Annual Forecasting Food & Grocery 2015

Market growth in food & grocery has been driven primarily by inflation in 2011 with volume growth suffering as consumers cut back on unnecessary spending. This report examines the prospects for the market over the next five years to 2015, analysing issues such as the impact of the economy, category performance and forecasts for both grocers and specialists.

Analysis of the impact and forecasts of the rate of inflation to 2015 for both specific retail channels and product categories Forecasts for the changes in retail channel share as grocers expand and specialists suffer Key issues and strategies up to 2015 for 15 key product categories within the food & grocery sector Evaluation of the differing paths to success and survival for grocers and specialist retailers in a difficult trading environment

Despite volume growth struggling, and even declining in certain categories, with consumer confidence low and unnecessary spending limited, spending on food & grocery continues to grow. This is attributable to high inflation levels, at 3.1% in 2011. We forecast inflation to decline slowly in the next five years reaching 2.6% in 2015.

Independent food specialists set to lose 0.8 percentage points share by 2015 as grocers expand into new categories, formats and geographical areas. Their growing focus on fresh and service will hit greengrocers, butchers, bakers, fishmongers and delicatessans. The rate of exit will decline as more specialised and innovative retailers survive.

Grocers continue to see space as their main avenue for growth with expansion into convenience formats and larger out-of-town stores, alongside improving geographical coverage. Retailers with existing strong coverage risk cannibalising sales through expansion encroaching on existing stores. Sales densities are at risk as new space continues to open.

When can I expect inflation to ease off and volumes to recover? How will space expansion impact sales densities in the next five years? What is the forecast for independent and specialist retailers as grocers expand and improve their offer?

Table of contents

OVERVIEW
•Summary
•Methodology

EXECUTIVE SUMMARY
•Introduction
•Scope
•Methodology
•Principle Sources

MARKET SUMMARY
•Value growth driven by inflation as volumes suffer…
?Market growth will be driven mainly by inflation as volume sales growth is constrained;
?Tough economic conditions will result in polarisation to the value and premium ends of the market;
?In spite of ongoing expansion by the Big Four, growing space will bring decreasing rewards as coverage reaches peak levels;
?Nevertheless, it will result in further market consolidation;
?Sales densities at risk as new store openings cannibalise existing space;
?Building customer loyalty will continue to be a focus as competition intensifies and loyalty schemes improve;
?Online and delivery process should be prioritised to meet growing consumer demand for convenient multichannel shopping;
?Independents and specialists will lose out to grocers and symbol groups;
?Off-licences & tobacconists face a struggle to survive.

APPENDIX
•Help and tips to use the annual forecasts
?Printing
?Copying data to Excel
?Viewing
?Inserting slides into your own presentations
•Ask the analyst
•Verdict consulting
•Disclaimer

TABLES
•Table: Principle sources of data and information

FIGURES
•Figure: Verdict forecasting methodology