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Variety Stores - UK - August 2004

INTRODUCTION AND ABBREVIATIONS
Definitions
Research methodology
Consumer research
ACORN
Other research
 ABBREVIATIONS
PREMIER INSIGHT
EXECUTIVE SUMMARY
Increased competition on all sides
Mixed goods sales lag behind all retail sales
Sales by top ten variety retailers approach £22 billion
Sector characterised by large multiples with famous names
Mature brands reaching geographic saturation
Poundland achieves the fastest rate of outlet growth
Out-of-town locations beckon
Intense competition in many product categories
Supermarkets increasingly encroach on variety market
Main online competition from Amazon
Economic drivers largely positive
Employment factors more equivocal
Demographics dominated by ageing population
So we’re all middle class now?
Rising number of households to benefit those selling homewares
Boots the most highly-used store
Predominantly female audience
Value retailers increase their ABC1 appeal
Age does matter
Correlation with media usage
Supermarkets a major threat
ABs like bigger specialist ranges
Specialists stealing WH Smith sales, but Boots faces widespread competition
Woolworths and Wilko valued for convenience
M&S damaged by perceptions of poor value and uninspiring clothing
Attitudes towards value for money, home shopping
Encouraging loyalty and impulse buying
M&S makes one third of sector sales
Supermarkets the scourge of Boots
Argos strengthens but Woolworths can only maintain share
WH Smith facing up to specialist competition
Poundstretcher falls behind other value retailers
Main developments at individual retailers
Argos focused on growth markets
Bhs has improved since takeover by Philip Green
Boots the Chemists developing three distinct store formats
Littlewoods/Index struggles to maintain sales
M&S strives to return to basic values
Poundland growing rapidly and expanding own-brands
Poundstretcher benefits from new management
WH Smith updating dowdy image
Wilkinson proves that high street variety retailing can be successful
Woolworths partially withdraws from out-of-town retailing
Prospects for variety retailers
RETAIL SALES
All retail sales
Figure 1: All retail sales, at current and constant 2000 prices, 1998-2004
Sales through non-specialist non-food retailers
Figure 2: Sales through non-specialist non-food retailers, at current and constant 2000 prices, 1998-2004
Sales through leading UK variety retailers
Figure 3: Sales through leading UK variety retailers, 2000-04
Figure 4: Retail sales by leading UK variety stores, 2000-04
SECTOR STRUCTURE
 LEADING MULTIPLES
Figure 5: Leading variety store retailers, UK outlet data, 2000-04
Competition intensifies in many categories
Other variety retailers
MARKET FACTORS
 ECONOMIC TRENDS
PDI and consumer expenditure
Figure 6: PDI, savings and consumer expenditure, at current prices, 1999-2009
Housing market
Figure 7: House prices, number of house sales and interest rates, 1999-2009
Employment trends
Figure 8: Structure of the working population, by gender, 1998-2009
 SOCIAL AND DEMOGRAPHIC TRENDS
Figure 9: Total UK population, by age group, 1999-2009
Socio-economic factors
Figure 10: UK adult population (aged 15+), by socio-economic group, 1999-2009
Number of households rising but average size in decline
Figure 11: Number and size of UK households, 1999-2009
Impact of marriage and divorce rates
Figure 12: Number of births, marriages and divorces, 1999-2009
Car use and out-of-town shopping
THE CONSUMER
Critical consumer findings
Browsing versus purchasing
Figure 13: Browsing versus purchasing at leading UK variety stores, May 2004
Figure 14: Browsing and purchasing from variety stores in the past six months, May 2004
Analysis of characteristics of purchasers
Figure 15: Variety stores where anything bought in the past six months, by gender, age and socio-economic group, May 2004
Figure 16: Variety stores where anything bought in the past six months, by gender, age and socio-economic group, May 2004
Figure 17: Variety stores where anything bought in the past six months, by presence of children, lifestage and Mintel’s Special Groups, May 2004
Figure 18: Variety stores where anything bought in the past six months, by presence of children, lifestage and Mintel’s Special Groups, May 2004
Figure 19: Variety stores where anything bought in the past six months, by region and ACORN categories, May 2004
Figure 20: Variety stores where anything bought in the past six months, by region and ACORN categories, May 2004
Figure 21: Variety stores where anything bought in the past six months, by media, source of regular grocery shopping and commercial TV viewing, May 2004
Figure 22: Variety stores where anything bought in the past six months, by media, source of regular grocery shopping and commercial TV viewing, May 2004
CONSUMER ATTITUDES AND TYPOLOGIES
Critical consumer findings
 VALUE FOR MONEY AND INTEREST IN HOME SHOPPING SERVICES
Figure 23: Summary of variety stores findings, May 2004
Key demographic differences
Value for money
Home shopping service
Number of variety stores used for purchasing
Figure 24: Number of variety stores used for purchase in the past six months, May 2004
How successfully do the main stores attract their target market?
