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Food Retailing - UK - November 2011

“These are tough times for the food retailers. For the first time trading down is becoming a big issue, thanks to their own success in building premium ranges in the good times.

There’s a real scrap developing at the lower end of the market, but Sainsbury’s seems relatively immune, though it is doing the right things as well.

And there’s little prospect of any improvement. The food retailers are going to be squeezed by high levels of inflation and falling disposable incomes.

There’s no point in ignoring the fact – the next couple of years are going to be very tough”

– Richard Perks, Director of Retail Research

Some questions answered in this report include:

  • What size store are consumers more likely to shop in?
  • Is appearance or reality more important for consumers?
  • Is it the end of the line for loyalty cards?
  • What are consumers doing to ease financial pressures and what effect is this having on food retail?
  • How can retailers build trust with consumers?

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Table of contents

  1. Introduction

      • ONS data and definitions
        • Financial definitions
          • Abbreviations
          • Executive Summary

              • The market
                • Tough times
                  • Food retailers
                    • Forecast
                      • Figure 1: Food retailers’ sales, 2006-16
                    • The big get bigger
                      • Competition – smoke and mirrors
                        • Online
                          • Non-foods and services
                            • The consumer
                              • Customer profiles
                                • Figure 2: UK: Profile of primary shoppers of main supermarkets, August 2011
                              • What drives store choice?
                                • Supermarkets and the recession
                                  • Figure 3: Consumers: “How do you feel about your finances?”, by supermarkets used, July 2011
                                • Consumers and the recession
                                  • Figure 4: Consumer attitudes towards grocery shopping, August 2011
                                • Companies, brands and innovation
                                  • Brands
                                    • Leading retailers
                                        • Figure 5: Channels of distribution for food and drink, 2010 (est)
                                        • Figure 6: Top 5 food retailers, Market share, 2010
                                      • What we think
                                      • Issues in the Market

                                        • What size store?
                                          • The superstore – discounter dynamic
                                            • Appearance or reality?
                                              • To take some recent examples:
                                                • The end of the line for loyalty cards?
                                                  • Building trust
                                                  • Future Opportunities

                                                      • Survival Skills
                                                        • Guiding Choice
                                                        • Who’s Innovating?

                                                          • Shopping experience
                                                            • Specialist skills on show
                                                              • Figure 7: Marks & Spencer (food): High Street, Kensington, store
                                                            • Inspire trend: Experience Is All
                                                              • Self-scanning
                                                                  • Figure 8: Tesco shopping wall in South Korea
                                                                • Asda supermarket
                                                                  • Figure 9: Asda Supermarket, Harrow
                                                                • Broadening the offer
                                                                  • International brands
                                                                    • Moves into food service
                                                                      • Promotions
                                                                        • Checkout coupons
                                                                          • Pre-pay discounts
                                                                            • Inspire trend: Let’s Make A Deal
                                                                            • The Market: Economic Background

                                                                              • Key points
                                                                                • Population forecast
                                                                                  • Figure 10: UK: Over 65s as % total UK population, 1991-2020
                                                                                • The economy
                                                                                  • Figure 11: UK: Quarterly GDP growth, 1991-2011 (Q3)
                                                                                  • Figure 12: UK: GfK NOP Consumer confidence index, January 2007-October 2011
                                                                                • Inflation
                                                                                  • Figure 13: Inflation in food and other major categories, 2006-11 (Sept)
                                                                                  • Figure 14: Percentage change in Retail Prices Index vs Earnings, 2008-11
                                                                              • The Market: Consumer Spending on Groceries

                                                                                • Key points
                                                                                  • Food spending in context
                                                                                      • Figure 15: UK: Consumer spending on selected major food categories, 2006-10
                                                                                      • Figure 16: UK: Comparison of spending on food and other major categories, 2006-10
                                                                                    • Food vs all consumer spend
                                                                                      • Figure 17: Spending on food and drink as % all consumer spending, 2006-11
                                                                                    • Food vs eating out
                                                                                        • Figure 18: Spending on food relative to spending on eating out, 2005-10
                                                                                    • The Market: Food Retailers’ Product Mix

                                                                                      • Product mix
                                                                                        • Figure 19: UK: Food retailers, product mix, 2010 (est)
                                                                                    • The Market: Sector Sales and Forecast

                                                                                          • Figure 20: Food retailers’ sales* at current and constant prices, 2006-16
                                                                                          • Figure 21: Food retailers’ sales, 2006-16
                                                                                        • Forecast methodology
                                                                                        • The Retailers: Channels of Distribution

                                                                                          • Key points
                                                                                              • Figure 22: Food, drink and tobacco – channels of distribution, 2010 (est)
                                                                                          • The Retailers: Leading Retailers

                                                                                            • Key points
                                                                                              • A tough climate
                                                                                                • Quality counts
                                                                                                  • Hard discounters and Iceland
                                                                                                    • Convenience stores
                                                                                                      • Figure 23: UK: Leading Food Retailers, 2010/11
                                                                                                  • The Retailers: Market Shares

                                                                                                    • Key points
                                                                                                        • Figure 24: Leading UK food retailers, estimated non-retail share of sales, 2009 and 2010
                                                                                                        • Figure 25: Leading UK food retailers’ market shares as share of all food retail specialists’ sales, 2009 and 2010
                                                                                                    • The Retailers: Online

                                                                                                      • Key points
                                                                                                        • Who shops online?
                                                                                                          • Figure 26: Proportion of adult population shopping online, 2003-11 (July)
                                                                                                          • Figure 27: Online groceries: Age profile of shoppers, 2006 and 2011
                                                                                                          • Figure 28: Internet penetration, 2001-11
                                                                                                        • Major players
                                                                                                          • Market size
                                                                                                            • Figure 29: UK: Food retailers’ Online sales, 2009-11(est)
                                                                                                          • Internet usage
                                                                                                              • Figure 30: UK: Top 20 transactional food and drink websites, by number of visits, August 2011
                                                                                                              • Figure 31: UK: Growth in unique visitor numbers year-on-year for the top 5 transactional food and drink websites, January 2010-September 2011
                                                                                                          • The Retailers: Advertising and Promotion

