Food Retailer Trends
March 2011
Adam Goodman
Vertical Insight Manager
Contents
Food Retailers – Top News
“It was not a good Christmas for food retailers. In December they saw a - 3.4% volume
decline, the largest volume fall since the retail sales series began in 1988.” (Mintel, Feb 2011)
• Food retailers‟ volume sales fell by 3.4% in December 2010, the largest
volume fall since records began.
• Consumer spending on food, beverages and tobacco picked up in the
second half of 2010, reaching 7.7% year-on-year growth in Q3.
– This appears to indicate consumers bought fewer, more expensive foods –
and that food retailers lost some share of the market – possibly to internet
pure players.
• Between December 2009 and December 2010 consumer food prices
rose by +5.7%, underpinning the increased spending on food.
• J. Sainsbury posted 14-week Christmas like-for-likes excluding petrol up
3.6%, recording a +20% rise in sales of its top-tier Taste the Difference
range in the week before Christmas.
• Waitrose saw its best-ever Christmas performance.
• Tesco‟s UK like-for-likes over a six-week Christmas period were up
+0.6%, lower than Morrisons‟ 1% gain.
• 2011 is likely to be characterised by further rises in inflation in food. This
could stifle any further trading up by consumers.
Source: Mintel, UK Retail Briefing Food Focus, Feb 2011
Consumer Trends: Food Retailers‟
The chart below shows the UK Food Retailers‟ Sales as a % of all Retail from 2005-2010
Mintel
NB: Note truncated scale exaggerates the trend
SOURCE: ONS/MINTEL
“While the Index results for January show a very encouraging start to the year for e-retailers,
it is important to note this strong growth is on the back of the lowest-ever annual growth
recorded in January last year when the e-retail market grew just 4.6%.” Tina Spooner, Director of
Information at IMRG
In-store food shopping will be very much focused
on leisure, discovery and fulfilment
Most functional and convenience shopping will be delivered through online shopping by
2020. UK is and will be largest player in Europe.
% making purchases on the internet, by country (nVision forecast, 2009-based projection)
Source: Eurostat Survey on ICT Usage/nVision | Base: All individuals aged 16-74
Groceries & Personal Care – a
consumer snapshot
43% are aged 35-54
72% have no children in the household
Medium household income
65% are the main decisionmaker for the category
They are brand loyal, rather
than early adopters
Make quick purchase decisions,
but prepared to shop around for
the best value
Average number of brands
considered: 3
Average number of retailers
considered: 2
Source: Microsoft & Carat New Shopper Journeys Europe Study 2010 : Groceries & Personal Care n=2622
50% normally buy 2-3 times a week
or more often
62% decide & buy on day of purchase
On average they spend
£196 per month
Buyer type:
66% Habitual
28% Impulse
6% Research
Most recent purchases:
77% Fruit & veg
75% Baked goods
65% Soft drinks, juices, alcohol
58% Chilled or frozen products
Purchase triggers:
41% Ran out of the item
20% A treat for themselves
20% Wanted to try a new brand
Groceries: The future is bright for digital…
Which of the following are you likely to do in the future?
75%
16%
Make a
purchase online
12%
Send
pictures/videos
of potential
purchases
8
10
Ask opinions
from people
don‟t personally
know on forums,
blogs, social
networks
13%
Use mobile to
research whilst
in-store
8%
7%
Make a
purchase
via a mobile
Use mobile to
interact with
billboards/
download
special offers etc
via the phone
of Groceries & Personal Care consumers believe they will
be utilising digital technologies for their future purchases
Source: Microsoft & Carat New Shopper Journeys Europe Study 2010 : Groceries & Personal Care n=2622
Retail & Online Retailers Spend
• For the most part, Retail advertisers tend to spend the most on
advertising in the Press and on TV
• On average the industry currently spends around 5% on Internet
advertising (not including search). 2010 expenditure has increased
+1% from that of 2009
Source: NNR adDynanix : Jan – Nov 2010
8
Display Advertisement Publisher Location:
Reach and Frequency (Retail – Food)
• Microsoft sites delivered both the highest number of impressions and the highest number
of unique visitors for Food Retailers in Dec.
