Table of Contents
Issues in the Market
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- Main themes
- Definition
- Abbreviations
Insights and Opportunities
Fast Forward Trends
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- Trend 1: Oliver's Army
- Definition
- Market touchpoints/implications:
- Trends 2 Horizontal Communities
- Definition
- Market touchpoints/implications:
- Trend 3: My Ads
- Definition
- Market touch points/implications
Market in Brief
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- Overview
- Industry insights
- Discounters leveraging price-based loyalty
- Non-food discounters under pressure in overcrowded market
- Loyalty schemes continue to be popular
- Overall participation in schemes static
- Consumers largely ambivalent to schemes
- Variations in redemption behaviour justify offering range of options
Industry Insights
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- Key findings, implications and conclusion
- Value of insights worth the cost
- Using information profitably
- Loyalty cards leveraging emotional loyalty
- Using loyalty schemes to enhance CRM
- Store cards under review
- No evidence of loyalty card fatigue
- Retailers need to keep schemes fresh
- Improving value from loyalty cards
- Customer-led innovation required
- Redemption behaviour favours discounts
- Simplicity ensures higher participation rates
- Multi-issuer schemes need total buy-in
- Most effective loyalty card schemes
- Online points issuing causing confusion
Internal Market Environment
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- Intense competition – margins under pressure
- Too much shopping space?
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- Figure 1: Trends in managed space, by type, 2001 and 2006
- Online option widens shopping choices
- Differentiation needed – price discounting lacks uniqueness
- Developing the proposition beyond low prices
- Loyalty schemes identify profitable customers
- Selling more to existing customers
- Fragmented non-food structure offers growth opportunities
- Discounters looking for growth in food retailing
Broader Market Environment
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- Prosperity for many but doubts about debt
- Prosperity for many
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- Figure 2: PDI and consumer expenditure, at current and constant prices, 2001-06
- Consumer boom over?
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- Figure 3: Net credit and savings ratio, 2000-06
- Jitters about employment
- Retail implications of demographic changes
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- Figure 4: Trends in UK population, by age, 2001 and 2011
- Continuing negative impact of rising utility costs
- Value culture among UK consumers
Who’s Innovating?
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- Discounting in food retailing
- Sainsbury’s Shop Scan Save trial a success
- Expanded offer at outlet centres
- Asda offers Essentials as new format idea
- Price comparison comes to the food sector
- Discounting in non-food retailing
- Only2
- GreasyPalm offers cashback rewards
- Loyalty cards
- Shop local
- Harrods opts for points-based system
- Store cards
- Active use of database
Discounting and Price Strategies in Food Retailing
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- Key findings, implications and conclusion
- EDLP too rigid to work effectively
- Discounters raising quality thresholds to attract new customers…
- Getting the right sites proving costly and time-consuming
- Price and promotion strategies
- Flexible pricing strategy dominates
- EDLP not delivering
- Tesco’s price reassurance builds brand trust
- Permanent low price on budget own-brands
- Tesco’s acquisition of a discounter
- Asda looking for an Essential difference
- Consumers attracted to deals
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- Figure 5: Influences at the point of purchase, 2003 and 2005
- Contrasting trends among LADs
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- Figure 6: LAD store numbers, 2000-06
- Lidl
- Aldi
- Netto
- Kwik Save
Grocery Discount Formats – Who Uses Them and How Often
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- Key findings, implications and conclusion
- Grocery discounters not changing shopping habits
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- Figure 7: Use of grocery discounters, 2002-06
- Core shoppers are the less affluent
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- Figure 8: Above-average regular usage of discounters, August 2006
- Prosperous pensioners offer major growth potential
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- Figure 9: ABC1 Special Groups’ usage of discounters, August 2006
- Greater convenience needed to attract ABC1 families
- Widespread vulnerability to discounters
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- Figure 10: Usage of discounters, by grocery store shopped, August 2006
Discounting in Non-food Retailing
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- Key findings, implications and conclusion
- Convenience of grocers for non-food shopping
- Major companies applying competitive squeeze
- Out-of-town discount destinations adding to shopping options
- Value variety stores a major battleground
- Conclusion
- Grocers and non-foods – Tesco forging ahead
- Competition falling behind