                                                                                                            • Key points
                                                                                                              • Strong growth in ad spend
                                                                                                                  • Figure 32: Main media advertising spend, by leading grocery retailers, 2007-10
                                                                                                                • Spending relative to turnover
                                                                                                                  • Figure 33: Leading grocers’ advertising spending as % of turnover, 2007-10
                                                                                                                • Spending by media
                                                                                                                  • Figure 34: Leading grocers’ main media advertising distribution, by media, 2010
                                                                                                                • Advertising content
                                                                                                                • The Consumer: Brand Research

                                                                                                                  • Brand map
                                                                                                                      • Figure 35: Attitudes towards and usage of food retail brands, August 2011
                                                                                                                    • Brand attitudes
                                                                                                                      • Figure 36: Attitudes by food retail brand, August 2011
                                                                                                                    • Brand personality
                                                                                                                      • Figure 37: Food retail brand personality – macro image, August 2011
                                                                                                                      • Figure 38: Food retail brand personality – micro image, August 2011
                                                                                                                    • Correspondence analysis
                                                                                                                      • Brand experience
                                                                                                                        • Figure 39: Food retail brand usage, August 2011
                                                                                                                        • Figure 40: Satisfaction with various food retail brands, August 2011
                                                                                                                        • Figure 41: Consideration of food retail brands, August 2011
                                                                                                                        • Figure 42: Consumer perceptions of current food retail brand performance, August 2011
                                                                                                                        • Figure 43: Food retail brand recommendation – Net Promoter Score, August 2011
                                                                                                                      • Brand index
                                                                                                                        • Figure 44: Food retail brand index, August 2011
                                                                                                                        • Figure 45: Food retail brand index vs. recommendation, August 2011
                                                                                                                      • Target group analysis
                                                                                                                          • Figure 46: Target groups, August 2011
                                                                                                                          • Figure 47: Food retail brand usage, by target groups, August 2011
                                                                                                                          • Figure 48: Food retail brand usage, by target groups, August 2011
                                                                                                                        • Group One – Conformists
                                                                                                                          • Group Two – Simply the Best
                                                                                                                            • Group Three – Shelf Stalkers
                                                                                                                              • Group Four – Habitual Shoppers
                                                                                                                                • Group Five – Individualists
                                                                                                                                • The Consumer – Who Shops Where?

                                                                                                                                  • Key points
                                                                                                                                    • Primary shoppers
                                                                                                                                        • Figure 49: Usage of outlets for main grocery shop, August 2011
                                                                                                                                        • Figure 50: UK: Profile of primary shoppers of main supermarkets, August 2011
                                                                                                                                        • Figure 51: UK: Profile of primary shoppers of main supermarkets, 2006 and 2011
                                                                                                                                      • Secondary shoppers
                                                                                                                                          • Figure 52: Usage of supermarkets for top up shop, August 2011
                                                                                                                                          • Figure 53: UK: Profile of secondary shoppers, August 2011
                                                                                                                                        • Store usage 2006-11
                                                                                                                                            • Figure 54: Usage of superstores for primary shopping trips, 2006 and 2011
                                                                                                                                            • Figure 55: Usage of stores for secondary shopping trips, 2006 and 2011
                                                                                                                                          • Type of stores used
                                                                                                                                              • Figure 56: Great Britain: Shops used regularly/occasionally, 2009 and 2010
                                                                                                                                          • The Consumer – The Key Factors For Choosing A Store

                                                                                                                                            • Key points
                                                                                                                                                • Figure 57: Aspects most important when you do your main grocery shop, August 2011
                                                                                                                                                • Figure 58: Usage of outlets for main shop, by aspects most important when you do your main grocery shop, August 2011
                                                                                                                                                • Figure 59: Aspects most important when you do your main grocery shop, by usage of supermarkets for main shop, August 2011
                                                                                                                                              • Factors in choosing a supermarket
                                                                                                                                                  • Figure 60: Deciding factors in shopping for food, drink and household products, GB, 2010
                                                                                                                                              • The Consumer – Attitudes Towards Grocery Shopping

                                                                                                                                                • Key points
                                                                                                                                                    • Figure 61: Consumer attitudes towards grocery shopping, August 2011
                                                                                                                                                    • Figure 62: Profile of consumers with particular attitudes, August 2011
                                                                                                                                                  • Attitudes vs shops used
                                                                                                                                                      • Figure 63: Consumer attitudes towards grocery shopping, by usage of supermarkets for main shop, August 2011
                                                                                                                                                  • Aldi (UK)

                                                                                                                                                      • Strategic evaluation
                                                                                                                                                          • Figure 65: Aldi: Stores per million capita in selected European countries, 2010
                                                                                                                                                        • Background
                                                                                                                                                          • Company performance
                                                                                                                                                            • Figure 66: Aldi (Europe): Group sales performance, 2006-10
                                                                                                                                                            • Figure 67: Aldi (Europe): Outlet data, 2006-10
                                                                                                                                                          • Store format
                                                                                                                                                            • Consumer profile
                                                                                                                                                              • Figure 68: Aldi: Primary shoppers, by gender, age and socio-economic group, August 2011
                                                                                                                                                              • Figure 69: Aldi: Primary shoppers, by region and acorn group, August 2011
                                                                                                                                                              • Figure 70: Aldi Secondary Shoppers – socio-demographic profile, August 2011
                                                                                                                                                              • Figure 71: Aldi: Secondary shoppers, by region and acorn group, August 2011
                                                                                                                                                            • Retail offering
                                                                                                                                                              • E-commerce and home shopping
                                                                                                                                                              • Asda Group

