Table of Contents
Overview
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- What you need to know
- Areas covered in this Report
- What is a discounter?
Executive Summary
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- The market
- Discounter sector continues to grow strongly
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- Figure 1: All discounters’ sector size (Ex-VAT), 2012-22
- Inflation on the rise
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- Figure 2: Consumer price inflation: overall index and key categories, January 2016-July 2017
- Real incomes now falling
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- Figure 3: Real wages growth: Wage growth vs inflation, January 2012-August 2017
- Companies and brands
- Combined Aldi and Lidl account for over half of the overall discount market…
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- Figure 4: Leading discounters’ estimated share of all discount sales, 2016
- …and also over 10% of the grocery sector
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- Figure 5: Grocery market share: The Big Four v the Food Discounters, 2010-16
- The consumer
- Nine in 10 shop with a discounter
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- Figure 6: Use of food and non-food discounters, by age, July 2017
- Poundland attracts the highest number of shoppers, but food discounters are most used
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- Figure 7: Discounters used and used most often in the last three months, July 2017
- Food discounters straddle the line between convenience and supermarkets
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- Figure 8: Food missions completed within food discounters, July 2017
- Household non-foods the most popular purchase at discounters
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- Figure 9: Non-food products purchased at discounters in the last three months, July 2017
- Satisfaction high amongst discount shoppers but there are areas to improve
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- Figure 10: Key drivers of overall satisfaction with discount retailers, July 2017
- The move to multi-price is likely to be a positive for the fixed-price players
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- Figure 11: Attitudes towards the discounter shopping experience, July 2017
- What we think
Issues and Insights
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- What do Brexit and uncertainty mean for the discounters?
- The facts
- The implications
- The move to multi-price in non-foods
- The facts
- The implications
- Glass or concrete: What is the ceiling for the food discounters?
- The facts
- The implications
The Market – What You Need to Know
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- Real incomes are now falling
- Consumer confidence has taken a hit but remains broadly positive
- Retail sales have remained positive in the first half
- Growth remains strong but has been slowing in the discount sector
- Food discounters the driver
- Non-food discounters evolving
Market Drivers
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- Inflation on the rise
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- Figure 12: Consumer price inflation: overall index and key categories, January 2016-July 2017
- Real incomes now falling
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- Figure 13: Real wages growth: Wage growth vs inflation, January 2012-August 2017
- Consumer confidence
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- Figure 14: Consumers’ view on their current and future financial situation, January 2014-July 2017
- Value sales remain strong…
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- Figure 15: Value retail sales (ex-fuel): food and non-food growth, non-seasonally adjusted, July 2016-June 2017
- …but in volume terms there are signs of consumers cutting back
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- Figure 16: Volume retail sales (ex-fuel): food and non-food growth, non-seasonally adjusted, July 2016-June 2017
Market Size and Forecast
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- Discount sector continues to grow strongly
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- Figure 17: All discounters’ sector size (Ex-VAT), 2012-22
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- Figure 18: All discounters’ sector size (Ex-VAT), detailed forecast at current and constant prices, 2012-22
- Figure 19: Discount sector size as a percentage of all retail sales (ex-fuel), 2008-17
- The food discounters segment
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- Figure 20: Food discounters’ sector size (ex-VAT), 2012-22
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- Figure 21: Food discounters’ sector size (ex-VAT), detailed forecast at current and constant prices, 2012-22
- The non-food discount segment
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- Figure 22: Non-food discounters’ sector size (ex-VAT), 2012-22
- Figure 23: Non-food discounters’ sector size (ex-VAT), detailed forecast at current and constant prices, 2012-22
- Forecast methodology
The Consumer – What You Need to Know
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- Nine in 10 consumers have shopped at a discounter
- Poundland the most visited discounter
- Food discounters providing a viable alternative to convenience
- Household purchases popular within the discount sector
- Overall satisfaction high with the discount experience but there is room for improvement
- The move to multi-price
- New ranges keep the shopping experience fresh
- Food discounters doing well in the premium stakes
Where They Shop
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- Poundland shows the highest number of shoppers
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- Figure 24: Discounters used and used most often in the last three months, July 2017
- Discount use on the up
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- Figure 25: Discounters visited in the last three months, 2015-17
- Food discounters are visited most frequently
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- Figure 26: Discounters visited in the last three months, by frequency of visitation, July 2017
- Repertoire of discount stores visited
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- Figure 27: Repertoire of discount stores used in the past three months, July 2017
Demographics of Discount Use – Retailer Comparison
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- Discount use skews younger
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- Figure 28: Use of food and non-food discounters, by age, July 2017
- Food discounter use peaks amongst high earners
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- Figure 29: Use of food and non-food discounters, by gross annual household income, July 2017
- Discounter usage peaks in Scotland
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- Figure 30: Use of food and non-food discounters, by region, July 2017
- Retailer comparisons: younger consumers clearly driving the market
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- Figure 31: Use of food discounters, by age, July 2017
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- Figure 32: Use of non-food discounters, by age, July 2017
Food Purchasing at Discounters
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- Discounters popular in traditional convenience categories
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- Figure 33: Food missions completed within food discounters, July 2017
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- Figure 34: Food missions completed within food discounters, by region, July 2017
- Food purchasing within non-food discounters
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- Figure 35: Types of food and drink purchased at non-food discounters, July 2017
Non-food Purchasing at Discounters
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- Household products popular at discounters
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- Figure 36: Non-food products purchased at discounters in the last three months, July 2017
- Older shoppers most likely to buy items for the home
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- Figure 37: Non-food products purchased at discounters in the last three months, by age, July 2017
- Aldi shoppers buy more non-foods
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- Figure 38: Non-food products purchased at discounters in the last three months, by food discounter used most often, July 2017
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- Figure 39: Non-food products purchased at non-food discounters in the last three months, by food discounter used most often, July 2017
- Repertoire of non-food products purchased
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- Figure 40: Repertoire of product categories purchased from in the last three months, July 2017
Satisfaction with Shopping at Discounters
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- Overall levels of satisfaction high with discounters
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- Figure 41: Satisfaction with factors at the discounter shopped with most often, July 2017
- Key Driver Analysis: a greater focus on customer service needed?
