UK Food & Grocery Retailers 2010

Expenditure growth is set to rise by just 3.4% to £124.0bn in 2010, the slowest rate of growth in sector since 2006 and we forecast subdued growth in the coming years comparative to its recent performance. It will become increasingly important for retailers in the sector to adjust strategies and propositions in response to intensifying competitive pressures allied to emerging consumer trends.Features and benefits

• Market size, sales and growth rates for the UK Food & Grocery sector overall and at category level.
• Analysis of the key issues that are impacting the sector and strategies to exploit growth opportunities.
• Comprehensive analysis of the online food & grocery market, including market size forecasts to 2014.
• Space allocation by product category across the leading operators.
• Profiles of key players operating in the sector: including operating statistics and market share analysis.Highlights

The sector has been impacted by the deteriorating economic climate and severely reduced household incomes. Consumers are increasingly prepared to trade down to value ranges and reduce weekly shopping budgets. However, while consumers remain price-led, product freshness, quality and provenance is taking greater precedence in purchasing decisions.Investment in online propositions will be increasingly important to effectively meet consumers’ increasing convenience demands. As consumers switch between instore and online to buy groceries, while expecting click & collect service when buying non-food online, leveraging multichannel capabilities will be key to success for the supermarkets.In responding to emerging shopping habits it is imperative that grocers pursue balanced and flexible space expansion. We expect smaller formats will increasingly form the focus of expansion plans as grocers exploit growth potential in convenience store retailing, with larger stores used to enhance non-food and leverage multichannel capabilities.Your key questions answered

• How will emerging economic and demographic trends impact the sector?
• Which operators have performed well during the economic downturn?
• Which operators have the best potential once the economy recovers?
• What are the avenues for growth and how can they be exploited?
• How will the online channel perform over the next five years and which factors will drive growth?

Table of contents

Overview
New avenues for growth emerge as inflation eases and consumer habits change
Executive Summary
Changing market dynamics alter avenues for growth
Spending growth more elusive due to more subdued food inflation
Volume growth recovers
Opportunities to address demographic trends
Future not just online but multichannel
Smaller formats for new stores
Extensions and maximising existing space
Grocers must respond to a new consumer mindset
Morrison and Asda show why strategies should focus on more than just value credentials
Non-food key driver
Big Four threaten non-retail, too - even banks
Oulook
Grocers need new strategies and propositions …
Changing market dynamics
New avenues for growth
Key action points
Market Analysis
Market continues to consolidate as superstores take greater share of spend
Food & grocery expenditure
UK Online Food & Grocery Market
Double digit growth till 2014
Food & grocery online shopping population
Frequency
Spend per head
Online food & grocery spend to 2014
Major players
Market share
Key retailers
Outlook
Company Data Analysis
Market shares
Key operating statistics
Advertising
Asda
Netto acquisition will sustain flagging growth
Recent key events
Proposition
Financials
Space
Sector performance - food & grocery
Market shares
Outlook
The Co-operative Group
Getting to grips with Somerfield
Recent key events
Proposition
Financials
Space
Sector performance - food & grocery
Market shares
Outlook
Iceland
Recovery process still on track
Recent key events
Proposition
Financials
Space
Sector performance - food & grocery
Market shares
Outlook
Marks & Spencer
Weak recovery in food performance
Recent key events
Proposition
Financials
Space
Sector performance - food & grocery
Market shares
Outlook
Morrisons
Focus on profitable sales growth
Recent key events
Proposition
Financials
Space
Sector performance - food & grocery
Market shares
Outlook
Ocado
Focuses on driving scale to compete with larger competitors
Recent key events
Proposition
Financials
Sector performance - food & grocery
Market shares
Outlook
Sainsbury
Faster growth driven by space expansion
Recent key events
Proposition
Financials
Space
Sector performance - food & grocery
Market shares
Outlook
Tesco
Back on track following a challenging 2009
Recent key events
Proposition
Financials
Space
Sector performance - food & grocery
Market shares
Outlook
Waitrose
Begins vigorous expansion
Recent key events
Proposition
Financials
Space
Sector performance - food & grocery
Market shares
Outlook
Hard Discounters
Discount sector boom is over

ALDI
Lidl
Smaller Grocery Players
Niche operators survive market consolidation
Booths
Farmfoods
Symbol Groups
Boost from local shopping trend and higher standards
Costcutter
Musgrave
Premier (Booker)
Spar
Appendix
Definitions
Methodology
Further reading
Ask the analyst
Verdict consulting
Disclaimer

