Food Retailing - UK - November 2011

INTRODUCTION
ONS data and definitions
Financial definitions
Abbreviations
EXECUTIVE SUMMARY
The market
Tough times
Food retailers
Forecast
Figure 1: Food retailers’ sales, 2006-16
The big get bigger
Competition – smoke and mirrors
Online
Non-foods and services
The consumer
Customer profiles
Figure 2: UK: Profile of primary shoppers of main supermarkets, August 2011
What drives store choice?
Supermarkets and the recession
Figure 3: Consumers: “How do you feel about your finances?”, by supermarkets used, July 2011
Consumers and the recession
Figure 4: Consumer attitudes towards grocery shopping, August 2011
Companies, brands and innovation
Brands
Leading retailers
Figure 5: Channels of distribution for food and drink, 2010 (est)
Figure 6: Top 5 food retailers, Market share, 2010
What we think
ISSUES IN THE MARKET
What size store?
The superstore – discounter dynamic
Appearance or reality?
To take some recent examples:
The end of the line for loyalty cards?
Building trust
FUTURE OPPORTUNITIES
 SURVIVAL SKILLS
 GUIDING CHOICE
WHO’S INNOVATING?
Shopping experience
Specialist skills on show
Figure 7: Marks & Spencer (food): High Street, Kensington, store
Inspire trend: Experience Is All
Self-scanning
Figure 8: Tesco shopping wall in South Korea
Asda supermarket
Figure 9: Asda Supermarket, Harrow
Broadening the offer
International brands
Moves into food service
Promotions
Checkout coupons
Pre-pay discounts
Inspire trend: Let’s Make A Deal
THE MARKET: ECONOMIC BACKGROUND
Key points
Population forecast
Figure 10: UK: Over 65s as % total UK population, 1991-2020
The economy
Figure 11: UK: Quarterly GDP growth, 1991-2011 (Q3)
Figure 12: UK: GfK NOP Consumer confidence index, January 2007-October 2011
Inflation
Figure 13: Inflation in food and other major categories, 2006-11 (Sept)
Figure 14: Percentage change in Retail Prices Index vs Earnings, 2008-11
THE MARKET: CONSUMER SPENDING ON GROCERIES
Key points
Food spending in context
Figure 15: UK: Consumer spending on selected major food categories, 2006-10
Figure 16: UK: Comparison of spending on food and other major categories, 2006-10
Food vs all consumer spend
Figure 17: Spending on food and drink as % all consumer spending, 2006-11
Food vs eating out
Figure 18: Spending on food relative to spending on eating out, 2005-10
THE MARKET: FOOD RETAILERS’ PRODUCT MIX
Product mix
Figure 19: UK: Food retailers, product mix, 2010 (est)
THE MARKET: SECTOR SALES AND FORECAST
Figure 20: Food retailers’ sales* at current and constant prices, 2006-16
Figure 21: Food retailers’ sales, 2006-16
Forecast methodology
THE RETAILERS: CHANNELS OF DISTRIBUTION
Key points
Figure 22: Food, drink and tobacco – channels of distribution, 2010 (est)
THE RETAILERS: LEADING RETAILERS
Key points
A tough climate
Quality counts
Hard discounters and Iceland
Convenience stores
Figure 23: UK: Leading Food Retailers, 2010/11
THE RETAILERS: MARKET SHARES
Key points
Figure 24: Leading UK food retailers, estimated non-retail share of sales, 2009 and 2010
Figure 25: Leading UK food retailers’ market shares as share of all food retail specialists’ sales, 2009 and 2010
THE RETAILERS: ONLINE
Key points
Who shops online?
