Table of Contents
Executive Summary
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- The market
- Real incomes continue to grow but there is still uncertainty in the market
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- Figure 1: Average weekly earnings, by consumer price index, January 2016-September 2019
- Spending on food and drink slowed in 2018
- Supermarkets on track to record third consecutive year of growth in 2019
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- Figure 2: All food retail sales (inc. VAT), 2014-24
- Figure 3: Supermarkets’ market size and forecast (inc. VAT), 2014-24
- Despite growth supermarkets continue to lose share of spending in the sector
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- Figure 4: Estimated breakdown of all grocery retail sales, by channel, 2013-19
- Companies and brands
- Tesco and Booker account for a quarter of the market
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- Figure 5: Leading grocery retailers: Share of all grocery retail sales, 2018
- M&S gets a new look as it aims for more big-basket shoppers
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- Figure 6: M&S Clapham, November 2019
- Tesco scores high on trust
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- Figure 7: Key metrics for selected brands, October 2019
- The consumer
- The number doing a ‘main shop’ only ticks up once more
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- Figure 8: How grocery shoppers typically shop, 2015-19
- Supermarket use continues to fall
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- Figure 9: Store format where the most is spent in a typical month, 2016-19
- Over half of grocery shoppers use Tesco on a monthly basis
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- Figure 10: Grocery retailers used, August 2019
- Sainsbury’s struggles to capture younger primary shoppers
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- Figure 11: Leading grocery retailers used for primary and secondary shops, by age, August 2019
- Own-brand crucial to differentiation…
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- Figure 12: Attitudes towards own-brand, by age, August 2019
- …as are food counters
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- Figure 13: Attitudes towards food counters in supermarkets, August 2019
- The debate between manned and self-service checkouts continues
- Food waste and plastic still key considerations
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- Figure 14: Ethical considerations of grocery shoppers, by rank, August 2019
- Plastic reduction can improve the look of stores
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- Figure 15: Attitudes towards packaging, recycling and dietary products, August 2019
- What we think
Issues and Insights
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- 2010-19: A review
- The facts
- The implications
- 2030: The demographic and technological drivers of shopping behaviour
- The facts
- The implications
- 2030: The channels and players that will succeed
- The facts
- The implications
The Market – What You Need to Know
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- Real incomes continue to grow but there is still uncertainty in the market
- Spending on food and drink slowed in 2018
- Supermarkets on track to record third consecutive year of growth in 2019
- Despite growth supermarkets continue to lose share of spending in the sector
Market Drivers
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- Overall inflation steady as food and drink prices rise
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- Figure 16: Food and drink inflation, September 2018-August 2019
- Real incomes continue to grow
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- Figure 17: Average weekly earnings, by consumer price index, January 2016-October 2019
- Confidence rises in 2019 amid Brexit uncertainty
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- Figure 18: Financial confidence tracker, January 2017-September 2019
- Main cause of concern around Brexit is cost of living
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- Figure 19: Consumer views on the impact of the EU referendum on the UK economy, September 2019
- Number of homeowners increases
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- Figure 20: UK household tenure status, 2013-18
Consumer Spending on Food and Drink
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- Spending on food and drink remains strong but slowing
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- Figure 21: Consumer spending on core food and drink categories, 2014-19
- Food spending to slow
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- Figure 22: Annual % change in consumer spending, value and volume, and inflation in food, 2014-19
- Food spending breakdown
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- Figure 23: Breakdown of consumer spending on food, 2018
- Spending on non-alcoholic drinks
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- Figure 24: Annual % change in consumer spending, value and volume, and inflation in non-alcoholic drinks, 2014-19
- Alcoholic drinks
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- Figure 25: Annual % change in consumer spending, value and volume, and inflation in alcoholic drinks, 2014-19
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- Figure 26: Breakdown of value spending in the alcoholic drinks category, 2018
Sector Size and Forecast
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- Grocery sector continues to see steady growth
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- Figure 27: All food retail sales (inc. VAT), 2014-24
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- Figure 28: All food retail sales (inc. VAT) market size and forecast, at current and constant prices, 2014-24
- Supermarket sector size
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- Figure 29: Supermarkets’ market size and forecast (inc. VAT), 2014-24
- Figure 30: Supermarkets: market size and forecast (inc. VAT), at current and constant prices, 2014-24
- Forecast methodology
Channels of Distribution
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- Supermarkets still the dominant channel…
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- Figure 31: Estimated channels of distribution for grocery retail sales, 2018
- …but large-format stores continue to lose share of spending
