The Squeezed Middle Market Polarisation and the quest for differentiation
Edward Garner - Communications Director
The Agenda
>
– External Pressures
– The Squeezed Middle
– Seeking Differentiation
• Instore Theatre
• Own Label
• Ethics & Provenance
– Online
– The future
Global Food Price Indices
300
250
200
150
100
50
0
2000
2001
2002
2003
2004
2005
2006
Food Price Index
Food Price Index, UN FAO
2007
2008
2009
2010
Cereals Price Index
2011
2012
2013
2014
Source: ONS Series ABQI / ABZV
2013
2009
2010
2011
2012
2004
2005
2006
2007
2008
1999
2000
2001
2002
2003
1994
1995
1996
1997
1998
1990
1991
1992
1993
1985
1986
1987
1988
1989
1980
1981
1982
1983
1984
1976
1977
1978
1979
1971
1972
1973
1974
1975
1966
1967
1968
1969
1970
1963
1964
1965
Food and Drink as a Proportion of UK Household Expenditure %
25
20
15
10
5
0
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
1963
Food and Drink as a Proportion of UK Household Expenditure %
25
Housing & Utilities
20
15
10
5
0
Source: ONS Series ABQI / ABZV
The Agenda
– External Pressures
>
– The Squeezed Middle
– Seeking Differentiation
• Instore Theatre
• Own Label
• Ethics & Provenance
– Online
– The future
Annual Till Roll Totals Expenditure Trends
Aldi
31
Lidl
13
Waitrose
Total Grocers
52 w/e Feb 02 2014 y/y % Change
9
3
Discounters
Threat…
Aldi
Lidl
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
Share (Expenditure)
Long-Term Share of Till Roll Grocers
4
3
2
1
0
Year-on-Year Expenditure Trends - % change
Aldi
Fresh+Chilled
36.0
Toiletries
34.9
TOTAL GROCERIES
29.4
Ambient Groceries
Frozen
Alcohol
28.7
21.4
21.0
52 w/e 02 Feb 14
Household
19.7
Aldi share amongst Asda/Aldi Shoppers - £%
34
32
30
28
26
24
22
20
18
16
14
Waitrose
Waitrose Baseline
Weekly 3 Point Centred Moving Average
02-Feb-14
05-Jan-14
08-Dec-13
10-Nov-13
13-Oct-13
15-Sep-13
18-Aug-13
21-Jul-13
23-Jun-13
26-May-13
28-Apr-13
31-Mar-13
03-Mar-13
03-Feb-13
06-Jan-13
09-Dec-12
11-Nov-12
14-Oct-12
16-Sep-12
19-Aug-12
22-Jul-12
24-Jun-12
27-May-12
29-Apr-12
01-Apr-12
04-Mar-12
05-Feb-12
08-Jan-12
11-Dec-11
13-Nov-11
16-Oct-11
18-Sep-11
21-Aug-11
24-Jul-11
26-Jun-11
29-May-11
01-May-11
03-Apr-11
06-Mar-11
Share (Expenditure)
Waitrose Share of Till Roll Grocers
5.0
4.0
3.0
2.0
1.0
0.0
Waitrose Share Index
I am prepared to pay more for organic food
205
I actively seek out fair trade products
179
I try to buy environmentally friendly products
145
I try to buy local product whenever I can
134
Price is most important factor
56
Till Roll Share indexed on All Shoppers – 52 w/e Jun 09 2013
What of the Squeezed Middle?
