Convenience and price key large-format drivers
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- Figure 20: Why the most is spent in supermarkets in a typical month, 2021
- Additional convenience around checkout and multi-mission could drive greater reliance on the format
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- Figure 21: What would encourage more supermarket shopping, 2021
- Greater range can lead to greater waste
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- Figure 22: Attitudes to grocery shopping, 2021
Issues and Insights
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- The multi-mission shop post-COVID-19
- Value – price is key but it is just one aspect of the equation
Market Drivers
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- GDP should reach pre-pandemic levels by the end of Q1 2022…
- …but the post-COVID bounceback will be short term
- Consumers’ financial wellbeing has slipped from its recent high point…
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- Figure 23: Household Financial Wellbeing Index, 2016-21
- …and concerns over inflation are coming to the fore
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- Figure 24: Consumer concerns over cost-of-living changes, 2021
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- Figure 25: Future Financial Confidence Index, 2015-21
- Improved confidence in 2021 and restrictions ending means retail is more opposed for share of wallet
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- Figure 26: Financial Confidence Tracker, confirmed spending in the last three months, 2019-21
- Inflationary pressures are mounting
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- Figure 27: CPIH and core components of inflation, 2021
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- Figure 28: Real income growth: average weekly earnings versus CPIH, 2018-21
- Food inflation being driven up by import levels
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- Figure 29: Origins of food consumed in the UK, 2019
- Figure 30: UK trade, value of import and export by food groups, 2019
- Footfall recovers more strongly in 2021
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- Figure 31: Google COVID-19 Community Mobility Reports: UK (National), average monthly change from baseline, 2020-21
- Summary of key economic data, 2020-26
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- Figure 32: Key economic data, 2020-26
Consumer Spending on Food and Drink
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- Growth slows as movement comes back into the market
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- Figure 33: Consumer spending (value, non-seasonally adjusted), total and year-on-year growth in core in-home food and drink categories, 2020-21
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- Figure 34: Consumer spending (value, non-seasonally adjusted) on core in-home food and drink categories, 2016-21
- Inflation starting to bite
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- Figure 35: Inflation: core in-home and out-of-home food and drink categories, 2021
- Despite dip in 2021, value sales of food remain inflated by the pandemic
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- Figure 36: Annual % change in consumer spending, value and volume, and inflation in food, 2015-21
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- Figure 37: Breakdown of consumer spending on food, 2020
- Greater in-home coffee and tea consumption drives non-alcoholic drink sales
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- Figure 38: Annual % change in consumer spending, value and volume, and inflation in non-alcoholic drinks, 2015-21
- Hospitality closures see in-home alcoholic drink spending soar
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- Figure 39: Annual % change in consumer spending, value and volume, and inflation in alcoholic drinks, 2015-21
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- Figure 40: Breakdown of value spending in the alcoholic drinks category, 2020
Market Size and Performance
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- Impact of COVID-19 on supermarket sector
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- Figure 41: Short-, medium- and long-term impact of COVID-19 on supermarket retail, 2021
- Grocery retail sector sees record highs in 2020
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- Figure 42: ONS grocery retail sales, by value and volume, non-seasonally adjusted year-on-year growth, 2020-21
- Supermarket sales grow under the market in 2020 as online soars and non-foods are hit
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- Figure 43: All grocery retail and supermarket sector size, (including VAT), 2016-21
Market Forecast
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- Grocery sector set for a period of inflation-led growth
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- Figure 44: Market forecast for all grocery retail sales (including VAT), 2016-26
- Larger-format players expected to benefit from pressure on finances
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- Figure 45: Market forecast for supermarket sales (including VAT), 2016-26
- Market drivers and assumptions
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- Figure 46: Key drivers affecting Mintel’s market forecast, 2017-26
- Forecast methodology
Channels of Distribution
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- Online remains at record levels…
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- Figure 47: Estimated channels of distribution for grocery retail sales, 2021
- …but supermarkets reclaim some ground in 2021
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- Figure 48: Estimated channels of distribution for grocery retail sales, by channel, 2011-21
How They Shop
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- Big-basket shops remain heightened
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- Figure 49: How grocery shoppers typically shop, 2015-21
- Seasonality and unexpected events affect shopping habits
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- Figure 50: How grocery shoppers typically shop, by quarter, 2016-21
- Frequency of shop creeps back up
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- Figure 51: Frequency of grocery shop, 2018-21
Retailers Shopped With
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- Over half of UK grocery shoppers use Tesco
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- Figure 52: Grocery retailers used, 2021
- Tesco continues to leak shoppers
- Morrisons loses secondary shoppers
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- Figure 53: Trend of grocery retailers usage, 2019-21
- Aldi more likely to be a primary shop than Lidl
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- Figure 54: Grocery retailers used for primary and secondary shops, 2021