Figure 26: Proportion of adult population shopping online, 2003-11 (July)
Figure 27: Online groceries: Age profile of shoppers, 2006 and 2011
Figure 28: Internet penetration, 2001-11
Major players
Market size
Figure 29: UK: Food retailers’ Online sales, 2009-11(est)
Internet usage
Figure 30: UK: Top 20 transactional food and drink websites, by number of visits, August 2011
Figure 31: UK: Growth in unique visitor numbers year-on-year for the top 5 transactional food and drink websites, January 2010-September 2011
THE RETAILERS: ADVERTISING AND PROMOTION
Key points
Strong growth in ad spend
Figure 32: Main media advertising spend, by leading grocery retailers, 2007-10
Spending relative to turnover
Figure 33: Leading grocers’ advertising spending as % of turnover, 2007-10
Spending by media
Figure 34: Leading grocers’ main media advertising distribution, by media, 2010
Advertising content
THE CONSUMER: BRAND RESEARCH
Brand map
Figure 35: Attitudes towards and usage of food retail brands, August 2011
Brand attitudes
Figure 36: Attitudes by food retail brand, August 2011
Brand personality
Figure 37: Food retail brand personality – macro image, August 2011
Figure 38: Food retail brand personality – micro image, August 2011
Correspondence analysis
Brand experience
Figure 39: Food retail brand usage, August 2011
Figure 40: Satisfaction with various food retail brands, August 2011
Figure 41: Consideration of food retail brands, August 2011
Figure 42: Consumer perceptions of current food retail brand performance, August 2011
Figure 43: Food retail brand recommendation – Net Promoter Score, August 2011
Brand index
Figure 44: Food retail brand index, August 2011
Figure 45: Food retail brand index vs. recommendation, August 2011
Target group analysis
Figure 46: Target groups, August 2011
Figure 47: Food retail brand usage, by target groups, August 2011
Figure 48: Food retail brand usage, by target groups, August 2011
Group One – Conformists
Group Two – Simply the Best
Group Three – Shelf Stalkers
Group Four – Habitual Shoppers
Group Five – Individualists
THE CONSUMER – WHO SHOPS WHERE?
Key points
Primary shoppers
Figure 49: Usage of outlets for main grocery shop, August 2011
Figure 50: UK: Profile of primary shoppers of main supermarkets, August 2011
Figure 51: UK: Profile of primary shoppers of main supermarkets, 2006 and 2011
Secondary shoppers
Figure 52: Usage of supermarkets for top up shop, August 2011
Figure 53: UK: Profile of secondary shoppers, August 2011
Store usage 2006-11
Figure 54: Usage of superstores for primary shopping trips, 2006 and 2011
Figure 55: Usage of stores for secondary shopping trips, 2006 and 2011
Type of stores used
Figure 56: Great Britain: Shops used regularly/occasionally, 2009 and 2010
THE CONSUMER – THE KEY FACTORS FOR CHOOSING A STORE
Key points
Figure 57: Aspects most important when you do your main grocery shop, August 2011
Figure 58: Usage of outlets for main shop, by aspects most important when you do your main grocery shop, August 2011
Figure 59: Aspects most important when you do your main grocery shop, by usage of supermarkets for main shop, August 2011
Factors in choosing a supermarket
Figure 60: Deciding factors in shopping for food, drink and household products, GB, 2010
THE CONSUMER – ATTITUDES TOWARDS GROCERY SHOPPING
Key points
Figure 61: Consumer attitudes towards grocery shopping, August 2011
Figure 62: Profile of consumers with particular attitudes, August 2011
Attitudes vs shops used
Figure 63: Consumer attitudes towards grocery shopping, by usage of supermarkets for main shop, August 2011
ALDI (UK)
Strategic evaluation
Figure 65: Aldi: Stores per million capita in selected European countries, 2010
Background
Company performance
Figure 66: Aldi (Europe): Group sales performance, 2006-10
Figure 67: Aldi (Europe): Outlet data, 2006-10
Store format
Consumer profile
Figure 68: Aldi: Primary shoppers, by gender, age and socio-economic group, August 2011
Figure 69: Aldi: Primary shoppers, by region and acorn group, August 2011
Figure 70: Aldi Secondary Shoppers – socio-demographic profile, August 2011
Figure 71: Aldi: Secondary shoppers, by region and acorn group, August 2011
Retail offering
E-commerce and home shopping
ASDA GROUP
Strategic evaluation