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- Figure 42: Key drivers of overall satisfaction with discount retailers, July 2017
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- Figure 43: Correlation (R) values with overall satisfaction key driver output, July 2017
- Retailer comparisons
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- Figure 44: Level of positive satisfaction with factors, by type of discounter shopped at most often, July 2017
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- Figure 45: Level of positive satisfaction with factors, by type of discounter shopped at most often, July 2017
- Methodology
Attitudes towards Discounters
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- Fluid product offerings lead to fresh experiences
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- Figure 46: Attitudes towards the discounter shopping experience, July 2017
- It is not just cheap and cheerful
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- Figure 47: Attitudes towards quality, sourcing and pricing at discounters, July 2017
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- Figure 48: Attitudes towards quality, sourcing and pricing at discounters, by type of discounters shopped with most often, July 2017
- Food discounters doing well in the premium stakes
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- Figure 49: Attitudes towards food discounters’ premium and healthy ranges, July 2017
- More affluent consumers stronger in their demand for healthier options
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- Figure 50: Attitudes towards food discounters’ premium and healthy ranges, by socio-economic group, July 2017
Leading Retailers – What You Need to Know
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- Aldi and Lidl take fifth and seventh spot within the grocery sector
- B&M the non-food leader but is looking to expand into food
- The move to multi-price
- Food discounters score more highly on brand trust
Leading Players – Key Metrics
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- Revenues
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- Figure 51: Leading discounters’ sales, 2012/13-2016/17
- Operating profits and margins
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- Figure 52: Leading discounters’ operating profits, 2012/13-2016/17
- Figure 53: Leading discounters’ operating margins, 2012/13-2016/17
- Stores and sales per outlet
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- Figure 54: Leading discounters’ outlet numbers, 2012/13-2016/17
- Figure 55: Leading discounters’ sales per outlet, 2012/13-2016/17
Market Shares
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- Food discounters account for half of the market
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- Figure 56: Leading discounters’ estimated share of all discount sales, 2016
- Figure 57: Leading 10 discounters’ share of all discount sales, 2012-16
- Aldi and Lidl now account for over 10% of all grocery sales
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- Figure 58: Estimated share of all grocery retail sales (ex-VAT, ex-fuel) by the leading players, 2016
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- Figure 59: Grocery market share: The Big Four v the Food Discounters, 2010-16
- Non-foods disrupting the mixed goods sector
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- Figure 60: Non-food discounters’ share of all mixed goods retail sales, 2008-16
- Savers in the health and beauty space
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- Figure 61: Savers: Market share of the specialist health and beauty sector (ex-VAT), 2011-16
Space Allocation Summary
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- Food discounters – Summary
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- Figure 62: Food discounters: Summary shelf frontage space allocation estimates, September 2017
- Food discounters - Detailed space allocation
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- Figure 63: Food discounters: Detailed shelf frontage space allocation estimates, September 2017
- Multi-price non-food discounters – Summary
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- Figure 64: Multi-price non-food discounters: Summary shelf frontage space allocation estimates, September 2017
- Multi-price non-food discounters – Detailed space allocation
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- Figure 65: Multi-price non-food discounters: Detailed shelf frontage space allocation estimates, September 2017
- Fixed-price non-food discounters – Summary
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- Figure 66: Fixed-price non-food discounters: Summary shelf frontage space allocation estimates, September 2017
- Fixed-price non-food discounters – Detailed space allocation
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- Figure 67: Fixed-price non-food discounters: Detailed shelf frontage space allocation estimates, September 2017
Retail Product Mix
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- Figure 68: Leading discounters: estimated sales by product, 2016
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- Figure 69: Leading discounters estimated sales mix, 2016
- Figure 70: Leading discounters, estimated sales per square metre, 2016
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Innovations and Marketing Activity
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- Aldi and Lidl look to online
- Lidl and Heidi Klum team up to launch affordable fashion line
- Poundland launches its first 50p sale
- Poundland ramps up Pep & Co concessions
- Poundworld shelves selling products costing more than £1
Advertising and Marketing Activity
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- Total advertising spend by the sector’s leading retailers down by nearly 60%