                                                                                                                                                                  • Strategic evaluation
                                                                                                                                                                    • Sales development lags behind its rivals
                                                                                                                                                                      • Discounter danger
                                                                                                                                                                        • Smaller stores, bigger expansion potential
                                                                                                                                                                          • Prospects
                                                                                                                                                                            • Background
                                                                                                                                                                              • Company performance
                                                                                                                                                                                • Figure 73: Asda Group Ltd: Group financial performance, 2006-10
                                                                                                                                                                                • Figure 74: Asda Group Ltd: Outlet data, 2006-10
                                                                                                                                                                              • Store formats
                                                                                                                                                                                • Smaller stores
                                                                                                                                                                                  • Customer profile
                                                                                                                                                                                    • Figure 75: Asda: Primary shoppers, by gender, age and socio-economic group, August 2011
                                                                                                                                                                                    • Figure 76: Asda: Primary shoppers, by region and acorn group, August 2011
                                                                                                                                                                                    • Figure 77: Asda Secondary Shoppers – socio-demographic profile, August 2011
                                                                                                                                                                                    • Figure 78: Asda: Secondary shoppers, by region and acorn group, August 2011
                                                                                                                                                                                  • Retail offering
                                                                                                                                                                                    • e-commerce and home shopping
                                                                                                                                                                                        • Figure 79: Asda.co.uk: Online consumer demographics, three month average to August 2011
                                                                                                                                                                                    • Co-operative Group (Food)

                                                                                                                                                                                        • Strategic evaluation
                                                                                                                                                                                          • The new estate
                                                                                                                                                                                            • Shouting louder
                                                                                                                                                                                              • Misjudged campaign
                                                                                                                                                                                                • Background
                                                                                                                                                                                                  • Company performance
                                                                                                                                                                                                    • Figure 81: Co-operative Group (Food): Group financial performance, 2006/07-2010/11
                                                                                                                                                                                                    • Figure 82: Co-operative Group (Food): Group financial performance, H1 2010 and h1 2011
                                                                                                                                                                                                    • Figure 83: Co-operative Group (Food): Outlet data, 2007/11
                                                                                                                                                                                                  • Consumer profile
                                                                                                                                                                                                    • Figure 84: Co-operative Group (Food): Secondary-shop consumer profile by gender, age, socio-economic group, August 2011
                                                                                                                                                                                                    • Figure 85: Co-operative Group (Food): Secondary-shop consumer profile by location, August 2011
                                                                                                                                                                                                    • Figure 86: Co-operative Group (Food): Secondary-shop consumer profile by ACORN classification, 2011
                                                                                                                                                                                                  • Retail offering
                                                                                                                                                                                                    • E-commerce and home shopping
                                                                                                                                                                                                    • Iceland Foods

                                                                                                                                                                                                        • Strategic evaluation
                                                                                                                                                                                                          • Recent ownership developments
                                                                                                                                                                                                            • Background
                                                                                                                                                                                                              • Company performance
                                                                                                                                                                                                                • Figure 88: Iceland Foods Ltd: Group financial performance, 2006/07-2010/11
                                                                                                                                                                                                                • Figure 89: Iceland Foods Ltd: Outlet data, 2006/07-2010/11
                                                                                                                                                                                                              • Consumer profiles
                                                                                                                                                                                                                • Figure 90: Iceland Foods Ltd: Consumer profile, by gender, age, socio-economic group, August 2011
                                                                                                                                                                                                                • Figure 91: Iceland Foods Ltd: Consumer profile, by location, August 2011
                                                                                                                                                                                                                • Figure 92: Iceland Foods Ltd: Consumer profile by ACORN classification, August 2011
                                                                                                                                                                                                              • Retail offering
                                                                                                                                                                                                                • E-commerce and home shopping
                                                                                                                                                                                                                • J Sainsbury

                                                                                                                                                                                                                    • Strategic evaluation
                                                                                                                                                                                                                      • Strong performance
                                                                                                                                                                                                                          • Figure 94: Sainsbury’s Supermarkets: Sales growth, 2006/07-2010/11
                                                                                                                                                                                                                        • Expansion underpins growth
                                                                                                                                                                                                                          • Looking to catch up in non-food
                                                                                                                                                                                                                            • Convenience stores good fit with online
                                                                                                                                                                                                                              • Intensifying price competition
                                                                                                                                                                                                                                • Background
                                                                                                                                                                                                                                  • Company performance
                                                                                                                                                                                                                                    • Figure 95: Sainsbury’s Supermarkets, 2006/07-2010/11
                                                                                                                                                                                                                                    • Figure 96: Sainsbury’s Supermarkets: Outlet data, 2006/07-2010/11
                                                                                                                                                                                                                                  • Store formats
                                                                                                                                                                                                                                    • Figure 97: Sainsbury’s Supermarkets: Outlets by size, 2006/07-2010/11
                                                                                                                                                                                                                                  • Consumer profile
                                                                                                                                                                                                                                    • Figure 98: Sainsbury’s: Primary shoppers, by gender, age and socio-economic group, August 2011
                                                                                                                                                                                                                                    • Figure 99: Sainsbury’s: Primary shoppers, by region and acorn group, August 2011
                                                                                                                                                                                                                                    • Figure 100: Sainsbury’s: Secondary shoppers – socio-demographic profile, August 2011
                                                                                                                                                                                                                                    • Figure 101: Sainsbury’s: Secondary shoppers, by region and acorn group, August 2011
                                                                                                                                                                                                                                  • Retail offering
                                                                                                                                                                                                                                    • e-commerce and home shopping
                                                                                                                                                                                                                                        • Figure 102: Sainsburys.co.uk: Online consumer demographics, three month average to August 2011
                                                                                                                                                                                                                                    • Marks & Spencer (Food)

