The latest title from Mintel Retail Intelligence, 2003 offers you a fresh overview of the market, providing new analysis of:

- market sizes

- supply structures

- major player activities

- market shares

- consumer attitudes

- future trends

- market forecasts

Mintel's assessment of the value of sales in a selection of non-food categories sold by grocery multiples in 2002 points to a figure of some £12.7 billion, representing growth since 1995 of 94%, compared with 20% overall market growth for those categories.

As grocery markets have matured, with annual growth rates reducing across all core product categories, driven by fierce price competition in the sector, retailers have realised that different avenues for growth are required. The food retailers originally looked at non-food as a straightforward opportunity to increase margins. However, they are increasingly taking lower margins as they turn these markets into higher-volume categories. The value message is emphasised in this way and, significantly, non-food margins can be used to subsidise food prices, thereby attracting more shoppers. This has serious implications for food retailers with a more limited non-food offer.

Since 2000, almost every grocery retailer has made non-food sales a priority for expansion. The degree to which they have been able to apply this priority has varied by the volume of sales space they are able to devote to non-food products and the size of the problems they are already facing in managing their existing grocery business. These are the priorities that dictate the pace of development into more non-food sales by UK major food multiple retailers.

In producing this report, Mintel carried out extensive consumer research during February 2000 and February/March 2003 into shopping habits and attitudes relating to non-food buying in the major grocery multiples.

The consumer research highlighted the fact that 40% of respondents would generally prefer to buy expensive non-food products, such as TVs or CD players, from a specialist retailer. Such consumers may be apprehensive about the degree of knowledge and expertise available in supermarkets. However, the response indicates by default that three fifths of consumers would be prepared to buy such products at the supermarket - indicating a high level of potential for such products, which as yet have low penetration levels.

On the other hand, over a third (34%) of respondents agreed that they would be happy to buy clothes for themselves or their family from the supermarket. As penetration levels for clothing are still fairly low (children's/babywear - 17%; womenswear - 16%; menswear - 14%), the response augurs well for the future of clothing in the sector. Asda, with its £1 billion George brand, is clearly well placed to benefit from this trend, while Tesco (with clothing sales of around £350 million), with its Florence and Fred and Cherokee ranges, and Sainsbury's, with its Jeff & Co clothing, are also capitalising on this potential.

In the popularity stakes, with 40% penetration, Tesco came in at 10 percentage points ahead of the next most popular multiple, Asda, in the 2003 research, gaining 2 percentage points over 2000. Asda gained the most percentage points since 2000, however, rising from a penetration of 25% to 30%