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- Figure 71: Recorded above-the-line, online display and direct mail total advertising expenditure by the UK’s leading discounters, 2012-17
- Lidl and Aldi accounted for 88.6% of total sector adspend in 2015
- Advertising spend peaks around Easter and in the run-up to Christmas
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- Figure 72: Recorded above-the-line, online display and direct mail total advertising expenditure by leading discounter, by month, 2016
- TV accounts for the majority of adspend among discounters
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- Figure 73: Recorded above-the-line, online display and direct mail total advertising expenditure by the UK’s leading discounters, by media type, 2012-17
- Nielsen Ad Intel coverage
Brand Research
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- Overview
- Brand map
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- Figure 74: Attitudes towards and usage of selected brands, July 2017
- Key brand metrics
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- Figure 75: Key metrics for selected brands, July 2017
- Brand attitudes: Aldi and Lidl most likely to be seen as socially responsible
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- Figure 76: Attitudes, by brand, July 2017
- Brand personality: Poundland lagging behind in the fun stakes
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- Figure 77: Brand personality – Macro image, July 2017
- Aldi most likely to be seen as the trendsetter in the discount space
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- Figure 78: Brand personality – Micro image, July 2017
- Brand analysis
- Aldi: functional but fun
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- Figure 79: User profile of Aldi, July 2017
- Home Bargains: lower awareness but excelling in experience
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- Figure 80: User profile of Home Bargains, July 2017
- Lidl: lagging behind its food discount rival
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- Figure 81: User profile of Lidl, July 2017
- B&M: struggling to connect with younger consumers?
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- Figure 82: User profile of B&M, July 2017
- Poundland: seen as widely available but basic
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- Figure 83: User profile of Poundland, July 2017
Aldi Stores Ltd
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- What we think
- Built in poor economic times, consolidated in better ones
- The softening of the hard edges
- Straddling the lines
- Background
- Company performance
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- Figure 84: Aldi Stores Ltd (UK & Ireland): Group financial performance, 2011-16
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- Figure 85: Aldi Stores Ltd (UK & Ireland): Outlet data, 2011-16
- Retail offering
Lidl (UK)
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- What we think
- Background
- Company performance
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- Figure 86: Lidl (UK): Estimated group financial performance, 2011/12-2016/17
- Figure 87: Lidl (UK): Outlet data, 2011/12-2015/16
- Retail offering
B&M Retail Ltd
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- What we think
- Background
- Company performance
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- Figure 88: B&M Retail Ltd: Group financial performance, 2011/12-2016/17
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- Figure 89: B&M Retail Ltd: Outlet data, 2011/12-2016/17
- Retail offering
TJ Morris Ltd (Home Bargains)
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- What we think
- Background
- Company performance
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- Figure 90: TJ Morris Ltd: Group financial performance, 2012/13-2016/17
- Figure 91: TJ Morris Ltd: Outlet data, 2012/13-2016/17
- Retail offering
Poundland
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- What we think
- Background
- Company performance
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- Figure 92: Poundland Ltd: Group financial performance, 2012/13-2016/17
- Figure 93: Poundland Ltd: Outlet data, 2012/13-2016/17
- Retail offering
Poundstretcher Ltd
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- What we think
- Background
- Company performance
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- Figure 94: Poundstretcher: Group financial performance, 2011/12-2015/16
- Figure 95: Poundstretcher: Outlet data, 2011/12-2015/16
- Retail offering
Poundworld Retail Ltd
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- What we think
- Background
- Company performance
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- Figure 96: Poundworld Retail Ltd: Group financial performance, 2011/12-2015/16
- Figure 97: Poundworld Retail Ltd: Outlet data, 2011/12-2015/16
- Retail offering
Wilko Retail Ltd
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- What we think
- Background
- Company performance
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- Figure 98: Wilko: Group financial performance, 2012/13-2016/17
- Figure 99: Wilko: Outlet data, 2012/13-2016/17
- Retail offering
Appendix – Data Sources, Abbreviations and Supporting Information
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- Data sources
- Consumer research methodology
- VAT
- Financial definitions
- Abbreviations
Appendix – Market Size and Forecast
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- Forecast methodology
Appendix – Key Driver Analysis
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- Interpretation of results
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- Figure 100: Correlation (R) values with overall satisfaction – Key driver output, July 2017
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- Figure 101: Satisfaction with discount retailers, July 2017
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