Latest Period Till Roll Totals - Share of Total Grocers
Tesco
30.7
29.2
Asda
17.2
17.3
Sainsbury's
16.8
17.1
Morrisons
12.7
The Co-operative
6.9
Waitrose
Aldi
11.3
6.1
4.3
+3.4%
4.9
2.1
4.1
Lidl
2.4
Iceland
2.0
2.3
Independents
2.0
1.9
Farmfoods
0.5
12 w/e 06 Feb 11
3.2
0.7
12 w/e 02 Feb 14
Latest Period Till Roll Totals - Share of Total Grocers
Tesco
30.7
29.2
Asda
17.2
17.3
Sainsbury's
16.8
17.1
Morrisons
12.7
The Co-operative
11.3
6.9
Waitrose
6.1
4.3
4.9
Aldi
2.1
Lidl
2.4
Iceland
2.0
2.3
Independents
2.0
1.9
Farmfoods
0.5
12 w/e 06 Feb 11
4.1
3.2
0.7
12 w/e 02 Feb 14
Sainsbury's
Tesco
Asda
Morrisons
02-Feb-14
05-Jan-14
08-Dec-13
10-Nov-13
13-Oct-13
15-Sep-13
18-Aug-13
21-Jul-13
23-Jun-13
26-May-13
28-Apr-13
31-Mar-13
03-Mar-13
03-Feb-13
06-Jan-13
09-Dec-12
11-Nov-12
14-Oct-12
16-Sep-12
19-Aug-12
22-Jul-12
24-Jun-12
27-May-12
29-Apr-12
01-Apr-12
04-Mar-12
05-Feb-12
08-Jan-12
11-Dec-11
13-Nov-11
16-Oct-11
18-Sep-11
21-Aug-11
24-Jul-11
26-Jun-11
29-May-11
01-May-11
03-Apr-11
06-Mar-11
06-Feb-11
09-Jan-11
12-Dec-10
Till-Roll Trends - Annual £% Change - Rolling 52wk periods
7
6
5
4
3
2
1
0
-1
Sainsbury's
Tesco
Asda
Morrisons
02-Feb-14
05-Jan-14
08-Dec-13
10-Nov-13
13-Oct-13
15-Sep-13
18-Aug-13
21-Jul-13
23-Jun-13
26-May-13
28-Apr-13
31-Mar-13
03-Mar-13
03-Feb-13
06-Jan-13
09-Dec-12
11-Nov-12
14-Oct-12
16-Sep-12
19-Aug-12
22-Jul-12
24-Jun-12
27-May-12
29-Apr-12
01-Apr-12
04-Mar-12
05-Feb-12
08-Jan-12
11-Dec-11
13-Nov-11
16-Oct-11
18-Sep-11
21-Aug-11
24-Jul-11
26-Jun-11
29-May-11
01-May-11
03-Apr-11
06-Mar-11
06-Feb-11
09-Jan-11
12-Dec-10
Till-Roll Trends - Annual £% Change - Rolling 52wk periods
7
6
5
4
3
2
1
0
-1
The Agenda
– External Pressures
– The Squeezed Middle
>
– Seeking Differentiation
• Instore Theatre
• Own Label
• Ethics & Provenance
– Online
– The future
Tesco Year-on-Year £% Changes
25
20
15
10
Value OL
5
Premium OL
0
-5
-10
-15
12 w/e periods - Total Grocery
Own Label Shares by Basket Size - Tesco
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
< £20
< £40
< £60
Economy Own Label
< £80
< £100
< £200
> £200
Premium Own Label
52 w/e Nov 10 2013
Market Buying Indices of Tesco Finest Buyers in Tesco
Chilled Olives
Fresh Soup
Chilled Burgers+Grills
Chilled Cooking Sauces
Fresh Pasta
Chilled Prepared Fish
Chilled Vegetarian
Chilled Ready Meals
Wine
Chilled Pate+Paste+Spread
Fresh Sausages
Wet/Smoked Fish
Sparkling Wine
Fresh Flavoured Meats
Chilled Processed Poultry
Chilled Breads
Total Toothbrushes
Ambient Olives
Chilled Pizza+Bases
Chilled Fruit Juice+Drink
389
318
231
222
200
196
195
187
186
171
170
162
158
155
152
152
152
151
150
150
52 w/e Nov 10 2013
Grocery Share at Round Pound Prices £1/2/3/4 - £%
Iceland
56
Asda
36
Farm Foods
25
Tesco
23
Morrisons
23
The Co-operative
23
Sainsbury's
22
