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Specialist Food and Drink Retailers - UK - March 2016

"The trend towards convenience shopping is driving footfall back into towns and cities where the specialists tend to be located, but with this comes additional competition from c-stores, discounters and online. While e-commerce isn’t the answer for many specialists, increasing use of technology to engage with customers and improved convenience in terms of later opening times or local pick-up points should help them to stand out from the competition."

- Thomas Slide, Retail Analyst


This report covers the following issues:

  • The growth of c-stores; help or hindrance?
  • Do Aldi and Lidl now pose the greatest threat?
  • Should specialists be improving online?

The wider food retail sector has been dealing with some pretty seismic changes in recent years that have led to a declining market share for the supermarkets as shifting demographics mean that a growing number of consumers opt to shop either locally or online. Consumers are increasingly breaking up their shopping into smaller but more frequent trips and this has been one factor helping the specialist food and drink sector return to growth over the past two years.

Within the sector the way in which products are sold is changing, with online retailers like Hubbub and Market Porter growing sales while subscription services like HelloFresh are set to increasingly disrupt the market. In response many specialist food and drink retailers are increasingly blurring the line between retail and foodservice with bakeries like Greggs at the forefront of this.

Finally, the discounters, Aldi and Lidl, are increasingly bringing themselves into competition with specialists by developing their premium product ranges and introducing a growing number of ethical and welfare certifications. Our consumer research shows that food and drink specialists continue to stand out for their product quality but to stay ahead they increasingly need to find ways to leverage convenience and staff expertise as well.

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • Specialist retailers’ sales grow 1.5% in 2015
              • Figure 1: Market size and forecast: consumer spending at specialist food and drink retailers (incl. VAT), 2010-20
            • Butchers and off-licences take the largest share of sales
              • Figure 2: Share of specialist food and drink retailers’ sales, 2014
            • Price deflation continues to impact the sector
              • Companies, strategies and innovations
                • Foodservice grows in importance
                  • Innovative approaches to convenience
                    • Non-standard society
                      • The consumer
                        • 62% of consumers have shopped at a food and drink specialist
                          • Figure 3: Usage of food and drink specialists, December 2015
                        • Satisfaction with food and drink specialists
                          • Figure 4: Attitudes towards specialists, December 2015
                        • What they buy and where
                          • Figure 5: What they bought and where they bought it, December 2015
                        • What would encourage more frequent shopping at specialists
                          • Figure 6: Factors that would encourage greater use of food and drink specialists, any rank, December 2015
                        • How specialist food and drink retailers are used
                          • Figure 7: How they choose to shop at specialist food and drink retailers, December 2015
                        • What we think
                        • Issues and Insights

                          • The growth of c-stores; help or hindrance?
                            • The facts
                              • The implications
                                • Do Aldi and Lidl now pose the greatest threat?
                                  • The facts
                                    • The implications
                                      • Should specialists be improving online?
                                        • The facts
                                          • The implications
                                          • The Market – What You Need to Know

                                            • Market size and forecast
                                              • Number of specialists continues to decline
                                                • Channels to market
                                                  • Price deflation
                                                    • Modest growth in total food retailers’ sales
                                                      • Consumer confidence
                                                      • Market Size and Forecast

                                                        • Specialists’ sales begin to grow again
                                                          • Figure 8: Market size and forecast: consumer spending at specialist food and drink retailers (incl. VAT), 2010-20
                                                          • Figure 9: Market size and forecast: consumer spending at all specialist food and drink retailers (incl. VAT), at current and constant prices, 2010-20
                                                        • Forecast methodology
                                                        • Channels to Market

                                                          • Number of specialists continues to decline
                                                            • Figure 10: Number of UK enterprises, by specialist type, 2011-14
                                                          • Butchers and off-licences take the largest share of sales
                                                            • Figure 11: Share of specialist food and drink retailers’ sales, 2014
                                                            • Figure 12: Share of specialist food and drink retailers’ sales, 2011-14
                                                        • Market Drivers

