Table of Contents
Overview
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- What you need to know
- Products covered in this Report
Executive Summary
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- The market
- Grocery sector expected to see sales accelerate in 2018
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- Figure 1: All food retail sales (inc. VAT), 2013-23
- Supermarket sector is growing once more…
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- Figure 2: Supermarkets’ market size and forecast (inc. VAT), 2013-23
- …but growth remains slower than the wider sector
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- Figure 3: Estimated breakdown of sector sales, by channel, 2012-18
- Inflation eases, allowing real incomes to grow once more
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- Figure 4: Average weekly earnings, by consumer price index, January 2015-September 2018
- Companies and brands
- Tesco remains the market leader but Sainsbury’s and Asda will create stiff competition
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- Figure 5: Leading grocery retailers: share of all grocery retail sales, 2017
- Aldi brand in rude health
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- Figure 6: Key metrics for selected brands, August 2018
- The consumer
- Most combine a main shop with a top-up
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- Figure 7: Household grocery buying behaviours, 2015-18
- Two thirds still spend the most in supermarkets
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- Figure 8: Store format where the most is spent in a typical month, 2016-18
- The majority of grocery shoppers shop with Tesco in a typical month
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- Figure 9: Grocery retailers used for primary and secondary shops, August 2018
- Almost nine in 10 purchase non-foods from supermarkets
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- Figure 10: Non-food products purchased in-store or online in the past 12 months, August 2018
- Just under three quarters use food counters
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- Figure 11: Food counter and café services used in supermarkets, August 2018
- 38% of grocery shoppers are very satisfied with their retailer of choice
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- Figure 12: Satisfaction with grocery retailer where the most is spent in a typical month, August 2018
- Quality of fresh a key area, but consumers are worried about levels of food waste
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- Figure 13: Attitudes towards shopping for groceries, August 2018
- What we think
Issues and Insights
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- The Asda and Sainsbury’s merger: 2+3=1?
- The facts
- The implications
- What does the future of supermarkets look like?
- The facts
- The implications
- Waste not, want not: Where do supermarkets sit in the fight against food waste?
- The facts
- The implications
The Market – What You Need to Know
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- Inflation eases, allowing real incomes to grow once more
- Spending on food holding up well
- Supermarket sector returns to growth in 2017…
- …but growth remains slower than the wider sector
Market Drivers
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- Inflation high throughout 2017
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- Figure 14: Food and drink inflation, 2013-August 18
- Real wages showing signs of growth in 2018
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- Figure 15: Average weekly earnings, by consumer price index, January 2015-September 2018
- Consumer confidence dips at end of summer
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- Figure 16: Consumer confidence: current financial situation vs sentiment for the coming year, January 2016-September 2018
- Increasing number of private renters
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- Figure 17: UK household tenure status, 2012-17
Consumer Spending on Food and Drink
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- Figure 18: Consumer spending on core food and drink categories, 2013-18
- Spending on food
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- Figure 19: Annual % change in the value, volume and prices in the food category, 2013-18
- How food spending breaks down
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- Figure 20: Composition of consumer spending on food, categories as % of total spending, 2017
- Spending on non-alcoholic drinks
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- Figure 21: Annual % change in the value, volume and prices in the non-alcoholic beverages category, 2013-18
- 2017 sees an uplift in alcoholic drink sales
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- Figure 22: Annual % change in the value, volume and prices in the alcoholic beverages category, 2013-18
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- Figure 23: Composition of consumer spending on alcoholic drinks, categories as a % of total spending, 2017
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Sector Size and Forecast
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- Grocery sector sees growth accelerate driven by inflation
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- Figure 24: All food retail sales (inc. VAT), 2013-23
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- Figure 25: All food retail sales (inc. VAT), market size and forecast, in current and constant prices, 2013-23
- Supermarket sector size
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- Figure 26: Supermarkets’ market size and forecast (inc. VAT), 2013-23
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- Figure 27: Supermarkets: market size and forecast (inc. VAT), in current and constant prices, 2013-23
- Forecast methodology
Channels of Distribution
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- Despite competition, supermarkets still account for half the market
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- Figure 28: Estimated channels of distribution for grocery retail sales, 2017
- Is the decline bottoming out?