                                                                                                                                                                                                                                        • Strategic evaluation
                                                                                                                                                                                                                                          • Figure 104: Marks & Spencer (food): High Street, Kensington, store
                                                                                                                                                                                                                                        • Background
                                                                                                                                                                                                                                          • Company performance
                                                                                                                                                                                                                                            • Figure 105: Marks & Spencer (food): Group sales performance, 2006/07-2010/11
                                                                                                                                                                                                                                            • Figure 106: Marks & Spencer (food): Outlet data, 2007/11
                                                                                                                                                                                                                                          • Store formats
                                                                                                                                                                                                                                            • Figure 107: Marks & Spencer (food): UK outlet data, 2007/11
                                                                                                                                                                                                                                          • Consumer profile
                                                                                                                                                                                                                                            • Figure 108: M&S (Food): Consumer profile, by gender, age, socio-economic group, August 2011
                                                                                                                                                                                                                                            • Figure 109: M&S (Food): Consumer profile, by location, August 2011
                                                                                                                                                                                                                                            • Figure 110: M&S (Food): Consumer profile by ACORN classification, August 2011
                                                                                                                                                                                                                                          • Retail offering
                                                                                                                                                                                                                                            • E-commerce and home shopping
                                                                                                                                                                                                                                            • Ocado

                                                                                                                                                                                                                                                • Strategic evaluation
                                                                                                                                                                                                                                                  • Intense competition
                                                                                                                                                                                                                                                    • IPO boosts funding
                                                                                                                                                                                                                                                      • Background
                                                                                                                                                                                                                                                        • Company performance
                                                                                                                                                                                                                                                          • Figure 112: Ocado: Group financial performance, 2005/06-2009/10
                                                                                                                                                                                                                                                        • Distribution
                                                                                                                                                                                                                                                          • Retail offering
                                                                                                                                                                                                                                                            • Product mix
                                                                                                                                                                                                                                                              • Figure 113: Ocado: Product mix, by number of lines, 2011
                                                                                                                                                                                                                                                            • E-commerce and home shopping
                                                                                                                                                                                                                                                              • Figure 114: Ocado.com: Online consumer demographics, three month average to August 2011
                                                                                                                                                                                                                                                          • Schwarz Group (UK)

                                                                                                                                                                                                                                                              • Strategic evaluation
                                                                                                                                                                                                                                                                • Roller coaster ride
                                                                                                                                                                                                                                                                  • Improving choice
                                                                                                                                                                                                                                                                    • Avoiding risks
                                                                                                                                                                                                                                                                      • Opportunities closer to home
                                                                                                                                                                                                                                                                        • Other investments
                                                                                                                                                                                                                                                                          • Background
                                                                                                                                                                                                                                                                            • Company performance
                                                                                                                                                                                                                                                                              • Figure 116: Schwarz Group: Estimated group sales performance, 2006/07-2010/11
                                                                                                                                                                                                                                                                              • Figure 117: Schwarz Group: Estimated outlet numbers, 2007/11
                                                                                                                                                                                                                                                                            • Consumer profile
                                                                                                                                                                                                                                                                              • Figure 118: Lidl: Secondary shoppers, by gender, age and socio-economic group, August 2011
                                                                                                                                                                                                                                                                              • Figure 119: Lidl: Secondary shoppers by region and acorn group, August 2011
                                                                                                                                                                                                                                                                            • Retail offering
                                                                                                                                                                                                                                                                              • e-commerce
                                                                                                                                                                                                                                                                              • SPAR International

                                                                                                                                                                                                                                                                                  • Strategic evaluation
                                                                                                                                                                                                                                                                                    • Rationalisation and the recovery
                                                                                                                                                                                                                                                                                      • Background
                                                                                                                                                                                                                                                                                        • Figure 121: SPAR International: Year of entry, by country
                                                                                                                                                                                                                                                                                      • Company performance
                                                                                                                                                                                                                                                                                        • Figure 122: SPAR International: Retail sales by country, 2006-10
                                                                                                                                                                                                                                                                                        • Figure 123: SPAR International: Estimated European sales exclusive of sales tax, 2010
                                                                                                                                                                                                                                                                                        • Figure 124: SPAR International: Outlet data, 2006-10
                                                                                                                                                                                                                                                                                        • Figure 125: SPAR International: Sales per m², by country (Europe), 2010
                                                                                                                                                                                                                                                                                      • European operations
                                                                                                                                                                                                                                                                                        • Figure 126: SPAR (Austria): Sales as share of Austrian food retailers’ sales, 2006-10
                                                                                                                                                                                                                                                                                        • Figure 127: SPAR (Belgium): Sales as share of all Belgian food retailers’ sales, 2006-10
                                                                                                                                                                                                                                                                                        • Figure 128: SPAR (Croatia): Sales as share of all Croatian food retailers’ sales, 2006-10
                                                                                                                                                                                                                                                                                        • Figure 129: SPAR (Czech Republic): Sales as share of all Czech food retailers’ sales, 2006-10
                                                                                                                                                                                                                                                                                        • Figure 130: SPAR (Denmark): Sales as share of all Danish food retailers’ sales, 2006-10
                                                                                                                                                                                                                                                                                        • Figure 131: SPAR (France): Sales as share of all French food retailers’ sales, 2006-10
                                                                                                                                                                                                                                                                                        • Figure 132: SPAR (Germany): Sales as share of all German food retailers’ sales, 2006-10
                                                                                                                                                                                                                                                                                        • Figure 133: SPAR (Greece): Sales as share of all Greek food retailers’ sales, 2006-10
                                                                                                                                                                                                                                                                                        • Figure 134: SPAR (Hungary): Sales as share of all Hungarian food retailers’ sales, 2006-10
                                                                                                                                                                                                                                                                                        • Figure 135: SPAR (Ireland): Sales as share of all Irish food retailers’ sales, 2006-10
                                                                                                                                                                                                                                                                                        • Figure 136: SPAR (Italy): Sales as share of all Italian food retailers’ sales, 2006-10
                                                                                                                                                                                                                                                                                        • Figure 137: SPAR (Netherlands): Sales as share of all Dutch food retailers’ sales, 2006-10
                                                                                                                                                                                                                                                                                        • Figure 138: SPAR (Norway): Sales as share of all Norwegian food retailers’ sales, 2006-10
                                                                                                                                                                                                                                                                                        • Figure 139: SPAR (Poland): Sales as share of all Polish food retailers’ sales, 2006-10
                                                                                                                                                                                                                                                                                        • Figure 140: SPAR (Romania): Sales as share of all Romanian food retailers’ sales, 2006-10
                                                                                                                                                                                                                                                                                        • Figure 141: SPAR (Russia): Sales as share of all Russian food retailers’ sales, 2006-10
                                                                                                                                                                                                                                                                                        • Figure 142: SPAR (Slovenia): Sales as share of all Slovenian food retailers’ sales, 2006-10
                                                                                                                                                                                                                                                                                        • Figure 143: SPAR (Spain): Sales as share of all Spanish food retailers’ sales, 2006-10
                                                                                                                                                                                                                                                                                        • Figure 144: SPAR (Switzerland): Sales as share of all Swiss food retailers’ sales, 2006-10
                                                                                                                                                                                                                                                                                        • Figure 145: SPAR (UK): Sales as share of all UK food retailers’ sales, 2006-10
                                                                                                                                                                                                                                                                                        • Figure 146: SPAR International: Sales and outlets, by country outside Europe, 2007-10
                                                                                                                                                                                                                                                                                      • Store formats
                                                                                                                                                                                                                                                                                        • Figure 147: SPAR International: Store formats, 2010
                                                                                                                                                                                                                                                                                      • Retail offering
                                                                                                                                                                                                                                                                                        • e-commerce and home shopping
                                                                                                                                                                                                                                                                                        • Tesco