- More casualties in discount sector expected
- Casualties in the value sector:
- QS
- Half Price Jewellers
- Eisenegger
- Off-price retailing locations another shopping option
- Price-comparison sites
- Stimulating discounting
- Usage on the increase
- Reviews and recommendations – new influences on shoppers
- Value clothing and footwear specialists
- Matalan
- Primark
- TK Maxx
- Peacock Group
- Ethel Austin
- MK One
- The Officers Club
- PriceLess
- Shoe Zone
- Shoefayre
- TJ Hughes
- Sportsworld
- Other value clothing and footwear retailers
- Boundary Mill Stores
- Low-price assortment retailers
- Wilkinsons
- Poundstretcher/Instore
- Poundland
- TJ Morris, trading as Home Bargains
- Other value-led variety stores
- B&M Retail
- 99p Stores Ltd
- Poundworld Retail
- QD Stores
- Other non-food discount and value-led formats
- Savers Health and Beauty
- The Perfume Shop
- Bodycare (Health & Beauty) Ltd
- The Fragrance Shop
- Choice Discount Stores Ltd
- The Factory Shop Group
- The Works Retail Ltd
- David Flatman Ltd operates Bookworld and Bargain Books
- The Greeting Card Group
- Decathlon
Loyalty Card Schemes
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- Key findings, implications and conclusion
- Grocery loyalty cards
- Tesco Clubcard
- Co-operative Membership
- New Co-operative Membership scheme
- Position on loyalty cards by other leading grocers
- Asda
- Morrisons
- Waitrose
- Iceland
- Somerfield
- Loyalty cards in non-food
- Boots the Chemists Advantage Card
- Homebase Spend & Save
- WH Smith Clubcard
- Other non-food retailer schemes
- The Body Shop
- Game
- Toys R Us Goldcard
- Decathlon
- Virgin Megastores
- IKEA
- Retailer customer membership clubs and discount schemes
- bonmarché
- Edinburgh Woollen Mill
- Focus DIY
- Multi-issuer schemes
- Nectar
- Air Miles
- ipoints
- GreasyPalm
- Store card and store-branded credit cards with reward points features
- Competition Commission cracks down on high APRs
- The market for store cards
- Marks & Spencer
- John Lewis Partnership card
- House of Fraser Recognition FraserCard and Recognition Card
- Principles Account Card with Privilege Points
- Monsoon Account Card
- HMV
- Bhs Goldcard with Choice Reward Points
- Toys R Us Credit Card
- Asda Store Card and Asda Credit Card
- Other store card and retailer-branded payment cards with reward points features
- Virgin Credit Card
- Focus Account Card
- Harrods Card
- Evans Essentials
Participation and Effectiveness
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- Key findings, implications and conclusion
- Participation rates
- Loyalty card participation static
- Store card participation declining
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- Figure 11: Regular use of loyalty and store cards, 2002-06
- Cardholder behaviour increasingly focused on one card
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- Figure 12: Number of loyalty cards held, 2002-06
- Only Tesco succeeding in increasing numbers of regular users
- High proportion of Tesco food shoppers participate in Clubcard
- Boots Advantage Card retaining but not increasing regular users
- Regular usage of Nectar declined sharply since 2004
- Homebase Spend & Save and WH Smith Clubcard also experiencing declining regular usage
- Store cards falling out of favour
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- Figure 13: Regular users of loyalty cards, by named schemes, 2002-06
- Effectiveness of schemes: Differentiating regular users from cardholders
- Tesco Clubcard leads on usage ratios
- Boots Advantage Card best performer in non-grocery
- Nectar losing relevancy to many cardholders
- Fewer than half of store cardholders use them regularly
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- Figure 14: Cardholders and regular users, by leading schemes, August 2006
- Comparison of leading schemes
- Tesco Clubcard
- No major issue with holders not using their cards regularly
- Widespread usage among competitors’ primary shoppers that use Tesco for secondary shopping
- Targeting the more affluent
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- Figure 15: Holding and usage of Tesco Clubcard, by lifestage and Mintel's Special Groups, August 2006
- Boots Advantage Card
- Opportunity to increase regular usage
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- Figure 16: Holding and usage of Boots Advantage Card, by lifestage and Mintel's Special Groups, August 2006
- Nectar Card
- Not as appealing to Sainsbury’s as Clubcard is to Tesco shoppers
- Sainsbury’s grocery shoppers less loyal than Tesco shoppers
- Targeting women and younger consumers
- Targeting the affluent
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- Figure 17: Holding and usage of Nectar Card, by lifestage and Mintel’s Special Groups, August 2006
- Card holding promiscuity among those in named schemes
- Tesco Clubcard users loyal to one scheme
- Boots Advantage Card users more likely to be active in two schemes
- Nectar Card users highly promiscuous
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- Figure 18: Number of cards used regularly, by those regularly using named cards, August 2006
Consumer Perceptions of Loyalty Card Schemes
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- Key findings, implications and conclusion
- Trends in perceptions of loyalty card schemes
- Lower prices continue to be more important than points
- Wallet clearout taken place?