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- Figure 29: Estimated breakdown of sector sales, by channel, 2012-18
The Consumer – What You Need to Know
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- Most combine a main shop with a top-up
- Two thirds still spend the most in supermarkets
- The majority of grocery shoppers shop with Tesco in a typical month
- Tesco primary shoppers skew younger, whilst Sainsbury’s skew older
- Almost nine in 10 purchase non-foods from supermarkets
- Just under three quarters use food counters
- 38% of grocery shoppers are very satisfied with their retailer of choice
- Quality of fresh a key area, but consumers are worried about levels of food waste
How They Shop
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- Nine in 10 responsible
- Most combine a main shop with a top-up
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- Figure 30: Household grocery buying behaviours, 2015-18
- Habits are not static
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- Figure 31: Household grocery buying behaviours, March 2016-September 2018
- Older consumers more likely to shop on a top-up basis…
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- Figure 32: Household grocery buying behaviours, by age, August 2018
- …leading to most shopping multiple times per week
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- Figure 33: Frequency of household grocery buying, August 2018
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- Figure 34: Household grocery buying behaviours, by frequency of grocery shop, August 2018
Types of Stores Used
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- Growth in use of discounters and online has led to less reliance on supermarkets
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- Figure 35: Store format where the most is spent in a typical month, 2016-18
- Who spends the most in supermarkets?
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- Figure 36: Store format where the most is spent in a typical month, by age. August 2018
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- Figure 37: Attitudes towards justification of supermarket visitation, by age, August 2018
- Large families, large baskets
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- Figure 38: Store format where the most is spent in a typical month, by parental status and gender, August 2018
Where They Shop
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- Tesco is leading the way…
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- Figure 39: Grocery retailers used, August 2018
- …but Aldi is the big winner
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- Figure 40: Trend of grocery retailers used, 2016-18
- Tesco attracts both primary and secondary shoppers
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- Figure 41: Grocery retailers used for primary and secondary shops, August 2018
- Just 7% are loyal to one retailer only
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- Figure 42: Repertoire of secondary retailers used, August 2018
- Discounters appeal in a secondary capacity to Asda shoppers
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- Figure 43: Where leading retailers’ primary shoppers also shop, August 2018
Retailer Demographic Comparison
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- Tesco attracts the young in a secondary capacity
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- Figure 44: Leading grocery retailers used for primary and secondary shops, by age, August 2018
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- Figure 45: The discounters: primary and secondary shoppers, by age, August 2018
- Large towns a hotspot for Asda
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- Figure 46: Leading grocery retailers used for primary and secondary shops, by location, August 2018
- Aldi is making inroads in the North
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- Figure 47: Leading retailers’ primary shoppers, by region live in, August 2018
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- Figure 48: Leading retailers’ secondary shoppers, by region live in, August 2018
- Asda usage prevalent amongst lower income groups
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- Figure 49: Leading grocery retailers used for primary and secondary shops, by household income bracket, August 2018
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- Figure 50: Aldi and Lidl, primary and secondary grocery shoppers, by household income bracket, August 2018
Non-foods in Supermarkets
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- More than four in five purchased non-foods in-store at supermarkets
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- Figure 51: Non-food products purchased in-store or online in the past 12 months, August 2018
- George the most shopped from brand
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- Figure 52: Supermarket brand shopped with in-store or online in the past 12 months, by categories of clothing, August 2018
- Only a third of supermarket shoppers are influenced by non-foods
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- Figure 53: Behaviours in supermarkets, August 2018
Counter Services and Non-food Services in Supermarkets
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- Three quarters (73%) of supermarket shoppers use food counters
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- Figure 54: Food counter and café services used in supermarkets, August 2018
- Most see food counters as more important than non-food areas
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- Figure 55: Attitudes towards food counts in supermarkets, by age, August 2018
- Refreshing the counter line-up could engage younger consumers
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- Figure 56: Food counter and café services used in supermarkets, by age, August 2018
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- Figure 57: Repertoire of food-based services typically used in supermarkets, August 2018
- Morrisons shoppers far more likely to use counter services