Independents
15
M&S
13
Waitrose
12
Lidl
Aldi
12 w/e 05 Jan 2014
5
4
Year-on-Year Expenditure Trends - % change
Asda
Fresh+Chilled
3.6
Alcohol
2.4
TOTAL GROCERIES
2.1
Frozen
1.8
Ambient Groceries
1.3
Toiletries
-0.1
Healthcare
-0.7
52 w/e 05 Jan 14
Household
-1.1
Value
Values
Basics v Smart Price - 4 weekly sales
65
60
£m
55
50
45
40
Sainsbury Basics
Asda Smartprice
Value
Values
Sainsbury Share Index
I actively seek out fair trade products
135
I am prepared to pay more for organic food
122
I try to buy environmentally friendly products
109
I try to buy local product whenever I can
105
Price is most important factor
89
Till Roll Share indexed on All Shoppers – 52 w/e Jun 09 2013
Sainsbury's Year-on-Year £% Changes
20
15
10
Value OL
5
Premium OL
0
-5
-10
12 w/e periods - Total Grocery
Trading Indices - Morrisons
52 w/e Jan 05 2014
Market Sectors indexed on Total Groceries
Fresh Fish
Chilled Bakery Products
Fresh Meat
Canned Goods
Chilled Convenience
Hot Beverages
Ambient Bakery Products
Biscuits
Pet Care
Fruit+Veg+Salads
130
121
118
112
109
106
104
104
104
103
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
Share (Expenditure)
Long-Term Share of Till Roll Grocers
24
22
20
18
16
14
12
10
8
6
4
2
0
M&S
M & S Baseline
Weekly 3 Point Centred Moving Average
02-Feb-14
05-Jan-14
08-Dec-13
10-Nov-13
13-Oct-13
15-Sep-13
18-Aug-13
21-Jul-13
23-Jun-13
26-May-13
28-Apr-13
31-Mar-13
03-Mar-13
03-Feb-13
06-Jan-13
09-Dec-12
11-Nov-12
14-Oct-12
16-Sep-12
19-Aug-12
22-Jul-12
24-Jun-12
27-May-12
29-Apr-12
01-Apr-12
04-Mar-12
05-Feb-12
08-Jan-12
11-Dec-11
13-Nov-11
16-Oct-11
18-Sep-11
21-Aug-11
24-Jul-11
26-Jun-11
29-May-11
01-May-11
03-Apr-11
06-Mar-11
Share (Expenditure)
M&S Share of Fresh & Chilled Groceries
8
7
6
5
4
The Agenda
– External Pressures
– The Squeezed Middle
– Seeking Differentiation
>
• Instore Theatre
• Own Label
• Ethics & Provenance
– Online
– The future
Chilled / Fresh
Frozen
Frozen
The Agenda
– External Pressures
– The Squeezed Middle
– Seeking Differentiation
• Instore Theatre
>
• Own Label
• Ethics & Provenance
– Online
– The future
0
25-Jul-10
22-Aug-10
19-Sep-10
17-Oct-10
14-Nov-10
12-Dec-10
09-Jan-11
06-Feb-11
06-Mar-11
03-Apr-11
01-May-11
29-May-11
26-Jun-11
24-Jul-11
21-Aug-11
18-Sep-11
16-Oct-11
13-Nov-11
11-Dec-11
08-Jan-12
05-Feb-12
04-Mar-12
01-Apr-12
29-Apr-12
27-May-12
24-Jun-12
22-Jul-12
19-Aug-12
16-Sep-12
14-Oct-12
11-Nov-12
09-Dec-12
06-Jan-13
03-Feb-13
03-Mar-13
31-Mar-13
28-Apr-13
26-May-13
23-Jun-13
21-Jul-13
18-Aug-13
15-Sep-13
13-Oct-13
10-Nov-13
08-Dec-13
05-Jan-14
Latest 12-wk % Change
Total Grocery Budget Own Label Trends - 4-weekly £m
140
120
100
80
60
40
20
Tesco
-11%
Asda
-11%
Sainsbury's
-3%
Morrisons
-9%
Premium Own-Label Sales Trends
Latest 52-wk % Change
120
80
60
40
20
