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
- Real incomes now falling
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- Figure 1: Real incomes: CPIH versus annual weekly earnings (excluding bonuses) Jan 2014-Oct 2017
- Consumer spending on food and drink accelerates
- Grocery retail sales return to more substantial growth
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- Figure 2: All food retail sales (incl. VAT), 2012-22
- Supermarkets sales also expected to return to growth…
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- Figure 3: Supermarkets’ market size and forecast (inc. VAT), 2012-22
- …but are likely to continue to lose share of spending
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- Figure 4: Estimated channels of distribution for grocery retail sales, 2016
- Leading retailers
- Tesco remains the dominant player
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- Figure 5: Leading grocery retailers: share of all grocery retail sales, 2016
- Aldi and Lidl continue to gain ground
- Tesco continues to recover its brand image
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- Figure 6: Attitudes towards and usage of selected brands, September 2017
- The consumer
- Levels of top-up shopping continue to rise
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- Figure 7: Grocery shopping behaviour, September 2015-17
- A majority continue to spend the most in supermarkets
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- Figure 8: Types of stores where consumers spend the most, September 2016 and 2017
- Meal planning influences shopping behaviour
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- Figure 9: How grocery shoppers plan meals in advance, September 2017
- Tesco the most used retailer in the UK
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- Figure 10: Grocery retailers used for primary and secondary shops, September 2017
- Nine in ten supermarket shoppers purchase non-foods
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- Figure 11: Types of non-foods purchased in supermarkets, September 2017
- Consumers have noticed price rises
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- Figure 12: Attitudes to pricing and trading down, September 2017
- What we think
Issues and Insights
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- This season’s must have accessory: wholesale
- The facts
- The implications
- Trading up/down/sideways: What falling real incomes could mean for the sector
- The facts
- The implications
- Amazon and Whole Foods: for now file under ‘potential’
- The facts
- The implications
The Market – What You Need to Know
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- Inflation continues to grow…
- …meaning real incomes are now falling
- Consumer spending on food and drink accelerates
- Grocery retail sales return to more substantial growth
- Supermarkets sales also expected to return to growth…
- …but are likely to continue to lose share of spending
Market Drivers
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- Inflation rises
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- Figure 13: Food and drink inflation, 2012- October17
- Consumer spending power falls
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- Figure 14: Average weekly earnings by consumer price index, Jan 2014-Sep 2017
- Consumer confidence has taken a hit but is holding up overall
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- Figure 15: Consumer confidence: current financial situation vs sentiment for the coming year, Jan 2014 – Sep 2017
- Private renting increases
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- Figure 16: UK household tenure status, 2011-16
Consumer Spending on Food and Drink
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- Figure 17: Consumer spending on core food and drink categories, 2012-17
- Spending on food
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- Figure 18: Annual % change in the value, volume and prices in the food category, 2012-17
- How food spending breaks down
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- Figure 19: Composition of consumer spending on food, categories as a % of total spending, 2016
- Spending on non-alcoholic drinks
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- Figure 20: Annual % change in the value, volume and prices in the non-alcoholic beverages category, 2012-17
- Spending on alcoholic drinks
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- Figure 21: Annual % change in the value, volume and prices in the alcoholic beverages category, 2012-17
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- Figure 22: Composition of consumer spending on alcoholic drinks, categories as a % of total spending, 2016
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Sector Size and Forecast
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- Grocery sector returns to strong growth driven by inflation
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- Figure 23: All food retail sales (inc. VAT), 2012-22
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- Figure 24: All food retail sales, market size and forecast, 2012-22
- Supermarket sector predicted to return to growth…
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- Figure 25: Supermarkets’ market size and forecast (inc. VAT), 2012-22
- Figure 26: Supermarkets: market size and forecast (inc. VAT), 2012-22
- …but are likely to continue to lose share in the short term
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- Figure 27: Estimated percentage of grocer sector sales accounted for by supermarkets, 2012-22
- Forecast methodology
Channels of Distribution
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- Supermarkets account for over half of all grocery retail sales
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- Figure 28: Estimated channels of distribution for grocery retail sales, 2016
- However supermarkets are increasingly sharing consumer baskets
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- Figure 29: Estimated breakdown of sector sales, by channel, 2012-17
The Consumer – What You Need to Know
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- Levels of top-up shopping continue to rise
- A majority continue to spend the most in supermarkets
- Meal planning influences shopping behaviour
- Tesco the most used retailer in the UK
- Nine in ten supermarket shoppers purchase non-foods
- Consumers have noticed price rises
- Traditional loyalty schemes still hold significance for shoppers
How They Shop
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- Nine in ten are responsible for grocery shopping
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- Figure 30: Who is responsible for grocery shopping in the household, September 2017
- Grocery shopping habits are becoming more fluid
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- Figure 31: Grocery shopping behaviour, September 2015-17
- Younger consumers more likely to do a singular main shop
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- Figure 32: Shopping behaviour by age, September 2017
- However such behaviours are not static
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- Figure 33: Mintel’s Grocery Tracker: shopping behaviour March 2016-June 2017
Types of Stores Used
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- Over half of grocery shoppers still spend the most in supermarkets
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- Figure 34: Types of stores where consumers spend the most, September 2016-2017
- Who spends the most in supermarkets?
