© specialists in understanding supermarket shoppers
Shopper Trend Report June 2013
Shopper Insights
●
Reports
●
Fuel price report
Oil price manipulation Amazon – Own label groceries Contactless Payments: Convenience or Con?
Quick Poll results:
Promotional Effectiveness
Overdraft borrowing outstrips re-payments
Consultancy
●
Strategy
© Issue 11
Out Now… We have just conducted the largest piece of shopper research of it’s kind in the UK. The ‘Retailer Series’ will cover the following in an individual report for each retailer* including: Tesco, Asda, Sainsbury’s, Morrisons, The Co-operative, Waitrose, Marks & Spencer’s, *Discounters (Aldi, Lidl, Iceland).
Shopper profiles for that retailer (by each shopper mission main shop, top up, meal for tonight) Penetration of regular use of that retailer (by store format) in the UK how different areas compare Shoppers’ retailer repertoire (by shopper mission) Identify shoppers’ core stores (most used stores) for each mission and which other stores they also use for that mission How do the different missions impact store and channel choice? Identify the proportion of shoppers having that retailer as a single primary store for each mission Frequency of visits in each store format (by shopper mission) and their ranking against all stores How far shoppers live and work from that retailer’s stores? How far they travel to that retailer’s store by mission? Transport used to get to the regularly used stores of that retailer What do shoppers desire from a store (the big 4 retailers) by mission? How shoppers perceive that retailer in relation to price, quality, value and range and how this compares against the other retailers? How do shoppers rate the good / bad points of that retailer and the correlation between desire and perception?
Who we spoke to…
5000 Primary Household Food & Grocery Shoppers Nationally representative sample of UK population
©
Shopper Trend Report June 2013 Issue 11
Greetings… Michael Symonds Research Manager, Evolution Insights
Welcome to Issue 11 of our Shopper Trend Report In a month where Morrisons finally announced it’s deal with Ocado a major spat is now brewing among the grocers after they signed a 25-year deal, enraging its long-term partner Waitrose. Waitrose has demanded to see details of the distribution deal, which will allow Morrisons to start grocery deliveries by next January. Waitrose has instructed lawyers to examine its existing contract with Ocado to find out whether the company has breached its terms, watch this space!!
In this month’s issue... Morrisons signs deal with Ocado Aldi posts record grocery market share
3
Fuel price report Oil price manipulation
5
Amazon – Own label groceries?
8
Contactless payment: Convenience or Con?
9
M&S Chief Executive has come under increased pressure after the retailer’s profits fell for the second year running, is time running out for Marc Bolland?
Overdraft borrowing outstrips repayments by 297m
10
Shares in Tesco have fallen over 5% after the supermarket giant reported a drop in UK sales over the past three months. Tesco said the horsemeat scandal had a "small but discernible impact" on frozen and chilled convenience food sales. Despite only having a small number of affected products, the retailer was very much at the centre of the negative fallout from the scandal!!
Regular features
Maybe, in an inclement climate for all retailers in the UK, and given that Tesco is so big, the very best that can be expected of Mr Clarke is that at some point he stops it going backwards.
Website: www.evolution-insights.com
Quick Poll Results
2
What’s New in Research
4
Shopper Health & Spend Index
6
Food & Grocery News
7
Telephone: 0113 336 6145
specialists in understanding supermarket shoppers
1
Shopper Trend Report June 2013 Issue 11
Quick Poll: Promotional Effectiveness
Please complete the following Quick Poll about ‘Cross Channel Promotional Activity’ for your chance to win two FREE questions in next month’s Shopper Survey.
In last months issue we ran a “Retailers” Quick Poll for your chance to win two free questions in our Monthly Shopper Survey. We are pleased to announce that…
Gillian Duncan – Shopper Insights Manager at Heineken was May’s winner.
