Table of Contents
Executive Summary
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- The five-year outlook for grocery retail
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- Figure 1: Category outlook, 2022-27
- The market
- Market size and forecast
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- Figure 2: Market forecast for all grocery retail sales (including VAT), 2017-27
- Supermarket demand to grow by 4.4% between 2022 and 2027
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- Figure 3: Market forecast for supermarket retail sales (including VAT), 2017-27
- Supermarkets remain the dominant channel…
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- Figure 4: Estimated share of total grocery retail sales, by format/channel, 2012-22
- Consumers’ financial wellbeing has fallen from the highs of 2021…
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- Figure 5: Household financial wellbeing index, 2016-2022
- Leading retailers
- Morrisons holds on to fourth spot in 2021, but Aldi to draw level in 2022
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- Figure 6: Leading grocery retailers: share of all grocery retail sales, 2021
- More to discounters than simply low prices
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- Figure 7: Key metrics for selected brands, 2022
- The consumer
- Smaller basket and top-up demand comes back more strongly…
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- Figure 8: How grocery shoppers typically shop, 2015-22
- …as frequency of shop grows
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- Figure 9: Frequency of grocery shopping, 2018-2022
- Online usage dips while discounters get a cost-of-living boost
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- Figure 10: Store format where the most is spent in a typical month, 2016-2022
- Aldi becomes the third most popular grocer
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- Figure 11: Grocery retailers used, 2019-22
- Price moves up the agenda…
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- Figure 12: Shift in priority toward key grocery factors, 2022
- Stocking up and tier shifting are most common reactions
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- Figure 13: Shifts in behaviour in response to the cost-of-living crisis, 2022
- Almost three quarters of grocer shoppers are a member of Clubcard
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- Figure 14: Loyalty/reward membership held, 2022
- Loyalty promotions have created switching behaviours
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- Figure 15: Attitudes towards loyalty schemes, 2022
- Food waste moves up the agenda
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- Figure 16: Attitudes to shopping for groceries, 2022
Issues and Insights
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- Cost-of-living crisis: open goal for discounters or will it be different this recession?
- Discounters gain as customers look to cut back…
- …however the leading multiples are now in a better place to defend and fight back
- Managed decline or sleeping giant: can large-format stores address the decline?
- Focus on what makes these stores unique
- Shifts in shopping behaviour should favour larger stores
Market Drivers
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- Inflation is the key concern for consumers and brands…
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- Figure 17: Inflation, overall index (CPI) and core categories, 2022
- …and despite government support, energy prices are still a major concern
- Rising interest rates mean that the pressure will move up to middle- and higher-income households
- High inflation and rising interest rates will compound the impact of the slowing recovery
- Consumer spending power will be curbed
- Unemployment is at a near 50-year low
- Consumers’ financial wellbeing has fallen from the highs of 2021…
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- Figure 18: Household financial wellbeing index, 2016-2022
- …and most people are feeling the effects of price rises
Consumer Spending on Food and Drink
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- Value growth accelerates, driven by inflation
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- Figure 19: Consumer spending (value, non-seasonally adjusted), total and year-on-year growth in core in-home and drink categories, 2021-22
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- Figure 20: Consumer spending (value, non-seasonally adjusted) on core in-home food and drink categories, 2017-22
- Building inflation driving customers to cut back
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- Figure 21: Inflation: core in-home and out-of-home food and drink categories, 2021-22
- Food: critical categories seeing record inflation
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- Figure 22: Annual % change in consumer spending, value and volume and inflation in food, 2017-22
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- Figure 23: Breakdown of consumer spending on food, 2021
- Non-alcoholic drink market rebalancing but opportunities continue to exist
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- Figure 24: Annual % change in consumer spending, value and volume, and inflation in non-alcoholic drinks, 2017-22
- Cuts in discretionary spend threaten alcohol sales
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- Figure 25: Annual % change in consumer spending, value and volume, and inflation in alcoholic drinks, 2017-22
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- Figure 26: Breakdown of value spending in the alcoholic drinks category, 2021
Market Size and Performance
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- Market rebalancing: in-home decline accelerated by the cost-of-living crisis
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- Figure 27: All grocery retail sales, non-seasonally adjusted value and volume growth, 2021-22
- Grocery sector returns to stronger growth, but inflation masking volume decline
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- Figure 28: All grocery retail sales (inc. VAT) market size, 2017-22
- Supermarket growth tempered by inflation and format shift
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- Figure 29: All supermarket size retail (inc. VAT), market size, 2017-22
