The UK grocery sector is changing fast, causing upheavals for several of the long-established market leaders. As online grocery sales grow and major grocers push into convenience formats, these channels cannibalise share from superstore and supermarket formats that generate the bulk of retailers’ profits: retailers are investing simply to stand still. At the same time, the shift away from out-of-town stores should not be overstated: hypermarket-based Asda is outperforming rivals, Sainsbury’s continues to open larger out-of-town stores and Tesco has said underperformance in hypermarkets is limited to around one-third of its largest stores.

Meanwhile, the discounters, Aldi and Lidl, are growing fast: Aldi overtook M&S Food by annual revenues in 2013 and is set to leapfrog Waitrose by this measure in 2014. Aldi and Lidl are chipping away at the market shares of (some) mid-market, full-range supermarkets – a problem which appears to be most severe for Morrisons and Tesco.

The midmarket grocers are under pressure to respond by competing more aggressively on pricing. Price competition has already pushed food and beverage prices into deflationary territory, and any major price offensive – for instance, by Tesco – will hit sector sales in 2015.

Mintel’s Supermarkets: More Than Just Food Retailing – UK, November 2014 report looks at these issues:

• Our online section provides market sizes and market shares for the fast-growing online grocery segment;

• Our Sector Size and Forecast section provides three separate segment forecasts – for Supermarket formats, Convenience Stores and Online – as well as the total sector forecast.

• Our Market Shares section provides five years of historic market shares data and estimated 2014 market shares for the biggest retailers, including for Aldi and Lidl.

And our consumer research sections address the changes in the sector. This year we asked consumers:

• Which retailers they use for their main grocery shop, and which retailers they use for top-up shopping.

• Which types of stores they use for their main shop and for their top-up shops, and how often they typically use these types of stores.

• About their perceptions of the discounters, with a series of attitude statements on Aldi and Lidl.

• The reasons why non-shoppers do not buy from Aldi/Lidl or, if they do some of their shopping at these stores, why they do not shop there more.

Looking at the issue of non-food retailing by grocers, we also asked shoppers which non-grocery products they had bought from supermarket retailers in the past year. We asked the same question in our 2013 report, providing us with year-on-year comparisons in non-grocery shopping at a time of change for the sector.

Data in this report includes:

• Consumer spending data, sourced partly from IRI.

• Retail sales data adapted from ONS data for the sector “non-specialised food stores”.

• Proprietary Mintel market sizes for the convenience stores and online segments.

• All consumer spending and retail sales data in the UK report is quoted including VAT.

Crown copyright material is reproduced with the permission of the Controller of HMSO and the Queen’s Printer for Scotland.

Financial definitions used are:

• Sales: Turnover as reported by the company, excluding VAT.

• Operating profits: pre-tax profits plus interest, less non-trading income such as the sale of fixed assets and any exceptional items, including provisions.

• Pre-tax profits: the net trading profit after deducting all operating costs including depreciation and finance charges, but before deduction of tax, dividends and other appropriations.

• Operating margin: operating profits as a percentage of sales.

• Pre-tax margin: pre-tax profits as a percentage of sales.