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Supermarkets - UK - November 2017

“The supermarket sector is expected to return to growth for the first time in four years in 2017. However it is still a sector fighting against the grain of current shopping habits. Consumers continue to move to more fluid and frequent habits and the discounters continue to present a considerable thorn in the side of the leading players. There are green shoots, but the largest stores are still swimming against the tide of changing shopping habits.”

– Nick Carroll, Senior Retail Analyst

This report looks at the following areas:

  • This season's must have accessory: wholesale
  • Trading up/down/sideways: What falling real incomes could mean for the sector
  • Amazon and Whole Foods: for now file under 'potential'

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Table of contents

  1. Overview

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

          • The market
            • Real incomes now falling
              • Figure 1: Real incomes: CPIH versus annual weekly earnings (excluding bonuses) Jan 2014-Oct 2017
            • Consumer spending on food and drink accelerates
              • Grocery retail sales return to more substantial growth
                • Figure 2: All food retail sales (incl. VAT), 2012-22
              • Supermarkets sales also expected to return to growth…
                • Figure 3: Supermarkets’ market size and forecast (inc. VAT), 2012-22
              • …but are likely to continue to lose share of spending
                • Figure 4: Estimated channels of distribution for grocery retail sales, 2016
              • Leading retailers
                • Tesco remains the dominant player
                  • Figure 5: Leading grocery retailers: share of all grocery retail sales, 2016
                • Aldi and Lidl continue to gain ground
                  • Tesco continues to recover its brand image
                    • Figure 6: Attitudes towards and usage of selected brands, September 2017
                  • The consumer
                    • Levels of top-up shopping continue to rise
                      • Figure 7: Grocery shopping behaviour, September 2015-17
                    • A majority continue to spend the most in supermarkets
                      • Figure 8: Types of stores where consumers spend the most, September 2016 and 2017
                    • Meal planning influences shopping behaviour
                      • Figure 9: How grocery shoppers plan meals in advance, September 2017
                    • Tesco the most used retailer in the UK
                      • Figure 10: Grocery retailers used for primary and secondary shops, September 2017
                    • Nine in ten supermarket shoppers purchase non-foods
                      • Figure 11: Types of non-foods purchased in supermarkets, September 2017
                    • Consumers have noticed price rises
                      • Figure 12: Attitudes to pricing and trading down, September 2017
                    • What we think
                    • Issues and Insights

                      • This season’s must have accessory: wholesale
                        • The facts
                          • The implications
                            • Trading up/down/sideways: What falling real incomes could mean for the sector
                              • The facts
                                • The implications
                                  • Amazon and Whole Foods: for now file under ‘potential’
                                    • The facts
                                      • The implications
                                      • The Market – What You Need to Know

                                        • Inflation continues to grow…
                                          • …meaning real incomes are now falling
                                            • Consumer spending on food and drink accelerates
                                              • Grocery retail sales return to more substantial growth
                                                • Supermarkets sales also expected to return to growth…
                                                  • …but are likely to continue to lose share of spending
                                                  • Market Drivers

                                                    • Inflation rises
                                                      • Figure 13: Food and drink inflation, 2012- October17
                                                    • Consumer spending power falls
                                                      • Figure 14: Average weekly earnings by consumer price index, Jan 2014-Sep 2017
                                                    • Consumer confidence has taken a hit but is holding up overall
                                                      • Figure 15: Consumer confidence: current financial situation vs sentiment for the coming year, Jan 2014 – Sep 2017
                                                    • Private renting increases
                                                      • Figure 16: UK household tenure status, 2011-16
                                                  • Consumer Spending on Food and Drink

                                                        • Figure 17: Consumer spending on core food and drink categories, 2012-17
                                                      • Spending on food
                                                          • Figure 18: Annual % change in the value, volume and prices in the food category, 2012-17
                                                        • How food spending breaks down
                                                            • Figure 19: Composition of consumer spending on food, categories as a % of total spending, 2016
                                                          • Spending on non-alcoholic drinks
                                                              • Figure 20: Annual % change in the value, volume and prices in the non-alcoholic beverages category, 2012-17
                                                            • Spending on alcoholic drinks
                                                              • Figure 21: Annual % change in the value, volume and prices in the alcoholic beverages category, 2012-17
                                                              • Figure 22: Composition of consumer spending on alcoholic drinks, categories as a % of total spending, 2016
                                                          • Sector Size and Forecast

