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ReportsnReports – UK Non-food in Grocers 2011

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Verdict Research: Growth in the non-food market is set to become more elusive for grocers as pressures increase on discretionary spending and initial gains from entering new product categories begin …

Verdict Research: Growth in the non-food market is set to become more elusive for grocers as pressures increase on discretionary spending and initial gains from entering new product categories begin to wane. We highlight the key trends and drivers which will impact the channel going forward as well as providing forecasts for grocers’ sales in each of the non-food categories which they operate in.

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  • 1. UK Non-food in Grocers 2011Verdict Research: Growth in the non-food market is set to become more elusive for grocersas pressures increase on discretionary spending and initial gains from entering new productcategories begin to wane. We highlight the key trends and drivers which will impact thechannel going forward as well as providing forecasts for grocers’ sales in each of the non-food categories which they operate in.Buy Now: UK Non-food in Grocers MarketBrowse All: Latest Market Research ReportsFeatures and benefitsDiscover which non-food sectors provide the most growth opportunities for grocers and howthey must develop propositions to take advantage of theseUnderstand how grocers have performed in non-food using individual growth rates andmarket share analysis for the Big FourUse our comprehensive profiles of the Big Four players: Asda, Morrisons, Sainsbury’s, Tescoto ensure you are best prepared to defend market shareUnderstand how smaller grocers are building their non-food propositionsHighlightsThe non-food market has been badly impacted by tough economic conditions causing manyconsumers to cut back on discretionary spending. Growth in non-food sales for grocers isbeginning to slow. This is partly down to the difficult non food market, but also due to spacegrowth having less of an impact on non-food sales and slowing sales densities.Convenience has been a major driver of success for grocers in non-food and this is set toremain a key advantage that grocers need to leverage when looking for future growth.However, their convenience advantage over competitors will be eroded over time asmultichannel expansion allows competitors to provide added convenience for shoppers.Grocers must start addressing the areas in which they are weakest to build their appealfurther, particularly as non-food expansion remains high on the agenda for three of the BigFour and competition is set to become more intense. Building brand authority will befundamental to their success in a more competitive market.Your key questions answeredWhat should grocers do to develop their non-food propositions further and how can theybuild their authority in the sectors they operate in?How will non-food in grocers perform up until 2014 and what opportunities do individualcategories present?Which grocer threatens the most in the non-food sector and how can others protect theirmarket shares?Table Of ContentsExecutive SummaryKey findings
  • 2. In a challenging non-food market – grocers increase share;Gains lessen as market begins to mature;Tesco and Asda dominate …though Sainsbury’s makes rapid gains;Convenience becoming ubiquitous …meaning grocers must build brand authority in non-food sectors;Health & beauty is the sector in which grocers have the highest channel share;Opportunities remain in all sectors – particularly homewares.Main conclusionsCompetition intensifying in a difficult non-food sectorKEY ISSUESCompetition to intensifyHigher sector authority required to combat continued expenditure slowdownIncreasing grocer penetration of non-foodShopper numbers rise in all but one sectorGrocers sales growth set to slowLow non-food expenditure growth …and weaker non-food volume growth will bring challengesBig four space gains to continueDespite slowing sales, space growth continues unabatedWhile smaller, convenience stores can enhance non-food offer …hypermarkets still core to capitalising on one-stop shopping …resulting in greater competition with each other and specialists expanding OOTMultichannel increases non-food offer of all storesClick & collect core to continued success of grocers in non-foodInstore kiosks convert footfall to non-food salesFrench model of click and drive pioneered in the UK by TescoGrocers can lead the way in m-Commerce developmentsConvenience key to grocers salesGrocers exceed sector average for convenience scores across all non-food sectors …but convenience to become ubiquitous as multichannel improvesGrocers can fight backGrocers must build authority in non-foodMust look beyond convenience to grow salesService and range in need of particular attentionShould look to specialists for inspirationBuilding brandsNext stage of non-food growth to be driven by strong branded offerDepartment stores such as Debenhams set the standardStrongly branded offer opens up greater international opportunitiesSector opportunitiesUK non-food market maturesFocus on brands and visual presentation in clothing & footwearFragmented market will provide opportunities in homewaresElectrical sales growth to slow and focus to switch to onlineGifts, better and best product offer opportunities in health & beautyStrong online offer required in music & video as sales fall into decline
  • 3. MARKET ANALYSISDefinitionsSummaryNon-food growth slows as consumers resist discretionary purchasesNon-food market[Missing title]Non-food volume growth dipsGrocers non-food salesGains slow but non-food remains central to growth strategiesGrocers non-food spaceNon-food space growth begins to slow, though continues to gain prominence instoreNon-food market forecast to 2014Outlook for non-food remains toughGrocers non-food market forecast to 2014Grocers maintain advantage in difficult marketLEADING COMPANIES DATA ANALYSISNon-food market sharesOperating statisticsSpace allocationHow reduced non-food space is allocated in superstores and hypermarketsStandalone non-food format space allocationAdvertising spendGrocers account for four out of the Top Five in retailer advertising spendASDAAims to be number one in UK non-food in five yearsRecent key eventsConveying quality key to growthPropositionFocus on clothing and homewares to drive footfall to non-foodFinancialsSales growth slows downPrice positioning drives footfall and salesSpaceNetto stores will boost numbersSector analysis – non-foodSpace allocationNon-food growth rate declines as Asda loses momentumMarket sharesAsda struggles to lead grocer charge into non-foodOutlookImproving and not just expanding offer will prove challengingMORRISONSReadies itself for baby steps in non-food onlineRecent key eventsNew chief executive provides continuityProposition