TABLE OF FIGURES
Figure 1: New avenues of growth in food & grocery retailing 2010-2014
Figure 2: The market dynamics have changed 2010
Figure 3: Food & grocery price inflation element of consumer spend 2007-2014
Figure 4: Change in share of major grocery distribution channels 2014 on 2009
Figure 5: Real household disposable income growth trend 2008-2014
Figure 6: Protect and build share by adding space 2010-2014
Figure 7: New Tesco store, Kingsbridge, Devon 2010
Figure 8: Sainsbury's store improvements of Garratt lane, Wandsworth, London 2010
Figure 9: New mezzanine level at Asda, Clapham Junction, London 2010
Figure 10: Maximising space by redesigning and adapting to customer needs - Carrefour, Ecully and Venissieux, France 2010
Figure 11: Consumer profile and mindset have changed 2010
Figure 12: Profile of food & grocery shoppers - by age bracket 2006-2010
Figure 13: Food & grocery loyal main users identifying drivers of loyalty % 2006-2010
Figure 14: Low prices not enough to entice spend 2010
Figure 15: Adverts convey more supermarket credentials 2010
Figure 16: Shopping habits and behaviour are changing 2010-2014
Figure 17: Products exploiting demand for convenient meal solutions 2010
Figure 18: Use of private label ranges to exploit shopping habits and emerging trends 2010
Figure 19: Leveraging multichannel capabilities - Tesco Direct 2010
Figure 20: Product innovation to capitalise on consumer behaviour and trends 2010
Figure 21: Food & grocery retailers share of total consumer spending 2000 to 2014
Figure 22: Food & Grocery retailers share of total retail spending 1999 to 2014
Figure 23: Total food & grocery retail sales and year-on-year change % 2000-2010
Figure 24: Channels of distribution - share of total grocery market by retail sales 2005-2010
Figure 25: Change % in total grocery market sales by retailer type 2010 on 2005
Figure 26: Change % in total grocery space by retailer type 2010 on 2005
Figure 27: Change % in annual sales densities by retailer type 2010 on 2005
Figure 28: Change % in total grocery store numbers by retailer type 2010 on 2005
Figure 29: Sources of growth in food & grocery expenditure 2000-2010
Figure 30: Change % in food & grocery expenditure by category 2005-2010
Figure 31: Online food & grocery spend and growth rate 2000-2010
Figure 32: Age breakdown of internet food & non-food shopping usage % 2009
Figure 33: Spend per head on food & grocery online 2009?2014
Figure 34: Value and growth of online food & grocery market 2000-2014
Figure 35: Online share of total food & grocery spend 2000-2014
Figure 36: Drivers and hindrances to growth of online food & grocery market 2010-2014
Figure 37: Sales of major online grocery retailers 2009 and 2010e
Figure 38: Share of spend of major online food & grocery retailers 2010e on 2005
Figure 39: Top Eight food online retailers - where food & grocery shoppers bought online 2008 and 2009
Figure 40: Comparison of the picking models in online food & grocery retailing 2010-2014
Figure 41: Tesco online food & grocery sales in calendar 2005-2010e
Figure 42: Tesco share of food & grocery spend online 2005-2010e
Figure 43: Sainsbury online food & grocery sales in calendar 2005-2010e
Figure 44: Sainsbury share of food & grocery spend online 2005-2010e
Figure 45: Asda online food & grocery sales in calendar 2005-2010e
Figure 46: Asda share of food & grocery spend online 2005-2010e
Figure 47: Ocado food & grocery sales 2005 to 2010
Figure 48: Ocado’s share of online food & grocery market 2005 to 2010
Figure 49: Retailers share of the total grocery market 2010e
Figure 50: Market shares % 2005 and 2010
Figure 51: Change in operating profit % 2009/10 on 2008/09
Figure 52: Change in sales area % 2009/10 on 2008/09
Figure 53: Average space allocation by category 2010 vs 2009
Figure 54: Asda UK sales and growth to December 2005-2010e
Figure 55: Asda UK operating profit to December 2004-2009
Figure 56: Asda sales density 2005-2010e
Figure 57: Asda food & grocery sales in calendar years 2005-2010e