                                                              • Grocery sector returns to strong growth driven by inflation
                                                                • Figure 23: All food retail sales (inc. VAT), 2012-22
                                                                • Figure 24: All food retail sales, market size and forecast, 2012-22
                                                              • Supermarket sector predicted to return to growth…
                                                                • Figure 25: Supermarkets’ market size and forecast (inc. VAT), 2012-22
                                                                • Figure 26: Supermarkets: market size and forecast (inc. VAT), 2012-22
                                                              • …but are likely to continue to lose share in the short term
                                                                • Figure 27: Estimated percentage of grocer sector sales accounted for by supermarkets, 2012-22
                                                              • Forecast methodology
                                                              • Channels of Distribution

                                                                • Supermarkets account for over half of all grocery retail sales
                                                                  • Figure 28: Estimated channels of distribution for grocery retail sales, 2016
                                                                • However supermarkets are increasingly sharing consumer baskets
                                                                    • Figure 29: Estimated breakdown of sector sales, by channel, 2012-17
                                                                • The Consumer – What You Need to Know

                                                                  • Levels of top-up shopping continue to rise
                                                                    • A majority continue to spend the most in supermarkets
                                                                      • Meal planning influences shopping behaviour
                                                                        • Tesco the most used retailer in the UK
                                                                          • Nine in ten supermarket shoppers purchase non-foods
                                                                            • Consumers have noticed price rises
                                                                              • Traditional loyalty schemes still hold significance for shoppers
                                                                              • How They Shop

                                                                                • Nine in ten are responsible for grocery shopping
                                                                                  • Figure 30: Who is responsible for grocery shopping in the household, September 2017
                                                                                • Grocery shopping habits are becoming more fluid
                                                                                  • Figure 31: Grocery shopping behaviour, September 2015-17
                                                                                • Younger consumers more likely to do a singular main shop
                                                                                  • Figure 32: Shopping behaviour by age, September 2017
                                                                                • However such behaviours are not static
                                                                                  • Figure 33: Mintel’s Grocery Tracker: shopping behaviour March 2016-June 2017
                                                                              • Types of Stores Used

                                                                                • Over half of grocery shoppers still spend the most in supermarkets
                                                                                    • Figure 34: Types of stores where consumers spend the most, September 2016-2017
                                                                                  • Who spends the most in supermarkets?
                                                                                    • Figure 35: Types of stores where consumers spend the most, by age, September 2017
                                                                                    • Figure 36: Types of stores where consumers spend the most, by parental status, September 2017
                                                                                    • Figure 37: Types of stores where consumers spend the most, by type of area lived in, September 2017
                                                                                  • The influence of family on shopping habits
                                                                                      • Figure 38: Parental influence on grocery shopping, September 2017
                                                                                  • The Impact of Planning and Eating Out

                                                                                      • Most do some form of meal planning
                                                                                        • Figure 39: How grocery shoppers plan meals in advance, September 2017
                                                                                        • Figure 40: How grocery shoppers plan meals in advance, by age, September 2017
                                                                                      • How does meal planning affect grocery shopping behaviour?
                                                                                        • Figure 41: How grocery shoppers plan meals in advance, by grocery shopping behaviour, September 2017
                                                                                      • Just under a third eat out or have a takeaway for dinner at least once a week
                                                                                        • Figure 42: Frequency of eating out, September 2017
                                                                                        • Figure 43: Frequency of eating out, by age, September 2017
                                                                                      • How does eating out affect shopping behaviours?
                                                                                        • Figure 44: Frequency of eating out, by grocery shopping behaviour, September 2017
                                                                                    • Retailers Used