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- Figure 32: Estimated breakdown of all grocery retail sales, by channel, 2013-19
The Consumer – What You Need to Know
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- The number doing a ‘main shop’ only ticks up once more
- Supermarket use continues to fall
- Over half of grocery shoppers use Tesco on a monthly basis
- Sainsbury’s struggles to capture younger primary shoppers
- Own-brand crucial to differentiation…
- …as are food counters
- The debate between manned and self-service checkouts continues
- Food waste and plastic still key considerations
How They Shop
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- Nine in 10 are responsible for grocery shopping
- The recent trend reversed
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- Figure 33: How grocery shoppers typically shop, 2015-19
- 25-44s’ habits show greatest change
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- Figure 34: How grocery shoppers typically shop, by age, 2018 and 2019
- If established is this a positive trend for supermarkets?
- Shopping behaviour is seasonal
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- Figure 35: How grocery shoppers typically shop, by season, May 2016-March 2019
Types of Stores Used
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- Supermarket use continues to edge downward
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- Figure 36: Store format where the most is spent in a typical month, 2016-19
- Younger shoppers more likely to have shifted spend away
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- Figure 37: Store format where the most is spent in a typical month, by age, August 2019
- Supermarkets hit by newer ways to shop
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- Figure 38: Store format where the most is spent in a typical month, by parental status and age, August 2019
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- Figure 39: Store format where the most is spent in a typical month, by lifestage and income, August 2019
Retailers Shopped With
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- Amazon wins more shoppers than ever
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- Figure 40: Grocery retailers used, August 2019
- Asda struggles to attract top-up shoppers
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- Figure 41: Trend of grocery retailers used, 2017-19
- Morrisons attracts more top-up shoppers
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- Figure 42: Grocery retailers used for primary and secondary shops, August 2019
- Over a third shop at more than three stores a month
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- Figure 43: Repertoire of secondary retailers used, August 2019
- Half of Lidl shoppers top up at Tesco
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- Figure 44: Where leading retailers’ primary shoppers also shop, August 2019
Retailer Demographic Comparison
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- Tesco loses 25-44 primary shoppers
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- Figure 45: Leading grocery retailers used for primary and secondary shops, by age, August 2019
- Aldi attracts younger primary shoppers
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- Figure 46: The discounters: primary and secondary shoppers, by age, August 2019
- Morrisons attracts urban shoppers
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- Figure 47: Leading grocery retailers used for primary and secondary shops, by location, August 2019
- Lidl and Aldi attract equal primary shoppers in London
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- Figure 48: Leading retailers’ primary shoppers, by region, August 2019
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- Figure 49: Leading retailers’ secondary shoppers, by region, August 2019
- Morrisons attracts the most lower-income households
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- Figure 50: Leading grocery retailers used for primary and secondary shops, by household income bracket, August 2019
- Discounters attract a more affluent shopper base
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- Figure 51: Aldi and Lidl, primary and secondary grocery shoppers, by household income bracket, August 2019
The Importance of Own-brand
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- Over half think own-brand is a retailer’s defining feature
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- Figure 52: Attitudes towards own-brand, by age, August 2019
- Aldi and Lidl’s impact on attitudes towards own-brand
- Tesco doubles down with Exclusively at Tesco
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- Figure 53: Exclusively at Tesco private-label ranges, 2019
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- Figure 54: New Sainsbury’s private-label ranges, 2019
- Just because it’s value doesn’t mean it has to look value
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- Figure 55: Asda value chicken meatballs, 2014 versus 2019
- Figure 56: Morrisons value beef curry, 2012 versus 2019
Food Counters and Added Services
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- Differentiation key
- Food counters seen as a differentiator
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- Figure 57: Attitudes towards food counters in supermarkets, August 2019
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- Figure 58: Agreement with statements regarding food counters in supermarkets, by age, August 2019
- Non-foods and services create the multi-mission experience
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- Figure 59: Behaviours towards non-foods and services in supermarkets, August 2019
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- Figure 60: Behaviours towards non-foods and services in supermarkets, by format where the most is spent in a typical month, August 2019
The Checkout Experience
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- Most still use staffed tills at grocery stores
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- Figure 61: Checkout behaviours of grocery shoppers, August 2019
- Modern developments and implications for the large-format sector
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- Figure 62: Sainsbury’s Smartshop app in action, April 2019
- What does such tech mean for the supermarket checkout experience?
