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Food & Grocery in the UK | Verdict Sector Report

Food & Grocery in the UK | Verdict Sector Report

Summary

Despite its negative impact on inflation, the on-going price activity in the market will start to result in a recovery in volumes. In a sector once reliant on inflation for consistent growth, grocers will experience the slowest rates of value growth since the mid-1990s, at least until 2017, when the sector will return to a more normal pattern.

Key Findings

  • Use our market share & channels of distribution to find out which retailers and channels are set to grow or decline significantly in the next 5 years
  • Assess your competitive strategies in the light of our grocery market data by retailer type, space and store number
  • Discover our comprehensive analysis of the key issues set to impact the food & grocery market over the next five years
  • Identify the market growth drivers and inhibitors and implement our strategies to improve sales growth potential
Summary

Both a driver and an inhibitor, the global trend for commodity price rises will limit the longevity of any price investment made by the Big Four supermarkets, as there is little room to dilute margin and only so far cost cutting can go.

Growth rates for the discounters will slow significantly in the coming years. New customers will be harder to come by as their acceptance among consumers has increased significantly. Fresh food will be a battleground for the discounters.

Reasons To Buy
  • What is the food & grocery market size and how will it develop over the next five years?
  • What is the direction of growth in food & grocery expenditure by category over the next five years?
  • Which channels have performed the best over the last five years, and which channels have seen their share of the market decline?
  • What are the key issues that will impede or maximize future growth opportunities?
  • What strategies can I put in place to help drive sales and protect sales densities and profitability from falling?