                                                                                        • Tesco the UK’s most visited grocery retailer
                                                                                          • Figure 45: Grocery retailers used, September 2017
                                                                                          • Figure 46: Trend of grocery retailers used, September 2015 -2017
                                                                                        • Tesco’s success is borne out of capturing both main and secondary shops
                                                                                          • Figure 47: Grocery retailers used for primary and secondary shops, September 2017
                                                                                        • Less than one in ten shop with one retailer
                                                                                          • Figure 48: Repertoire of secondary retailers used, September 2017
                                                                                        • Asda shoppers most likely to do a secondary shop at the discounters
                                                                                          • Figure 49: Where leading retailers’ primary shoppers also shop, September 2017
                                                                                      • Retailer Demographic Comparison

                                                                                          • Tesco attracts the highest level of young secondary shoppers
                                                                                              • Figure 50: Leading grocery retailers used for primary and secondary shops, by age, September 2017
                                                                                              • Figure 51: The discounters: primary and secondary shoppers, by age, September 2017
                                                                                            • Tesco and Sainsbury’s picking up secondary use in urban areas
                                                                                              • Figure 52: Leading grocery retailers used for primary and secondary shops, by age, September 2017
                                                                                            • Tesco and Sainsbury’s strongest in the capital
                                                                                              • Figure 53: Leading retailers’ primary shoppers, by region lived in, September 2017
                                                                                              • Figure 54: Leading Retailers’ secondary shoppers, by region lived in, September 2017
                                                                                            • Asda strong in the lower socio-economic groups
                                                                                              • Figure 55: Leading grocery retailers used for primary and secondary shops, by socio-economic group, September 2017
                                                                                              • Figure 56: Aldi and Lidl, primary and secondary grocery shoppers, by socio-economic group, September 2017
                                                                                          • Non-foods in Supermarkets

                                                                                            • Health and beauty the most popular non-food category
                                                                                                • Figure 57: Types of non-foods purchased in supermarkets, September 2017
                                                                                              • Clothing purchasing peaks amongst Asda shoppers
                                                                                                • Figure 58: Types of non-foods purchased in supermarkets, by retailer where the most money is spent in a typical month, September 2017
                                                                                              • Consumers tend to favour a few categories
                                                                                                • Figure 59: Types of non-foods purchased in supermarkets, repertoire analysis, September 2017
                                                                                              • Non-food products and services seen as time-saving and convenient
                                                                                                  • Figure 60: Attitudes to non-foods in supermarkets, September 2017
                                                                                                • Young consumers more likely to be swayed by non-food range
                                                                                                  • Figure 61: Types of non-foods purchased in supermarkets, September 2017
                                                                                              • Attitudes to Prices and Loyalty Schemes

                                                                                                • Consumers have noticed price increases
                                                                                                  • Figure 62: Attitudes to pricing and trading down, September 2017
                                                                                                • Older consumers most likely to have noticed price increases
                                                                                                  • Figure 63: Agreement to statements about pricing and trading down, by age, September 2017
                                                                                                • A move to own-brand?
                                                                                                    • Figure 64: Mintel Grocery Tracker: attitudes to own v private label, March 2016-Sep 2017
                                                                                                  • Loyalty schemes
                                                                                                    • Figure 65: Attitudes to loyalty schemes, September 2017
                                                                                                    • Figure 66: Agreement to statements around loyalty schemes, by retailer with who the most money is spent in a typical month, September 2017
                                                                                                • Leading Retailers – What You Need to Know

                                                                                                  • Tesco is still the dominant player
                                                                                                    • Aldi and Lidl continue to gain ground
                                                                                                      • Tesco continues to recover its brand image
                                                                                                        • Almost half of consumers do some shopping online
                                                                                                          • Checkout free grocery
                                                                                                          • Leading Grocery Retailers – Key Metrics

                                                                                                              • 2016 sees a return to growth for (most of) the leading players
                                                                                                                  • Figure 67: Leading grocery retailers: net sales, 2012-16
                                                                                                                • Consolidation amongst the symbol groups
                                                                                                                  • Figure 68: Leading grocery retailers: Store numbers, 2012-16
                                                                                                                  • Figure 69: Leading grocery retailers: annual sales per outlet, 2012-16
                                                                                                                • Sales area and densities
                                                                                                                  • Figure 70: Leading grocery retailers: total sales area, 2012-16
                                                                                                                  • Figure 71: Leading grocery retailers: annual sales per sq m, 2012-16
                                                                                                                • Operating profits and margins
                                                                                                                  • Figure 72: Leading grocery retailers: operating profits, 2012-16
                                                                                                                  • Figure 73: Leading grocery retailers: operating margins, 2012-16
                                                                                                              • Market Share