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- Figure 58: Food counter and café services used in supermarkets, by retailer where the most is spent with in a typical month, August 2018
- Three quarters have used an in-store service in the past year
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- Figure 59: Services used in supermarkets in the past year, August 2018
Satisfaction with the Grocery Shopping Experience
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- Just over a third say they are very satisfied with their retailer of choice
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- Figure 60: Satisfaction with grocery retailer where the most is spent in a typical month, August 2018
- Scope to give more information about where products are sourced
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- Figure 61: Key drivers of overall satisfaction with grocery retailers, August 2018
- Retailer comparison
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- Figure 62: Overall satisfaction with the retailer where the most is spent in a typical month, August 2018
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- Figure 63: Satisfaction with select factors at the retailer where the most is spent in a typical month, August 2018
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- Figure 64: Satisfaction with select factors at the retailer where the most is spent in a typical month, August 2018
- Key Driver Analysis: Methodology
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- Figure 65: Overall satisfaction with grocery retailers – Key driver output, August 2018
Attitudes towards Fresh Foods, Food Waste and Plastics
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- Most feel fresh is the most important consideration when choosing where to shop
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- Figure 66: Attitudes towards fresh foods in supermarkets, August 2018
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- Figure 67: Agreement with attitudes towards fresh foods in supermarkets, by channel where the most is spent in a typical month, August 2018
- Vast majority feel food waste is an important concern
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- Figure 68: Attitudes towards food waste in supermarkets, August 2018
- Grocers should be leading on plastic reduction and education
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- Figure 69: Attitudes towards plastics and packaging at grocery retailers, August 2018
Leading Retailers – What You Need to Know
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- Morrisons posts strongest growth in 2017
- Sainsbury’s and Asda will push Tesco, but it retains its leading market share
- Tesco also the market leader online
- Aldi and Lidl still have the edge on value-for-money perceptions
Leading Grocery Retailers – Key Metrics
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- Sales
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- Figure 70: Leading grocery retailers, net sales, 2013-17
- Stores
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- Figure 71: Leading grocery retailers: Store numbers, 2013-17
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- Figure 72: Leading grocery retailers: annual sales per outlet, 2013-17
- Sales areas and densities
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- Figure 73: Leading grocery retailers: total sales area, 2013-17
- Figure 74: Leading grocery retailers: annual sales per sq m, 2013-17
- Operating profits and margins
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- Figure 75: Leading grocery retailers: operating profits, 2013-17
- Figure 76: Leading grocery retailers: operating margins, 2013-17
Market Share
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- Tesco remains the market leader…
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- Figure 77: Leading grocery retailers: share of all grocery retail sales, 2017
- …but Sainsbury’s plus Asda would create a challenge
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- Figure 78: Leading grocery retailers: share of all grocery retail sales, 2013-18
- A note on our market share
Online
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- Around half of consumers do some online grocery shopping
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- Figure 79: Usage of online grocery shopping, December 2017
- Online grocery only accounts for 6% of sector sales
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- Figure 80: Estimated breakdown of sector sales, by channel, 2012-18
- The in-store experience matters
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- Figure 81: Why users shop online for groceries, December 2017
- Same-day delivery comes at a cost
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- Figure 82: Attitudes towards same-day delivery services, December 2017
- Tesco is losing market share
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- Figure 83: Leading online grocery retailers’ estimated market shares, 2017
Space Allocation Summary
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- Summary data and classifications
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- Figure 84: Food, non-food standard classifications, 2018
- Convenience comparison overview
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- Figure 85: UK leading food retailers’ hypermarket store format: Convenience comparison overview split, November 2018
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- Figure 86: UK leading food retailers’ superstore format: Convenience comparison overview split, November 2018
- Figure 87: UK leading food retailers’ smaller supermarkets and discounters: Convenience comparison overview split, November 2018
- Detailed convenience comparison split
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- Figure 88: UK leading food retailers’ hypermarket store format: Convenience comparison detailed split, November 2018
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- Figure 89: UK leading food retailers’ superstore format: Convenience comparison detailed split, November 2018