Tesco Finest
+12%
Sainsbury's Taste the Difference
+9%
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
0
2003
Sales (Expenditure £m)
100
The Agenda
– External Pressures
– The Squeezed Middle
– Seeking Differentiation
• Instore Theatre
• Own Label
>
• Ethics & Provenance
– Online
– The future
90
40
02-Jul-06
27-Aug-06
22-Oct-06
17-Dec-06
11-Feb-07
08-Apr-07
03-Jun-07
29-Jul-07
23-Sep-07
18-Nov-07
13-Jan-08
09-Mar-08
04-May-08
29-Jun-08
24-Aug-08
19-Oct-08
14-Dec-08
08-Feb-09
05-Apr-09
31-May-09
26-Jul-09
20-Sep-09
15-Nov-09
10-Jan-10
07-Mar-10
02-May-10
27-Jun-10
22-Aug-10
17-Oct-10
12-Dec-10
06-Feb-11
03-Apr-11
29-May-11
24-Jul-11
18-Sep-11
13-Nov-11
08-Jan-12
04-Mar-12
29-Apr-12
24-Jun-12
19-Aug-12
14-Oct-12
09-Dec-12
03-Feb-13
31-Mar-13
26-May-13
21-Jul-13
15-Sep-13
10-Nov-13
05-Jan-14
Fairtrade Prepacked Bananas Market Share
100
Sainsbury
80
70
60
50
Total Grocers
30
20
10
0
Fairtrade Shares
Sainsbury's
30
Tesco
19
The Co-operative
16
Morrisons
11
Waitrose
9
Asda
7
M&S
3
Lidl
1
Independents
1
Iceland
1
Aldi
1
Farm Foods
0
Share of Fairtrade - 52 w/e Jan 05 2014
60
22-Oct-06
17-Dec-06
11-Feb-07
08-Apr-07
03-Jun-07
29-Jul-07
23-Sep-07
18-Nov-07
13-Jan-08
09-Mar-08
04-May-08
29-Jun-08
24-Aug-08
19-Oct-08
14-Dec-08
08-Feb-09
05-Apr-09
31-May-09
26-Jul-09
20-Sep-09
15-Nov-09
10-Jan-10
07-Mar-10
02-May-10
27-Jun-10
22-Aug-10
17-Oct-10
12-Dec-10
06-Feb-11
03-Apr-11
29-May-11
24-Jul-11
18-Sep-11
13-Nov-11
08-Jan-12
04-Mar-12
29-Apr-12
24-Jun-12
19-Aug-12
14-Oct-12
09-Dec-12
03-Feb-13
31-Mar-13
26-May-13
21-Jul-13
15-Sep-13
10-Nov-13
05-Jan-14
Not-Caged Eggs Market Share
100
Sainsbury’s
90
80
Morrisons
70
Asda
50
Tesco
40
30
Total Organic Grocery Products including Baby - 4 weekly £m
100
80
60
40
20
0
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Total Organic Market (inc. Baby) Rolling 52 week periods Y-on-Y Change %
7
6
5
3
3
1
0
-1
-2
-3
-4
-5
-5
-5
-6
-6
-6
-6
-7
-6
-6
-6
-6
-6
-5
-5
-6
-5
-5
-5
I Consider That Price Is The Most Important Factor
When Buying A Product
Farm Foods
127
Iceland
120
Aldi
118
Independents
115
Asda
109
Lidl
109
Tesco
105
Morrisons
98
The Co-operative
91
Sainsbury's
89
M&S
Waitrose
65
56
Outlet Share Index
52 w/e Jun 09 2013
I try to buy local product whenever I can
Waitrose
134
M&S
114
Sainsbury's
105
Morrisons
99
Tesco
98
Asda
89
Outlet Share Index
52 w/e Jun 09 0213
What happens when low prices rule the supply chain
Year on Year Changes - 12 w/e £%
10
7
2
2
2
4
4
0
-1
0
-1
-6
-6
-10
-16
-20
-25
-30
-28
-40
-41
-41
-50
Frozen Burgers
-1
-5
Year on Year Changes - 12 w/e £%
10
7
5
7
7
4
0
-1
-1
-5
-10
-8
-8
-10
-11
-15
-12
-15
-20
Frozen Ready Meals
-7
-7
-6
-7
-6
-5
Impact of the Horsemeat Scandal - 12 w/e Feb 02 2014
Frozen Quorn
15
Frozen Poultry
7
Frozen Burgers
4
Fresh Beef
4