https://www.surveymonkey.com/s/PHGZTN5 (The results and winner will be published in the next issue)
Please find the Quick Poll results below…
KEY:
Retailer
FMCG
Promotional Effectiveness FMCG
58%
Think there are too many in-store promotions
FMCG
FMCG
42%
67%
Think their sales would decrease if no promotions were allowed in their categories
Think retailers have the most influence on the amount of instore promotions
FMCG
100%
Retailer
Think retailers have the most influence on the amount of instore promotions
Don’t know
Website: www.evolution-insights.com
Telephone: 0113 336 6145
specialists in understanding supermarket shoppers
2
©
Shopper Trend Report June 2013 Issue 11
Morrisons signs deal with Aldi posts record grocery Ocado to launch online market share service
Dalton Philips said that the deal will propel Morrisons from a “standing start straight into the fast lane” of online retailing and that the company had made an “informed choice” by securing a tie-up with Ocado. Under the deal, Morrisons will pay Ocado £170m to buy its new distribution centre in Dordon in the Midlands and license Ocado’s technology for 25 years. The supermarket chain will then lease half of the warehouse back to Ocado, which will use the space for its existing grocery business. The remaining half will provide Morrisons with capacity for £500m of online orders per year. Once the warehouse is at full capacity, the companies will then look to develop new sites. Although Ocado will provide the technology, warehouse, staff and vans, the new Morrisons internet food service will be badged as Morrisons and the existing Ocado service, including its other warehouse in Hatfield, will be unaffected. However, the tie-up between Morrisons and Ocado has thrown Ocado’s relationship with Waitrose into doubt. Ocado has had a deal to deliver Waitrose products since 2000 but the contract has a break clause in 2017. Waitrose said it is taking legal advice about whether Ocado’s deal with Morrisons represented a breach of the contract. “We have asked to see the detail of the deal and the operating arrangements,” stated the company. “Meanwhile, we have instructed lawyers so that we can get a clear and unequivocal view of the contract and examine what might constitute a breach."
Website: www.evolution-insights.com
Discount grocer Aldi has posted an all-time record share of the grocery market of 3.5 per cent as it continues to grow ahead of rivals, new data released today reveals. Aldi also reported the highest ever year-on-year growth of 31.5 per cent in the 12 weeks ended May 12th 2013, according to Kantar Worldpanel, continuing to break records as shoppers increasingly turn to the value supermarket amid on-going economic uncertainty. Similarly, Lidl saw its market share rise to its largest share of three per cent over the period, reporting sales growth of 8.9 per cent while upmarket chain Waitrose also maintained its recent success. Holding on to the record share of 4.9 per cent recorded last month, Waitrose witnessed sales growth of 12 per cent over the period, more than three times the market average. In terms of the big four, Sainsbury’s again outperformed competitors, reporting sales growth of 5.6 per cent and market share of 16.8 per cent. Meanwhile, Asda reported a 2.8 per cent sales rise while Tesco’s and Morrisons’ sales climbed 1.7 per cent and 1.2 per cent respectively.
Aldi's £12.99 champagne trumps rivals
A bottle of Aldi bubbly which costs just £12.99 has beaten some of the world's most renowned champagnes in a blind taste test. The cut-price supermarket drink was voted by experts as better than other bottles, some of which were ten times more expensive.
Telephone: 0113 336 6145
specialists in understanding supermarket shoppers
3
Shopper Trend Report June 2013 Issue 11
Bulletin Board Focus Groups (BBFG’s)
A BBFG is very similar to a message board or chat room. It is comprised of participants who have been recruited according to a screening criteria to participate in a discussion online. Respondents are recruited in the same way as for traditional focus groups. Discussions can be designed to last as long as needed to accomplish the research objectives. However, 3-7 days are the most common lengths. A minimum number of participants for an active group would be 10. What makes a BBFG unique from other methodologies is that the respondents need not be present at the same time. Participants can "log-in" at times convenient to them to take part in the discussion. As a result participants often provide more indepth feedback and well thought out responses. One of the key benefits of online qualitative research is the ability to access people living all over the country at no extra cost. Using cutting-edge technology, we can talk to and involve people wherever they happen to be, anywhere in the country or world. It's highly effective, flexible and convenient and a major addition to our repertoire of qualitative research methodologies.
1. Group members can participate from any Internet-connected computer at any convenient time. This means your focus group can include senior executives and decision makers who are difficult to convene. 2. Participation requires no travel and can be conducted across time zones, from anywhere in the world. This eliminates travel costs and the need to co-ordinate many people's schedules. 3. You can obtain more information from fewer groups. Up to 20 individuals can participate, in contrast to the 8 or so participants in face-to-face groups. 4. You can observe the exchange and modify the questions while the group is in progress, allowing you to take advantage of unexpected turns in the discussion. 5. Group members can remain anonymous to all but the moderator and client, so they tend to be more candid in their comments. 6. By using graphics, sound and even video, participants can evaluate web sites, logos, commercials -anything that can be sent over the internet. 7. Transcripts are available almost immediately in text format, avoiding costly transcription. With participant approval, quotes can be used for referrals and endorsements.