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- Figure 90: UK leading food retailers’ smaller supermarkets and discounters: Convenience comparison detailed split, November 2018
- Food and drink categories split
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- Figure 91: Waitrose, Finchley Road, London, Sushi Daily, November 2018
- Figure 92: UK leading food retailers: food and drink categories as a percentage of total space allocated to food and drink, November 2018
Retail Product Mix
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- Figure 93: Leading food retailers, estimated Sales Mix, 2017/18
- Figure 94: Leading food retailers: Category sales as % total sales, 2017
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- Figure 95: Leading food retailers, Sales density by broad category, 2017
- Figure 96: Leading food retailers: Estimated share of key product markets, 2017
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Innovation and Launch Activity
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- Extended non-grocery offering to encourage consumers to visit supermarkets
- Tapping into consumer demand for locally produced food
- Helping customers make healthier food choices when grocery shopping in-store
- Eco-conscious grocery shopping
- Food-to-go experiences
- E-bike grocery home delivery service
- Speeding up the supermarket checkout process
Advertising and Marketing Activity
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- Total sector advertising down 8.2% year on year in 2017
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- Figure 97: Recorded above-the-line, online display and direct mail total advertising expenditure by UK supermarket and online grocers, 2014-18*
- Tesco ramps up advertising spend in 2017
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- Figure 98: Recorded above-the-line, online display and direct mail total advertising expenditure, by leading UK supermarket and online grocers, 2014-17
- Advertising spend peaks around key seasonal events in the retail calendar
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- Figure 99: Recorded above-the-line, online display and direct mail total advertising expenditure by UK supermarket and online grocers, by month, 2016 and 2017
- TV grabs the biggest share of advertising expenditure
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- Figure 100: Percentage media type split of recorded above-the-line, online display and direct mail total advertising expenditure by UK supermarkets and online grocers, 2014-18*
- What we’ve seen so far in 2018
- Nielsen Ad Intel coverage
Brand Research
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- What you need to know
- Brand map
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- Figure 101: Attitudes towards and usage of selected brands, October 2018
- Key brand metrics
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- Figure 102: Key metrics for selected brands, October 2018
- Brand attitudes: Aldi and Lidl’s image highly associated with good value
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- Figure 103: Attitudes, by brand, October 2018
- Brand personality: Co-op moving away from boring sentiment
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- Figure 104: Brand personality – Macro image, October 2018
- Aldi, Lidl and Iceland still regarded as somewhat basic
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- Figure 105: Brand personality – Micro image, October 2018
- Brand analysis
- Another good year for Tesco
- Sainsbury’s/Asda potential branding dilemma
- Asda showing signs of recovery
- Morrisons’ accessibility is improving
- Aldi is positively endorsed
- The Co-op’s brand image overhaul is working
- Lidl still marginally behind Aldi
- M&S Simply Food as stylish as ever
- Iceland pushing eco-credentials
- Exclusivity helps Waitrose stand out
- Ocado is highly recommended
- Amazon widely accessible
Aldi
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- What we think
- Encouraging ‘one-stop shopping’
- Launching in Italy
- Growing harmonisation
- Company background
- Company performance
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- Figure 106: Aldi: estimated group financial performance, 2013-17
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- Figure 107: Aldi: Outlet data, 2013-17
- Retail offering
Asda Group
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- What we think
- Sainsbury’s merger: not the end for the Asda brand but is it good for Sainsbury’s?
- Abandoning price guarantee shouldn’t impact perceptions of competitiveness
- A greater focus on sustainability
- More flexible on customers’ specific needs
- Digital offer refinements
- Company background
- Company performance
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- Figure 108: Asda Group Ltd: Group financial performance, 2013-17
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- Figure 109: Asda Stores Ltd: Breakdown of revenue between sale of goods and fuel, 2013-17
- Figure 110: Asda Group Ltd: Outlet data, 2013-17
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- Figure 111: Asda Group Ltd: Outlets, by type, 2017/18
- Retail offering
The Co-operative Food
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- What we think
- Further move into wholesale brings scale
- Facing a challenge in its traditional territory
- Local sourcing
- Growing closer to the community
- Company background
- Company performance
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- Figure 112: The Co-operative Food: Group financial performance, 2013/14-2017/18
- Figure 113: The Co-operative Food: Outlet data, 2013/14-2017/18
- Retail offering
Iceland Foods
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- What we think
- New-generation high street stores show above-average performance
- Swooping on vacant property to expand Food Warehouse format
- Reaching out to new customers
- Partnership with JD.com to launch an online flagship store in China
- Looking to satisfy demand for vegetarian and vegan options
- Awardwinning Luxury range helping change perceptions of the brand
- Reducing plastic usage
- Bans palm oil from its own-brand foods in UK first
- Company background
- Company performance