Sales development lags behind its rivals
Discounter danger
Smaller stores, bigger expansion potential
Prospects
Background
Company performance
Figure 73: Asda Group Ltd: Group financial performance, 2006-10
Figure 74: Asda Group Ltd: Outlet data, 2006-10
Store formats
Smaller stores
Customer profile
Figure 75: Asda: Primary shoppers, by gender, age and socio-economic group, August 2011
Figure 76: Asda: Primary shoppers, by region and acorn group, August 2011
Figure 77: Asda Secondary Shoppers – socio-demographic profile, August 2011
Figure 78: Asda: Secondary shoppers, by region and acorn group, August 2011
Retail offering
e-commerce and home shopping
Figure 79: Asda.co.uk: Online consumer demographics, three month average to August 2011
CO-OPERATIVE GROUP (FOOD)
Strategic evaluation
The new estate
Shouting louder
Misjudged campaign
Background
Company performance
Figure 81: Co-operative Group (Food): Group financial performance, 2006/07-2010/11
Figure 82: Co-operative Group (Food): Group financial performance, H1 2010 and h1 2011
Figure 83: Co-operative Group (Food): Outlet data, 2007/11
Consumer profile
Figure 84: Co-operative Group (Food): Secondary-shop consumer profile by gender, age, socio-economic group, August 2011
Figure 85: Co-operative Group (Food): Secondary-shop consumer profile by location, August 2011
Figure 86: Co-operative Group (Food): Secondary-shop consumer profile by ACORN classification, 2011
Retail offering
E-commerce and home shopping
ICELAND FOODS
Strategic evaluation
Recent ownership developments
Background
Company performance
Figure 88: Iceland Foods Ltd: Group financial performance, 2006/07-2010/11
Figure 89: Iceland Foods Ltd: Outlet data, 2006/07-2010/11
Consumer profiles
Figure 90: Iceland Foods Ltd: Consumer profile, by gender, age, socio-economic group, August 2011
Figure 91: Iceland Foods Ltd: Consumer profile, by location, August 2011
Figure 92: Iceland Foods Ltd: Consumer profile by ACORN classification, August 2011
Retail offering
E-commerce and home shopping
J SAINSBURY
Strategic evaluation
Strong performance
Figure 94: Sainsbury’s Supermarkets: Sales growth, 2006/07-2010/11
Expansion underpins growth
Looking to catch up in non-food
Convenience stores good fit with online
Intensifying price competition
Background
Company performance
Figure 95: Sainsbury’s Supermarkets, 2006/07-2010/11
Figure 96: Sainsbury’s Supermarkets: Outlet data, 2006/07-2010/11
Store formats
Figure 97: Sainsbury’s Supermarkets: Outlets by size, 2006/07-2010/11
Consumer profile
Figure 98: Sainsbury’s: Primary shoppers, by gender, age and socio-economic group, August 2011
Figure 99: Sainsbury’s: Primary shoppers, by region and acorn group, August 2011
Figure 100: Sainsbury’s: Secondary shoppers – socio-demographic profile, August 2011
Figure 101: Sainsbury’s: Secondary shoppers, by region and acorn group, August 2011
Retail offering
e-commerce and home shopping
Figure 102: Sainsburys.co.uk: Online consumer demographics, three month average to August 2011
MARKS & SPENCER (FOOD)
Strategic evaluation
Figure 104: Marks & Spencer (food): High Street, Kensington, store
Background
Company performance
Figure 105: Marks & Spencer (food): Group sales performance, 2006/07-2010/11
Figure 106: Marks & Spencer (food): Outlet data, 2007/11
Store formats
Figure 107: Marks & Spencer (food): UK outlet data, 2007/11
Consumer profile
Figure 108: M&S (Food): Consumer profile, by gender, age, socio-economic group, August 2011
Figure 109: M&S (Food): Consumer profile, by location, August 2011
Figure 110: M&S (Food): Consumer profile by ACORN classification, August 2011
Retail offering
E-commerce and home shopping
OCADO
Strategic evaluation
Intense competition
IPO boosts funding
Background
Company performance
Figure 112: Ocado: Group financial performance, 2005/06-2009/10
Distribution
Retail offering
Product mix
Figure 113: Ocado: Product mix, by number of lines, 2011
E-commerce and home shopping
Figure 114: Ocado.com: Online consumer demographics, three month average to August 2011
SCHWARZ GROUP (UK)
Strategic evaluation
Roller coaster ride
Improving choice
Avoiding risks
Opportunities closer to home
Other investments
Background
Company performance
Figure 116: Schwarz Group: Estimated group sales performance, 2006/07-2010/11
