Food Retailing - UK - November 2008

Christmas Shopping 2011 and Planning for 2012 - UK - February 2012 -

Key points

Inflation

Figure 1: Inflation: All items and food and drink, 1988-2008

Figure 2: UK: Inflation, food and all items, 2007-08

Competition

The Media campaign

The Competition Commission Inquiry

Store formats – C-stores

Figure 3: UK: C-stores of the leading food retailers, 2008

Store formats – hypermarkets

Green issues

Growing online sales

Figure 4: UK online food retailing sales, 2007

2008

Broader Market Environment

Christmas Shopping 2011 and Planning for 2012 - UK - February 2012 -

Key points

Ageing population a major long term problem

Figure 5: UK population forecasts, by age group, 2003-13

The economy

Figure 6: UK GDP growth, 1989-2008

Consumers being squeezed

Retail sales

Figure 7: UK: Year on year retail sales value growth, Jan 2008-Sept 2008

Figure 8: UK: Year on year retail sales volume growth, Jan 2008-Sept 2008

Consumer confidence

Figure 9: UK: Nationwide Consumer Confidence Index, Jan 2005-Sept 2008

The Market in Context

Christmas Shopping 2011 and Planning for 2012 - UK - February 2012 -

Key points

Food retailers – Key markets

Figure 10: UK: Consumer spending on selected major goods categories, 2003-07

Food – by far the most important sector

Figure 11: UK: Spending on food as % all consumer spending, 2003-07

Figure 12: Food – estimated channels of distribution, 2007

Alcohol and tobacco

Figure 13: Alcohol and tobacco – Estimated channels of distribution, 2007

Non-foods

Product mix

Figure 14: UK: Food retailers, estimated product mix, 2007

Fuel and other non-retail items

Figure 15: UK Fuel sales of the major food retailers, 2007

Food in context – Eating out

Figure 16: Spending on food relative to spending on eating out, 2003-07

Strengths and Weaknesses in the Market

Christmas Shopping 2011 and Planning for 2012 - UK - February 2012 -

Strengths

Weaknesses

Who’s Innovating?

Key points

Tesco’s old age friendly store

Sainsbury’s takes Tu into Homewares

Consumer friendly technology

Organic appeal?

Green matters

A finger in every pie

Sector Size and Forecast

Key points

The future

Figure 17: UK: Food retailers’ sales, 2003-13

Winners and losers

The past

The Consumer – Where They Shop for Groceries

Key points

Note on Research

Timing of the Research

Supermarkets used

Figure 18: Supermarket usage, July 2008

Figure 19: Profile of supermarket users, by age and socio-economic group, July 2008

Winners and losers

Figure 20: UK: Food retailer usage changes, July 2008

Figure 21: UK: Where shoppers who have used stores less have migrated to, July 2008

Figure 22: Net change in customers, July 2008

Profile of retailers by customer loyalty

Figure 23: Profile of shoppers whose usage is unchanged, July 2008

Profile of customers using supermarkets more

Figure 24: Profile of shoppers whose usage has increased, July 2008

Hard discounters

Profile of customers using supermarkets less

Figure 25: Profile of shoppers whose usage has declined, July 2008

Who is suffering

Factors Influencing Where People Shop for Groceries

Christmas Shopping 2011 and Planning for 2012 - UK - February 2012 -

Key points

Key factors

Figure 26: UK: Key preferences in grocery shopping – summary findings, July 2008

The environment

Consumer Attitudes towards Grocery Shopping

Segmenting consumers by attitudes to grocery shopping

Methodology

Figure 27: UK shoppers, by attitudinal group, July 2008

How have shopping habits changed in the last 12 months?

Figure 28: Changes in UK grocery shopping habits over the last 12 months, July 2008

Online – small but growing rapidly

Families switch to own label

Value lines – selective shopping

Premium lines

The squeeze begins to bite

But – have the supermarkets done anything to help?

Objections to online

Loyalty cards

Postscript – celebrities

Brand Elements

Christmas Shopping 2011 and Planning for 2012 - UK - February 2012 -

Brand map

Figure 29: Attitudes and usage of food retailer brands, September 2008

Tesco

What the brand is trying to achieve

What the consumer thinks

Figure 30: Attitudes towards the Tesco brand, September 2008

Sainsbury’s

What the brand is trying to achieve

What the consumer thinks

Figure 31: Attitudes towards the Sainsbury’s brand, September 2008

Asda

What the brand is trying to achieve

What the consumer thinks

Figure 32: Attitudes towards the Asda brand, September 2008

Morrisons

What the brand is trying to achieve

What the consumer thinks

Figure 33: Attitudes towards the Morrisons brand, September 2008

The Co-operative Movement

What the brand is trying to achieve

What the consumer thinks

Figure 34: Attitudes towards the Co-op brand, September 2008

Aldi

What the brand is trying to achieve

What the consumer thinks

Figure 35: Attitudes towards the Aldi brand, September 2008

Brand qualities of food retailers

Tesco dominates, Asda and Sainsbury strong runners up; M&S a powerful niche player