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- Figure 114: Iceland Foods Ltd: UK financial performance, 2013/14-2017/18
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- Figure 115: Iceland Foods Ltd: UK outlet data, 2013/14-2017/18
- Retail offering
J Sainsbury (UK)
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- What we think
- ‘Combination’ with Asda has potential to transform the business
- Beauty and clothing sectors targeted for expansion
- Improving payment options to reduce checkout queues
- Delivery enhancements help to refine online offer
- Expanding reach
- More reasons to shop in-store
- Taking full control of Nectar opens up possibilities
- Company background
- Company performance
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- Figure 116: J Sainsbury (UK): Group financial performance, 2013/14-2017/18
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- Figure 117: J Sainsbury (UK): Outlet data, 2013/14-2017/18
- Retail offering
Marks & Spencer (UK food)
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- What we think
- Digital first strategy
- M&S and Decoded open data science academy
- Social-first video content
- Responding to the increasing demand for convenience
- Company background
- Company performance
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- Figure 118: Marks & Spencer (UK food): Group sales performance, 2013/14-2017/18
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- Figure 119: Marks & Spencer (UK Food): food outlets, by format, 2013/14-2017/18
- Figure 120: Marks & Spencer (UK food): Outlet data, 2013/14-2017/18
- Retail offering
Ocado Group
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- What we think
- Sobeys deal
- Kroger deal
- War on plastics
- Food redistribution strategy
- Company background
- Company performance
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- Figure 121: Ocado Group plc: Group financial performance, 2012/13-2016/17
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- Figure 122: Ocado Group plc: Key performance metrics, 2013/14-2017/18
- Retail offering
Schwarz Group
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- What we think
- Tight controls the key
- Problems in fresh foods
- Lessons from the UK
- Online
- Where next?
- Company background
- Company performance
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- Figure 123: Schwarz Group: Group financial performance, 2013/14-2017/18
- Figure 124: Schwarz Group: Outlet data, 2013/14-2017/18
- Retail offering
Spar International
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- What we think
- Focused expansion of ultra-convenient stores in high-footfall locations
- Targeting higher-spending customers with new Market fascia
- Online shopping platforms launched in Austria, Slovenia, France and Russia
- One-click payment solutions to skip the checkout queue
- Capitalising on wellbeing trend
- Enhanced in-store shopping environment
- Reducing the impact of the business on the environment
- Company background
- Company performance
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- Figure 125: Spar International: Western Europe and Central & Eastern Europe retail sales, by country, 2013-17
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- Figure 126: Spar International: Western Europe and Central & Eastern Europe stores, by country, 2013-17
- Figure 127: Spar International: Western Europe and Central & Eastern Europe retail sales area, 2013-17
- Retail offering
Tesco
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- What we think
- Recent performance
- Strategy
- Cutting costs
- Looking for growth – Booker
- Cutting back on general merchandise
- Discounting and Jack’s
- So what could go wrong?
- Where next?
- Company background
- Company performance
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- Figure 128: Tesco: Like-for-like growth, by UK format, Q1 2014/15-Q2 2018/19
- Figure 129: Tesco Central Europe and Asia, like-for-like growth, Q1 2016/17-Q2 2018/19
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- Figure 130: Tesco Plc: Group financial performance, 2013/14-2017/18
- Figure 131: Tesco Plc: Outlet data, 2013/14-2017/18
- Retail offering
Waitrose & Partners
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- What we think
- All in for online
- Improving the in-store experience
- C-store sector looks a struggle
- Environment and plastics a key focus of change
- Health and wellbeing takes centre stage
- Company background
- Company performance
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- Figure 132: Waitrose: Group financial performance, 2013/14-2017/18
- Figure 133: Waitrose: Outlet data, 2013/14-2017/18
- Retail offering
Wm Morrison Group
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- What we think
- Fresh Look store makeover driving supermarket sales growth
- Morrisons.com expands online delivery catchment
- Wholesale extending the reach of Morrisons and making the brand accessible to more consumers
- Voice-enabled shopping through Alexa
- Tapping into meat-free tastes
- Expanded non-food product offering
- War on plastic
- Preparing for Brexit
- Company background
- Company performance
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- Figure 134: Wm Morrison Group: Group financial performance, 2013/14-2017/18
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- Figure 135: Wm Morrison Group: Outlet data, 2013/14-2017/18
- Retail offering
Appendix – Data Sources, Abbreviations and Supporting Information
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- Data sources
- Financial definitions
- Consumer research methodology
- Abbreviations
Appendix – Key Driver Analysis
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- Interpretation of results
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- Figure 136: Overall satisfaction with grocery retailers – Key driver output, July 2018
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- Figure 137: Satisfaction with grocery retailers, July 2018
Appendix – Market Size and Forecast
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- Forecast methodology
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