Food Retailing - UK - November 2009

ISSUES IN THE MARKET
Main themes
Definitions
Financial definitions
 ABBREVIATIONS
FUTURE OPPORTUNITIES
Taking on the hard discounters
A unique experience you only get here
Selling ‘green’ to the recession-conscious consumer
Taking care of the earth won’t cost the earth
MARKET IN BRIEF
Economic background
Implications for the food retailers
Online
The majors
Premium products and ethical attitudes
Convenience retailing
Sector size and forecast
INTERNAL MARKET ENVIRONMENT
Key points
Inflation
Figure 1: Inflation: All items and food and drink, 1988-2009 (Q3)
Industry competition
Convenience stores
Figure 2: UK: C-stores of the leading food retailers, 2008
Store formats – hypermarkets
Green issues
Responses to recession
Growing online sales
For the majors only
Specialists
Figure 3: UK online food retailing sales, 2006-08
Where next?
BROADER MARKET ENVIRONMENT
Key points
Ageing population a major long term problem
Figure 4: UK population forecasts, by age group, 2004-14
The economy
Figure 5: UK GDP growth, 1989-2009
An unusual recession
Where next?
Figure 6: Inflation and wages growth, 2006-09
Retail sales
Figure 7: UK: Year on year retail sales value growth, Jan 2008-Sept 2009
Figure 8: UK: Year on year retail sales volume growth, Jan 2008-Sept 2009
Figure 9: Food price inflation, 2008-09
Consumer confidence
Figure 10: UK: Nationwide Consumer Confidence Index, 2004-09
Figure 11: Proportion of consumers concerned about their finances, 2008-09
THE MARKET IN CONTEXT
Key points
Food retailers – Key markets
Figure 12: UK: Consumer spending on selected major goods categories, 2004-09 (H1)
Food – by far the most important sector
Figure 13: UK: Spending on food as % all consumer spending, 2004-09
Channels of distribution
Figure 14: Food, drink and tobacco – estimated channels of distribution, 2008
Non-foods
Product mix
Figure 15: UK: Food retailers, estimated product mix, 2008
Fuel and other non-retail items
Figure 16: UK fuel sales of the major food retailers, 2008
Food in context – Eating out
Figure 17: Spending on food relative to spending on eating out, 2004-09 (H1)
STRENGTHS AND WEAKNESSES IN THE MARKET
Strengths
Weaknesses
Online – a strength or weakness?
WHO’S INNOVATING?
Key points
Discount brands
e-commerce
Loyalty cards
SECTOR SIZE AND FORECAST
Key points
The present
Food retailers
Where next?
Long term trends
Figure 18: Food retailers sales, 2004-14
Winners and losers
RETAILER COMPETITOR ANALYSIS
Key points
Leading retailers
The market leaders
Hard discounters
Figure 19: UK: Leading food retailers, 2008/09
Evaluation
Market shares
Pitfalls
Figure 20: Leading UK food retailers, estimated non-retail share of sales, 2008
Market leaders
Figure 21: Leading UK food retailers, market shares, 2008
RETAIL ADVERTISING AND PROMOTION
Key points
Trends in total spending on advertising
Figure 22: Main media advertising: Leading supermarkets, 2005-09
Figure 23: UK: Spending on advertising as % of total sales, 2008
Advertising media
Figure 24: Leading retailers’ advertising spend, by medium, 2008
Figure 25: Leading retailers’ advertising split, by media, 2008
Figure 26: UK: Total supermarket spend on advertising, by media, 2005-09*
BRAND ELEMENTS
Key points
 BRAND MAP
Figure 27: Attitudes towards and usage of food retail brands, July 2009
 BRAND QUALITIES OF FOOD RETAIL BRANDS
Tesco rules the roost
Figure 28: Personalities of various food retail brands, July 2009
 EXPERIENCE OF FOOD RETAIL BRANDS
Tesco most popular, Waitrose an occasional treat
Figure 29: Consumer usage of various food retail brands, July 2009
Brand intentions for food retail brands
Tesco has highest retention, Somerfield most considered
Figure 30: Consideration of various food retail brands, July 2009
 BRAND SATISFACTION FOR FOOD RETAIL BRANDS
Top quality, top marks
Figure 31: Satisfaction with various food retail brands, July 2009
 BRAND COMMITMENT TO FOOD RETAIL BRANDS
Repertoire usage is the norm
Figure 32: Commitment to various food retail brands, July 2009
 SAINSBURY’S
What the consumer thinks
Figure 33: Attitudes towards the Sainsbury’s brand, July 2009
 SOMERFIELD
What the consumer thinks
Figure 34: Attitudes towards the Somerfield brand, July 2009
 WAITROSE
What the consumer thinks
Figure 35: Attitudes towards the Waitrose brand, July 2009
 MORRISONS
What the consumer thinks
Figure 36: Attitudes towards the Morrisons brand, July 2009
 LIDL
What the consumer thinks
Figure 37: Attitudes towards the Lidl brand, July 2009
 THE CO-OPERATIVE
What the consumer thinks
Figure 38: Attitudes towards the The Co-operative brand, July 2009
 ASDA
What the consumer thinks
Figure 39: Attitudes towards the ASDA brand, July 2009
 ALDI
What the consumer thinks
Figure 40: Attitudes towards the Aldi brand, July 2009
 MARKS & SPENCER
What the consumer thinks
Figure 41: Attitudes towards the Marks & Spencer brand, July 2009
 TESCO
What the consumer thinks
Figure 42: Attitudes towards the Tesco brand, July 2009
THE CONSUMER – WHO SHOPS WHERE?