Figure 25: CHAID analysis of leading variety stores, May 2004
Which variety stores attract similar groups of customers
Figure 26: Correlation analysis of variety stores shoppers, May 2004
Figure 27: Variety stores shoppers that also shop at Argos, Bhs, Boots, Index and M&S, May 2004
Figure 28: Variety stores shoppers that also shop at Poundland, Poundstretcher, WH Smith, Wilkinson Hardware and Woolworths, May 2004
Best value-for-money variety stores
Figure 29: Variety stores offering the best value for money, by variety stores browsed in the past six months, May 2004
Figure 30: Variety stores offering the best value for money, by variety stores browsed in the past six months, May 2004
Interest in home shopping services
Figure 31: Variety stores where shoppers would use a home shopping service, by variety stores browsed in the past six months, May 2004
Figure 32: Variety stores where shoppers would use a home shopping service, by variety stores browsed in the past six months, May 2004
 CONSUMER ATTITUDES TOWARDS VARIETY STORES
Figure 33: Attitudes towards variety stores, May 2004
Shopping patterns at variety stores
Figure 34: Attitudes towards variety stores, by gender, age and socio-economic group, May 2004
Figure 35: Go to variety stores less frequently because I pick up many of the items they sell at supermarkets, by Mintel’s Special Groups, May 2004
Range issues
Figure 36: Attitudes towards variety stores, by gender, age and socio-economic group, May 2004
Figure 37: Prefer ranges of a specialist and don’t mind limited range if can get low prices, by lifestage, May 2004
Marks & Spencer and Bhs
Figure 38: Attitudes towards variety stores, by gender, age and socio-economic group, May 2004
Woolworths, Wilkinson, Boots and WH Smith
Figure 39: Attitudes towards variety stores, by gender, age and socio-economic group, May 2004
Figure 40: Attitudes towards shopping and shopping behaviour at Boots and WH Smith, by Mintel’s Special Groups, May 2004
Attitudes towards variety stores among browsers of stores
Figure 41: Attitudes towards variety stores, by stores browsed, May 2004
Figure 42: Attitudes towards variety stores, by stores browsed, May 2004
RETAIL MARKET SHARES
M&S makes a third of sector sales
Figure 43: Market shares of leading UK variety retailers, 2000 and 2003
Figure 44: Market shares of leading UK variety store retailers, 2003
Boots loses out to supermarkets
Argos gains momentum but Woolworths wobbles
WH Smith sorts its shelves
Discounters in the ascendant
Shares slide in the middle market
RETAILER PROFILES
Argos
Figure 45: Argos, outlet data, 2000-04
Figure 46: Argos, financial performance, 2000-04
Figure 47: Argos, online sales, 2002-04
Bhs
Figure 48: Bhs Limited, outlet data, 2000-03
Fast fashion stirs the hangers
New focus on homewares
Figure 49: Bhs Limited, financial performance, 2000-03
Bhs Group results
Boots the Chemists
Figure 50: Boots the Chemists, outlet data, 2000-04
Figure 51: Boots Group plc, financial performance, 2000-04
Littlewoods/Index
Figure 52: Littlewoods, outlet data, 1999-2003
Figure 53: Littlewoods Ltd, financial performance, 1999-2003
Marks & Spencer
Figure 54: Marks & Spencer, outlet data, 2000-04
New format development
Store refurbishment
Figure 55: Marks & Spencer UK retail product mix, by allocation of selling space and proportion of turnover, 1998-2004
Figure 56: Marks & Spencer, financial performance, 2000-04
Figure 57: Marks & Spencer, like-for-like sales performance, 2003-04
Clothing sales
Poundland
Figure 58: Poundland Limited, store numbers, 2000-04
Figure 59: Poundland Ltd, financial performance, 2000-04
Poundstretcher
Figure 60: Brown & Jackson plc, outlet data, 2000-04
Instore heralds a move to the mass market
Figure 61: Development of the Instore format, 2003-04
Figure 62: Brown & Jackson plc, financial performance, 2000-04
WH Smith
Figure 63: WH Smith plc, UK retail outlet data, 1999-2003
Figure 64: WH Smith plc, UK retailing, financial performance, 1999-2003
Wilkinson Hardware Stores
Figure 65: Wilkinson Hardware Stores Ltd, outlet data, 2000-04
Figure 66: Wilkinson Hardware Stores Ltd, financial performance, 2000-04
Woolworths
Figure 67: Woolworths Mainchain and Big W, outlet data, 2000-04
Figure 68: Woolworths plc, financial performance, 2001-04
Figure 69: Woolworths and Big W retail chains, financial performance, 2000-03
RETAIL PRACTICES AND OPERATIONAL ISSUES
 CURRENT TRADING AND OUTLOOK
Figure 70: Leading variety stores, recent trading performance, 2002/03 or 2003/2004
Christmas 2003 trading
 PERFORMANCE OF KEY PRODUCT SECTORS
Tough conditions in clothing
Highly competitive housewares
Contesting confectionery
Supermarkets improving health and beauty
Other product categories
 DEFLATION RULES IN MANY SECTORS
 TARGETING OF KEY CUSTOMER GROUPS
 INTERNET SHOPPING LIMITED
 BRAND STRATEGIES IN THE VARIETY SECTOR
 CAN SERVICE MAKE A DIFFERENCE?