Ethical Considerations in Grocery Shopping
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- Food waste and plastic use still the key issues
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- Figure 63: Ethical considerations of grocery shoppers, by rank, August 2019
- Significant differences in opinion between the generations
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- Figure 64: Ethical considerations of grocery shoppers, any rank, by age, August 2019
- The fight against plastics can lead to better in-store environments
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- Figure 65: Attitudes towards packaging, recycling and dietary products, August 2019
Attitudes towards Pricing, Dietary Needs and Stockpiling
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- EDLP adds convenience but can lessen the excitement
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- Figure 66: Attitudes towards price and promotions at grocery retailers, August 2019
- The rise of dietary demands
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- Figure 67: Attitudes towards dietary needs, August 2019
- A fifth stockpiled products ahead of the October Brexit deadline
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- Figure 68: Stockpiling behaviours, August 2019
Leading Retailers – What You Need to Know
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- Tesco and Booker account for a quarter of the market
- M&S gets a new look as it aims for more big-basket shoppers
- Online usage being driven by existing users
- Tesco scores highly on trust
Leading Retailers – Key Metrics
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- Sales
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- Figure 69: Leading grocery retailers, net sales, 2014-18
- Stores
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- Figure 70: Leading grocery retailers: Store numbers, 2014-18
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- Figure 71: Leading grocery retailers: Annual sales per outlet, 2014-18
- Sales areas and densities
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- Figure 72: Leading grocery retailers: Total sales area, 2014-18
- Figure 73: Leading grocery retailers: Annual sales per square metre, 2014-18
- Operating profits and margins
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- Figure 74: Leading grocery retailers: Operating profits, 2014-18
- Figure 75: Leading grocery retailers: Operating margins, 2014-18
Market Share
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- Tesco increases its advantage over the other big four
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- Figure 76: Leading grocery retailers: Share of all grocery retail sales, 2018
- Market concentration drops in spite of acquisitions
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- Figure 77: Leading grocery retailers: Share of all grocery retail sales, 2014-19
- A note on our market share
Online
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- Online grocery usage is driven by existing customers
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- Figure 78: Use of online grocery services, December 2018
- Continued growth of online grocery hangs on addressing negative experiences
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- Figure 79: Estimated breakdown of sector sales, by channel, 2013-19
- Issues encountered with online grocery shopping
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- Figure 80: Issues experienced with online grocery orders in the past year, December 2018
- Why consumers choose not to shop online
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- Figure 81: Reasons for not shopping online for groceries, by previous experience of or interest in using online groceries services, December 2018
- Key players in the online grocery sector
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- Figure 82: Leading online grocery retailers’ estimated market shares (excluding VAT), 2018
Space Allocation Summary
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- Summary data and classifications
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- Figure 83: Food, non-food standard classifications, 2019
- Hypermarkets convenience comparison overview
- Hypermarkets broadening their product and services offering to give customers more reasons to visit
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- Figure 84: UK leading food retailers’ hypermarket store format: Convenience comparison overview split, November 2019
- Figure 85: McDonalds restaurant, Asda Supercentre, Watford, November 2019
- Detailed hypermarket convenience comparison split
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- Figure 86: UK leading food retailers’ hypermarket store format: Convenience comparison detailed split, November 2019
- Superstores convenience comparison overview
- Bigger percentage share of in-store space allocated to convenience products