Website: www.evolution-insights.com
Telephone: 0113 336 6145
specialists in understanding supermarket shoppers
4
Shopper Trend Report June 2013 Issue 11
Fuel price report The average price of petrol on UK forecourts has fallen from 136.89p a litre in mid April to 133.35p in mid May. It had hit a year high of just over 140p on March 4, having started the year at around 132p. Diesel, on average, now costs 138.17p a litre, down from 141.76p a month ago. It also reached a year high on March 4 of almost 146.5p a litre, having started the year at around 140p. But the AA said that this week's International Energy Agency (IEA) warning that traders and speculators were taking control of the European fuel market meant that more and ups and downs in prices could be expected. The drop in pump prices in the last few weeks follows a series of supermarket price reductions, led by competitive independents and other non-supermarket retailers, which have now reduced the cost of petrol to as low as 128p/129p. The AA said: "However, wholesale price movements indicate the fragility of the price falls as petrol costs have rebounded, fallen away again and then bounced back over the past three weeks." Averaging 132.8p a litre, Yorkshire and Humberside has resumed its position as the cheapest region in the UK for petrol. Northern Ireland is the most expensive for petrol at 135.1p and also for diesel, at 139.3p a litre. This is 2p more than the cheapest diesel area - Yorkshire and Humberside at 137.3p AA public affairs head Paul Watters said: "Three times in the past 12 months, drivers have been hammered by £4£5 hikes in the cost of a tank of petrol. It is clear that, if petrol and diesel wholesale price movements were transparent, families and businesses would have 10 to 14 days' notice of the next price shock - and hopefully the reason for it." He went on: "We have seen petrol consumption in the UK fall to record lows this year. As many as 69% of AA members are cutting back on car use, other spending or both, and 86% of US drivers are using their cars less. The warning signs couldn't be any clearer." Average UK Fuel Prices
150.0 145.0
144.3 139.3
140.0 135.0
140.4 137.3
140.2
138.4
144.8
146.4 141.8
140.4 139.8
138.9
135.5
133.8
130.0
144.6 143.7 141.9
137.9
Officials admitted the impact of oil-price fixing could go be much wider than driving up petrol prices, after the European officials raided companies suspected of “colluding” to distort the market. Fears are growing that a fresh financial scandal has hit consumers’ pockets, after the European Commission revealed this week it is conducting an inquiry into allegations of fuel price-fixing. BP and Shell, along with a Norwegian oil giant, Statoil, are suspected of having “colluded in reporting distorted prices to manipulate the published prices for a number of oil and biofuel products”. Ed Davey, the Energy Secretary, has promised companies will face the “full force of the law” if their behaviour is found to have “driven up” petrol prices. However, his Department of Energy and Climate Change also acknowledged the impact of oil market rigging could be bigger than simply affecting petrol prices. It said manipulation of the oil price could have driven inflation and pointed out that the market is an important benchmark for many financial transactions. High oil prices also feeds through to bigger bills for food, clothes and other essentials because it pushes up the cost of transport and manufacturing. A high oil price will also fuel inflation, which erodes the value of people's savings, and can stifle economic growth, by pushing up businesses' costs.
139.9 136.9
135.1
133.4
132.3 132.1
132.2
138.2
Oil price manipulation ‘could have driven up food prices‘ as well as petrol
125.0
Petrol
May-13
Apr-13
Mar-13
Feb-13
Jan-13
Dec-12
Nov-12
Oct-12
Sep-12
Jul-12
Aug-12
Jun-12
May-12
120.0
Diesel
Website: www.evolution-insights.com
Telephone: 0113 336 6145
Evolution Insights Ltd, Prospect House, Sovereign Street, Leeds LS1 4BJ
Shopper Trend Report June 2013 Issue 11
SHOPPER HEALTH INDEX Attitudes towards Health Year-on-Year
Attitudes towards Health Month-on-Month
No change
+2% May 2012
April 2013
May 2013
May 2013
Evolution Insights ask a nationally representative sample of 1,000 primary Food & Grocery shoppers each month to rate themselves on a scale where 1 = “I am eating and drinking what I want” and 10 = “I am choosing every product carefully based on health grounds”
SHOPPER SPEND INDEX Attitudes towards Spend Year-on-Year
Attitudes towards Spend Month-on-Month
+5% May 2012
May 2013
-2% April 2013 2011
May 2013 2012
Evolution Insights ask a nationally representative sample of 1,000 primary Food & Grocery shoppers each month to rate themselves on a scale where 1 = “I am choosing every item carefully based on price” and 10 = “I choose any product I want irrespective of price”
Website: www.evolution-insights.com
Telephone: 0113 336 6145
specialists in understanding supermarket shoppers
6
Shopper Trend Report June 2013 Issue 11
FOOD & GROCERY
Waitrose: Middle Eastern food sales on the rise
Ocado launches 'favourites' software
Online grocer Ocado recently announced the launch of new software aimed at stealing online shoppers from competitors including Waitrose. Seeking to “put the control back into the hands of the consumer”, Ocado is to use technology allowing customers shopping online to important their list of ‘favourites’ from Asda, Tesco, Sainsbury’s or Waitrose to the ocado.com site, transporting their data to allow preferred products to appear in their ‘favourites’ tab before adding them easily to baskets. Such a move is “a UK first”, the grocer said, and is the latest move from a leading supermarket chain aimed at enticing consumers seeking value for money at a time of low consumer confidence and strained budgets. Jason Gissing, Ocado Co-Founder, believes that this latest move will further strengthen the company’s proposition. He commented: “We are giving shoppers more choice and more freedom, ruling out the need to start from scratch when doing their weekly shop.” “We know online shoppers want to try Ocado, but feel trapped as their favourites are stored with their current supermarket – with this initiative we are giving the power back to the customer.”
