how britain shops for food a look at the post-recession landscape
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How Britain Shops for Food A look at the post-recession landscape. Today’s agenda What we’ll talk about. the economy. food shopping behaviour. food retail strategies. the economy recovery on the way?. . . . lack of money I can’t spend. lack of will I won’t spend. - PowerPoint PPT PresentationTRANSCRIPT
How Britain Shops for FoodA look at the post-recession landscape
Today’s agendaWhat we’ll talk about
theeconomy
food shoppingbehaviour
food retailstrategies
the economyrecovery on the way?
The economy
The recession mindset
lack of money
I can’t spend
lack of will
I won’t spend
lack of
spontaneityI think, then spend
The economy
The household budget
Income(-1.4%)
Costs(-1.8%)
Credit(-6.9%)
Saving(+31%)
Total change(-2.7%)
Changes in position since H2, 2009
The economy
Higher debt servicing costs
Debt payments as a proportion of income
10.5%
2008
7.1%
2009
9.5%
2010/11
10.7%
2010/11
11.2%
2010/11
3% rate5% rate
6% rate
The economy
Taxation and statutory spend
incometax
nationalinsurance
value addedtax
counciltax
pensioncosts
The economy
Erosion of discretionary income
30
32
34
36
38
40
42
44
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
38.4%
42.1% %
Percentage of income that is discretionary
38.4% £13,26035.1%
The economy
Spending decisions will be different
Retail Savings
Household Health services
Automotive Leisure
Lower priority Higher priority
food shopping behaviourwhat does this mean for the consumer?
Food shopping behaviour
Inflation
+2.5% +5.5%
2006/07 2008/09
Food shopping behaviour
Food spending dynamics
Food retail spend as a proportion of all retail spend%
35
36
37
38
39
40
41
42
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
40.0%
37.7%
41.7%
Food shopping behaviour
Consumer reaction
Importance of price in driving store selection%
47.1 46.8
42.642.1
3940
4142
4344
4546
4748
2005 2006 2007 2008 2009
Food shopping behaviour
Consumer reaction
%
47.1 46.8
42.642.1
48.2
3940414243444546474849
2005 2006 2007 2008 2009
Importance of price in driving store selection
Food shopping behaviour
Shopping around
1.9
…other grocery retailers
In 2008 on average customers visited their
main store and…
2.4
In 2009 on average customers visited their
main store and…
…other grocery retailers
Food shopping behaviour
Use of discount grocers
+7.9% pts +3.2% pts +0.7% pts
7.9%
9.8%
3.6%
15.8%
13.0%
4.3%
2008 2009 2008 2009 2008 2009
+0.6% pts
8.4%9.0%
2008 2009
Food shopping behaviour
Eating out
2007 2008 2009 2010 2011
+3.4%
+2.3%
-3.1% -0.1% +1.9%
Percentage change in dining out expenditure (year-on-year)
Food shopping behaviour
What it means for food and grocery
+4.0%
+5.5%
+3.5%
2007
2008
2009
2010
+3.2%
2011
+3.1%
2012
+3.5%
2013
+4.0%
Year on year change in all food and grocery expenditure
Food shopping behaviour
Summary
Grocery will remain the most buoyant major retail sector
Inflation will remain in the market, but not at 2008 levels
Achieving volume growth will be challenging
But there will be solid pockets of growth
Value and price will remain more important
food retail strategiesresponses of the food and grocery sector
Food retail strategies
Four considerations
FragmentationDemand is becoming more fragmented
StoresConsumers have more stores to pick from
Proliferation of productThere is more choice than ever before
ReachShoppers want to buy in a variety of ways
Food retail strategies
Consideration 1: fragmentation
20%of Waitrose shoppers are
C2DE
18%of Aldi shoppers are AB
Food retail strategies
Solution 1: segmentation
SegmentationA segmented approach is required to grow
FragmentationDemand is becoming more fragmented
GOOD BETTER BEST
Low volume
Highest price pointsHigher marginsPremium offer
High volume
Low priceLow margin
Competitive entry prices
Core product
Core offerBasis of positioning
Standard margin
Food retail strategies
Solution 1: segmentation
Food retail strategies
Consideration 2: proliferation of product
Important to have a wide range with lots of
choice
Important to provide an edited range of what I
want
+6.9% pts
-5.4% pts
Change from 1999 in consumer views on range
Proliferation of productThere is more choice than ever before
Edited choiceLess will become more
Food retail strategies
Solution 2: clarity and edited choice
Food retail strategies
Solution 2: clarity and edited choice
Cooking from scratch
Eating in treats
Everyday basics
Indulgent
Food retail strategies
Consideration 3: choice
1970s 1990s 2000s1980s
4 4 63
Average number of grocery stores consumers have easy access to
Added value and differentiationStand out from the crowd
StoresConsumers have more stores to pick from
Food retail strategies
Solution 3: added value
Food retail strategies
Solution 3: added value
niche
differentiation
fashionability
personal service
brand marketing
experience / environment
Watchwords for adding value and differentiation
Food retail strategies
Consideration 4: customer reach
Supermarkets, 46.8% Internet,
4.6%
Neighbourhood, 35.9%
Other,12.6%
Sources of growth in food and grocery retail (2009-13)
Multi-formatUse multiple touch points
ReachShoppers want to buy in a variety of ways
Food retail strategies
Solution 4: multi-format
Food retail strategies
Solution 4: multi-format
Meeting multiple customer needs
Food retail strategies
How it all fits together
Slowing sales growth, rising cost growth Must drive market share – must add value
Consumer wallets are under pressure Need to stimulate wants
Consumers and shopping trips becoming more segmented Segment stores/channels/ranges
Competition intensifies space saturation product proliferation
message overload
Clarity of offer focused propositions, clearly identified/branded clear
price/range architecture less is more
The endThanks for listening