Key points
Primary shoppers
Figure 43: Supermarkets used for main grocery shopping, 1998-2009
Figure 44: Profile of primary shoppers, July 2009
Figure 45: Profile of primary shoppers, 1996, 2006 and 2009
Secondary shoppers
Figure 46: Supermarkets used for top-up grocery shopping, July 2009
Figure 47: Profile of secondary shoppers, 2009
WHAT CONSUMERS LOOK FOR IN A FOOD RETAILER
Key points
The shopper wish list
Figure 48: Key attributes of a food retailer, July 2009
Figure 49: Shopping for groceries at the supermarket, by supermarkets used for main grocery shopping, July 2009
Buying online
Figure 50: Shopping for groceries online, by supermarkets used for main grocery shopping, July 2009
Attitudes by secondary shopping habits
Figure 51: Most popular shopping for groceries at the supermarket, by supermarkets used for top-up grocery shopping, July 2009
Figure 52: Next most popular shopping for groceries at the supermarket, by supermarkets used for top-up grocery shopping, July 2009 (continued)
Figure 53: Other shopping for groceries at the supermarket, by supermarkets used for top-up grocery shopping, July 2009 (continued)
CONSUMER ATTITUDES TOWARDS GROCERY SHOPPING
Key points
What consumers like and dislike
Figure 54: Consumer attitudes to stores and branding, July 2009
Figure 55: Grocery shopping attitudes, by age and affluence, 2009
Figure 56: Grocery shopping in general, by supermarkets used for main grocery shopping, July 2009
Consumer attitudes by secondary shopping locations
Figure 57: Most popular grocery shopping in general, by supermarkets used for top-up grocery shopping, July 2009
Figure 58: Next most popular grocery shopping in general, by supermarkets used for top-up grocery shopping, July 2009 (continued)
Figure 59: Other grocery shopping in general, by supermarkets used for top-up grocery shopping, July 2009 (continued)
ALDI (EUROPE)
Figure 60: Aldi (Europe): Sales as share of all food retailers' sales in Europe, 2004-08
Figure 61: Aldi (Germany): Sales as share of all food retailers' sales in Germany, 2004-08
Strategic evaluation
History
Sales performance
Figure 62: Aldi (Europe): Group sales performance, 2004-08
Store portfolio
Figure 63: Aldi (Europe): Outlet data, 2004-08
Retail offering
Market positioning
Brands
Product offer
Pricing
Operational issues
Advertising and marketing
e-commerce and home shopping
ASDA GROUP LTD
Figure 64: Asda Group Ltd: Sales as share of all food retailers’ sales in UK, 2004-08
Strategic evaluation
History
Financial performance
Figure 65: Asda Group Ltd: Group financial performance, 2004-08
Store portfolio
Figure 66: Asda Group Ltd: Outlet data, 2004-08
Retail offering
Market positioning
Brands
Product offer
Pricing
Operational issues
Advertising and marketing
e-commerce and home shopping
CO-OPERATIVE GROUP (FOOD)
Figure 67: Co-operative Group (Food): Sales as share of all food retailers in UK, 2004-08
Strategic evaluation
History
Financial performance
Figure 68: Co-operative Group (Food): Group financial performance, 2004/05-2008/09
Figure 69: Somerfield: Group financial performance, 2003/04-2007/08
Store portfolio
Figure 70: Co-operative Group (Food): Outlet data, 2005-09
Retail offering
Market positioning
Brands
Figure 71: Co-operative Group: Own brands, 2009
Product offer
Pricing
Operational issues
Advertising and marketing
e-commerce and home shopping
ICELAND FOODS LTD
Figure 72: Iceland Foods Ltd: Sales as share of all food retailers in UK, 2004-08
History
Financial performance
Figure 73: Iceland Foods Ltd: Group financial performance, 2004/05-2008/09
Store portfolio
Figure 74: Iceland Foods Ltd: Outlet data, 2005-09
Retail offering
Market positioning
Brands
Product offer
Pricing
Advertising and marketing
e-commerce and home shopping
J SAINSBURY
Figure 75: J Sainsbury: Sales as share of all food retailers in UK, 2004-08
Strategic evaluation
History
Financial performance