  • Outlook
    • Overview
    • Main Conclusions
      • Superficial price cuts will have limited impact
      • Inflation will dictate the next five years
      • Competition facing Big Four will intensify
      • Space growth continues
      • but takes a different form
      • Grocers must not neglect their larger stores
      • Omnichannel not just online
      • Greater online synergy between food & non-food will emerge
      • Price war set to continue
      • Value players will continue to stake their claim
  • Recommendations
    • Overview
    • Key Take Outs
  • Market Size
    • Overview
    • Definitions
      • Table Food & grocery products definition, 2015
      • Table Grocers and food specialists definitions, 2015
    • Expenditure
      • Table Food & grocery expenditure, inflation, volume and value, 2010-15e
      • Table Food expenditure, inflation, volume and value and share of sector, 2010-15
      • Table Non-durable household goods expenditure, inflation, volume and value and share of sector, 2010-15e
      • Table Soft drinks expenditure, inflation, volume and value and share of sector, 2010-15e
      • Table Alcoholic drinks expenditure, inflation, volume and value and share of sector, 2010-15e
      • Table Tobacco expenditure, inflation, volume and value and share of sector, 2010-15e
    • Grocers' and Food Specialists' Sales
      • Table Grocers' and food specialists' sales at current and constant prices, 2010-15e
      • Table Channels of distribution (%), 2010-15e
      • Table Grocery market size by retailer type continued, 2005-15e
      • Table Grocery space by retailer type, 2005-15e
      • Table Grocery store numbers by retailer type, 2005-15e
  • Market Forecast
    • Overview
    • Definitions
      • Table Grocers and food specialists definitions, 2015
      • Table Food & grocery products definition, 2015
    • Summary
      • Key findings
      • Strategies for success
    • Expenditure
      • Key findings
      • Expenditure growth supported by inflation
        • Table Food & grocery expenditure, inflation, volume and value, 2015e-20e
        • Table Food expenditure, inflation, volume and value and share of sector, 2015e-20e
        • Table Bakery and cereals expenditure, inflation, volume and value and share of sector, 2015e-20e
        • Table Dairy products expenditure, inflation, volume and value and share of sector, 2015e-20e
        • Table Fruit and veg expenditure, inflation, volume and value and share of sector, 2015e-20e
        • Table Hot drinks expenditure, inflation, volume and value and share of sector, 2015e-20e
        • Table Meat and fish expenditure, inflation, volume and value and share of sector, 2015e-20e
        • Table Oils and fats expenditure, inflation, volume and value and share of sector, 2015e-20e
        • Table Pets, petcare and petfood expenditure, inflation, volume and value and share of sector, 2015e-20e
        • Table Sugar and sweet products expenditure, inflation, volume and value and share of sector, 2015e-20e
        • Table Other foods expenditure, inflation, volume and value and share of sector, 2015e-20e
        • Table Non-durable household goods expenditure, inflation, volume and value and share of sector, 2015e-20e
        • Table Soft drinks expenditure, inflation, volume and value and share of sector, 2015e-20e
        • Table Alcoholic drinks expenditure, inflation, volume and value and share of sector, 2015e-20e
        • Table Wine expenditure, inflation, volume and value and share of sector, 2015e-20e
        • Table Spirits expenditure, inflation, volume and value and share of sector, 2015e-20e
        • Table Beer expenditure, inflation, volume and value and share of sector, 2015e-20e
        • Table Tobacco expenditure, inflation, volume and value and share of sector, 2015e-20e
    • Grocers' and Food Specialists' Sales
      • Key findings
        • Table Sources of growth at food & grocery specialists (%), 2010-20e
        • Table Grocers' and food specialists' sales at current and constant prices (£m), 2015e-20e
        • Table Channels of distribution (%), 2015e-20e
        • Table Grocery market size by retailer type, 2010-20e
        • Table Grocery space by retailer type, 2010-20e
        • Table Grocery store numbers by retailer type, 2010-20e
    • Quarterly Expenditure Forecasts
      • Food & grocery
        • Table Food & grocery expenditure (£m) and growth (%), quarterly, 2014-17e
        • Table Food expenditure (£m) and growth (%), quarterly, 2014-17e
        • Table Soft drinks expenditure (£m) and growth (%), quarterly, 2014-17e
        • Table Alcoholic drinks expenditure (£m) and growth (%), quarterly, 2014-17e
        • Table Tobacco expenditure (£m) and growth (%), quarterly, 2014-17e
        • Table Non-durable household goods expenditure (£m) and growth (%), quarterly, 2014-17e
  • Channel Shares
    • Overview
    • Food & Grocery Online
      • Outlook
      • Amazon threat a serious one for the grocers
      • Click & collect and PUDO remain insignificant
      • Minimum spend increases are vital
      • Online grocery growth slows as market begins to mature
        • Table Online food & grocery market, 2010-20e
      • Food share of click & collect will decline
        • Table Click & collect food & grocery market, 2014-20e
      • PUDO is insignificant, impractical and will remain so
        • Table PUDO food & grocery market, 2014-20e
        • Table Online food & grocery shopping population, 2014-20e
      • Spend per head to rise as greater proportion goes online
      • Gender breakdown reflects the wider market
        • Table Gender breakdown of online food & grocery market, 2014
      • Significant growth in shopping population across the board
      • Tesco dominates online, as fledgling Morrisons overtakes Waitrose
  • Market Shares
    • Overview
    • Expenditure Share
      • Sainsbury's set to overtake Asda by keeping out of price wars
        • Table Grocers' share of food & grocery products (%), 2010-15e
  • Sector Trends
    • Overview
    • Price War will have Minimal Impact on the Sector
      • Cuts across essentials will help, but consumers still stretched
      • Price marketing isn't working
    • The Discounters must Build on their Success During the Downturn
      • Changing shopping habits will help the discounters grow
      • The value players must adapt to survive
      • Store expansion must form the basis of growth
      • The online channel cannot be ignored, but must not become the focus
    • Larger Stores Cannot be Ignored Despite Underperforming Against Convenience
      • Table Food & grocery store format definitions, 2014
      • Convenience stores drive higher sales densities for grocers
        • Table Sales density by store format (£/sq ft), 2009-14e
      • Top-up shopping trend continues, keeping focus on convenience
        • Table Store portfolio change at Tesco and Sainsbury's in their last three financial years, 2014
      • Larger stores are being overhauled
      • Retailers must innovate to continue driving convenience growth
    • Grocers must React to Growth Opportunities in the Online Market
      • Younger, more affluent shoppers drive demand for online food & grocery shopping
        • Table Profile of food & grocery online shoppers and the total online market (%), 2014
      • Home delivery continues to dominate the online market
        • Table Online food & grocery market split by fulfilment method (£m), 2014 and 2019e
        • Table Online food & grocery shoppers stating how they currently use, and will use in the future, alternatives to home delivery (%), 2014
        • Table Device usage by online food & grocery shoppers, 2014
      • Integration makes success online more likely
      • Tesco ranks highest for customer conversion online
  • Major Competitors
    • Overview
    • Sales
      • Polarisation continues as discounters and Waitrose outperform
        • Table Leading grocers' key operating statistics, 2015
      • Only four of the top grocers are able to increase profits
      • The majority of the top grocers have seen their margins squeezed over time
    • Space
      • Aldi and Lidl are expanding aggressively
        • Table Leading grocers' store portfolios, 2015
        • Table Leading grocers' food & grocery space, 2015
      • Discounters increasingly drive sales from smaller space
    • Space Allocation
      • Nearly one third of grocers' space is occupied by non-food on average
      • Asda has the highest proportion of non-food in its sales mix
        • Table Grocery space allocation of the Big Four supermarkets (%), 2015
        • Table Grocery space allocation of the other supermarkets (%), 2015
  • Methodology
    • Methodology: Outlook
      • Market size
      • Market shares
      • Sales density calculation
    • Methodology: Recommendations
      • Market size
      • Market shares
      • Sales density calculation
    • Methodology: Market Size
      • Market size
      • Market shares
    • Methodology: Market Forecast
    • Methodology: Market Shares
      • Market size
      • Market shares
      • Sales density calculation
    • Methodology: Sector Trends
      • Market size
      • Market shares
  • Appendix
    • Market Size
    • Market Forecast
    • About Verdict Retail
    • Disclaimer

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