Fresh Pork
2
Fresh Poultry
2
Fresh Lamb
1
Chilled Quorn
1
Frozen Ready Meals
-1
Frozen Lamb
Frozen Beef
-6
-10
% Chg y/y
0
05-Jan-14
08-Dec-13
10-Nov-13
13-Oct-13
15-Sep-13
18-Aug-13
21-Jul-13
23-Jun-13
26-May-13
28-Apr-13
31-Mar-13
03-Mar-13
03-Feb-13
06-Jan-13
09-Dec-12
11-Nov-12
14-Oct-12
16-Sep-12
19-Aug-12
22-Jul-12
24-Jun-12
27-May-12
29-Apr-12
01-Apr-12
04-Mar-12
05-Feb-12
08-Jan-12
11-Dec-11
13-Nov-11
16-Oct-11
18-Sep-11
21-Aug-11
5
24-Jul-11
26-Jun-11
10
29-May-11
01-May-11
03-Apr-11
06-Mar-11
06-Feb-11
09-Jan-11
12-Dec-10
14-Nov-10
Freedom Foods - 4 weekly sales - £m
20
15
In 52 weeks 41% of GB households
have purchased Freedom Food
Freedom Food Trading Indices
Sainsbury’s 383
Co-operative 305
The Agenda
– External Pressures
– The Squeezed Middle
– Seeking Differentiation
• Instore Theatre
• Own Label
• Ethics & Provenance
>
– Online
– The future
Total Internet Grocery - Rolling 12 w/e growth
22
21
19
20
19
18
18
16
16
15
15
15
17
22
20
19
18
18
16
16
17
17
17
16
17
14
04- 01- 29- 27- 24- 22- 19- 16- 14- 11- 09- 06- 03- 03- 31- 28- 26- 23- 21- 18- 15- 13- 10- 08- 05- 02Mar- Apr- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb12 12 12 12 12 12 12 12 12 12 12 13 13 13 13 13 13 13 13 13 13 13 13 13 14 14
Total Grocery Internet
Lifestage Signatures
12
10
8
6
4
2
0
Pre-Family
Young
Family 0-4
Years
Middle
Family 5-9
Years
Family 10+
Years
Older
Dependents
52 w/e Jan 05 2014
Empty
Nesters
Retired
Total Grocery Internet
Lifestage Signatures
12
10
8
6
4
2
0
Pre-Family
Young
Family 0-4
Years
Middle
Family 5-9
Years
Family 10+
Years
Older
Dependents
52 w/e Jan 05 2014
Empty
Nesters
Retired
Total Grocery Internet
Lifestage Signatures
12
10
8
6
4
2
0
Pre-Family
Young
Family 0-4
Years
Middle
Family 5-9
Years
Family 10+
Years
Older
Dependents
52 w/e Jan 05 2014
Empty
Nesters
Retired
Trading Index
Internet Delivery
Organic
185
Frozen
Ambient Groceries
Fresh+Chilled
121
103
99
52 w/e Jan 05 2014
Chilled / Fresh
Frozen
Trading Index
Internet Delivery
Fresh Poultry
120
Fresh Beef
Fresh Lamb
Fresh Pork
95
86
82
52 w/e Jan 05 2014
The Agenda
– External Pressures
– The Squeezed Middle
– Seeking Differentiation
• Instore Theatre
• Own Label
• Ethics & Provenance
– Online
>
– The future
Till Roll Totals Expenditure Trends
Total Bargain
Stores
Total Grocers
12 Feb 02 2014 y/y % Change
15
2
HOUSEHOLD PENETRATION %GB
Tesco
Asda
Sainsbury's
Total Bargain Stores
Morrisons
The Co-operative
79
79
60
60
59
59
51
52
48
49
39
Aldi
37
30
Iceland
35
33
Lidl
33
30
Waitrose
31
19
Independents
20
21
Farmfoods
19
11
12 w/e 03 Feb 2013
13
12 w/e 02 Feb 2014
!
GROWTH:
>
Aldi +31%
Lidl +13%
Waitrose +9%
Tesco Finest +12%
Sainsbury’s TTD +9%
Organic +7%
Bargain Stores +15%
Internet +20%
edward.garner@kantarworldpanel.com
twitter edgarner