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- Figure 35: Types of stores where consumers spend the most, by age, September 2017
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- Figure 36: Types of stores where consumers spend the most, by parental status, September 2017
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- Figure 37: Types of stores where consumers spend the most, by type of area lived in, September 2017
- The influence of family on shopping habits
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- Figure 38: Parental influence on grocery shopping, September 2017
The Impact of Planning and Eating Out
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- Most do some form of meal planning
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- Figure 39: How grocery shoppers plan meals in advance, September 2017
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- Figure 40: How grocery shoppers plan meals in advance, by age, September 2017
- How does meal planning affect grocery shopping behaviour?
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- Figure 41: How grocery shoppers plan meals in advance, by grocery shopping behaviour, September 2017
- Just under a third eat out or have a takeaway for dinner at least once a week
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- Figure 42: Frequency of eating out, September 2017
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- Figure 43: Frequency of eating out, by age, September 2017
- How does eating out affect shopping behaviours?
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- Figure 44: Frequency of eating out, by grocery shopping behaviour, September 2017
Retailers Used
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- Tesco the UK’s most visited grocery retailer
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- Figure 45: Grocery retailers used, September 2017
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- Figure 46: Trend of grocery retailers used, September 2015 -2017
- Tesco’s success is borne out of capturing both main and secondary shops
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- Figure 47: Grocery retailers used for primary and secondary shops, September 2017
- Less than one in ten shop with one retailer
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- Figure 48: Repertoire of secondary retailers used, September 2017
- Asda shoppers most likely to do a secondary shop at the discounters
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- Figure 49: Where leading retailers’ primary shoppers also shop, September 2017
Retailer Demographic Comparison
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- Tesco attracts the highest level of young secondary shoppers
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- Figure 50: Leading grocery retailers used for primary and secondary shops, by age, September 2017
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- Figure 51: The discounters: primary and secondary shoppers, by age, September 2017
- Tesco and Sainsbury’s picking up secondary use in urban areas
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- Figure 52: Leading grocery retailers used for primary and secondary shops, by age, September 2017
- Tesco and Sainsbury’s strongest in the capital
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- Figure 53: Leading retailers’ primary shoppers, by region lived in, September 2017
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- Figure 54: Leading Retailers’ secondary shoppers, by region lived in, September 2017
- Asda strong in the lower socio-economic groups
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- Figure 55: Leading grocery retailers used for primary and secondary shops, by socio-economic group, September 2017
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- Figure 56: Aldi and Lidl, primary and secondary grocery shoppers, by socio-economic group, September 2017
Non-foods in Supermarkets
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- Health and beauty the most popular non-food category
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- Figure 57: Types of non-foods purchased in supermarkets, September 2017
- Clothing purchasing peaks amongst Asda shoppers
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- Figure 58: Types of non-foods purchased in supermarkets, by retailer where the most money is spent in a typical month, September 2017
- Consumers tend to favour a few categories
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- Figure 59: Types of non-foods purchased in supermarkets, repertoire analysis, September 2017
- Non-food products and services seen as time-saving and convenient
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- Figure 60: Attitudes to non-foods in supermarkets, September 2017
- Young consumers more likely to be swayed by non-food range
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- Figure 61: Types of non-foods purchased in supermarkets, September 2017
Attitudes to Prices and Loyalty Schemes
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- Consumers have noticed price increases
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- Figure 62: Attitudes to pricing and trading down, September 2017
- Older consumers most likely to have noticed price increases
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- Figure 63: Agreement to statements about pricing and trading down, by age, September 2017
- A move to own-brand?