                                                                                                                                                                                                                                                                                            • Strategic evaluation
                                                                                                                                                                                                                                                                                              • Be careful not to overstate the problems
                                                                                                                                                                                                                                                                                                • Clubcard
                                                                                                                                                                                                                                                                                                  • Loyalty
                                                                                                                                                                                                                                                                                                    • The “£500m campaign”
                                                                                                                                                                                                                                                                                                      • The end of Clubcard?
                                                                                                                                                                                                                                                                                                        • The limits of growth
                                                                                                                                                                                                                                                                                                          • Overseas
                                                                                                                                                                                                                                                                                                            • Time to be optimistic
                                                                                                                                                                                                                                                                                                              • Background
                                                                                                                                                                                                                                                                                                                • Company performance
                                                                                                                                                                                                                                                                                                                  • Figure 149: Tesco Plc: Group financial performance, 2006/07-2010/11
                                                                                                                                                                                                                                                                                                                  • Figure 150: Tesco: Like-for-like sales growth, 26 weeks to Aug 2011
                                                                                                                                                                                                                                                                                                                  • Figure 151: Tesco Plc: Outlet data, 2007/11
                                                                                                                                                                                                                                                                                                                • Performance by country
                                                                                                                                                                                                                                                                                                                  • UK
                                                                                                                                                                                                                                                                                                                    • Figure 152: UK: Sales as share of all food retailers’ sales, 2006-10
                                                                                                                                                                                                                                                                                                                  • Czech Republic
                                                                                                                                                                                                                                                                                                                    • Figure 153: Czech Republic: Sales as share of all food retailers’ sales, 2006-10
                                                                                                                                                                                                                                                                                                                  • Hungary
                                                                                                                                                                                                                                                                                                                    • Figure 154: Hungary: Sales as share of all food retailers sales, 2006-10
                                                                                                                                                                                                                                                                                                                  • Poland
                                                                                                                                                                                                                                                                                                                    • Figure 155: Poland: Sales as % all food retailers’ sales, 2006-10
                                                                                                                                                                                                                                                                                                                  • Ireland
                                                                                                                                                                                                                                                                                                                    • Figure 156: Ireland: Sales as % all food retailers’ sales, 2006-10
                                                                                                                                                                                                                                                                                                                  • Turkey
                                                                                                                                                                                                                                                                                                                    • Store formats
                                                                                                                                                                                                                                                                                                                      • Figure 157: Tesco: UK store formats, 2010/11
                                                                                                                                                                                                                                                                                                                      • Figure 158: Tesco: Other European store formats, 2010/11
                                                                                                                                                                                                                                                                                                                    • Consumer profile
                                                                                                                                                                                                                                                                                                                      • Primary shoppers
                                                                                                                                                                                                                                                                                                                        • Figure 159: Tesco - Primary shoppers by gender, age and socio-economic group, August 2011
                                                                                                                                                                                                                                                                                                                        • Figure 160: Tesco - Primary shoppers, by region, August 2011
                                                                                                                                                                                                                                                                                                                        • Figure 161: Tesco - Primary shoppers, by Acorn classification, August 2011
                                                                                                                                                                                                                                                                                                                      • Consumer profile – secondary shoppers
                                                                                                                                                                                                                                                                                                                        • Figure 162: Tesco - Secondary Shoppers – by gender, age and socio-economic group, August 2011
                                                                                                                                                                                                                                                                                                                        • Figure 163: Tesco - Secondary Shoppers – by region, August 2011
                                                                                                                                                                                                                                                                                                                        • Figure 164: Tesco - Secondary Shoppers, by Acorn classification, August 2011
                                                                                                                                                                                                                                                                                                                      • Retail offering
                                                                                                                                                                                                                                                                                                                        • Figure 165: Tesco UK: Sales, by product category, 2009/10-2010/11
                                                                                                                                                                                                                                                                                                                      • e-commerce and home shopping
                                                                                                                                                                                                                                                                                                                        • Figure 166: Tesco: Online consumer demographics, three month average to August 2011
                                                                                                                                                                                                                                                                                                                    • Waitrose