Market Forecast
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- The five year outlook for grocery retail
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- Figure 30: Category outlook, 2022-27
- Grocery sector to grow by 13.7% between 2022 and 2027
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- Figure 31: Market forecast for all grocery retail sales (including VAT), 2017-27
- Supermarket demand to grow by 4.4% between 2022 and 2027
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- Figure 32: Market forecast for supermarket retail sales (including VAT), 2017-27
- Learnings from the last income squeeze
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- Figure 33: All grocery retail sales, non-seasonally adjusted value and volume growth, 2011-14
- Forecast methodology
Channels of Distribution
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- Supermarkets remain the dominant channel…
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- Figure 34: Estimated channels of distribution for grocery retail sales, 2022
- …but share continues to move away as discounters gain
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- Figure 35: Estimated share of total grocery retail sales, by format/channel, 2012-22
How Consumers Shop for Groceries
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- Nine in ten consumers have some responsibility for grocery shopping
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- Figure 36: Responsibility for grocery shopper, by age and gender, 2022
- Smaller basket and top-up demand comes back more strongly…
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- Figure 37: How grocery shoppers typically shop, 2015-22
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- Figure 38: Grocery tracker: how grocery shoppers typically shop, 2017-2022
- …as frequency of shop grows
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- Figure 39: Frequency of grocery shopping, 2018-2022
Types of Stores Used
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- Online use dips while discounters get a cost-of-living boost
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- Figure 40: Store format where the most is spent in a typical month, 2016-2022
- Discounters hit highest ever share of spending in 2022
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- Figure 41: Grocery tracker: format/channel where the most is spent in a typical month, 2019-2021
- Danger of discount switching as more see finances pressurised
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- Figure 42: Store format where the most is spent in a typical month by current financial situation, 2022
Retailers Shopped With
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- Aldi becomes the third most popular grocer
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- Figure 43: Grocery retailers used, 2019-22
- Lidl now claims more primary shops than Morrisons
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- Figure 44: Primary and secondary grocery retailers used, 2022
- Just 6% of grocery shoppers using a single brand in a typical month
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- Figure 45: Where leading retailers’ primary shoppers also shop, 2022
Retailer Demographic Comparison
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- Tesco and Aldi gain among under 44s…
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- Figure 46: Leading grocery retailers used for primary and secondary shops, by age, 2022
- …helped by capturing more family shops
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- Figure 47: Leading grocery retailers used for primary and secondary shops, by parental status, 2022
- Tesco gains across the UK, while Aldi’s push into the south brings more shoppers
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- Figure 48: Leading grocery retailers used for primary and secondary shops, by type of area lived in, 2022
- Discounter shopping still skews towards lower income households
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- Figure 49: Leading grocery retailers used for primary and secondary shops, by household income, 2022
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- Figure 50: Leading grocery retailers used for primary and secondary shops, by current financial situation, 2022
Priority Shifts in the Past Year
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- Price moves up the agenda…
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- Figure 51: Shift in priority toward key grocery factors, 2022
- …but underlying trends remain important
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- Figure 52: Factors selected as ‘more important’, by current financial situation, 2022
Behaviour Shifts due to the Cost of Living Crisis
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- Stocking up and tier shifting are most common reactions
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- Figure 53: Shifts in behaviour in response to the cost-of-living crisis, 2022
- Bigger packs a way to tap into more ‘preparedness’ among shoppers
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- Figure 54: Sainsbury’s ‘big pack’ area, 2022
- The cost-of-living crisis presents a significant opportunity for own-label
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- Figure 55: Key private label launches by leading players, 2022
Loyalty Schemes
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- Almost three quarters of grocer shoppers are a member of Clubcard
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- Figure 56: Loyalty/reward membership held, 2022
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- Figure 57: Loyalty/reward membership held, by retailer shopped with, 2022
- Loyalty promotions have created switching behaviours
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- Figure 58: Attitudes towards loyalty schemes, 2022
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- Figure 59: Attitudes towards loyalty schemes, by retailer primary shopper and loyalty/reward card customer base, 2022
Attitudes towards Food Waste, Promotions and Fuel
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- Discount price-matching is having significant impact