Figure 58: Netto food & grocery sales in calendar years 2004-2009e
Figure 59: Asda share of total market held by food & grocery retailers 2005-2010e
Figure 60: Asda share of market in food & grocery products 2005-2010e
Figure 61: Netto share of total market held by food & grocery retailers 2004-2009e
Figure 62: Netto share of market in food & grocery products 2004-2009e
Figure 63: Co-operative Group food retail UK sales and growth to * January 2005-2010
Figure 64: Co-operative Group food retail operating profit to * January 2005-2010
Figure 65: Co-operative Group food retail UK sales density to * January 2005-2010
Figure 66: Co-operative Group food & grocery sales in calendar years 2005-2010
Figure 67: Co-operative share of total market held by food & grocery retailers 2005-2010e
Figure 68: Co-operative share of market in food & grocery products 2005-2010e
Figure 69: Iceland UK sales and growth to March 2005-2010
Figure 70: Iceland group operating profit to March 2005-2010
Figure 71: Iceland UK sales density to March 2005-2010
Figure 72: Iceland food & grocery sales in calendar years 2005-2010e
Figure 73: Iceland share of total market held by food & grocery retailers 2005-2010e
Figure 74: Iceland share of market in food & grocery products 2005-2010e
Figure 75: Marks & Spencer total UK sales and growth to March 2005-2010
Figure 76: Marks & Spencer group total operating profit to March 2005-2010
Figure 77: Marks & Spencer UK food sales and growth to March 2005-2010
Figure 78: Marks & Spencer UK food & grocery sales density to March 2005-2010
Figure 79: Marks & Spencer sales of food & grocery products in calendar years 2005-2010
Figure 80: Marks & Spencer food sales as share of total market held by food & grocery retailers 2005-2010e
Figure 81: Marks & Spencer share of market in food & grocery products 2005-2010e
Figure 82: Morrison UK sales and growth to January 2005-2010
Figure 83: Morrison UK operating profit to January 2005-2010
Figure 84: Morrison sales density to January 2005-2010
Figure 85: Morrison food & grocery sales in calendar years 2005-2010e
Figure 86: Morrison share of total market held by food & grocery retailers 2005-2010e
Figure 87: Morrison share of market in food & grocery products 2005-2010e
Figure 88: Ocado UK sales and growth to November 2005-2010e
Figure 89: Ocado food & grocery sales in calendar years 2005-2010e
Figure 90: Ocado share of total market held by food & grocery retailers 2005-2010e
Figure 91: Ocado share of market in food & grocery products 2005-2010e
Figure 92: Sainsbury UK sales and growth to March 2005-2010
Figure 93: Sainsbury operating profit to March 2005-2010
Figure 94: Sainsbury UK sales density to March 2005-2010
Figure 95: Sainsbury food & grocery sales in calendar years 2005-2010e
Figure 96: Sainsbury share of total market held by food & grocery retailers 2005-2010e
Figure 97: Sainsbury share of market in food & grocery products 2005-2010e
Figure 98: Tesco UK sales and growth to February 2005-2010
Figure 99: Tesco group operating profit to February 2005-2010
Figure 100: Tesco UK sales density to February 2005-2010
Figure 101: Tesco food & grocery sales in calendar years 2005-2010e
Figure 102: Tesco share of total market held by food & grocery retailers 2005-2010e
Figure 103: Tesco share of market in food & grocery products 2005-2010e
Figure 104: Waitrose UK sales and growth to March 2005-2010
Figure 105: Waitrose operating profit to March 2005-2010
Figure 106: Waitrose sales density to March 2005-2010
Figure 107: Waitrose food & grocery sales in calendar years 2005-2010e
Figure 108: Waitrose share of total market held by food & grocery retailers 2005-2010e
Figure 109: Waitrose share of market in food & grocery products 2005-2010e
Figure 110: Aldi share of total market held by food & grocery retailers 2005-2010e
Figure 111: Aldi share of market in food & grocery products 2005-2010e
Figure 112: Lidl share of total market held by food & grocery retailers 2005-2010e
Figure 113: Lidl share of market in food & grocery products 2005-2010e