- Over a third shop at just one extra store a month
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- Figure 55: Repertoire of secondary retailers used, 2021
- Tesco shoppers visiting Sainsbury’s and Aldi
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- Figure 56: Where leading retailers’ primary shoppers also visit, 2021
Retailer Demographic Comparison
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- Morrisons’ audience skewed towards older shoppers
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- Figure 57: Leading grocery retailers used for primary and secondary shops, by age, 2021
- Lidl has broad appeal across all age ranges
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- Figure 58: The discounters: primary and secondary usage, by age, 2021
- Tesco’s vast store estate sees it reach rural consumers
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- Figure 59: Leading grocery retailers used for primary and secondary shops, by location, 2021
- Lidl ahead of Aldi in competitive London market
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- Figure 60: Leading retailers’ primary shoppers, by region, 2021
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- Figure 61: Leading retailers’ secondary shoppers, by region, 2021
- Asda secondary shoppers more affluent than primary shoppers
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- Figure 62: Leading grocery retailers’ primary and secondary shoppers, by household income bracket, 2021
- Two discounters have broadly similar profiles
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- Figure 63: The discounters: primary and secondary grocery shoppers, by household income bracket, 2021
Types of Store Used
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- Shift away from supermarkets stabilises
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- Figure 64: Store format where the most is spent in a typical month, 2016-21
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- Figure 65: Grocery Tracker: Format where the most is spent in a typical month, 2019-21
- Supermarket use does skew older, but captures a majority of spend from all generations
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- Figure 66: Store format where the most is spent in a typical month, by age, 2021
- Big-basket families critical to supermarkets, but online has captured significant demand in this area
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- Figure 67: Store format where the most is spent in a typical month, by parental status and age of children, 2021
- Battle in the middle-incomes to come as inflation bites
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- Figure 68: Store format where the most is spent in a typical month, by household income band, 2021
Future Channel Use
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- A note on the timing of this research
- Boost for online set to continue, but discounters and supermarkets to come more into the mix
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- Figure 69: Expected channel use over the next 12 months, 2021
- Supermarkets and discounters set for a boost, and changing habits continue to hit c-stores
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- Figure 70: Expected channel use: percentage point difference between ‘more’ and ‘less’ usage in the coming 12 months, 2021
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- Figure 71: Users of channels by expected channel use in the next 12 months, 2021
Key Drivers of Supermarket Use
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- Convenience, price and range critical to drive supermarket patronage
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- Figure 72: Why the most is spent in supermarkets in a typical month, 2021
- Loyalty schemes critical to Tesco and Sainsbury’s supermarket shoppers
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- Figure 73: Why the most is spent in supermarkets in a typical month, by supermarket retailer where the most is spent in a typical month, 2021
- Loyalty 2.0 a key battleground in 2022
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- Figure 74: Attitudes towards loyalty scheme savings, 2021
What Would Encourage More Supermarket Use
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- Price the barrier to more supermarket patronage for many
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- Figure 75: What would encourage more supermarket shopping, 2021
- Convenience a key driver for younger generations
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- Figure 76: What would encourage more supermarket shopping, by age, 2021
Attitudes towards Price, Convenience and Sustainability
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- Convenience a barrier for smaller basket shoppers
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- Figure 77: Attitudes to convenience in supermarkets, 2021
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- Figure 78: Attitudes towards self-scan and automated checkout, by age, 2021
- Greater in-home needs places pressure on budgets
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- Figure 79: Attitudes to value in supermarkets, 2021
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- Figure 80: Attitudes to value in supermarkets, by self-assessment of current financial situation, 2021
- Calls for greater transparency on seasonality and carbon footprint
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- Figure 81: Attitudes towards sustainability and grocery shopping, 2021
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- Figure 82: Attitudes towards sustainability and grocery shopping, 2021
Leading Retailers - Key Metrics
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- Sales – a record year for many
- Online drives growth as two of the big four change hands
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- Figure 83: Leading grocery retailers sales, 2016/17-2020/21
- Store growth keeps Aldi and Lidl gaining in a difficult market
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- Figure 84: Leading grocery retailers, store numbers, 2016/17-2020/21
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- Figure 85: Leading grocery retailers: annual sales per outlet, 2016/17-2020/21
- Sales areas and densities
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- Figure 86: Leading grocer retailers: total sales area, 2016/17-2020/21
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- Figure 87: Leading grocery retailers: annual sales per sq m, 2016/17-2020/21
- Operating profits and margins
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- Figure 88: Leading grocery retailers: operating profits, 2016/17-2020/21
- Figure 89: Leading grocery retailers: operating margins, 2016/17-2020/21
Market Share