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- Figure 87: UK leading food retailers’ superstore format: Convenience comparison overview split, November 2019
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- Figure 88: Wok Street, Sainsbury’s Superstore, Finchley Road, London, November 2019
- Detailed superstores convenience comparison split
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- Figure 89: UK leading food retailers’ superstore format: Convenience comparison detailed split, November 2019
- Smaller supermarkets and discounters convenience comparison overview
- Food and drink products dominate
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- Figure 90: UK leading food retailers’ smaller supermarkets and discounters: Convenience comparison overview split, November 2019
- Detailed smaller supermarkets and discounters comparison split
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- Figure 91: UK leading food retailers’ smaller supermarkets and discounters: Convenience comparison detailed split, November 2019
- Food and drink categories split
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- Figure 92: UK leading food retailers: food and drink categories as a percentage of total space allocated to food and drink, November 2019
Retail Product Mix
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- Figure 93: Leading food retailers, estimated sales mix, 2018/19
- Figure 94: Leading food retailers: category sales as a % of total sales, 2018
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- Figure 95: Leading food retailers, sales density by broad category, per sqm, 2018
- Figure 96: Leading food retailers: estimated share of key product markets, 2018
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Launch Activity and Innovation
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- Supermarkets drive forward their sustainability agendas
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- Figure 97: M&S vertical farming initiative with Infarm, 2019
- Payment services that help save time
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- Figure 98: M& ‘Mobile, Pay, Go’ service at its store in Clapham Junction, 2019
- Experiencing the supermarket in different ways
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- Figure 99: Aldi Local store in Balham, 2019
- Developments in delivery
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- Figure 100: Waitrose Rapid Deliver service, 2019
- Promoting health and wellness
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- Figure 101: Sainsbury’s ‘Unlock the Hero in You’ campaign, 2019
- Non-food innovations
- Sustainability efforts
- Extending the brand into non-food categories
Advertising and Marketing Activity
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- Total sector advertising down 7.7% year-on-year in 2018
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- Figure 102: Recorded above-the-line, online display and direct mail total advertising expenditure by UK supermarket and online grocers, 2015-19*
- Tesco is the sector’s biggest advertising spender
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- Figure 103: Recorded above-the-line, online display and direct mail total advertising expenditure, by leading UK supermarket and online grocers, 2015-18
- Advertising spend peaks around Christmas
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- Figure 104: Recorded above-the-line, online display and direct mail total advertising expenditure by UK supermarket and online grocers, by month, 2017 and 2018
- TV accounts for the biggest percentage share of advertising spend
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- Figure 105: Percentage media type split of recorded above-the-line, online display and direct mail total advertising expenditure by UK supermarkets and online grocers, 2015-19
- What we’ve seen so far in 2019
- Tesco and Sainsbury’s celebrating anniversaries
- Asda and Lidl focusing on quality and range
- Co-op community-focused campaign
- Ocado’s grocery delivery with no friction
- Costcutter’s biggest summer campaign to date
- Nielsen Ad Intel coverage
Brand Research
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- What we think
- Brand map
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- Figure 106: Attitudes towards and usage of selected brands, October 2019
- Key brand metrics
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- Figure 107: Key metrics for selected brands, October 2019
- Brand attitudes: Tesco most trusted retailer
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- Figure 108: Attitudes, by brand, October 2019
- Brand personality: Co-op perceived to be more fun
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- Figure 109: Brand personality – macro image, October 2019
- Ocado, Waitrose and M&S are the most stylish