                                                                                                                                                                                                                                                                                                                        • Strategic evaluation
                                                                                                                                                                                                                                                                                                                          • Star performer
                                                                                                                                                                                                                                                                                                                            • New stores and variety in the offer
                                                                                                                                                                                                                                                                                                                              • Rolling out online
                                                                                                                                                                                                                                                                                                                                • Background
                                                                                                                                                                                                                                                                                                                                  • Company performance
                                                                                                                                                                                                                                                                                                                                    • Figure 168: Waitrose Ltd: Group financial performance, 2006/07-2010/11
                                                                                                                                                                                                                                                                                                                                    • Figure 169: Waitrose Ltd: Outlet data, 2006/07-2010/11
                                                                                                                                                                                                                                                                                                                                  • Consumer profile
                                                                                                                                                                                                                                                                                                                                    • Figure 170: Waitrose: Secondary shoppers - by gender, age and socio-economic group, August 2011
                                                                                                                                                                                                                                                                                                                                    • Figure 171: Waitrose: Secondary shoppers - by region and acorn group, August 2011
                                                                                                                                                                                                                                                                                                                                  • Retail offering
                                                                                                                                                                                                                                                                                                                                    • E-commerce and home shopping
                                                                                                                                                                                                                                                                                                                                      • Figure 172: Waitrose.com: Online consumer demographics, three month average to August 2011
                                                                                                                                                                                                                                                                                                                                  • Wm Morrison Group

                                                                                                                                                                                                                                                                                                                                      • Strategic evaluation
                                                                                                                                                                                                                                                                                                                                        • Slowly diversifying channels
                                                                                                                                                                                                                                                                                                                                          • Innovations – and flexibility
                                                                                                                                                                                                                                                                                                                                            • Figure 174: Wm Morrison Group: ‘Lab’ store, Kirkstall, Leeds
                                                                                                                                                                                                                                                                                                                                          • Revitalising own brands
                                                                                                                                                                                                                                                                                                                                            • Background
                                                                                                                                                                                                                                                                                                                                              • Company performance
                                                                                                                                                                                                                                                                                                                                                • 2010/11
                                                                                                                                                                                                                                                                                                                                                    • Figure 175: Wm Morrison Group: Group financial performance, 2006/07-2010/11
                                                                                                                                                                                                                                                                                                                                                    • Figure 176: Wm Morrison Group: Sales breakdown, 2006/07-2010/11
                                                                                                                                                                                                                                                                                                                                                    • Figure 177: Wm Morrison Group: Annual sales growth excluding fuel, 2006/07-2010/11
                                                                                                                                                                                                                                                                                                                                                    • Figure 178: Wm Morrison Group: Sales breakdown, H1 2010/11 and H1 2011/12
                                                                                                                                                                                                                                                                                                                                                    • Figure 179: Wm Morrison Group: Outlet data, 2006/07-2010/11
                                                                                                                                                                                                                                                                                                                                                    • Figure 180: Wm Morrison Group: Outlet data by region, 2010 and 2011
                                                                                                                                                                                                                                                                                                                                                  • Store formats
                                                                                                                                                                                                                                                                                                                                                    • Figure 181: Wm Morrison Group: Store portfolio by size, 2007-11
                                                                                                                                                                                                                                                                                                                                                  • Consumer profile
                                                                                                                                                                                                                                                                                                                                                    • Figure 182: Wm Morrison Group: Consumer profile by gender, age, socio-economic group, August 2011
                                                                                                                                                                                                                                                                                                                                                    • Figure 183: Wm Morrison Group: Consumer profile by location, August 2011
                                                                                                                                                                                                                                                                                                                                                    • Figure 184: Wm morrison Group: Consumer profile, by ACORN classification, August 2011
                                                                                                                                                                                                                                                                                                                                                  • Retail offering
                                                                                                                                                                                                                                                                                                                                                    • E-commerce and home shopping
                                                                                                                                                                                                                                                                                                                                                      • Figure 185: Wm Morrison Group: Online consumer demographics, three month average to August 2011
                                                                                                                                                                                                                                                                                                                                                  • Appendix – The Market

                                                                                                                                                                                                                                                                                                                                                    • Population
                                                                                                                                                                                                                                                                                                                                                      • Figure 186: Europe: Population, by age group, 2005
                                                                                                                                                                                                                                                                                                                                                      • Figure 187: Europe: Population, by age group, 2010
                                                                                                                                                                                                                                                                                                                                                      • Figure 188: Europe: Population, by age group, 2015
                                                                                                                                                                                                                                                                                                                                                      • Figure 189: Europe: Population, by age group, 2020
                                                                                                                                                                                                                                                                                                                                                    • GDP
                                                                                                                                                                                                                                                                                                                                                      • Figure 190: Europe: GDP (current prices), 2010
                                                                                                                                                                                                                                                                                                                                                      • Figure 191: Europe: GDP growth rates (current prices), 2001-Q3 2011
                                                                                                                                                                                                                                                                                                                                                      • Figure 192: Europe: GDP growth rates (constant prices), 2001 – Q3 2011
                                                                                                                                                                                                                                                                                                                                                    • Consumer spending
                                                                                                                                                                                                                                                                                                                                                      • Figure 193: Europe: Households’ consumer spending (current prices), 2010
                                                                                                                                                                                                                                                                                                                                                      • Figure 194: Europe: Households’ consumer spending growth rates (current prices), 2001- Q3 2011
                                                                                                                                                                                                                                                                                                                                                      • Figure 195: Europe: Households’ consumer spending growth rates (constant prices), 2001-Q3 2011
                                                                                                                                                                                                                                                                                                                                                    • Consumer prices
                                                                                                                                                                                                                                                                                                                                                      • Figure 196: Europe: Harmonised index of consumer prices, 2001-10
                                                                                                                                                                                                                                                                                                                                                    • Unemployment
                                                                                                                                                                                                                                                                                                                                                      • Figure 197: Europe: Average rate of unemployment, 2001-10
                                                                                                                                                                                                                                                                                                                                                    • Interest rates
                                                                                                                                                                                                                                                                                                                                                      • Figure 198: Europe: Interest rates, 2005 -Q3 2011
                                                                                                                                                                                                                                                                                                                                                    • Consumer confidence
                                                                                                                                                                                                                                                                                                                                                      • Figure 199: Europe: Consumer confidence, Sep 2010 -Aug 2011
                                                                                                                                                                                                                                                                                                                                                  • Appendix – The Consumer – Brand Research