                                                          • Price deflation
                                                              • Figure 13: CPI for food and alcoholic beverages, 2010-16
                                                            • Growth of the discounters
                                                              • Figure 14: Grocery sector market shares for Aldi and Lidl, 2010-15
                                                              • Figure 15: People who shop more or the same at Aldi and Lidl, December 2013-August 2015
                                                            • All food retailers’ sales
                                                              • Figure 16: All food retailers: Sales, 2010-20
                                                            • Consumer confidence
                                                              • Figure 17: Consumers’ perceived financial health index, 2010-16
                                                              • Figure 18: Consumers’ perceived financial health, by age, January 2016
                                                              • Figure 19: Consumers’ perceived financial health, by region, January 2016
                                                          • Key Players – What You Need to Know

                                                            • Preserve of the Independent
                                                              • Food service – the way forward
                                                                • Specialist delis and ready prepared meals
                                                                  • The premium end of the market
                                                                    • Other developments
                                                                    • Competitive Strategies

                                                                        • Figure 20: Key financials of the key food and drink specialist retailers, 2013-15
                                                                      • Foodservice option is increasingly important
                                                                        • Specialists offering delivery lead growth
                                                                          • The rise and rise of subscription services
                                                                            • Mergers and acquisitions
                                                                            • Launch Activity and Innovation

                                                                              • Drinks retailers
                                                                                • Text for wine service for busy customers
                                                                                  • New hybrid wine store
                                                                                    • Butchers and greengrocers
                                                                                      • Mock meat butchers
                                                                                        • Raw meat vending machine
                                                                                          • Butcher Shop of the Year 2015-2016
                                                                                            • Graze enters retail arena
                                                                                              • Cornish pasty drive-thru
                                                                                                • Bakeries and confectioners
                                                                                                  • 100% gluten-free bakery store
                                                                                                    • Doughnut courier service
                                                                                                      • Purity and provenance
                                                                                                        • New artisan micro-bakery
                                                                                                          • Artisan bakery chain grab-and-go concept
                                                                                                            • Mr Crisp
                                                                                                              • Krispy Kreme broadcasting live video to Twitter followers
                                                                                                                • Not-for-profit bakery
                                                                                                                  • Health food stores
                                                                                                                    • ‘Holland & Barrett More’
                                                                                                                    • The Consumer – What You Need to Know

                                                                                                                      • Bakers are most popular specialist
                                                                                                                        • Overall, specialists attract consumers with a higher income
                                                                                                                          • Specialists are delivering on quality, but struggling on convenience
                                                                                                                            • Specialists are the second most popular destination for meat and fish
                                                                                                                              • Health food shops attract a quarter of visits
                                                                                                                                • Price is a driving factor for food and drink
                                                                                                                                  • Young consumers prioritise convenience
                                                                                                                                    • Consumers go to specialists when they can’t get what they want in supermarkets
                                                                                                                                      • Specialists leveraging consumer trust
                                                                                                                                        • Over-55s like to shop around
                                                                                                                                        • Use of Food and Drink Specialists

                                                                                                                                          • Bakers are the most popular specialist
                                                                                                                                            • Figure 21: Usage of food and drink specialists, December 2015
                                                                                                                                          • Choice of specialists differs by gender
                                                                                                                                            • Figure 22: Usage of food and drink specialists, by gender, December 2015
                                                                                                                                          • Specialists attract consumers with a higher income
                                                                                                                                            • Figure 23: Usage of food and drink specialists, by age and affluence, December 2015
                                                                                                                                          • Specialists are most popular in Scotland, London and the North
                                                                                                                                              • Figure 24: Usage of food and drink specialists, by region, December 2015
                                                                                                                                            • Bakeries are popular in Scotland and Wales
                                                                                                                                              • Figure 25: Usage of bakeries, by region, December 2015
                                                                                                                                            • Butchers popular across the board
                                                                                                                                              • Figure 26: Usage of butchers, by region, December 2015
                                                                                                                                            • Use of delicatessens varies widely by region
                                                                                                                                              • Figure 27: Usage of delicatessens, by region, December 2015
                                                                                                                                            • Confectionery stores lack popularity in the South West and East Midlands
                                                                                                                                              • Figure 28: Usage of confectionery shops, by region, December 2015
                                                                                                                                            • Londoners love health food shops
                                                                                                                                              • Figure 29: Usage of health food shops, by region, December 2015
                                                                                                                                            • Scotland most popular for fishmongers
                                                                                                                                              • Figure 30: Usage of fishmongers, by region, December 2015
                                                                                                                                            • Consumers spend the most at butchers
                                                                                                                                              • Figure 31: Usage of food and drink specialists, December 2015
                                                                                                                                          • Attitudes towards Specialists