 WILL VARIETY RETAILERS REMAIN ON THE HIGH STREET?
 NEW FORMATS APLENTY
 ADVERTISING AND PROMOTIONAL STRATEGIES
 LOYALTY SCHEMES LIMITED
 NEW ENTRANTS TO THE MIXED GOODS ARENA
THE FUTURE
Factors likely to influence future performance
Supermarkets and specialists will continue to squeeze variety store sales
Responses to competitive pressure
Demographic drivers
Socio-economic factors
Who are likely to be the winners and losers?
M&S solid but no longer an icon
Resuscitation required at WH Smith
Boots future based on tailored formats and own-brand development
Mixed prospects for value retailers
Future unclear for Littlewoods and Index
Few potential new entrants except supermarkets
FORECAST
Solid growth predicted
Figure 71: Forecast total retail sales of UK variety stores, 2004-09
Figure 72: Forecast retail sales of top ten variety store chains, 2004-09
Factors incorporated
APPENDIX 1
Figure 73: Variety stores browsed while out shopping in the past six months, by gender, age and socio-economic group, May 2004
Figure 74: Variety stores browsed while out shopping in the past six months, by gender, age and socio-economic group, May 2004
Figure 75: Variety stores browsed while out shopping in the past six months, by presence of children, lifestage and Mintel’s Special Groups, May 2004
Figure 76: Variety stores browsed while out shopping in the past six months, by presence of children, lifestage and Mintel’s Special Groups, May 2004
Figure 77: Variety stores browsed while out shopping in the past six months, by region and ACORN category, May 2004
Figure 78: Variety stores browsed while out shopping in the past six months, by region and ACORN category, May 2004
Figure 79: Variety stores browsed while out shopping in the past six months, by media, source of regular grocery shopping and commercial TV viewing, May 2004
Figure 80: Variety stores browsed while out shopping in the past six months, by media, source of regular grocery shopping and commercial TV viewing, May 2004
APPENDIX 2
Figure 81: Variety stores offering the best value for money, by gender, age and socio-economic group, May 2004
Figure 82: Variety stores offering the best value for money, by gender, age and socio-economic group, May 2004
Figure 83: Variety stores offering the best value for money, by presence of children, lifestage and Mintel’s Special Groups, May 2004
Figure 84: Variety stores offering the best value for money, by presence of children, lifestage and Mintel’s Special Groups, May 2004
Figure 85: Variety stores offering the best value for money, by region and ACORN category, May 2004
Figure 86: Variety stores offering the best value for money, by region and ACORN category, May 2004
Figure 87: Variety stores offering the best value for money, by media, source of regular grocery shopping and commercial TV viewing, May 2004
Figure 88: Variety stores offering the best value for money, by media, source of regular grocery shopping and commercial TV viewing, May 2004
Figure 89: Variety stores where shoppers would use a home shopping service, by gender, age and socio-economic group, May 2004
Figure 90: Variety stores where shoppers would use a home shopping service, by presence of children, lifestage and Mintel’s Special Groups, May 2004
Figure 91: Variety stores where shoppers would use a home shopping service, by region and ACORN category, May 2004
Figure 92: Variety stores where shoppers would use a home shopping service, by media, source of regular grocery shopping and commercial TV viewing, May 2004
Figure 93: Attitudes towards variety stores, by presence of children, lifestage and Mintel’s Special Groups, May 2004
Figure 94: Attitudes towards variety stores, by presence of children, lifestage and Mintel’s Special Groups, May 2004
Figure 95: Attitudes towards variety stores, by presence of children, lifestage and Mintel’s Special Groups, May 2004
Figure 96: Attitudes towards variety stores, by presence of children, lifestage and Mintel’s Special Groups, May 2004
Figure 97: Attitudes towards variety stores, by region and ACORN category, May 2004
Figure 98: Attitudes towards variety stores, by region and ACORN category, May 2004
Figure 99: Attitudes towards variety stores, by region and ACORN category, May 2004
Figure 100: Attitudes towards variety stores, by region and ACORN category, May 2004
Figure 101: Attitudes towards variety stores, by media, source of regular grocery shopping and commercial TV viewing, May 2004
Figure 102: Attitudes towards variety stores, by media, source of regular grocery shopping and commercial TV viewing, May 2004
Figure 103: Attitudes towards variety stores, by media, source of regular grocery shopping and commercial TV viewing, May 2004
Figure 104: Attitudes towards variety stores, by media, source of regular grocery shopping and commercial TV viewing, May 2004

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