TABLE OF TABLES
Table 1: Grocers & food specialists definition 2010
Table 2: Food & grocery retail sales 2000-2010
Table 3: Channels of distribution 2005-2010
Table 4: Total grocery market size by retailer type 2000-2010
Table 5: Total grocery space by retailer type 2000-2010
Table 6: Annual sales densities by retailer type 2000-2010
Table 7: Total grocery store numbers by retailer type 2000-2010
Table 8: Total food & grocery market consumer expenditure 2000-2010
Table 9: Non-durable household goods consumer spend 2000-2010
Table 10: Total food market consumer expenditure 2000-2010
Table 11: Soft drinks market consumer expenditure 2000-2010
Table 12: Alcoholic drinks consumer expenditure 2000-2010
Table 13: Tobacco products consumer expenditure 2000-2010
Table 14: Summary of online food & grocery shoppers and spend 2009
Table 15: Online food & grocery shopping population 2007?2014
Table 16: Frequency of shopping for food & grocery online 2009
Table 17: Spend per year on food & grocery online 2009
Table 18: Online food & grocery spend, sector penetration and share of total online 1999-2014
Table 19: Sales of major online food & grocery players 2004-2010e
Table 20: Share of spend of major online food & grocery retailers 2005-2010e
Table 21: Shares of total sales via food & grocery retailers 2005-2010e
Table 22: Leading grocery retailers operating statistics 2009/10
Table 23: Leading grocery retailers store profiles 2009/10
Table 24: Grocery space allocation - retailers A-F 2010
Table 25: Grocery space allocation - retailers A-F (continued) 2010
Table 26: Grocery space allocation - retailers G-M 2010
Table 27: Grocery space allocation - retailers G-M (continued) 2010
Table 28: Grocery space allocation - retailers N-W 2010
Table 29: Grocery space allocation - retailers N-W (continued) 2010
Table 30: advertising media expenditure 2004-2009
Table 31: Asda company overview 2010
Table 32: Asda retail proposition 2010
Table 33: Asda UK key operating statistics 2005-2010e
Table 34: Netto UK key operating statistics 2004-2009e
Table 35: Asda UK trading record 2000-2010e
Table 36: Netto UK trading record 1999-2009e
Table 37: Asda store portfolio 2000-2010e
Table 38: Netto UK store portfolio 1999-2009e
Table 39: Asda space allocation 2010
Table 40: Asda space allocation (continued) 2010
Table 41: Asda estimated sales mix 2009
Table 42: Co-operative Group company overview 2010
Table 43: Co-operative Group retail proposition 2010
Table 44: Co-operative Group food retail key operating statistics 2005-2011e
Table 45: Co-operative Group food retail trading record 2002-2011e
Table 46: Co-operative Group food retail UK store portfolio 2000-2011e
Table 47: Co-operative Group food retail space allocation 2010
Table 48: Co-operative Group food retail space allocation (continued) 2010
Table 49: Iceland company overview 2010
Table 50: Iceland retail proposition 2010
Table 51: Iceland key operating statistics 2005-2010
Table 52: Iceland trading record 2000-2010
Table 53: Iceland UK store portfolio 2000-2010
Table 54: Iceland space allocation 2010
Table 55: Iceland space allocation (continued) 2010
Table 56: Marks & Spencer company overview 2010
Table 57: Marks & Spencer retail proposition 2010
Table 58: Marks & Spencer UK key operating statistics 2005-2010
Table 59: Marks & Spencer UK trading record 2000-2010
Table 60: Marks & Spencer store portfolio 2000-2010e
Table 61: Marks & Spencer store portfolio (food) 2000-2010e
Table 62: Marks & Spencer space allocation 2010
Table 63: Marks & Spencer space allocation (continued) 2010
Table 64: Marks & Spencer trading record (food) 2000-2010
Table 65: Morrison company overview 2010
Table 66: Morrison retail proposition 2010
Table 67: Morrison key operating statistics 2005-2010
Table 68: Morrison trading record 2000-2010
Table 69: Morrison store portfolio 2000-2010
Table 70: Morrison space allocation 2010
Table 71: Morrison space allocation (continued) 2010
Table 72: Morrison estimated sales mix 2009/10
Table 73: Ocado company overview 2010
Table 74: Ocado retail proposition 2010
Table 75: Ocado UK key operating statistics 2005-2010e
Table 76: Ocado UK trading record 2000-2010e
Table 77: Sainsbury company overview 2010
Table 78: Sainsbury retail proposition 2010
Table 79: Sainsbury key operating statistics 2005-2010
Table 80: Sainsbury trading record 2000-2010
Table 81: Sainsbury UK store portfolio
Table 82: Sainsbury space allocation 2010
Table 83: Sainsbury space allocation (continued) 2010
Table 84: Sainsbury estimated sales mix 2009/10
Table 85: Tesco company overview 2010
Table 86: Tesco retail proposition 2010
Table 87: Tesco UK key operating statistics 2005-2010
Table 88: Tesco UK trading record 2000-2010
Table 89: Tesco UK store portfolio 2000-2010
Table 90: Tesco space allocation 2010
Table 91: Tesco space allocation (continued) 2010
Table 92: Tesco estimated sales mix 2009/10
Table 93: Waitrose company overview 2010
Table 94: Waitrose retail proposition 2010
Table 95: Waitrose key operating statistics 2005-2010
Table 96: Waitrose trading record 2000-2010
Table 97: Waitrose store profile 2000-2010
Table 98: Waitrose space allocation 2010
Table 99: Waitrose space allocation (continued) 2010
Table 100: Waitrose estimated sales mix 2009/10
Table 101: Aldi UK key operating statistics 2005-2010e
Table 102: Aldi UK sales record 2000-2010e
Table 103: Aldi UK store numbers 2000-2010e
Table 104: Aldi space allocation 2010
Table 105: Aldi space allocation (continued) 2010
Table 106: Lidl UK key operating statistics 2005-2010e
Table 107: Lidl UK sales record 2000-2010e
Table 108: Lidl UK store numbers 2000-2010e
Table 109: Lidl space allocation 2010
Table 110: Lidl space allocation (continued) 2010
Table 111: Booths facts 2010
Table 112: Farmfoods facts 2010
Table 113: Costcutter facts 2010
Table 114: Musgrave facts 2010
Table 115: Premier (Booker) facts 2010
Table 116: SPAR facts 2010

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