Figure 117: Schwarz Group: Estimated outlet numbers, 2007/11
Consumer profile
Figure 118: Lidl: Secondary shoppers, by gender, age and socio-economic group, August 2011
Figure 119: Lidl: Secondary shoppers by region and acorn group, August 2011
Retail offering
e-commerce
SPAR INTERNATIONAL
Strategic evaluation
Rationalisation and the recovery
Background
Figure 121: SPAR International: Year of entry, by country
Company performance
Figure 122: SPAR International: Retail sales by country, 2006-10
Figure 123: SPAR International: Estimated European sales exclusive of sales tax, 2010
Figure 124: SPAR International: Outlet data, 2006-10
Figure 125: SPAR International: Sales per m², by country (Europe), 2010
European operations
Figure 126: SPAR (Austria): Sales as share of Austrian food retailers’ sales, 2006-10
Figure 127: SPAR (Belgium): Sales as share of all Belgian food retailers’ sales, 2006-10
Figure 128: SPAR (Croatia): Sales as share of all Croatian food retailers’ sales, 2006-10
Figure 129: SPAR (Czech Republic): Sales as share of all Czech food retailers’ sales, 2006-10
Figure 130: SPAR (Denmark): Sales as share of all Danish food retailers’ sales, 2006-10
Figure 131: SPAR (France): Sales as share of all French food retailers’ sales, 2006-10
Figure 132: SPAR (Germany): Sales as share of all German food retailers’ sales, 2006-10
Figure 133: SPAR (Greece): Sales as share of all Greek food retailers’ sales, 2006-10
Figure 134: SPAR (Hungary): Sales as share of all Hungarian food retailers’ sales, 2006-10
Figure 135: SPAR (Ireland): Sales as share of all Irish food retailers’ sales, 2006-10
Figure 136: SPAR (Italy): Sales as share of all Italian food retailers’ sales, 2006-10
Figure 137: SPAR (Netherlands): Sales as share of all Dutch food retailers’ sales, 2006-10
Figure 138: SPAR (Norway): Sales as share of all Norwegian food retailers’ sales, 2006-10
Figure 139: SPAR (Poland): Sales as share of all Polish food retailers’ sales, 2006-10
Figure 140: SPAR (Romania): Sales as share of all Romanian food retailers’ sales, 2006-10
Figure 141: SPAR (Russia): Sales as share of all Russian food retailers’ sales, 2006-10
Figure 142: SPAR (Slovenia): Sales as share of all Slovenian food retailers’ sales, 2006-10
Figure 143: SPAR (Spain): Sales as share of all Spanish food retailers’ sales, 2006-10
Figure 144: SPAR (Switzerland): Sales as share of all Swiss food retailers’ sales, 2006-10
Figure 145: SPAR (UK): Sales as share of all UK food retailers’ sales, 2006-10
Figure 146: SPAR International: Sales and outlets, by country outside Europe, 2007-10
Store formats
Figure 147: SPAR International: Store formats, 2010
Retail offering
e-commerce and home shopping
TESCO
Strategic evaluation
Be careful not to overstate the problems
Clubcard
Loyalty
The “£500m campaign”
The end of Clubcard?
The limits of growth
Overseas
Time to be optimistic
Background
Company performance
Figure 149: Tesco Plc: Group financial performance, 2006/07-2010/11
Figure 150: Tesco: Like-for-like sales growth, 26 weeks to Aug 2011
Figure 151: Tesco Plc: Outlet data, 2007/11
Performance by country
UK
Figure 152: UK: Sales as share of all food retailers’ sales, 2006-10
Czech Republic
Figure 153: Czech Republic: Sales as share of all food retailers’ sales, 2006-10
Hungary
Figure 154: Hungary: Sales as share of all food retailers sales, 2006-10
Poland
Figure 155: Poland: Sales as % all food retailers’ sales, 2006-10
Ireland
Figure 156: Ireland: Sales as % all food retailers’ sales, 2006-10
Turkey
Store formats
Figure 157: Tesco: UK store formats, 2010/11
Figure 158: Tesco: Other European store formats, 2010/11
Consumer profile
Primary shoppers
Figure 159: Tesco - Primary shoppers by gender, age and socio-economic group, August 2011
Figure 160: Tesco - Primary shoppers, by region, August 2011
Figure 161: Tesco - Primary shoppers, by Acorn classification, August 2011
Consumer profile – secondary shoppers
Figure 162: Tesco - Secondary Shoppers – by gender, age and socio-economic group, August 2011
Figure 163: Tesco - Secondary Shoppers – by region, August 2011
Figure 164: Tesco - Secondary Shoppers, by Acorn classification, August 2011
Retail offering
Figure 165: Tesco UK: Sales, by product category, 2009/10-2010/11
e-commerce and home shopping