                                                                                                                • Tesco is the market leader
                                                                                                                  • Figure 74: Leading grocery retailers: share of all grocery retail sales, 2016
                                                                                                                  • Figure 75: Leading grocery retailers: share of all grocery retail sales, 2012-17
                                                                                                                • Could Aldi crack the top four?
                                                                                                                    • Figure 76: Market shares: The Big Four grocery multiples vs the discounters, 2010-17
                                                                                                                  • A note on our market share
                                                                                                                  • Space Allocation Summary

                                                                                                                    • Summary data and classifications
                                                                                                                        • Figure 77: Food, non-food standard classifications, 2017
                                                                                                                      • Convenience comparison overview
                                                                                                                        • Figure 78: UK leading food retailers’ hypermarket store format: Convenience comparison overview split, November 2017
                                                                                                                        • Figure 79: UK leading food retailers’ superstore format: Convenience comparison overview split, November 2017
                                                                                                                        • Figure 80: UK leading food retailers’ smaller supermarkets and discounters: Convenience comparison overview split, November 2017
                                                                                                                      • Detailed convenience comparison split
                                                                                                                        • Figure 81: UK leading food retailers’ hypermarket store format: Convenience comparison detailed split, November 2017
                                                                                                                        • Figure 82: UK leading food retailers’ superstore format: Convenience comparison detailed split, November 2017
                                                                                                                        • Figure 83: UK leading food retailers’ smaller supermarkets and discounters: Convenience comparison detailed split, November 2017
                                                                                                                      • Food and drink categories split
                                                                                                                        • Figure 84: UK leading food retailers: food and drink categories as a percentage of total space allocated to food and drink, November 2017
                                                                                                                    • Retail Product Mix

                                                                                                                          • Figure 85: Leading food retailers, estimated Sales Mix, 2016
                                                                                                                          • Figure 86: Leading food retailers: Category sales as % total sales, 2016
                                                                                                                          • Figure 87: Leading food retailers, Sales density by broad category, 2016
                                                                                                                          • Figure 88: Leading food retailers: Estimated share of key product markets, 2016
                                                                                                                      • Brand Research

                                                                                                                          • What you need to know
                                                                                                                            • Brand map
                                                                                                                              • Figure 89: Attitudes towards and usage of selected brands, September 2017
                                                                                                                            • Key brand metrics
                                                                                                                              • Figure 90: Key metrics for selected brands, September 2017
                                                                                                                            • Brand attitudes: Aldi and Lidl lead perceptions of offering good value
                                                                                                                              • Figure 91: Attitudes, by brand, September 2017
                                                                                                                            • Brand personality: Still work to do for the Co-op to change perceptions
                                                                                                                              • Figure 92: Brand personality – Macro image, September 2017
                                                                                                                            • The big four trade on being reliable and accessible
                                                                                                                              • Figure 93: Brand personality – Micro image, September 2017
                                                                                                                            • Brand analysis
                                                                                                                              • Tesco
                                                                                                                                • Sainsbury’s
                                                                                                                                  • Asda
                                                                                                                                    • Morrisons
                                                                                                                                      • Aldi
                                                                                                                                        • The Co-op
                                                                                                                                          • Lidl
                                                                                                                                            • M&S Simply Food
                                                                                                                                              • Iceland
                                                                                                                                                • Waitrose
                                                                                                                                                  • Ocado
                                                                                                                                                    • Amazon and Whole Foods
                                                                                                                                                    • Online

                                                                                                                                                      • Over half do online grocery shopping
                                                                                                                                                        • Figure 94: Usage of online grocery shopping, December 2016
                                                                                                                                                      • Online grocery is only around 6% of total sector sales
                                                                                                                                                        • Figure 95: Estimated breakdown of sector sales, by channel, 2012-17
                                                                                                                                                      • Delivery passes on the rise
                                                                                                                                                        • Figure 96: Ownership of delivery passes, December 2016
                                                                                                                                                      • Tesco is the dominant online player but losing market share
                                                                                                                                                        • Figure 97: Leading online grocery retailers’ estimated market shares, 2016
                                                                                                                                                    • Launch Activity and Innovation