Figure 76: J Sainsbury: Group financial performance, 2004/05-2008/09
Figure 77: Sainsbury’s Supermarkets, 2004/05-2008/09
Figure 78: Sainsbury’s Supermarkets, Sales trends, 2004/05-2008/09
Store portfolio
Figure 79: Sainsbury’s Supermarkets: Outlet data, 2004/05-2008/09
Figure 80: Sainsbury’s Supermarkets: Outlets by size, 2004/05-2008/09
Retail offering
Market positioning
Brands
Figure 81: Sainsbury’s Supermarkets: Own brand portfolio 2009
Product offer
Pricing
Advertising and marketing
e-commerce and home shopping
MARKS & SPENCER (FOOD)
Figure 82: Marks & Spencer (food): Sales as share of all food retailers in UK, 2004-08
Recent history
Financial performance
Figure 83: Marks & Spencer (food): Group food sales, 2004/05-2008/09
Store portfolio
Figure 84: Marks & Spencer (food): Outlet data, 2005-09
Retail offering
Market positioning
Brands
Product offer
Pricing
e-commerce and home shopping
WM MORRISON GROUP
Figure 85: Wm Morrison Group: Sales as share of all food retailers in UK, 2004-08
Strategic evaluation
History
Financial performance
Figure 86: Wm Morrison Group: Group financial performance, 2004/05-2008/09
Figure 87: Wm Morrison Group: Sales performance, 2005/06-2008/09
Store portfolio
Figure 88: Wm Morrison Group: Outlet data, 2005-09
Figure 89: Wm Morrison Supermarkets: Store portfolio by size, 2003 and 2007-09
Retail offering
Market positioning
Brands
Product offer
Pricing
Operational issues
Advertising and marketing
e-commerce and home shopping
MUSGRAVE
Figure 90: Musgrave (Republic of Ireland): Sales as share of all food retailers’ sales in Republic of Ireland, 2004-08
Figure 91: Musgrave (UK): Sales as share of all food retailers’ sales in UK, 2004-08
Recent history
Financial performance
Figure 92: Musgrave: Group financial performance, 2004-08
Figure 93: Musgrave: Estimated retail sales breakdown, by market, 2004-08
Figure 94: Musgrave: Percentage of retail sales, by brand, 2008
Store portfolio
Figure 95: Musgrave: Outlet data, 2004-08
Retail offering
Market positioning/Product offer
Figure 96: Musgrave: Fascias, 2009
Brands
Figure 97: Musgrave: Own brand lines, 2009
Operational issues
e-commerce and home shopping
SCHWARZ GROUP
Figure 98: Schwarz Group: Sales as share of all food retailers in Europe, 2004-08
Strategic evaluation
History
Financial performance
Figure 99: Schwarz Group: Estimated Group financial performance, 2005-09
Figure 100: Schwarz Group: Proportion of group sales, 2004-08
Figure 101: Schwarz Group: Estimated proportion of international sales, by market, 2008/09
Store portfolio
Figure 102: Schwarz Group: Estimated outlet data, 2005-09
Figure 103: Schwarz Group: Store formats, 2009
Retail offering
Market positioning
Brands
Product offer
Pricing
Operational issues
Advertising and marketing
e-commerce and home shopping
SPAR INTERNATIONAL
Figure 104: SPAR (Europe): Sales as share of all European food retailers’ sales, 2004-08
Strategic evaluation
History
Figure 105: SPAR International: Year of entry, by country
Financial performance
Figure 106: SPAR International: Retail sales by country, 2004-08
Figure 107: SPAR International: Estimated European sales exclusive of sales tax, 2008
European operations
Figure 108: SPAR (Austria): Sales as share of Austrian food retailers’ sales, 2004-08
Figure 109: SPAR (Belgium): Sales as share of all Belgian food retailers’ sales, 2004-08
Figure 110: SPAR (Croatia): Sales as share of all Croatian food retailers’ sales, 2004-08
Figure 111: SPAR (Czech Republic): Sales as share of all Czech food retailers’ sales, 2004-08
Figure 112: SPAR (Denmark): Sales as share of all Danish food retailers’ sales, 2004-08
Figure 113: SPAR (France): Sales as share of all French food retailers’ sales, 2004-08
Figure 114: SPAR (Germany): Sales as share of all German food retailers’ sales, 2004-08
Figure 115: SPAR (Greece): Sales as share of all Greek food retailers’ sales, 2004-08