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- Figure 110: Brand personality – micro image, October 2019
- Brand analysis
- Tesco the most trusted brand
- Sainsbury’s leads on style and being ethical out of big four
- Asda wins on accessibility over Sainsbury’s
- Morrisons joins Sainsbury’s in third place for reliable retailer
- Aldi is accessible to customers
- Co-op continues to be the most ethical
- Lidl is more basic than rival Aldi
- M&S styles it out with great customer service
- Iceland offers great value for money
- Waitrose’s perceived exclusivity wavers
- Amazon’s innovativeness and uniqueness remain high
- Ocado is perceived as exclusive and comes highly recommended
Aldi
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- What we think
- Aldi to buy ‘Leader Price’ discounter from Casino
- Increasing transparency with a focus on sustainability
- Nord and Süd collaborate on own-brand sourcing
- Meeting individual market needs
- Aldi Nord evolving faster than ever
- Company background
- Company performance
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- Figure 111: Aldi: estimated group sales performance, 2014-18
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- Figure 112: Aldi: outlet data: 2014-18
- Retail offering
Asda Group
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- What we think
- 30-minute grocery delivery service
- Preparing to launch new membership-free cash & carry operation
- Mobile app scan-and-pay trial to speed up the shopping process
- Helping shoppers spread the cost of shopping at a time of uncertainty
- Expanded foodservice offering giving people more reasons to visit its stores
- Commitment to plastic reduction
- Company background
- Company performance
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- Figure 113: Asda Group Ltd: Group financial performance, 2014-18
- Figure 114: Asda Group Ltd: Outlet data, 2014-18
- Retail offering
The Co-operative Group
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- What we think
- Expanding on-demand delivery grocery service
- Ringing the changes in-store with the rollout of pay-in-aisle technology
- NUS deal an opportunity to build brand loyalty with the next generation of grocery shoppers
- Useful services proposition gives consumers more reasons to visit its stores
- Expanded foodservice and food-to-go options
- Reducing plastics and improving the recyclability of its packaging
- Company background
- Company performance
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- Figure 115: The Co-operative Food: Group financial performance, 2014/15-2018/19
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- Figure 116: The Co-operative Food: Outlet data, 2014/15-2018/19
- Retail offering
Iceland Foods
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- What we think
- Accelerating retail park store format and continuing core high street refits
- Exploring new channels to sell its food and expand customer base
- Unique new own-label food offering to drive footfall
- Enhanced online shopping service
- Tackling the problem of plastic pollution
- Company background
- Company performance
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- Figure 117: Iceland Foods Ltd: Group financial performance, 2014/15-2018/19
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- Figure 118: Iceland Foods Ltd: Outlet data, 2014/15-2018/19
- Retail offering
J Sainsbury
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- What we think
- Sainsbury’s six new strategic priorities
- Sainsbury’s and Asda merger blocked by CMA
- Integration of the Argos business remains challenging
- Digital update to Nectar loyalty scheme
- Unmanned stores
- Company background
- Company performance
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- Figure 119: J Sainsbury (UK): Group financial performance, 2014/15-2018/19
- Figure 120: J Sainsbury (UK): Outlet data, 2014/15-2018/19
- Retail offering
Marks & Spencer (UK Food)
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- What we think
- A full online food delivery service for the first time
- Repurposing store estate will give more customers access to the full M&S Food range
- Tapping into new food trends with innovative products
- New value-for-money positioning to appeal to a wider audience
- In-store farming for exceptional freshness
- Upping the ante on its war on plastic
- Incentivising customers to reduce food waste
- Company background
- Company performance
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- Figure 121: Marks & Spencer (UK food): Group sales performance, 2014/15-2018/19
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- Figure 122: Marks & Spencer (UK Food): Food outlets, by format, 2014/15-2018/19
- Figure 123: Marks & Spencer (UK food): Outlet data, 2014/15-2018/19
- Retail offering
Ocado Group
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- What we think
- 50/50 joint venture with M&S