Figure 36: Personalities of various food retailing brands, September 2008

Experience of food retail brands

Tesco dominant, M&S is the strongest for occasional visits

Figure 37: Consumer usage of various food retail brands, September 2008

Brand intentions for food retail brands

Tesco has nowhere left to go, Waitrose excites most interest

Figure 38: Consumer usage of various food retail brands, September 2008

Brand momentum for food retail brands

M&S losing ground

Figure 39: Momentum of various food retail brands, September 2008

Brand motivation for food retail brands

M&S ranks highest for its café

Figure 40: Motivation for choosing various food retail brands, September 2008

Brand satisfaction for food retail brands

M&S and Waitrose the most satisfying

Figure 41: Satisfaction with various food retail brands, September 2008

Brand commitment to food retailer brands

Tesco and Asda have the strongest core of loyal shoppers

Figure 42: Commitment to various food retail brands, September 2008

Round up

Retail Competitor Analysis

Online Grocery Retailing - UK - September 2011 -

Key points

Leading retailers

Tesco, the largest and still gaining

Winners and losers

Hard discounters

Figure 43: UK: Leading food retailers, 2007/08

Evaluation

Market shares

Pitfalls

Figure 44: Leading UK food retailers, estimated non-retail share of sales, 2007

Market leaders

Figure 45: Leading UK food retailers, market shares, 2007

Aldi (Europe)

Figure 46: Aldi (Europe): Sales as share of all food retailers' sales in Europe, 2003-07

Figure 47: Aldi (Germany): Sales as share of all food retailers' sales in Germany, 2003-07

Strategic evaluation

History

Financial performance

Figure 48: Aldi (Europe): Estimated group sales performance, 2003-07

Store portfolio

Figure 49: Aldi (Europe): Outlet data, 2003-07

Retail offering

Market positioning

Product offer

Pricing

Operational issues

Advertising and marketing

e-commerce and home shopping

Asda Stores

Figure 50: Asda Stores Ltd: Sales as share of all food retailers in UK, 2003-07

Strategic evaluation

History

Financial performance

Figure 51: Asda Group: Financial performance, 2003-07

Store portfolio

Figure 52: Asda Group: Outlet data, 2004-08

Figure 53: Asda Group: Outlet numbers by store type, 2005-08

Retail offering

Market positioning

Product offer

Pricing

Advertising and marketing

e-commerce and home shopping

Co-operative Group (Food)

Figure 54: Co-operative Group (Food): Sales as share of all food retailers’ sales in UK, 2003-07

Figure 55: Somerfield: Sales as share of all food retailers’ sales in UK, 2003-07

Strategic evaluation

History

Financial performance

Figure 56: Co-operative Group (food): Financial performance, 2003/04-2007/08

Somerfield

Figure 57: Somerfield: Group financial performance, 2003/04-2007/08

Store portfolio

Figure 58: Co-operative Group: Outlet data, 2004-08

Figure 59: Somerfield: Outlet data, 2003-07

Retail offering

Market positioning

Brands

Figure 60: Co-operative Group: Own brands, 2008

Product offer

Pricing

Operational issues

Advertising and marketing

e-commerce and home shopping

Iceland Foods

Figure 61: Iceland Foods Ltd: Sales as share of all food retailers in UK, 2003-07

History

Financial performance

Figure 62: Iceland Foods: Group financial performance, 2003/04-2007/08

Store portfolio

Figure 63: Iceland Foods Ltd: Outlet data, 2003/04-2007/08

Retail offering

Market positioning

Brands

Pricing

Advertising and marketing

e-commerce and home shopping

J Sainsbury

Christmas Shopping 2011 and Planning for 2012 - UK - February 2012 -

Figure 64: Sainsbury’s Supermarkets: Sales as share of all food retailers in the UK, 2003-07

Strategic evaluation

History

Financial performance

Figure 65: J Sainsbury: Group financial performance, 2003/04-2007/08

Figure 66: Sainsbury’s Supermarkets, 2003/04-2007/08

Figure 67: Sainsbury’s Supermarkets: Sales growth, 2004/05-2007/08

Store portfolio

Figure 68: Sainsbury’s Supermarkets: Outlet data, 2004-08

Figure 69: Sainsbury’s Supermarkets: Outlets by size, 2004-08

Retail offering

Market positioning

Brands

Figure 70: Sainsbury’s Supermarkets: Own brand portfolio

Product offer

Pricing

Advertising and marketing

e-commerce and home shopping

Marks & Spencer (food)