                                                                                                                                                      • Checkout-free grocery shopping
                                                                                                                                                        • Speedy delivery services
                                                                                                                                                          • Voice-controlled devices that can order grocery items for direct delivery to your home
                                                                                                                                                            • Driverless grocery delivery
                                                                                                                                                              • New grocery store with a unique, artisan-style twist on the traditional supermarket experience
                                                                                                                                                                • Zero waste supermarkets
                                                                                                                                                                  • Sainsbury’s capitalising on the revival in interest in vinyl
                                                                                                                                                                    • Grab & Go van to save them time and effort travelling to a store
                                                                                                                                                                    • Advertising and Marketing Activity

                                                                                                                                                                      • 2016 total advertising spend declined 5.8% year-on-year
                                                                                                                                                                        • Figure 98: Recorded above-the-line, online display and direct mail total advertising expenditure by UK supermarket and online grocers, 2013-16
                                                                                                                                                                      • Asda toppled by Lidl as the leading advertiser by spend
                                                                                                                                                                        • Figure 99: Recorded above-the-line, online display and direct mail total advertising expenditure by leading UK supermarket and online grocers, 2013-16
                                                                                                                                                                      • Advertising spend peaks around Easter and in the month leading up to Christmas
                                                                                                                                                                          • Figure 100: Recorded above-the-line, online display and direct mail total advertising expenditure by UK supermarket and online grocers, by month, 2015-16
                                                                                                                                                                        • TV accounted for the lion’s share of spend in 2016
                                                                                                                                                                          • Figure 101: Percentage media type split of recorded above-the-line, online display and direct mail total advertising expenditure by UK supermarkets and online grocers, 2013-16
                                                                                                                                                                        • What we’ve seen so far in 2017
                                                                                                                                                                          • Nielsen Ad Intel coverage
                                                                                                                                                                          • Aldi

                                                                                                                                                                              • What we think
                                                                                                                                                                                • The key markets
                                                                                                                                                                                  • Germany
                                                                                                                                                                                    • UK
                                                                                                                                                                                      • US
                                                                                                                                                                                        • Australia
                                                                                                                                                                                          • Further expansion
                                                                                                                                                                                            • Company background
                                                                                                                                                                                              • Company performance
                                                                                                                                                                                                • Figure 102: Aldi: Estimated group sales performance, 2012-16
                                                                                                                                                                                                • Figure 103: Aldi: Number of outlets, 2012-16
                                                                                                                                                                                              • Retail offering
                                                                                                                                                                                              • Asda Group

                                                                                                                                                                                                  • What we think
                                                                                                                                                                                                    • Toyou drives footfall into stores
                                                                                                                                                                                                      • Lack of significant convenience presence could be an issue
                                                                                                                                                                                                        • Better solution may be to push hard on online development
                                                                                                                                                                                                          • A deal on the horizon?
                                                                                                                                                                                                            • Cost-cutting on the agenda
                                                                                                                                                                                                              • What next?
                                                                                                                                                                                                                • Company background
                                                                                                                                                                                                                  • Company performance
                                                                                                                                                                                                                    • Figure 104: Asda Group Ltd: Group financial performance, 2012-16
                                                                                                                                                                                                                    • Figure 105: Asda Group Ltd: outlet data, 2012-16
                                                                                                                                                                                                                  • Retail offering
                                                                                                                                                                                                                  • The Co-operative Food

                                                                                                                                                                                                                      • What we think
                                                                                                                                                                                                                        • £137.5 million bid for wholesale group Nisa
                                                                                                                                                                                                                          • IT investment transforming the store experience
                                                                                                                                                                                                                            • Rolling out local sourcing programme nationwide
                                                                                                                                                                                                                              • Healthier food options
                                                                                                                                                                                                                                • Bolstering eco credentials
                                                                                                                                                                                                                                  • Company background
                                                                                                                                                                                                                                    • Company performance
                                                                                                                                                                                                                                      • Figure 106: The Co-operative Food: group financial performance, 2012/13-2016/17
                                                                                                                                                                                                                                      • Figure 107: The Co-operative Food: outlet data, 2012/13-2016/17
                                                                                                                                                                                                                                    • Retail offering
                                                                                                                                                                                                                                    • Iceland Foods