Website: www.evolution-insights.com
According to Waitrose, flavours from the Middle East have been growing in popularity in recent years and now dishes and ingredients once seen as exotic are now becoming more commonplace. Waitrose said preserved lemons, used in many Middle Eastern dishes, have seen a 72% rise in sales on last year, and spicy sauce harissa has also seen a 62% rise. Sumac, a less traditional ingredient, with a tart flavour, has been on Waitrose shelves for 11 years, but over the last year, sales have grown 23%. Yotam Ottolenghi, a leading chef in Middle Eastern cooking commented: “I knew something was achieved when I recently spotted sumac in the spice section of my local Waitrose.” Waitrose said houmous is now so mainstream that it is part of the essential Waitrose range, viewed as a grocery staple. Victoria Mason from Waitrose said: “We’re seeing a big trend in Middle Eastern foods as chefs like Ottolenghi are helping to drive this with his books, restaurants and TV programmes”. “Middle Eastern cuisine like Mediterranean food is a healthy yet tasty option which is attractive to mums trying to tantalise the taste buds of the family whilst giving them something that’s good for them too”.
Telephone: 0113 336 6145
specialists in understanding supermarket shoppers
7
Shopper Trend Report June 2013 Issue 11
Amazon - Own Label Groceries? Amazon, the world’s largest online retailer, was launched in 1995 with Amazon.co.uk following three years later. Initially Amazon started life as an online bookstore but quickly diversified into many other categories including DVD’s, CD’s, MP3 downloads, software, video games, electronics, toys, jewellery, clothing, and most recently food. Amazon has over 164 million active customers’ accounts worldwide. Last year Amazon became the highest-rated brand in Britain, displacing Google (biannual YouGov BrandIndex). It is scored on six key images – general impression, value, quality, satisfaction, recommendation and corporate reputation. Launched in 2010, Amazon ‘opened’ a grocery store which currently stocks over 23,000 top grocery lines including Pampers, Kraft, Kenco, Walkers and Oreo. This includes a large selection of international and specialist items such as organic, kosher, gluten free, sugar free and vegan. As well as offering great value individual items, the Amazon.co.uk Grocery store allows customers to take advantage of the savings and convenience provided by bulk-buying items such as nappies, washing powders, pasta, rice, herbs, cooking oils and spices.
With current low levels consumer confidence and limited household income it is not surprising that some shoppers are looking to for alternative channels for their food and groceries in an attempt to make savings. Although the Big Four supermarkets remain the most popular channels, alternative channels such as Amazon Groceries aim to tempt shoppers away from their usual supermarket choice. The internet has allowed for the emergence of sites offering bulk and discount groceries without the need for physical stores, thus keeping costs low.
Although Amazon is popular for non-food and grocery shopping, only 10% primary online shoppers currently use it for food and groceries – and these shoppers are using it for specific items rather than complete shops. One of the drivers to Amazon is the discounts available on brands, however 60% of Amazon food and grocery shoppers don’t feel that all the brands they want are currently available on the site.. A recent study has found that over 1/3 of shoppers would consider buying Amazon own-label groceries if they were available – this is particularly strong for non-perishables such as tea and coffee, pasta, cereals and health & beauty products. However, there is some concern over fresh items, with just under 80% of respondents saying they are unlikely to buy fresh food, diary, meat etc. Still, there is a clear opportunity for Amazon to gain space in the online grocery market if a third of their 164 million active users were to start buying groceries from them – plus a significant boost to whichever FMCG supplied their products!
For any further information regarding our upcoming reports, please contact Dale Henry at dale.henry@evolution-insights.com
Website: www.evolution-insights.com
Telephone: 0113 336 6145
Evolution Insights Ltd, Prospect House, Sovereign Street, Leeds LS1 4BJ
9
Shopper Trend Report June 2013 Issue 11
Contactless Payment: Convenience or Con?