Online Grocery Retailing - UK - September 2011 -

Figure 71: Marks & Spencer (food): Sales as share of all food retailers in UK, 2003-07

Recent history

Financial performance

Figure 72: Marks & Spencer (food): Like-for-like sales performance, 2007/08-2008/09

Figure 73: Marks & Spencer (food): Group financial performance, 2003/04-2007/08

Store portfolio

Figure 74: Marks & Spencer (food): Outlet data, 2004-08

Retail offering

Market positioning

Brands

Product offer

Pricing

Operational issues

Advertising and marketing

e-commerce and home shopping

Wm Morrison Supermarkets

Figure 75: Wm Morrison group: Sales as share of all food retailers' sales in UK, 2003-07

Strategic evaluation

History

Financial performance

Figure 76: Wm Morrison group: Financial performance, 2004/05-2007/08

Store portfolio

Figure 77: Wm Morrison Supermarkets: Outlet data, 2004-08

Figure 78: Wm Morrison Supermarkets: Store portfolio by size, 2003, 2007 and 2008

Retail offering

Market positioning

Brands

Product offer

Pricing

Operational issues

Advertising and marketing

e-commerce and home shopping

Musgrave

Figure 79: Musgrave (Ireland): Sales as share of all food retailers’ sales in Ireland, 2003-07

Figure 80: Musgrave (UK): sales as share of all food retailers’ sales in the UK, 2003-07

Recent history

Financial performance

Figure 81: Musgrave: Group financial performance, 2003-07

Figure 82: Musgrave: Estimated retail sales by market, 2003-07

Figure 83: Musgrave: Percentage of retail sales by brand, 2007

Store portfolio

Figure 84: Musgrave: Main formats outlet data, 2003-07

Retail offering

Market positioning

Brands

Figure 85: Musgrave: Breakdown of brand lines, 2008

Product offer

Operational issues

e-commerce and home shopping

Ocado

Figure 86: Ocado Ltd: Sales as share of all food retailers in UK, 2003-07

History

Financial performance

Figure 87: Ocado Ltd: Group financial performance, 2003-07

Retail offering

Operational issues

Schwarz Group

Figure 88: Schwarz Group: Estimated sales as share of all food retailers’ sales in Europe, 2003-07

Figure 89: Schwarz Group: Estimated sales as share of all food retailers’ sales in Germany, 2003-07

Figure 90: Schwarz Group: Estimated sales as share of all food retailers’ sales in France, 2003-07

Strategic evaluation

History

Financial performance

Figure 91: Schwarz Group: Estimated group sales, 2003/04-2007/08

Figure 92: Schwarz Group: German operations’ share of group sales, by fascia, 2003/04-2007/08

Figure 93: Schwarz Group: Estimated share in group international sales by market, 2007/08

Store portfolio

Figure 94: Schwarz Group: Store portfolio, Germany vs international, 2003/04-2007/08

Figure 95: Schwarz Group: Store formats, 2008

Recent developments

Figure 96: Schwarz Group: Outlet data, 2004-08

Retail offering

Market positioning

Brands

Product offer

Pricing

Operational issues

Advertising and marketing

e-commerce and home shopping

SPAR International

Figure 97: SPAR (Europe): Sales as share of all European food retailers’ sales, 2003-07

Strategic evaluation

History

Figure 98: SPAR International: Year of entry by country

Financial performance

Figure 99: SPAR International: Retail sales by country, 2003-07

Figure 100: SPAR International: Estimated European sales exclusive of sales tax, 2007

European operations

Figure 101: SPAR (Austria): Sales as share of Austrian food retailers’ sales, 2003-07

Figure 102: SPAR (Belgium): Sales as share of all Belgian food retailers’ sales, 2003-07

Figure 103: SPAR (Croatia): Sales as share of all Croatian food retailers’ sales, 2005-07

Figure 104: SPAR (Czech Republic): Sales as share of all Czech food retailers’ sales, 2003-07

Figure 105: SPAR (Denmark): Sales as share of all Danish food retailers’ sales, 2003-07

Figure 106: SPAR (France): Sales as share of all French food retailers’ sales, 2003-07

Figure 107: SPAR (Germany): Sales as share of all German food retailers’ sales, 2003-07

Figure 108: SPAR (Greece): Sales as share of all Greek food retailers’ sales, 2003-07

Figure 109: SPAR (Hungary): Sales as share of all Hungarian food retailers’ sales, 2003-07

Figure 110: SPAR (Ireland): Sales as share of all Irish food retailers’ sales, 2003-07

Figure 111: SPAR (Italy): Sales as share of all Italian food retailers’ sales, 2003-07