                                                                                                                                                                                                                                                                                                                                                      • Figure 200: Store usage, August 2011
                                                                                                                                                                                                                                                                                                                                                      • Figure 201: Store commitment, August 2011
                                                                                                                                                                                                                                                                                                                                                      • Figure 202: Store momentum, August 2011
                                                                                                                                                                                                                                                                                                                                                      • Figure 203: Store diversity, August 2011
                                                                                                                                                                                                                                                                                                                                                      • Figure 204: Store satisfaction, August 2011
                                                                                                                                                                                                                                                                                                                                                      • Figure 205: Store recommendation, August 2011
                                                                                                                                                                                                                                                                                                                                                      • Figure 206: Store attitude, August 2011
                                                                                                                                                                                                                                                                                                                                                      • Figure 207: Store image – macro image, August 2011
                                                                                                                                                                                                                                                                                                                                                      • Figure 208: Store image – micro image, August 2011
                                                                                                                                                                                                                                                                                                                                                      • Figure 209: Profile of target groups, by demographic, August 2011
                                                                                                                                                                                                                                                                                                                                                      • Figure 210: Psychographic segmentation, by target group, August 2011
                                                                                                                                                                                                                                                                                                                                                      • Figure 211: Store usage, by target group, August 2011
                                                                                                                                                                                                                                                                                                                                                    • Brand index
                                                                                                                                                                                                                                                                                                                                                      • Figure 212: Store index
                                                                                                                                                                                                                                                                                                                                                  • Appendix – The Consumer – Who Shops Where?

                                                                                                                                                                                                                                                                                                                                                      • Figure 213: Usage of supermarkets for main shop, by demographics, August 2011
                                                                                                                                                                                                                                                                                                                                                      • Figure 214: Most popular usage of supermarkets for top up shop, by demographics, August 2011
                                                                                                                                                                                                                                                                                                                                                      • Figure 215: Next most popular usage of supermarkets for top up shop, by demographics, August 2011
                                                                                                                                                                                                                                                                                                                                                  • Appendix – The Consumer – Key Factors For Choosing A Store

                                                                                                                                                                                                                                                                                                                                                      • Figure 216: Aspects most important when you do your main grocery shop, by demographics, August 2011
                                                                                                                                                                                                                                                                                                                                                  • Appendix – The Consumer – Attitudes Towards Grocery Shopping

                                                                                                                                                                                                                                                                                                                                                      • Figure 217: Most popular consumer attitudes towards grocery shopping, by demographics, August 2011
                                                                                                                                                                                                                                                                                                                                                      • Figure 218: Next most popular consumer attitudes towards grocery shopping, by demographics, August 2011
                                                                                                                                                                                                                                                                                                                                                      • Figure 219: Other consumer attitudes towards grocery shopping, by demographics, August 2011