Opinions on the topic are mixed; you only has to scroll down the Twitter feed to see some examples:
With advent of Google wallet, contactless bank cards and mobile handsets fitted with NFC chips; it has become increasingly easier for shoppers to make purchases at record speeds. Since the introduction of this revolutionary new process supermarkets and high street retailers have been quick to embrace the technology with around 200,000 acceptance points for contactless transactions in the UK, with Visa reporting a 22% growth in usage per quarter.
However it is important to note that many shoppers are reluctant to adopt contactless payment, due to a lack of trust; in what appears to be a relatively untried and unreliable system. Although banks such as Barclays and HSBC have imposed measures such as a £20 cap on purchases, the perceived benefits of carrying little or no change and shorter queues/ transaction times have been overshadowed by recent reports of fraudulent activity regarding the pin-less payments. According to recent news wireless devices such as mobile phones are able to steal bank details and subsequently make purchases of up to £100 over the course of a day (5x£20), a statement by Barclays Bank aimed to reassure customers promising to repay any fraudulent purchases. Not only is theft an issue but the transaction process in itself has been questioned by shoppers, with many claiming that they have been mischarged, in conjunction with low sensitivity chip readers; making the process less time efficient.
Website: www.evolution-insights.com
The general consensus is that contactless payment is here to stay but with many shoppers expressing fear and doubt over the safety of their hard earned money, cash and generic debit/credit cards won’t be facing extinction just yet.
We are asking some related questions regarding contactless payment cards in our Monthly Shopper Survey and we will share the results next month
Telephone: 0113 336 6145
Evolution Insights Ltd, Prospect House, Sovereign Street, Leeds LS1 4BJ
9
Shopper Trend Report June 2013 Issue 11
Overdraft borrowing outstrips repayments by £297m BBA figures show that April was the first month of 2013 where bank customers borrowed more than they paid off
Consumers made more use of overdrafts in April than at any time this year, with borrowing outstripping repayments to the tune of £297m, according to figures from the British Bankers' Association (BBA). April was the first month of 2013 that bank customers borrowed more than they paid off and the largest figure for net borrowing since August 2011, with the exception of December 2012 when £492m of debt was taken on through overdrafts. On a seasonally adjusted basis, net borrowing in the form of personal loans and overdrafts was in positive territory for the first time in 18 months, at a total of £507m. However, credit card borrowing was outstripped by repayments for the first time since February 2012, with debts on plastic reduced by £34m, according to seasonally adjusted figures. Both the BBA and commentators said that the timing of Easter had skewed the overdraft figures. Despite a scarcity of decent savings rates to attract consumers, the BBA said money continued to flow into accounts, with the value of personal deposits up by 5.5% over the year to April. There was, however, a month-on-month fall, and the £1.4bn increase in the amount deposited in British banks was below the £2.3bn recorded in March and the previous six-month average of £3bn.
Website: www.evolution-insights.com
Howard Archer, chief UK economist at IHS Global Insight, said: "While there was borrowing of £507m in April in the form of personal loans and overdrafts following a drop of £666m in March, these figures were distorted by timing issues related to Easter, and it is perhaps best to focus on the fact that there was an overall net repayment of £159m in April/March combined." Archer added: "Overall, the underlying unsecured consumer credit data for April and the rise in personal deposits indicates that consumer appetite for taking on new borrowing is still limited while there is also an on-going strong desire of many consumers to reduce their debt." Mortgage lending figures from the banks showed a slight increase on March's numbers, with 59,813 home loans approved over the month, compared with 58,994 in the previous month. The figure was slightly above the previous six-month average of 59,843. The BBA said it expected the government's schemes to help the mortgage market to assist more first-time buyers and movers "in due course". Repayments on home loans were greater than new borrowing, with mortgage debt to the banks reduced by £241m over the month. The BBA's statistics director, David Dooks, said: "New household borrowing totalled over £16bn in April. This monthly level has been fairly constant recently and with various government schemes, including the recent extension to Funding for Lending, banks are offering competitive rates and products." He added: "Low consumer confidence is depressing demand for new borrowing and consumers are continuing to save." Figures for business borrowing showed that net lending by banks continued to fall, with non-financial firms reducing their debts by almost £2bn over the month, the third consecutive month of repayments and the fifth in six months.
Telephone: 0113 336 6145
Evolution Insights Ltd, Prospect House, Sovereign Street, Leeds LS1 4BJ
10
specialists in understanding supermarket shoppers