Figure 166: Tesco: Online consumer demographics, three month average to August 2011
WAITROSE
Strategic evaluation
Star performer
New stores and variety in the offer
Rolling out online
Background
Company performance
Figure 168: Waitrose Ltd: Group financial performance, 2006/07-2010/11
Figure 169: Waitrose Ltd: Outlet data, 2006/07-2010/11
Consumer profile
Figure 170: Waitrose: Secondary shoppers - by gender, age and socio-economic group, August 2011
Figure 171: Waitrose: Secondary shoppers - by region and acorn group, August 2011
Retail offering
E-commerce and home shopping
Figure 172: Waitrose.com: Online consumer demographics, three month average to August 2011
WM MORRISON GROUP
Strategic evaluation
Slowly diversifying channels
Innovations – and flexibility
Figure 174: Wm Morrison Group: ‘Lab’ store, Kirkstall, Leeds
Revitalising own brands
Background
Company performance
2010/11
Figure 175: Wm Morrison Group: Group financial performance, 2006/07-2010/11
Figure 176: Wm Morrison Group: Sales breakdown, 2006/07-2010/11
Figure 177: Wm Morrison Group: Annual sales growth excluding fuel, 2006/07-2010/11
Figure 178: Wm Morrison Group: Sales breakdown, H1 2010/11 and H1 2011/12
Figure 179: Wm Morrison Group: Outlet data, 2006/07-2010/11
Figure 180: Wm Morrison Group: Outlet data by region, 2010 and 2011
Store formats
Figure 181: Wm Morrison Group: Store portfolio by size, 2007-11
Consumer profile
Figure 182: Wm Morrison Group: Consumer profile by gender, age, socio-economic group, August 2011
Figure 183: Wm Morrison Group: Consumer profile by location, August 2011
Figure 184: Wm morrison Group: Consumer profile, by ACORN classification, August 2011
Retail offering
E-commerce and home shopping
Figure 185: Wm Morrison Group: Online consumer demographics, three month average to August 2011
APPENDIX – THE MARKET
Population
Figure 186: Europe: Population, by age group, 2005
Figure 187: Europe: Population, by age group, 2010
Figure 188: Europe: Population, by age group, 2015
Figure 189: Europe: Population, by age group, 2020
GDP
Figure 190: Europe: GDP (current prices), 2010
Figure 191: Europe: GDP growth rates (current prices), 2001-Q3 2011
Figure 192: Europe: GDP growth rates (constant prices), 2001 – Q3 2011
Consumer spending
Figure 193: Europe: Households’ consumer spending (current prices), 2010
Figure 194: Europe: Households’ consumer spending growth rates (current prices), 2001- Q3 2011
Figure 195: Europe: Households’ consumer spending growth rates (constant prices), 2001-Q3 2011
Consumer prices
Figure 196: Europe: Harmonised index of consumer prices, 2001-10
Unemployment
Figure 197: Europe: Average rate of unemployment, 2001-10
Interest rates
Figure 198: Europe: Interest rates, 2005 -Q3 2011
Consumer confidence
Figure 199: Europe: Consumer confidence, Sep 2010 -Aug 2011
APPENDIX – THE CONSUMER – BRAND RESEARCH
Figure 200: Store usage, August 2011
Figure 201: Store commitment, August 2011
Figure 202: Store momentum, August 2011
Figure 203: Store diversity, August 2011
Figure 204: Store satisfaction, August 2011
Figure 205: Store recommendation, August 2011
Figure 206: Store attitude, August 2011
Figure 207: Store image – macro image, August 2011
Figure 208: Store image – micro image, August 2011
Figure 209: Profile of target groups, by demographic, August 2011
Figure 210: Psychographic segmentation, by target group, August 2011
Figure 211: Store usage, by target group, August 2011
Brand index
Figure 212: Store index
APPENDIX – THE CONSUMER – WHO SHOPS WHERE?
Figure 213: Usage of supermarkets for main shop, by demographics, August 2011
Figure 214: Most popular usage of supermarkets for top up shop, by demographics, August 2011
Figure 215: Next most popular usage of supermarkets for top up shop, by demographics, August 2011
APPENDIX – THE CONSUMER – KEY FACTORS FOR CHOOSING A STORE
Figure 216: Aspects most important when you do your main grocery shop, by demographics, August 2011
APPENDIX – THE CONSUMER – ATTITUDES TOWARDS GROCERY SHOPPING
Figure 217: Most popular consumer attitudes towards grocery shopping, by demographics, August 2011
Figure 218: Next most popular consumer attitudes towards grocery shopping, by demographics, August 2011
Figure 219: Other consumer attitudes towards grocery shopping, by demographics, August 2011