Figure 112: SPAR (Netherlands): Sales as share of all Dutch food retailers’ sales, 2003-07

Figure 113: SPAR (Norway): Sales as share of all Norwegian food retailers’ sales, 2003-07

Figure 114: SPAR (Poland): Sales as share of all Polish food retailers’ sales, 2003-07

Figure 115: SPAR (Russia): Sales as share of all Russian food retailers’ sales, 2003-07

Figure 116: SPAR (Slovenia): Sales as share of all Slovenian food retailers’ sales, 2003-07

Figure 117: SPAR (Spain): Sales as share of all Spanish food retailers’ sales, 2003-07

Figure 118: SPAR (Switzerland): Sales as share of all Swiss food retailers’ sales, 2003-07

Figure 119: SPAR (UK): Sales as share of all UK food retailers’ sales, 2003-07

Figure 120: SPAR International: Sales and outlets by country outside Europe, 2001 and 2006-07

Store portfolio

Figure 121: SPAR International: Outlet data, 2003-07

Figure 122: SPAR International: Sales per m² by country (Europe), 2007

Figure 123: SPAR International: Store formats, 2008

Retail offering

Market positioning

Product offer

Pricing

Operational issues

Advertising and marketing

e-commerce and home shopping

Tesco

Figure 124: Tesco (Europe): Sales as share of all food retailers in Europe, 2003-07

Strategic evaluation

History

Financial performance

Figure 125: Tesco Plc: Group financial performance, 2003/04-2007/08

Figure 126: Tesco (UK): Sales as share of all food retailers in UK, 2003-07

Figure 127: Tesco (Czech Rep): Sales as share of all food retailers in Czech Republic, 2003-07

Figure 128: Tesco (Hungary): Sales as share of all food retailers in Hungary, 2003-07

Figure 129: Tesco (Ireland): Sales as share of all food retailers in Ireland, 2003-07

Figure 130: Tesco (Poland): Sales as share of all food retailers in Poland, 2003-07

Figure 131: Tesco (Slovak Rep): Sales as share of all food retailers in Slovak Republic, 2003-07

Store portfolio

Figure 132: Tesco Plc: Outlet data, 2003/04-2007/08

Figure 133: Tesco: UK store formats, 2007/08

Figure 134: Tesco: European store formats, 2007/08

Figure 135: Tesco: Asian store formats, 2007/08

Retail offering

Market positioning

Brands

Product offer

Figure 136: Tesco UK: Sales by product, 2006/07 and 2007/08

Pricing

Advertising and marketing

e-commerce and home shopping

Waitrose

Figure 137: Waitrose Ltd: Sales as share of all food retailers in UK, 2003-07

History

Financial performance

Figure 138: Waitrose Ltd: Group financial performance, 2003/04-2007/08

Store portfolio

Figure 139: Waitrose Ltd: Outlet data, 2003/04-2007/08

Retail offering

Market positioning

Brands

Product offer

Pricing

Operational issues

Advertising and marketing

e-commerce and home shopping

Retail Advertising and Promotion

Key points

Trends in total spending on advertising

Figure 140: Main media advertsising: Leading supermarkets, 2004-08 (H1)

Figure 141: Total advertising spending, 2004-08 (H1)

Figure 142: UK: Spending on advertising as % total sales, 2007

Advertising media

Figure 143: Leading retailers’ advertising spend, by medium, 2007

Figure 144: Leading retailers’ advertising split by media, 2007

Figure 145: UK: Total supermarket spend on advertising, by media, 2004-08 (H1)

Appendix: Where They Shop For Groceries

Figure 146: Regular shoppers, by demographic, July 2008

Figure 147: How regular shoppers have changed their shopping habits in the last year, July 2008

Figure 148: Demographics for how the frequency of shopping at each outlet has changed in the past 12 months, July 2008

Figure 149: Demographics for how the frequency of shopping at each outlet has changed in the past 12 months, July 2008

Figure 150: Demographics for how the frequency of shopping at each outlet has changed in the past 12 months, July 2008

Figure 151: Demographics for how the frequency of shopping at each outlet has changed in the past 12 months, July 2008

Figure 152: Demographics for how the frequency of shopping at each outlet has changed in the past 12 months, July 2008

Figure 153: Demographics for how the frequency of shopping at each outlet has changed in the past 12 months, July 2008

Figure 154: Demographics for how the frequency of shopping at each outlet has changed in the past 12 months, July 2008

Appendix: Factors Influencing Where People Shop for Groceries

Consumer preferences: Detail demographics

Figure 155: Key preferences for grocery shopping, by detailed demographics, July 2008

Appendix: Consumer Attitudes towards Grocery Shopping