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- Figure 64: Mintel Grocery Tracker: attitudes to own v private label, March 2016-Sep 2017
- Loyalty schemes
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- Figure 65: Attitudes to loyalty schemes, September 2017
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- Figure 66: Agreement to statements around loyalty schemes, by retailer with who the most money is spent in a typical month, September 2017
Leading Retailers – What You Need to Know
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- Tesco is still the dominant player
- Aldi and Lidl continue to gain ground
- Tesco continues to recover its brand image
- Almost half of consumers do some shopping online
- Checkout free grocery
Leading Grocery Retailers – Key Metrics
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- 2016 sees a return to growth for (most of) the leading players
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- Figure 67: Leading grocery retailers: net sales, 2012-16
- Consolidation amongst the symbol groups
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- Figure 68: Leading grocery retailers: Store numbers, 2012-16
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- Figure 69: Leading grocery retailers: annual sales per outlet, 2012-16
- Sales area and densities
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- Figure 70: Leading grocery retailers: total sales area, 2012-16
- Figure 71: Leading grocery retailers: annual sales per sq m, 2012-16
- Operating profits and margins
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- Figure 72: Leading grocery retailers: operating profits, 2012-16
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- Figure 73: Leading grocery retailers: operating margins, 2012-16
Market Share
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- Tesco is the market leader
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- Figure 74: Leading grocery retailers: share of all grocery retail sales, 2016
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- Figure 75: Leading grocery retailers: share of all grocery retail sales, 2012-17
- Could Aldi crack the top four?
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- Figure 76: Market shares: The Big Four grocery multiples vs the discounters, 2010-17
- A note on our market share
Space Allocation Summary
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- Summary data and classifications
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- Figure 77: Food, non-food standard classifications, 2017
- Convenience comparison overview
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- Figure 78: UK leading food retailers’ hypermarket store format: Convenience comparison overview split, November 2017
- Figure 79: UK leading food retailers’ superstore format: Convenience comparison overview split, November 2017
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- Figure 80: UK leading food retailers’ smaller supermarkets and discounters: Convenience comparison overview split, November 2017
- Detailed convenience comparison split
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- Figure 81: UK leading food retailers’ hypermarket store format: Convenience comparison detailed split, November 2017
- Figure 82: UK leading food retailers’ superstore format: Convenience comparison detailed split, November 2017
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- Figure 83: UK leading food retailers’ smaller supermarkets and discounters: Convenience comparison detailed split, November 2017
- Food and drink categories split
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- Figure 84: UK leading food retailers: food and drink categories as a percentage of total space allocated to food and drink, November 2017
Retail Product Mix
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- Figure 85: Leading food retailers, estimated Sales Mix, 2016
- Figure 86: Leading food retailers: Category sales as % total sales, 2016
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- Figure 87: Leading food retailers, Sales density by broad category, 2016
- Figure 88: Leading food retailers: Estimated share of key product markets, 2016
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Brand Research
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- What you need to know
- Brand map
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- Figure 89: Attitudes towards and usage of selected brands, September 2017
- Key brand metrics
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- Figure 90: Key metrics for selected brands, September 2017
- Brand attitudes: Aldi and Lidl lead perceptions of offering good value
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- Figure 91: Attitudes, by brand, September 2017
- Brand personality: Still work to do for the Co-op to change perceptions
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- Figure 92: Brand personality – Macro image, September 2017
- The big four trade on being reliable and accessible
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- Figure 93: Brand personality – Micro image, September 2017
- Brand analysis
- Tesco
- Sainsbury’s
- Asda
- Morrisons
- Aldi
- The Co-op
- Lidl
- M&S Simply Food
- Iceland
- Waitrose
- Ocado
- Amazon and Whole Foods
Online
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- Over half do online grocery shopping
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- Figure 94: Usage of online grocery shopping, December 2016
- Online grocery is only around 6% of total sector sales
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- Figure 95: Estimated breakdown of sector sales, by channel, 2012-17
- Delivery passes on the rise
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- Figure 96: Ownership of delivery passes, December 2016
- Tesco is the dominant online player but losing market share
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- Figure 97: Leading online grocery retailers’ estimated market shares, 2016
Launch Activity and Innovation
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- Checkout-free grocery shopping