  • 4. Strengthening price architecture a major focusFinancialsTrading performance defies recessionProfit growth remains in double figuresSpaceSustains space growth despite recessionSector analysis – non-foodSpace allocationStrategy step-change requires compelling range and promotion to succeedMarket shares[Missing title]OutlookFood remains core but Morrisons readies itself for online non-food ventureSAINSBURY’SNon-food central to making Sainsbury’s “great again”Recent key eventsPresses on with expansion to regain second place among Big FourPropositionRoom for sub branding development to gain prominence in non-foodFinancialsNon-food growth driven by space expansionProfit growth slows but still ahead of salesSpaceRapid growth in supermarkets and convenience storesSector analysis – non-foodSpace allocationExpansion and multichannel drive growth in non-foodMarket sharesGains set to level off as competitors provide enhanced offerOutlookImprovements in non-food marketing will enhance space expansion gainsTESCOAims to get non-food back on trackRecent key eventsClear strategy to further progress in non-foodPropositionPrice architecture a major focusFinancialsNew space drives sales growthNon-stop growth across sales and profitSpaceSustains space growth despite recessionSector analysis – non-foodSpace allocationGrowth recovers in 2010/11Market shares[Missing title]
  • 5. OutlookFocus on non-food and loyalty will help maintain share as competition intensifiesSMALLER PLAYERSThe Co-operativePlans to further extend neighbourhood storebase but non-food is a squeezeWaitroseNon-food remains peripheral but provides potential for further growthOTHER SMALLER GROCERS NON-FOOD OFFERSDiscounters: and then there were twoAldi and Lidl dominant after exit of NettoAldiLidlOcadoIcelandSPARSECTOR COMPARISONSMain non-food markets in which grocers participateHealth & beauty and clothing & footwear remain strong as sales growth in other non-foodsectors dwindlesGrocers non-food componentsWeak competition helps grocers make rapid sales increases in electricals …though clothing & footwear looks set to be next target for growthMore effective merchandising required to diversify non-food salesGrocers non-food space allocation by sectorProportion of non-food space falls as online gains greater emphasis and growth slowsGrocers non-food sales forecasts by market componentHealth & beauty remains grocers stalwart with solid growth forecast …while music & video and electricals sales pose greater challengesCLOTHING & FOOTWEARChannels of distributionGrocers take share …Grocers salesbut market gains slowGrocers sharesSainsbury’s becomes engine of growthPricing architecturePrice points of key productsOpening price pointsClosing price pointsRange architectureWomenswearMenswearChildrenswearOutlookCompetition intensifies as Sainsbury’s pushes in clothing
  • 6. Focus on building brands as quality becomes more importantNeed to create a specialist experienceMultichannel a big opportunityELECTRICALSChannels of distributionGrocers join in pillage of specialists channelGrocers salesFall in demand makes electricals a tough sector for grocersGrocers sharesGrocers make only small market share gains as price shows limited appealPricing architecturePrice points of key productsOpening price pointsClosing price pointsRange architectureSpecialists still ahead but grocers enlarge rangesOutlookFootfall in decline as concerns about the economy persist and few innovative products arelaunchedDriving market share gains proving challengingHEALTH & BEAUTYChannels of distributionBig Four gain share from specialistsGrocers salesGrocers focus on non-food expansion continues to provide growthGrocers sharesTesco continues to dominate with Asda making groundPricing architecturePrice points of key productsOpening price pointsClosing price pointsHOMEWARESChannels of distributionSpecialists are squeezed as grocers and non-specialists diversify into homewaresGrocers salesTake advantage of retailer casualtiesGrocers sharesTesco just holds on to first positionPricing architecturePrice points of key productsOpening price pointsClosing price pointsRange architectureLack choice compared to non-grocer rivalsOutlookOpportunities for grocers in fragmented market
  • 7. MUSIC & VIDEOChannels of distributionDecline of specialist retailers provides opportunities for growthGrocers salesGrocers share growsGrocers sharesTesco loses momentum as online retailers start to dominateOutlookGrocers could gain further share from decline of specialistsYoung music & video shoppers find grocers unappealingGrocers shoppers more prone to government cutsGrocers need to leverage online food offersOTHER NON-FOODDiscretionary categories continue to suffer from restricted spendingGrocers salesGrocers benefit from convenience and value-driven shoppingGrocers other non-food offersBooks, news & stationeryDIY & gardeningFurniture & floorcoveringsSports equipmentToys & gamesAPPENDIXLatest Market Research Reports:Electricals Retailing in Europe: Market Size, Retailer Strategies and Competitor PerformanceASOS: A Spotlight On ServiceUK Department Stores 2011Where Britain Shops Department Stores 2011About Us:ReportsnReports is an online library of over 75,000 market research reports and in-depthmarket research studies & analysis of over 5000 micro markets. We provide 24/7 online andoffline support to our customers. Get in touch with us for your needs of market researchreports.Follow us on Twitter: http://twitter.com/marketsreportsOur Facebook Page: http://www.facebook.com/pages/ReportsnReports/191441427571689Contact:Mr. Priyank7557 Rambler road,Suite 727, Dallas, TX 75231Tel: +1-888-989-8004 EXT 106E-mail: sales@reportsandreports.comhttp://www.reportsnreports.comBlog: http://www.reportsnreportsblog.com

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