                                                                                                                                                                                                                                                                                                                                                  Companies Covered

                                                                                                                                                                                                                                                                                                                                                  • Abel & Cole Limited
                                                                                                                                                                                                                                                                                                                                                  • Advertising Standards Authority
                                                                                                                                                                                                                                                                                                                                                  • Albertsons Inc.
                                                                                                                                                                                                                                                                                                                                                  • Aldi Stores Ltd (UK & Ireland)
                                                                                                                                                                                                                                                                                                                                                  • Alldays Plc
                                                                                                                                                                                                                                                                                                                                                  • Alliance Boots UK Retail
                                                                                                                                                                                                                                                                                                                                                  • Amazon.co.uk
                                                                                                                                                                                                                                                                                                                                                  • Argos
                                                                                                                                                                                                                                                                                                                                                  • Asda Group Ltd
                                                                                                                                                                                                                                                                                                                                                  • ASPIAG (Austria SPAR International AG)
                                                                                                                                                                                                                                                                                                                                                  • Associated British Foods Plc
                                                                                                                                                                                                                                                                                                                                                  • Bartle Bogle Hegarty (UK)
                                                                                                                                                                                                                                                                                                                                                  • Baugur
                                                                                                                                                                                                                                                                                                                                                  • Booker Cash & Carry Limited
                                                                                                                                                                                                                                                                                                                                                  • BP Oil UK (retail)
                                                                                                                                                                                                                                                                                                                                                  • Budgens Stores Ltd - retail sales
                                                                                                                                                                                                                                                                                                                                                  • BWG Group
                                                                                                                                                                                                                                                                                                                                                  • Cadbury Schweppes Plc
                                                                                                                                                                                                                                                                                                                                                  • Carrefour Europe
                                                                                                                                                                                                                                                                                                                                                  • Casino
                                                                                                                                                                                                                                                                                                                                                  • Co-operative Group
                                                                                                                                                                                                                                                                                                                                                  • Colruyt Group
                                                                                                                                                                                                                                                                                                                                                  • Compass Group Plc
                                                                                                                                                                                                                                                                                                                                                  • Conveco Ltd
                                                                                                                                                                                                                                                                                                                                                  • Costcutter Supermarkets Group
                                                                                                                                                                                                                                                                                                                                                  • CVC Capital Partners Limited
                                                                                                                                                                                                                                                                                                                                                  • Dagrofa
                                                                                                                                                                                                                                                                                                                                                  • Dansk Supermarked
                                                                                                                                                                                                                                                                                                                                                  • Despar
                                                                                                                                                                                                                                                                                                                                                  • Direct Wines Ltd
                                                                                                                                                                                                                                                                                                                                                  • Dobbies Garden Centres plc
                                                                                                                                                                                                                                                                                                                                                  • Dohle Group
                                                                                                                                                                                                                                                                                                                                                  • Drinks Direct
                                                                                                                                                                                                                                                                                                                                                  • Duchy Originals
                                                                                                                                                                                                                                                                                                                                                  • Edeka Group
                                                                                                                                                                                                                                                                                                                                                  • Eurospar Finland
                                                                                                                                                                                                                                                                                                                                                  • First Quench Retailing
                                                                                                                                                                                                                                                                                                                                                  • Fortnum & Mason Plc
                                                                                                                                                                                                                                                                                                                                                  • Freeview
                                                                                                                                                                                                                                                                                                                                                  • Fresh & Easy
                                                                                                                                                                                                                                                                                                                                                  • FreshDirect Inc
                                                                                                                                                                                                                                                                                                                                                  • Gfk NOP
                                                                                                                                                                                                                                                                                                                                                  • Greggs Plc
                                                                                                                                                                                                                                                                                                                                                  • GT Smith Ltd
                                                                                                                                                                                                                                                                                                                                                  • Harrods Group Total
                                                                                                                                                                                                                                                                                                                                                  • HBOS plc (Halifax Bank of Scotland)
                                                                                                                                                                                                                                                                                                                                                  • Heston Blumenthal
                                                                                                                                                                                                                                                                                                                                                  • HJ Heinz Company UK
                                                                                                                                                                                                                                                                                                                                                  • Homebase Ltd
                                                                                                                                                                                                                                                                                                                                                  • Hotel Chocolat Ltd
                                                                                                                                                                                                                                                                                                                                                  • Iceland Foods Ltd
                                                                                                                                                                                                                                                                                                                                                  • Interspar/Maximarkt
                                                                                                                                                                                                                                                                                                                                                  • Ipsos MORI
                                                                                                                                                                                                                                                                                                                                                  • J. Sainsbury
                                                                                                                                                                                                                                                                                                                                                  • Jamie Oliver
                                                                                                                                                                                                                                                                                                                                                  • John Lewis Partnership
                                                                                                                                                                                                                                                                                                                                                  • Kantar Media
                                                                                                                                                                                                                                                                                                                                                  • Kaufland (Bulgaria)
                                                                                                                                                                                                                                                                                                                                                  • Kmart Corporation
                                                                                                                                                                                                                                                                                                                                                  • Lidl (UK)
                                                                                                                                                                                                                                                                                                                                                  • Lloyds Banking Group
                                                                                                                                                                                                                                                                                                                                                  • Londis (Holdings) Ltd - retail sales
                                                                                                                                                                                                                                                                                                                                                  • Majestic Wine Warehouse Ltd
                                                                                                                                                                                                                                                                                                                                                  • Marks & Spencer
                                                                                                                                                                                                                                                                                                                                                  • Musgrave UK - consolidated sales
                                                                                                                                                                                                                                                                                                                                                  • Naked Wines
                                                                                                                                                                                                                                                                                                                                                  • Nectar
                                                                                                                                                                                                                                                                                                                                                  • Netto Foodstores Ltd
                                                                                                                                                                                                                                                                                                                                                  • NorgesGruppen
                                                                                                                                                                                                                                                                                                                                                  • Ocado
                                                                                                                                                                                                                                                                                                                                                  • Oddbins Ltd
                                                                                                                                                                                                                                                                                                                                                  • Office for National Statistics
                                                                                                                                                                                                                                                                                                                                                  • Office of Fair Trading
                                                                                                                                                                                                                                                                                                                                                  • One Stop Community Stores Ltd
                                                                                                                                                                                                                                                                                                                                                  • Philips Consumer Electronics UK
                                                                                                                                                                                                                                                                                                                                                  • Royal Bank of Scotland Group plc
                                                                                                                                                                                                                                                                                                                                                  • Saatchi & Saatchi (UK)
                                                                                                                                                                                                                                                                                                                                                  • Safeway Stores
                                                                                                                                                                                                                                                                                                                                                  • Samsung Electronics (UK) Ltd
                                                                                                                                                                                                                                                                                                                                                  • Schroder Investment Management
                                                                                                                                                                                                                                                                                                                                                  • Schwarz Group
                                                                                                                                                                                                                                                                                                                                                  • Select Service Partner
                                                                                                                                                                                                                                                                                                                                                  • Shaw's Supermarkets, Inc
                                                                                                                                                                                                                                                                                                                                                  • Shop Direct Group
                                                                                                                                                                                                                                                                                                                                                  • Somerfield
                                                                                                                                                                                                                                                                                                                                                  • Spar UK Ltd
                                                                                                                                                                                                                                                                                                                                                  • Sperwer
                                                                                                                                                                                                                                                                                                                                                  • T&S Stores Plc
                                                                                                                                                                                                                                                                                                                                                  • T-Mobile (UK) Ltd
                                                                                                                                                                                                                                                                                                                                                  • Tengelmann
                                                                                                                                                                                                                                                                                                                                                  • Tesco Plc
                                                                                                                                                                                                                                                                                                                                                  • The Big Food Group Plc
                                                                                                                                                                                                                                                                                                                                                  • The British Land Company Plc
                                                                                                                                                                                                                                                                                                                                                  • The Drink Shop
                                                                                                                                                                                                                                                                                                                                                  • The Wine Society
                                                                                                                                                                                                                                                                                                                                                  • Trader Joe's Company Inc
                                                                                                                                                                                                                                                                                                                                                  • Veropoulos
                                                                                                                                                                                                                                                                                                                                                  • Waitrose Ltd
                                                                                                                                                                                                                                                                                                                                                  • Wal-Mart Stores, Inc
                                                                                                                                                                                                                                                                                                                                                  • Walmart Stores (USA)
                                                                                                                                                                                                                                                                                                                                                  • Weetabix Ltd.
                                                                                                                                                                                                                                                                                                                                                  • Welcome Break Group Ltd
                                                                                                                                                                                                                                                                                                                                                  • Wm Morrison Supermarkets
                                                                                                                                                                                                                                                                                                                                                  • Woolworths Group plc

                                                                                                                                                                                                                                                                                                                                                  Food Retailing - UK - November 2011

                                                                                                                                                                                                                                                                                                                                                  £1,750.00 (Excl.Tax)