- Ambivalent collecting increasing
- Coupon activity and interest in special offers in decline
- Negative perceptions of loyalty cards not widespread
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- Figure 19: Attitudes towards loyalty schemes, 2000-06
- Attitudes towards loyalty card schemes
- More affluent just as interested in lower prices as less affluent
- An element of ABs more likely to be rational…
- …but another element of this group are ambivalent
- More affluent have above-average interest in coupons
- Less affluent least interested in loyalty card schemes
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- Figure 20: Most popular attitudes towards loyalty card schemes, by lifestage and Mintel's Special Groups, August 2006
- Other popular attitudes towards loyalty card schemes
- More affluent are most interested in mailings…
- …but some ABs more negative about loyalty cards than those in other groups
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- Figure 21: Other popular attitudes towards loyalty card schemes, by lifestage and Mintel's Special Groups, August 2006
- Attitudes towards loyalty card schemes among participants in named schemes
- Tesco Clubcard participants show affinity for low prices
- Boots Advantage Card users most attuned to direct mail offers
- Evidence of ambivalence among Nectar Card holders
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- Figure 22: Attitudes towards loyalty card schemes among regular users of named cards, August 2006
How Behaviour Varies Among Participants
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- Key findings, implications and conclusion
- Behaviour among participants
- Checkout discount the most popular method of taking rewards
- Deferred gratification indicative of economic wellbeing
- Saving rewards for third-party deals not a widespread activity
- Negative perceptions about value of rewards widespread
- Using rewards to win greater share of spend
- Care needed in structuring cross-selling incentives
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- Figure 23: Behaviour in loyalty card schemes, August 2006
- Detailed findings:
- Negativity to schemes strongest among ABC1 pre-/no family groups
- ABC1 families show greatest propensity to save for treats
- Lapsed participants most likely to be ABC1 third agers
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- Figure 24: Behaviour in loyalty schemes, by lifestage and Mintel’s Special Groups, August 2006
- Attitudes towards loyalty card schemes by participants in named schemes
- Tesco Clubcard – mainly focused on discount redemption
- Boots Advantage Card – bonuses offered and accepted
- Nectar Card – some collectors focus on worthwhile rewards
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- Figure 25: Behaviour in loyalty schemes, by regular users of named schemes, August 2006
- Cluster group analysis shows small proportion of dedicated collectors
- Dedicated collectors loyal to the scheme – 15% of respondents
- Discount-oriented collectors – 25% of respondents
- Cards not appropriate to financial lifestyles – 18% of respondents
- Unconcerned about cards – 41% of respondents
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- Figure 26: Cluster groups, by lifestage and Mintel’s Special Groups, August 2006
- Detailed findings:
- Dedicated collectors
- Purposeful discount-oriented collectors
- Cards not appropriate
- Totally unconcerned
The Causes of Disloyalty Among Grocery Shoppers
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- Key findings, implications and conclusion
- Factors affecting grocery shopping decisions
- Change of home the main cause of change
- Fragility of loyalty based on convenience and low prices
- Overcoming boredom
- Promotions attract new business, loyalty cards do not
- Many stores failing on operating standards
- New store openings have a major impact
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- Figure 27: Reasons for changing main source of grocery shopping, August 2006
- Analysis of reasons for switching by store currently shopped
- New store development programme working for Tesco but Sainsbury’s has stalled
- Asda’s price-led campaign
- Sainsbury’s superior operating standards winning it new customers
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- Figure 28: Reasons for changing main source of grocery shopping, by main source of grocery shopping, August 2006
Appendix
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- Consumer research
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- Figure 29: Trends in managed space, by type, 2001 and 2006
- Figure 30: Development pipeline, by region, 2006
- Figure 31: PDI, at current and constant 2001 prices, 2001-11
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- Figure 32: Trends in consumer expenditure, at current and constant 2001 prices, 2001-11
- Figure 33: RPI, 2001-11
- Figure 34: Unemployment trends for November-January period, 2001/02-2005/06
- Figure 35: Trends in the UK population, by gender and age, 2001-11
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- Figure 36: LAD store numbers, 2000-06
- Figure 37: Trends in factory outlet/outlet malls space, by region, 2001 and 2006
- Figure 38: Top ten outlet malls, by floorspace, 2006
The Consumer – Detailed Consumer Demographics
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- Figure 39: Usage of grocery discounters, by gender, age and socio-economic group, August 2006
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- Figure 40: Usage of grocery discounters, by Mintel’s Special Groups and grocery store used, August 2006
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- Figure 41: Usage of grocery discounters, by lifestage and presence of children, August 2006