                                                                                                                                                                                                                                        • What we think
                                                                                                                                                                                                                                          • New concept stores continue to be rolled out
                                                                                                                                                                                                                                            • Quality focus for products
                                                                                                                                                                                                                                              • Loyalty programme to move to existing payment cards
                                                                                                                                                                                                                                                • Company background
                                                                                                                                                                                                                                                  • Company performance
                                                                                                                                                                                                                                                    • Figure 108: Iceland Foods Ltd: group financial performance, 2012/113-2016/17
                                                                                                                                                                                                                                                    • Figure 109: Iceland Foods Ltd: outlet data, 2012/13-2016/17
                                                                                                                                                                                                                                                  • Retail offering
                                                                                                                                                                                                                                                  • Schwarz Group (Lidl)

                                                                                                                                                                                                                                                      • What we think
                                                                                                                                                                                                                                                        • Lidl lands in the US
                                                                                                                                                                                                                                                          • Further expansion
                                                                                                                                                                                                                                                            • Lidl goes on the attack in Germany
                                                                                                                                                                                                                                                              • Further gains in the UK
                                                                                                                                                                                                                                                                • Embracing technology
                                                                                                                                                                                                                                                                  • Lidl bets big on clothing
                                                                                                                                                                                                                                                                    • Figure 110: Esmara by Heidi Klum at Lidl UK, September 2017
                                                                                                                                                                                                                                                                  • Online operations at early stages of development
                                                                                                                                                                                                                                                                    • Company background
                                                                                                                                                                                                                                                                      • Company performance
                                                                                                                                                                                                                                                                        • Figure 111: Schwarz Group: Group sales performance, 2012/13-2016/17
                                                                                                                                                                                                                                                                        • Figure 112: Schwarz Group: Outlet data, 2012/13-2016/17
                                                                                                                                                                                                                                                                      • Retail offering
                                                                                                                                                                                                                                                                      • Marks & Spencer (UK Food)

                                                                                                                                                                                                                                                                          • What we think
                                                                                                                                                                                                                                                                            • Delivery and convenience prioritised
                                                                                                                                                                                                                                                                              • Sushi counters
                                                                                                                                                                                                                                                                                • Plan A 2025 – A new sustainability and eco focus
                                                                                                                                                                                                                                                                                  • Company background
                                                                                                                                                                                                                                                                                    • Company performance
                                                                                                                                                                                                                                                                                      • Figure 113: Marks & Spencer (UK Food): group sales performance, 2012/13-2016/17
                                                                                                                                                                                                                                                                                      • Figure 114: Marks & Spencer (UK Food): food outlets, by format, 2012/13-2016/17
                                                                                                                                                                                                                                                                                      • Figure 115: Marks & Spencer (UK Food): outlet data, 2012/13-2016/17
                                                                                                                                                                                                                                                                                    • Retail offering
                                                                                                                                                                                                                                                                                    • Wm Morrison Group

                                                                                                                                                                                                                                                                                        • What we think
                                                                                                                                                                                                                                                                                          • ‘Fresh look’ supermarket format driving store sales growth
                                                                                                                                                                                                                                                                                            • Re-entry into the convenience market
                                                                                                                                                                                                                                                                                              • Responding to consumer demand for more locally sourced food and drink products
                                                                                                                                                                                                                                                                                                • New store-pick online service extends home delivery reach
                                                                                                                                                                                                                                                                                                  • Expanded online product offering boosting e-commerce sales
                                                                                                                                                                                                                                                                                                    • Own-label push to combat food price inflation
                                                                                                                                                                                                                                                                                                      • First womenswear range
                                                                                                                                                                                                                                                                                                        • Cutting food waste
                                                                                                                                                                                                                                                                                                          • Company background
                                                                                                                                                                                                                                                                                                            • Company performance
                                                                                                                                                                                                                                                                                                              • Figure 116: Wm Morrison Group: group financial performance, 2012/13-2016/17
                                                                                                                                                                                                                                                                                                              • Figure 117: Wm Morrison Group: outlet data, 2012/13-2016/17
                                                                                                                                                                                                                                                                                                            • Retail offering
                                                                                                                                                                                                                                                                                                            • Ocado Group