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- Figure 60: Attitudes towards discounter price-matching schemes, 2022
- Pressure on fuel costs is also driving switching behaviour
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- Figure 61: Attitudes towards fuel promotions, 2022
- Food waste rises significantly on the agenda
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- Figure 62: Attitudes towards grocery shopping, by age, 2022
- HFSS legislation comes into play, causing a navigation headache
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- Figure 63: Booths household and Sainsbury’s discover end of aisles, 2022
Leading Retailers – Key Metrics
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- Slowdown in sales growth reflects difficult comparatives
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- Figure 64: Leading grocery retailers’ sales, 2017/18-2021/22
- Supermarket giants strengthen their convenience store estates
- Tesco, Morrisons and Aldi pilot grab-and-go, checkout-free stores
- Iceland and Waitrose building a presence in locations where grocery shopping may not be conveniently accessible
- Morrisons and discounters roll-out eco concept store formats
- Co-op’s store rebranding and robot home deliveries
- New Spar food-to-go concept and Morrisons’ Market Kitchen store expansion
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- Figure 65: Leading grocery retailers, store numbers, 2017/18-2021/22
- Shoppers returning to stores, but footfall still below pre-pandemic level
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- Figure 66: Leading grocery retailers, sales per outlet, 2017/18-2021/22
- Sales areas and densities
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- Figure 67: Leading grocer retailers: total sales area, 2017/18-2021/22
- Figure 68: Leading grocery retailers: annual sales per sq m, 2017/18-2021/22
- Operating profits and margins
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- Figure 69: Leading grocery retailers: operating profits, 2017/18-2021/22
- Figure 70: Leading grocery retailers: operating margins, 2017/18-2021/22
Market Share
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- Morrisons holds on to fourth spot in 2021, but Aldi to draw level in 2022
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- Figure 71: Leading grocery retailers: share of all grocery retail sales, 2021
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- Figure 72: Leading grocery retailers estimated market shares, 2017-22
- A note on our market share
Launch Activity and Innovation
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- Technology in supermarket aisles
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- Figure 73: Lidl’s refill station, kingswinford, 2022
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- Figure 74: Amazon One, US, 2022
- Figure 75: Veeve smart shopping cart, US, 2022
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- Figure 76: TX SCARA stacking bottles, Japan, 2022
- Supermarkets campaign to save the planet
- Fighting food waste
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- Figure 77: Sainsfreeze, a walk-in freezer concept store, Shoreditch, 2022
- Supermarket schemes to help cash-strapped customers
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- Figure 78: Asda’s ‘Winter Warmer’ scheme, 2022
- New partnerships and launches
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- Figure 79: Deliveroo Hop store, Oxford Street, London, 2022
- Supporting a cause by shopping
Advertising and Marketing Activity
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- Advertising expenditure reached its highest since 2018
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- Figure 80: recorded above-the-line, online display and direct mail total advertising expenditure by UK supermarkets and online supermarkets and grocers, 2018-2022
- Some big spenders cut their budgets
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- Figure 81: Recorded above-the-line, online display and direct mail total advertising expenditure, by leading UK supermarkets and online supermarkets and grocers, 2018-2021
- TV advertising accounted for the biggest share
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- Figure 82: Recorded above-the-line, online display and direct mail total advertising expenditure, by UK supermarkets and online supermarkets and grocers, by media, 2021
- What we’ve seen so far in 2022
- Campaigns to fight the cost-of-living crisis
- Promoting quality food, healthier choice and supporting farmers
- Tesco’s first Ramadan campaign
- New launches: Morrisons Media Group and Sainsbury’s self-service advertising platform
- Christmas 2022 ads: Tesco’s nod to the cost-of-living crisis and Aldi’s homage to Home Alone and more
- Nielsen Ad Intel coverage
Brand Research
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- Brand map
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- Figure 83: Attitudes towards and usage of selected brands, 2022
- Key brand metrics
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- Figure 84: Key metrics for selected brands, 2022
- Brand attitudes: Tesco is as strong as ever and its online service is seen as excellent
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- Figure 85: Attitudes, by brand, 2022
- Brand personality: Aldi and Lidl are considered fun owing to their social media presence
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- Figure 86: Brand personality – macro image, 2022
- Retailers seen as basic gain advantage during the financial crisis
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- Figure 87: Brand personality – micro image, 2022
- Brand analysis
- Fun supermarkets are seen as different from the rest, gaining trust and users
- Going basic is seen as a safer option
- Most supermarkets are seen as ethical
- Tesco performs as strongly as ever, and even stronger in its online service
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
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- Figure 88: All grocery retail sales forecast (including VAT), current price prediction intervals, 2022-27
- Figure 89: Supermarket retail sales forecast (including VAT), current price prediction intervals, 2022-27
- Market drivers and assumptions
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