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- Figure 42: Usage of grocery discounters, by region and ACORN categories, August 2006
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- Figure 43: Usage of grocery discounters, by media usage and commercial TV viewing, August 2006
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- Figure 44: Tesco Clubcard ownership and usage, by gender, age and socio-economic group, August 2006
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- Figure 45: Tesco Clubcard ownership and usage, by lifestage, presence of children and Mintel’s Special Groups, August 2006
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- Figure 46: Tesco Clubcard ownership and usage, by region and ACORN categories, August 2006
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- Figure 47: Tesco Clubcard ownership and usage, by media usage, commercial TV viewing and store used for grocery shopping, August 2006
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- Figure 48: Boots Advantage Card ownership and usage, by gender, age and socio-economic group, August 2006
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- Figure 49: Boots Advantage Card ownership and usage, by lifestage, presence of children and Mintel’s Special Groups, August 2006
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- Figure 50: Boots Advantage Card ownership and usage, by region and ACORN categories, August 2006
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- Figure 51: Boots Advantage Card ownership and usage, by media usage, commercial TV viewing and store used for grocery shopping, August 2006
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- Figure 52: Nectar Card ownership and usage, by gender, age and socio-economic group, August 2006
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- Figure 53: Nectar Card ownership and usage, by lifestage, presence of children and Mintel’s Special Groups, August 2006
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- Figure 54: Nectar Card ownership and usage, by region and ACORN categories, August 2006
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- Figure 55: Nectar Card ownership and usage, by media usage, commercial TV viewing and store used for grocery shopping, August 2006
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- Figure 56: Most popular attitudes towards loyalty card schemes, by gender, age and socio-economic group, August 2006
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- Figure 57: Most popular attitudes towards loyalty card schemes, by lifestage, presence of children and Mintel’s Special Groups, August 2006
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- Figure 58: Most popular attitudes towards loyalty card schemes, by region and ACORN categories, August 2006
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- Figure 59: Most popular attitudes towards loyalty card schemes, by media usage, commercial TV viewing and store used for grocery shopping, August 2006
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- Figure 60: Other popular attitudes towards loyalty card schemes, by gender, age and socio-economic group, August 2006
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- Figure 61: Other popular attitudes towards loyalty card schemes, by lifestage, presence of children and Mintel’s Special Groups, August 2006
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- Figure 62: Other popular attitudes towards loyalty card schemes, by region and ACORN categories, August 2006
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- Figure 63: Other popular attitudes towards loyalty card schemes, by media usage, commercial TV viewing and store used for grocery shopping, August 2006
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- Figure 64: Attitudes towards loyalty schemes among regular users of named loyalty cards, August 2006
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- Figure 65: Behaviour in loyalty card schemes, by gender, age and socio-economic group, August 2006
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- Figure 66: Behaviour in loyalty card schemes, by lifestage, presence of children and Mintel’s Special Groups, August 2006
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- Figure 67: Behaviour in loyalty card schemes, by region and ACORN categories, August 2006
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- Figure 68: Behaviour in loyalty card schemes, by media usage, commercial TV viewing and store used for grocery shopping, August 2006
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- Figure 69: Attitudes towards loyalty schemes among regular users of named loyalty cards, August 2006
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- Figure 70: Cluster groups, by gender, age and socio-economic group, August 2006
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- Figure 71: Cluster groups, by lifestage, presence of children and Mintel’s Special Groups, August 2006
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- Figure 72: Cluster groups, by region and ACORN categories, August 2006
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- Figure 73: Cluster Groups, by media usage, commercial TV viewing and store used for grocery shopping, August 2006
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- Figure 74: Reasons for changing main source of grocery shopping in last 12 months, August 2006
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- Figure 75: Main reason for changing main source of grocery shopping in last 12 months, by supermarket used for grocery shopping, August 2006
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