Figure 116: SPAR (Hungary): Sales as share of all Hungarian food retailers’ sales, 2004-08
Figure 117: SPAR (Ireland): Sales as share of all Irish food retailers’ sales, 2004-08
Figure 118: SPAR (Italy): Sales as share of all Italian food retailers’ sales, 2004-08
Figure 119: SPAR (Netherlands): Sales as share of all Dutch food retailers’ sales, 2004-08
Figure 120: SPAR (Norway): Sales as share of all Norwegian food retailers’ sales, 2004-08
Figure 121: SPAR (Poland): Sales as share of all Polish food retailers’ sales, 2004-08
Figure 122: SPAR (Romania): Sales as share of all Romanian food retailers’ sales, 2006-08
Figure 123: SPAR (Russia): Sales as share of all Russian food retailers’ sales, 2004-08
Figure 124: SPAR (Slovenia): Sales as share of all Slovenian food retailers’ sales, 2004-08
Figure 125: SPAR (Spain): Sales as share of all Spanish food retailers’ sales, 2004-08
Figure 126: SPAR (Switzerland): Sales as share of all Swiss food retailers’ sales, 2004-08
Figure 127: SPAR (UK): Sales as share of all UK food retailers’ sales, 2004-08
Figure 128: SPAR International: Sales and outlets, by country outside Europe, 2006-08
Store portfolio
Figure 129: SPAR International: Outlet data, 2004-08
Figure 130: SPAR International: Sales per m², by country (Europe), 2008
Figure 131: SPAR International: Store formats, 2009
Retail offering
Market positioning
Product offer
Pricing
Operational issues
Advertising and marketing
e-commerce and home shopping
TESCO
Figure 132: Tesco (Europe): Sales as share of all food retailers’ sales in Europe, 2004-08
Strategic evaluation
History
Financial performance
Figure 133: Tesco Plc: Group financial performance, 2004/05-2008/09
Figure 134: Tesco (UK): Sales as share of all food retailers in UK, 2004-08
Figure 135: Tesco (Czech Rep): Sales as share of all food retailers in Czech Republic, 2004-08
Figure 136: Tesco (Hungary): Sales as share of all food retailers in Hungary, 2004-08
Figure 137: Tesco (Rep. of Ireland): Sales as share of all food retailers in Republic of Ireland, 2004-08
Figure 138: Tesco (Poland): Sales as share of all food retailers in Poland, 2004-08
Figure 139: Tesco (Slovak Rep): Sales as share of all food retailers in Slovak Republic, 2004-08
Store portfolio
Figure 140: Tesco Plc: Outlet data, 2004/05-2008/09
Figure 141: Tesco: UK store formats, 2008/09
Figure 142: Tesco: Other European store formats, 2008/09
Retail offering
Market positioning
Brands
Product offer
Figure 143: Tesco UK: Sales by product category, 2007/08 and 2008/09
Pricing
Advertising and marketing
e-commerce and home shopping
WAITROSE LTD
Figure 144: Waitrose Ltd: Sales as share of all food retailers in UK, 2004-08
History
Financial performance
Figure 145: Waitrose Ltd: Group financial performance, 2004/05-2008/09
Store portfolio
Figure 146: Waitrose Ltd: Outlet data, 2005-09
Retail offering
Market positioning
Brands
Product offer
Pricing
e-commerce and home shopping
APPENDIX – WHO SHOPS WHERE?
Figure 147: Supermarkets used for main grocery shopping, by demographics, July 2009
Figure 148: Most popular supermarkets used for top-up grocery shopping, by demographics, July 2009
Figure 149: Next most popular supermarkets used for top-up grocery shopping, by demographics, July 2009 (continued)
Figure 150: Other supermarkets used for top-up grocery shopping, by demographics, July 2009 (continued)
APPENDIX – WHAT CONSUMERS LOOK FOR IN A FOOD RETAILER
Figure 151: Key attributes of a food retailer, July 2009
Figure 152: Key attributes of a food retailer, July 2009 (continued)
Figure 153: Key attributes of a food retailer, July 2009 (continued)
APPENDIX – CONSUMER ATTITUDES TOWARDS GROCERY SHOPPING
Figure 154: Consumer attitudes towards grocery shopping, July 2009
Figure 155: Consumer attitudes towards grocery shopping, by demographics, July 2009
Figure 156: Consumer attitudes towards grocery shopping, July 2009