- Speedy delivery services
- Voice-controlled devices that can order grocery items for direct delivery to your home
- Driverless grocery delivery
- New grocery store with a unique, artisan-style twist on the traditional supermarket experience
- Zero waste supermarkets
- Sainsbury’s capitalising on the revival in interest in vinyl
- Grab & Go van to save them time and effort travelling to a store
Advertising and Marketing Activity
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- 2016 total advertising spend declined 5.8% year-on-year
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- Figure 98: Recorded above-the-line, online display and direct mail total advertising expenditure by UK supermarket and online grocers, 2013-16
- Asda toppled by Lidl as the leading advertiser by spend
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- Figure 99: Recorded above-the-line, online display and direct mail total advertising expenditure by leading UK supermarket and online grocers, 2013-16
- Advertising spend peaks around Easter and in the month leading up to Christmas
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- Figure 100: Recorded above-the-line, online display and direct mail total advertising expenditure by UK supermarket and online grocers, by month, 2015-16
- TV accounted for the lion’s share of spend in 2016
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- Figure 101: Percentage media type split of recorded above-the-line, online display and direct mail total advertising expenditure by UK supermarkets and online grocers, 2013-16
- What we’ve seen so far in 2017
- Nielsen Ad Intel coverage
Aldi
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- What we think
- The key markets
- Germany
- UK
- US
- Australia
- Further expansion
- Company background
- Company performance
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- Figure 102: Aldi: Estimated group sales performance, 2012-16
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- Figure 103: Aldi: Number of outlets, 2012-16
- Retail offering
Asda Group
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- What we think
- Toyou drives footfall into stores
- Lack of significant convenience presence could be an issue
- Better solution may be to push hard on online development
- A deal on the horizon?
- Cost-cutting on the agenda
- What next?
- Company background
- Company performance
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- Figure 104: Asda Group Ltd: Group financial performance, 2012-16
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- Figure 105: Asda Group Ltd: outlet data, 2012-16
- Retail offering
The Co-operative Food
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- What we think
- £137.5 million bid for wholesale group Nisa
- IT investment transforming the store experience
- Rolling out local sourcing programme nationwide
- Healthier food options
- Bolstering eco credentials
- Company background
- Company performance
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- Figure 106: The Co-operative Food: group financial performance, 2012/13-2016/17
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- Figure 107: The Co-operative Food: outlet data, 2012/13-2016/17
- Retail offering
Iceland Foods
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- What we think
- New concept stores continue to be rolled out
- Quality focus for products
- Loyalty programme to move to existing payment cards
- Company background
- Company performance
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- Figure 108: Iceland Foods Ltd: group financial performance, 2012/113-2016/17
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- Figure 109: Iceland Foods Ltd: outlet data, 2012/13-2016/17
- Retail offering
Schwarz Group (Lidl)
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- What we think
- Lidl lands in the US
- Further expansion
- Lidl goes on the attack in Germany
- Further gains in the UK
- Embracing technology
- Lidl bets big on clothing
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- Figure 110: Esmara by Heidi Klum at Lidl UK, September 2017
- Online operations at early stages of development
- Company background
- Company performance
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- Figure 111: Schwarz Group: Group sales performance, 2012/13-2016/17
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- Figure 112: Schwarz Group: Outlet data, 2012/13-2016/17
- Retail offering
Marks & Spencer (UK Food)
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- What we think
- Delivery and convenience prioritised
- Sushi counters
- Plan A 2025 – A new sustainability and eco focus
- Company background
- Company performance
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- Figure 113: Marks & Spencer (UK Food): group sales performance, 2012/13-2016/17
- Figure 114: Marks & Spencer (UK Food): food outlets, by format, 2012/13-2016/17
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- Figure 115: Marks & Spencer (UK Food): outlet data, 2012/13-2016/17
- Retail offering
Wm Morrison Group
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- What we think
- ‘Fresh look’ supermarket format driving store sales growth
- Re-entry into the convenience market
- Responding to consumer demand for more locally sourced food and drink products
- New store-pick online service extends home delivery reach
- Expanded online product offering boosting e-commerce sales
- Own-label push to combat food price inflation
- First womenswear range
- Cutting food waste
- Company background
- Company performance
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- Figure 116: Wm Morrison Group: group financial performance, 2012/13-2016/17
- Figure 117: Wm Morrison Group: outlet data, 2012/13-2016/17
- Retail offering
Ocado Group
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- What we think
- Waitrose sourcing agreement has positives and negatives
- No guarantee that Waitrose will terminate…
- …but the implications for Ocado if it does
- Broadening the customer base
- Diversifying into new sectors
- What next?