Source: ComScore adMetrix : December 2010
Display Advertisement Publisher Location:
Reach and Frequency (Retail – Food)
• Microsoft sites also have the highest share of Food Retailers ad impressions, however
average frequency is very competitive and far less than eBay, AOL and Glam Media.
Source: ComScore adMetrix : December 2010
Top Advertiser by Impression and UU by ComScore
AdMetrix (Food Retailers)
Source: ComScore AdMetrix – December 2010
Food & Grocery Search Traffic KPIs
Traffic
• Searches for food & grocery generics increased by
+29% between 2009 and 2010
•
Searches for food & grocery generics increased by
+29% Oct to Dec 2010 v Oct to Dec 2009.
•
Searches for food and grocery however increased
by 43% in Jan 2011 v Jan 2010
Top Insights:
• The large grocers were the only channel to gain
sales in 2010 (Mintel)
•
Mobile applications will be designed to help users
eat and live more healthily. Linked to a country's
national health service, it holds information on all
their medical history and monitors body changes
throughout the day – making recommendations on
intake and consumption habits (nVision)
1. Microsoft Advertising Intelligence Tool
Food & Grocery Demographics and Daily Trends
16%)
35-49
31% . 25-34
27%
59%
1.Microsoft Advertising Intelligence Tool – December 2010 to Feb 2011 data
Groceries & Personal Care shoppers are using online display
media – right now
63%
Top performing Microsoft
Advertising properties:
59%
51%
46%
35%
31%
ALMOST
2 of Groceries & Personal Care consumers are found on
3 Microsoft Advertising – more than any other online property
Source: Microsoft & Carat New Shopper Journeys Europe Study 2010 : Groceries & Personal Care n=2622
A number of touch points to consider
Microsoft Advertising products can connect you with your consumers
at each point in the path to purchase:
Source: Microsoft & Carat New Shopper Journeys Europe Study 2010 : Groceries & Personal Care n=2622
Industry Insights
Food Retailers – Large Grocers benefit
• The large grocers were the only channel to gain sales in 2010. The off-licences and
tobacconists performed particularly weakly, but that is probably because of the demise
of Threshers. It may be that the strength of the larger grocers has been because they
picked up most of that business.
BREAKDOWN OF FOOD RETAILERS’ SALES, BY SUB-SECTOR, 2006-10
Source: Mintel UK Retail Briefing Food Focus UK. February 2011
Leading Retailers Share of „Food Retailers‟ Sales
2009/2010‟
Market shares based on food retailers’ sales of £133,628 million in 2009.
The pie chart below overstates the market shares
of the four leaders because the company sales
figures include fuel and other “non-retail” sales
which are not included in the total market size
figure
The pie chart below accounts for the estimate
proportion of the leading four retailers’ sales made up
of “nonretail sales” . Once these non-retail categories
are stripped out (such as petrol, restaurants and NHS
income, and business to business sales) Tesco,
Sainsbury, Asda and Morrison's share changed
Scrutiny of the whole journey of food
products
•
The Digital Revolution is already playing a role in making the full
journey of food products more transparent, as demonstrated by
websites like „Wheresyoursfrom.com‟ which enables consumers
to trace the exact origin of the eggs they buy.
•
By 2020, smartphone apps -like the Breadcrumbs one pictured
here which includes features like a summary of ingredients and
the date of manufacture -will have significantly accelerated and
amplified demand for detailed knowledge of the full journey of our
food.
•
Mobile devices will become sensors and RFID readers, allowing
consumers to interact with food in a much more detailed and
informed manner, providing data on exactly where foods originate
(when and how a product was produced, who came in contact
with it, whether it was ethically produced) -and detailing full
ingredient lists.
•
These mobile developments will vastly increase consumers‟
information expectations. They will stimulate new quality demands
within the whole food production process, in particular around
hyper-freshness and hyper-localism.