- Future earnings potential of proprietary software and robotic infrastructure solutions
- On-demand grocery delivery service
- Freshly harvested produce delivered within an hour
- Improving the shopping experience
- Company background
- Company performance
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- Figure 124: Ocado Group plc: Group financial performance, 2013/14-2017/18
- Figure 125: Ocado Group plc: Key performance metrics, 2014/15-2018/19
- Retail offering
Schwarz Group (Lidl)
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- What we think
- Lidl pushing online growth in more markets
- UK anticipates online launch
- Kaufland seeking a road to recovery
- Lidl opens smallest store
- Adapting to shopper trends
- Company background
- Company performance
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- Figure 126: Schwarz Group: Group sales performance, 2014/15-2018/19
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- Figure 127: Schwarz Group: Outlet data, 2014/15-2018/19
- Retail offering
Spar International
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- What we think
- Maximising foodservice opportunities
- Positioned to capitalise on shopping locally and food provenance
- Checkout-free shopping with scan, pay and go
- Rollout of healthy food product ranges across European markets
- Tackling food waste and saving consumers money at the same time
- Company background
- Company performance
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- Figure 128: Spar International: Selected Western Europe and Central & Eastern Europe retail sales, by country, 2014-18
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- Figure 129: Spar International: Selected Western Europe and Central & Eastern Europe stores, by country, 2014-18
- Figure 130: Spar International: Selected Western Europe and Central & Eastern Europe retail sales area, 2014-18
- Retail offering
Tesco
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- What we think
- Dave Lewis decides to leave the business
- Tesco counter cost cuts expected to hit 9,000 jobs
- Metro: simplifying store operations
- New Clubcard subscription service
- Booker acquires Best Food Logistics
- Tesco continues to invest in Jack’s
- Increased investment in Asia
- Expanding F&F clothing range and performance
- Company background
- Company performance
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- Figure 131: Tesco: Central Europe and Asia, like-for-like growth, Q1 2017/18-Q2 2019/20
- Figure 132: Tesco Plc: Group financial performance, 2014/15-2018/19
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- Figure 133: Tesco plc, group outlet data, 2014/15-2018/19
- Retail offering
Waitrose & Partners
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- What we think
- Radical management restructuring will bring Waitrose and John Lewis brands closer
- Waitrose and John Lewis testing new joint loyalty scheme
- End of Ocado supply deal a blow
- Expanded order fulfilment options offering greater flexibility and convenience
- Upskilling food counter staff
- Unique at-home tasting experiences
- Taking action on plastics and food waste
- Company background
- Company performance
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- Figure 134: Waitrose & Partners: Group financial performance, 2014/15-2018/19
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- Figure 135: Waitrose & Partners: Outlet data, 2014/15-2018/19
- Retail offering
WM Morrison Group
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- What we think
- Breathing new life into its stores and loyalty scheme
- Same-day online delivery
- Capitalising on growth in convenience store sector through wholesale tie-ups
- Expanded own online shop delivery options
- Reducing plastic usage and minimising food waste
- Company background
- Company performance
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- Figure 136: Wm Morrison Group: Group financial performance, 2014/15-2018/19
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- Figure 137: Wm Morrison Group: Outlet data, 2014/15-2018/19
- Retail offering
Appendix – Data Sources, Abbreviations and Supporting Information
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- Data sources
- Financial definitions
- Consumer research methodology
- Abbreviations
- Detailed space allocation data
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- Figure 138: UK leading food retailers hypermarket store format: detailed space allocation, November 2019
- Figure 139: UK leading food retailers superstore format: detailed space allocation, November 2019
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- Figure 140: UK leading food retailers smaller supermarkets and discounters: detailed space allocation, November 2019
Appendix – Market Size and Forecast
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- Forecast methodology
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