- Company background
- Company performance
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- Figure 118: Ocado Group plc: group financial performance, 2011/12-2015/16
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- Figure 119: Ocado Group plc: Key performance metrics, 2012/13-2015/16
- Retail offering
J Sainsbury (UK)
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- What we think
- Looking to drive synergies from the Home Retail Group deal
- Pushing ahead with online innovations
- Keeping a lid on costs
- What next?
- Company background
- Company performance
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- Figure 120: J Sainsbury (UK)*: group financial performance, 2012/13-2016/17
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- Figure 121: J Sainsbury (UK): outlet data, 2012/13-2016/17
- Retail offering
Spar International
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- What we think
- Capitalising on smaller, more frequent food shopping
- Modernisation of larger stores
- New health store concept to meet the demands of health-conscious consumers
- E-commerce solutions to make shopping as convenient as possible
- Food waste scheme prompts positive response
- Company background
- Company performance
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- Figure 122: Spar International: Western Europe and Central & Eastern Europe retail sales, by country, 2012-16
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- Figure 123: Spar International: Western Europe and Central & Eastern Europe Outlets, 2012-16
- Figure 124: Spar International: Western Europe and Central & Eastern Europe retail sales area, 2012-16
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- Figure 125: Spar International: Western Europe and Central & Eastern Europe sales per sq m, by country, 2012-16
- Retail offering
Tesco
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- What we think
- The turnaround
- Booker
- Logic behind the deal
- A consumer downturn?
- Company background
- Fraud Squad investigation
- Company performance
- Full year 2016/17
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- Figure 126: Tesco: sales growth by country in local currency terms, 2015/16-2016/17
- First half 2017/18
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- Figure 127: Tesco: first half sales growth by country in local currency terms, H1 2016/17 – H1 2017/18
- Online
- Tesco Bank
- The balance sheet
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- Figure 128: Tesco Plc: group financial performance, 2012/13-2016/17
- Figure 129: Tesco UK: like-for-like sales growth by format, Q1 and Q2 2017/18
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- Figure 130: Tesco: UK store space by format, 2017
- Figure 131: Tesco Plc: outlet data, 2012/13-2016/17
- Retail offering
Waitrose
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- What we think
- Store sales decline forces shift in focus
- Prioritising footfall and loyalty over profit
- Foodservice and click-and-collect drive footfall
- What next?
- Company background
- Company performance
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- Figure 132: Waitrose: group financial performance, 2012/13-2016/17
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- Figure 133: Waitrose: outlet data, 2012/13-2016/17
- Retail offering
Appendix – Data Sources, Abbreviations and Supporting Information
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- Data sources
- Consumer research methodology
- Financial definitions
- Abbreviations
Appendix – Market Size and Forecast
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- Forecast methodology
Appendix - Detailed Space Allocation
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- Figure 134: UK leading food retailers hypermarket store format: detailed space allocation, November 2017
- Figure 135: UK leading food retailers superstore format: detailed space allocation, November 2017
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- Figure 136: UK leading food retailers smaller supermarkets and discounters: detailed space allocation, November 2016
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