                                                                                                                                                                                                                                                                                                                • What we think
                                                                                                                                                                                                                                                                                                                  • Waitrose sourcing agreement has positives and negatives
                                                                                                                                                                                                                                                                                                                    • No guarantee that Waitrose will terminate…
                                                                                                                                                                                                                                                                                                                      • …but the implications for Ocado if it does
                                                                                                                                                                                                                                                                                                                        • Broadening the customer base
                                                                                                                                                                                                                                                                                                                          • Diversifying into new sectors
                                                                                                                                                                                                                                                                                                                            • What next?
                                                                                                                                                                                                                                                                                                                              • Company background
                                                                                                                                                                                                                                                                                                                                • Company performance
                                                                                                                                                                                                                                                                                                                                  • Figure 118: Ocado Group plc: group financial performance, 2011/12-2015/16
                                                                                                                                                                                                                                                                                                                                  • Figure 119: Ocado Group plc: Key performance metrics, 2012/13-2015/16
                                                                                                                                                                                                                                                                                                                                • Retail offering
                                                                                                                                                                                                                                                                                                                                • J Sainsbury (UK)

                                                                                                                                                                                                                                                                                                                                    • What we think
                                                                                                                                                                                                                                                                                                                                      • Looking to drive synergies from the Home Retail Group deal
                                                                                                                                                                                                                                                                                                                                        • Pushing ahead with online innovations
                                                                                                                                                                                                                                                                                                                                          • Keeping a lid on costs
                                                                                                                                                                                                                                                                                                                                            • What next?
                                                                                                                                                                                                                                                                                                                                              • Company background
                                                                                                                                                                                                                                                                                                                                                • Company performance
                                                                                                                                                                                                                                                                                                                                                    • Figure 120: J Sainsbury (UK)*: group financial performance, 2012/13-2016/17
                                                                                                                                                                                                                                                                                                                                                    • Figure 121: J Sainsbury (UK): outlet data, 2012/13-2016/17
                                                                                                                                                                                                                                                                                                                                                  • Retail offering
                                                                                                                                                                                                                                                                                                                                                  • Spar International

                                                                                                                                                                                                                                                                                                                                                      • What we think
                                                                                                                                                                                                                                                                                                                                                        • Capitalising on smaller, more frequent food shopping
                                                                                                                                                                                                                                                                                                                                                          • Modernisation of larger stores
                                                                                                                                                                                                                                                                                                                                                            • New health store concept to meet the demands of health-conscious consumers
                                                                                                                                                                                                                                                                                                                                                              • E-commerce solutions to make shopping as convenient as possible
                                                                                                                                                                                                                                                                                                                                                                • Food waste scheme prompts positive response
                                                                                                                                                                                                                                                                                                                                                                  • Company background
                                                                                                                                                                                                                                                                                                                                                                    • Company performance
                                                                                                                                                                                                                                                                                                                                                                      • Figure 122: Spar International: Western Europe and Central & Eastern Europe retail sales, by country, 2012-16
                                                                                                                                                                                                                                                                                                                                                                      • Figure 123: Spar International: Western Europe and Central & Eastern Europe Outlets, 2012-16
                                                                                                                                                                                                                                                                                                                                                                      • Figure 124: Spar International: Western Europe and Central & Eastern Europe retail sales area, 2012-16
                                                                                                                                                                                                                                                                                                                                                                      • Figure 125: Spar International: Western Europe and Central & Eastern Europe sales per sq m, by country, 2012-16
                                                                                                                                                                                                                                                                                                                                                                    • Retail offering
                                                                                                                                                                                                                                                                                                                                                                    • Tesco