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- Tesco and Booker chains account for a quarter of the grocery sector
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- Figure 90: Leading grocery retailers: share of all grocery retail sales, 2020
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- Figure 91: Leading grocery retailers: share of all grocery retail sales, 2016-21
- A note on our market shares
Online
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- Sales dip a little in 2021 but pandemic-driven online behaviour proves sticky
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- Figure 92: Online sales by store-based grocery retailers, as a percentage of all grocery retail sales, 2020-21
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- Figure 93: Online grocery: total market size (inc. VAT) and annual % growth, 2015-21
- Despite an improved picture, concern is still a driver of increased online use
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- Figure 94: COVID-19 Tracker: Impact on online shopping behaviour and time spent in-store, 2020-21
- New models and new mission in the online channel
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- Figure 95: Getir, IMAX Waterloo advertisement, 2021
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- Figure 96: Estimated composition of the online grocery sector, by type of service, 2018-20
- Click-and-collect represents an opportunity for large-format stores
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- Figure 97: Attitudes towards click-and-collect and packaging, 2020
Launch Activity and Innovation
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- Amazon enters the real world
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- Figure 98: Amazon Fresh, Ealing, 2021
- Tesco and Gorillas join forces in first of its kind partnership
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- Figure 99: Gorillas delivery, 2021
- Quiet places for those that need them
- Vegetables on a train in REWE trial
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- Figure 100: REWE’s train-based supermarket, 2021
- Tesco takes aim at plastic problems
- Pret enters retail world with Tesco partnership
- Rapid delivery sector sees flurry of acquisitions
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- Figure 101: Getir billboard, 2021
- Asda launches new refill store
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- Figure 102: Asda’s draught beer refill station, 2021
- Asda trials a vegan butcher’s counter
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- Figure 103: Asda’s vegan-based butcher’s counter, 2021
Advertising and Marketing Activity
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- Sector advertising spend down 7.6% in 2020
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- Figure 104: Recorded above-the-line, online display and direct mail total advertising expenditure by UK supermarket and online supermarket and grocers, 2017-21*
- Tesco the biggest advertising spender
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- Figure 105: Recorded above-the-line, online display and direct mail total advertising expenditure, by leading UK supermarket and online supermarkets and grocers, 2017-20
- Advertising spend spikes around annual seasonal events
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- Figure 106: Recorded above-the-line, online display and direct mail total advertising expenditure, by UK supermarket and online supermarket and grocers, by month, 2019-20
- 43% of total advertising spend channelled through TV
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- Figure 107: Recorded above-the-line, online display and direct mail total advertising expenditure by UK supermarket and online supermarket and grocers, by media type, 2020
- What we’ve seen so far in 2021
- Tesco’s biggest ever integrated campaign for mobile phones
- Aldi and Lidl kick off their Christmas advertising campaigns early
- Asda, Sainsbury’s and Morrisons unveil new taglines and brand positioning campaigns
- Co-op Food pushes green credentials with recycling campaign
- Ocado’s biggest national multichannel advertising campaign to date
- Deliveroo boosts awareness of tie-ups with supermarket partners
- Nielsen Ad Intel coverage
Brand Research
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- Brand map
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- Figure 108: Attitudes towards and usage of selected brands, 2021
- Key brand metrics
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- Figure 109: Key metrics for selected brands, 2021
- Brand attitudes: Iceland and the discounters score well for value
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- Figure 110: Attitudes, by brand, 2021
- Brand personality: Waitrose, Ocado and M&S all considered exclusive
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- Figure 111: Brand personality – macro image, 2021
- Amazon at the cutting edge of retail
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- Figure 112: Brand personality – micro image, 2021
- Brand analysis
- Tesco, the UK’s largest supermarket, scores highly for trust
- Sainsbury’s considered marginally more ethical than big-four rivals
- Asda is considered basic but good value
- Morrisons has the lowest awareness and usage of the big four
- Aldi scores well for accessibility and fun
- Co-op scores well for ethics
- Lidl is considered basic but good value
- M&S is highly trusted and recommended
- Iceland is considered basic but fun
- Waitrose is considered exclusive but expensive
- Amazon is head and shoulders above competitors when it comes to innovation
- Ocado struggles to put across its value proposition
- A note on the timing of the research
Appendix – Data Sources, Abbreviations and Supporting Information
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- Data sources
- Financial definitions
- Abbreviations
- Consumer research methodology
Appendix: Forecast Methodology
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- Market forecast and prediction intervals: all grocery retail sales
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- Figure 113: All grocery retail sales (including VAT), at current and constant prices, 2016-26
- Figure 114: All grocery retail sales forecast (including VAT), current price prediction intervals, 2021-26
- Market forecast and prediction intervals: supermarket retail sales
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- Figure 115: Supermarket retail sales (inc. VAT), at current and constant prices, 2016-26
- Figure 116: Supermarket retail sales forecast (inc. VAT), current price prediction intervals, 2021-26
- Market drivers and assumptions
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- Figure 117: Key drivers affecting Mintel’s market forecast, 2020-26
- Forecast methodology
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