Source: nVision & Future Foundation, Beyond 2010
Retail M-Commerce
“The evolution of mobile technology has given rise to the empowered consumer: at the touch of a
button, almost anywhere, consumers can research products, companies, and even make purchases.”
(ForseeResults)
Forsee study of 10,000 UK visitors to the biggest e-retail sites in the UK (according to IMRG) stated:
Key findings:
• Shoppers are using mobile phones to access websites and
apps more than ever before – “32% of respondents have used
their phone to access a retailer website, and an additional 32%
indicated they plan to access retailer websites or mobile apps by
phone in the future”
• purchase behaviour is exploding – “8% of UK made purchase via
mobile at Christmas 2010”
• Shoppers use their phones for a variety of tasks – “47% of
shoppers used phone for price comparison reasons”
• Good experiences with mobile sites and apps have critical
cross-channel impact - “Shoppers who are highly satisfied with a
mobile experience say they are 32% more likely to buy from that
retailer online and 31% more likely to buy offline”
Source: Foresee Results, Jan 2011.
Retail M-Commerce
Source: Forseestudy of nearly 10,000 visitors to the biggest e-retail websites in the United Kingdom
In which of the following ways did you use
your phone while shopping in a store?
accessed that
store’s website
on their phone
accessed a
competitor’s
website on their
phone
“Applications and websites tailored to mobile shoppers are a musthave for retailers. As smartphone use increases, more customers will
turn to the mobile channel to find price and product information
before making a purchase.” (ForeseeResults)
Beyond 2020 Eating Habits
Consumers will also eat out of the home in a more spontaneous way as mobile technology
enables them to seamlessly locate food offers wherever they happen to be. They will no
longer need to plan their choices in advance and instead will almost always decide at the last
minute according to their mood, the latest live reviews, the location of their friends and
incentives offered by hospitality players.
Eating habits will be much more mobile, flexible and spontaneous
% who access the internet via their mobile phone at least once a month in the UK
“
Mobile applications will be
designed to help users eat
and live more healthily.
Linked to a country's
national health service, it
holds information on all their
medical history and
monitors body changes
throughout the day –
making recommendations
on intake and consumption
habits
“
Source: nVision & Future Foundation Research: Beyond 2010 Future of Food Beyond 2010
Base: 1,200 respondents aged 16+, GB
Microsoft Advertising & Carat Study
New Shopper Journeys‟
Retail brand marketing must respond to major shifts in
consumer behaviour as digital media and the
economic downturn transform consumers‟ shopping
habits.
„New Shopper Journeys‟, a study from Carat and
Microsoft Advertising, shows that shoppers no longer
pass through a standard purchase funnel. Retail brand
marketing must respond to new spheres of influence
and balance the role of bought, owned and earned
media in shaping shoppers‟ decisions
Find out more:
http://advertising.microsoft.com/uk/retail-brandmarketing-research
Alternatively speak to your Microsoft Advertising
representative to learn more about this study.
APPENDIX
Food & Grocery
Which?/ nVision: Most popular online
supermarkets
Ranking measured on a scale of 1-5 (1 being poor, 5 being excellent)
Source: Which?/nVision, 2010
Base: 2,661 respondents aged 16+, UK
“How interested would you be in any of the following services?
Demonstrations in the supermarket where a chef shows me how to
prepare better meals / dishes”
% who would be very or quite interested, by gender, age and social grade
Source: nVision Research, 2010
Base: 1,000 online respondents aged 16+, GB
Best reputation on environmental issues –
supermarket
Q. “For each of the following product/service categories, please write in the one brand that you feel
has the best reputation on environmental issues”
Source: Readers Digest European Trusted Brands Survey/nVision, 2010
Base: 1,276 respondents aged 20+, UK
Top 10 grocery retail markets in Europe
In billions of euros
IGD forecast
Source: Institute of Grocery Distribution (IGD)/nVision, 2010