                                                                                                                                                                                                                                                                                                                                                                        • What we think
                                                                                                                                                                                                                                                                                                                                                                          • The turnaround
                                                                                                                                                                                                                                                                                                                                                                            • Booker
                                                                                                                                                                                                                                                                                                                                                                              • Logic behind the deal
                                                                                                                                                                                                                                                                                                                                                                                • A consumer downturn?
                                                                                                                                                                                                                                                                                                                                                                                  • Company background
                                                                                                                                                                                                                                                                                                                                                                                    • Fraud Squad investigation
                                                                                                                                                                                                                                                                                                                                                                                      • Company performance
                                                                                                                                                                                                                                                                                                                                                                                        • Full year 2016/17
                                                                                                                                                                                                                                                                                                                                                                                            • Figure 126: Tesco: sales growth by country in local currency terms, 2015/16-2016/17
                                                                                                                                                                                                                                                                                                                                                                                          • First half 2017/18
                                                                                                                                                                                                                                                                                                                                                                                            • Figure 127: Tesco: first half sales growth by country in local currency terms, H1 2016/17 – H1 2017/18
                                                                                                                                                                                                                                                                                                                                                                                          • Online
                                                                                                                                                                                                                                                                                                                                                                                            • Tesco Bank
                                                                                                                                                                                                                                                                                                                                                                                              • The balance sheet
                                                                                                                                                                                                                                                                                                                                                                                                • Figure 128: Tesco Plc: group financial performance, 2012/13-2016/17
                                                                                                                                                                                                                                                                                                                                                                                                • Figure 129: Tesco UK: like-for-like sales growth by format, Q1 and Q2 2017/18
                                                                                                                                                                                                                                                                                                                                                                                                • Figure 130: Tesco: UK store space by format, 2017
                                                                                                                                                                                                                                                                                                                                                                                                • Figure 131: Tesco Plc: outlet data, 2012/13-2016/17
                                                                                                                                                                                                                                                                                                                                                                                              • Retail offering
                                                                                                                                                                                                                                                                                                                                                                                              • Waitrose

                                                                                                                                                                                                                                                                                                                                                                                                  • What we think
                                                                                                                                                                                                                                                                                                                                                                                                    • Store sales decline forces shift in focus
                                                                                                                                                                                                                                                                                                                                                                                                      • Prioritising footfall and loyalty over profit
                                                                                                                                                                                                                                                                                                                                                                                                        • Foodservice and click-and-collect drive footfall
                                                                                                                                                                                                                                                                                                                                                                                                          • What next?
                                                                                                                                                                                                                                                                                                                                                                                                            • Company background
                                                                                                                                                                                                                                                                                                                                                                                                              • Company performance
                                                                                                                                                                                                                                                                                                                                                                                                                  • Figure 132: Waitrose: group financial performance, 2012/13-2016/17
                                                                                                                                                                                                                                                                                                                                                                                                                  • Figure 133: Waitrose: outlet data, 2012/13-2016/17
                                                                                                                                                                                                                                                                                                                                                                                                                • Retail offering
                                                                                                                                                                                                                                                                                                                                                                                                                • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                                                                                                                                                                                                                                                                  • Data sources
                                                                                                                                                                                                                                                                                                                                                                                                                    • Consumer research methodology
                                                                                                                                                                                                                                                                                                                                                                                                                      • Financial definitions
                                                                                                                                                                                                                                                                                                                                                                                                                        • Abbreviations
                                                                                                                                                                                                                                                                                                                                                                                                                        • Appendix – Market Size and Forecast

                                                                                                                                                                                                                                                                                                                                                                                                                          • Forecast methodology
                                                                                                                                                                                                                                                                                                                                                                                                                          • Appendix - Detailed Space Allocation

                                                                                                                                                                                                                                                                                                                                                                                                                              • Figure 134: UK leading food retailers hypermarket store format: detailed space allocation, November 2017
                                                                                                                                                                                                                                                                                                                                                                                                                              • Figure 135: UK leading food retailers superstore format: detailed space allocation, November 2017
                                                                                                                                                                                                                                                                                                                                                                                                                              • Figure 136: UK leading food retailers smaller supermarkets and discounters: detailed space allocation, November 2016

                                                                                                                                                                                                                                                                                                                                                                                                                          Supermarkets - UK - November 2017

                                                                                                                                                                                                                                                                                                                                                                                                                          US $2,648.76 (Excl.Tax)