                                                                                                                                            • Delivering on quality but struggling on convenience
                                                                                                                                                • Figure 32: Attitudes towards specialists, December 2015
                                                                                                                                              • Bakeries perform best on location and value for money
                                                                                                                                                • Figure 33: Attitudes towards bakeries, December 2015
                                                                                                                                              • Butchers deliver high satisfaction levels
                                                                                                                                                • Figure 34: Attitudes towards butchers, December 2015
                                                                                                                                              • Confectionery shops deliver the goods
                                                                                                                                                • Figure 35: Attitudes towards confectionery shops, December 2015
                                                                                                                                            • Key Driver Analysis

                                                                                                                                              • Methodology
                                                                                                                                                  • Figure 36: Key drivers of overall satisfaction with specialist retailer store, December 2015
                                                                                                                                                  • Figure 37: Overall satisfaction with specialist retailer store – key driver output, December 2015
                                                                                                                                              • Where They Buy Different Types of Product

                                                                                                                                                  • Meat is the most popular product to buy from a specialist
                                                                                                                                                    • Figure 38: What they bought and where they bought it, December 2015
                                                                                                                                                  • Discounters in second place for alcohol sales
                                                                                                                                                    • Health food specialists account for a quarter of visits
                                                                                                                                                      • Figure 39: Where they buy health foods or supplements, December 2015
                                                                                                                                                    • Convenience stores are popular for bread, milk and confectionery
                                                                                                                                                    • What Would Encourage Greater Use of Specialists

                                                                                                                                                      • Price a driving factor when it comes to buying food and drink
                                                                                                                                                        • Figure 40: What would encourage greater use of food and drink specialists, December 2015
                                                                                                                                                      • Getting customers involved
                                                                                                                                                        • Figure 41: What would encourage greater use of food and drink specialists, any rank, December 2015
                                                                                                                                                      • Young consumers prioritise convenience
                                                                                                                                                        • Figure 42: Customer profiles of factors (any ranking) that would encourage greater use of food and drink specialists, December 2015
                                                                                                                                                    • How They Use Specialist Food and Drink Retailers

                                                                                                                                                      • Finding items the supermarkets don’t stock
                                                                                                                                                        • Specialists are leveraging additional trust
                                                                                                                                                          • Figure 43: How they choose to shop at specialist food and drink retailers, December 2015
                                                                                                                                                        • Younger consumers more likely to buy on impulse from specialists
                                                                                                                                                          • Figure 44: How they choose to shop at specialist food and drink retailers, by age, December 2015
                                                                                                                                                        • Over-55s prefer to shop around
                                                                                                                                                          • Figure 45: How they choose to shop at specialist food and drink retailers, by age, December 2015
                                                                                                                                                      • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                          • Abbreviations
                                                                                                                                                            • Consumer research methodology
                                                                                                                                                            • Appendix – Market Size and Forecast

                                                                                                                                                              • Forecast Methodology
                                                                                                                                                                • Key Driver Analysis
                                                                                                                                                                  • Interpretation of results
                                                                                                                                                                    • Figure 46: Overall satisfaction with specialist retailer store – key driver output, December 2015
                                                                                                                                                                    • Figure 47: Satisfaction with specialist retailer store, December 2015

                                                                                                                                                                Companies Covered

                                                                                                                                                                To learn more about the companies covered in this report please contact us.

                                                                                                                                                                Specialist Food and Drink Retailers - UK - March 2016

                                                                                                                                                                £1,995.00 (Excl.Tax)