© specialists in understanding supermarket shoppers
Shopper Trend Report July 2013
Shopper Insights
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Reports
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Housing market continues to gain pace UK mortgage approvals At three year high Average weekly earnings / UK inflation rate The future of grocery retailing Asda to expand Click & Collect Contactless payment
Consultancy
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Strategy
© Issue 12
Out Now… We have recently conducted the largest piece of shopper research of it’s kind in the UK. The ‘Retailer Series’ covers 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
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Shopper Trend Report July 2013 Issue 12
Greetings… Michael Symonds
In this month’s issue...
Research Manager, Evolution Insights
Welcome to Issue 12 of our Shopper Trend Report In a month where the polarisation of the high street is showing no signs of slowing as new data reveals that discount chains Aldi and Lidl, along with high end grocer Waitrose, have won more customers this year than any of their supermarket rivals. Asda, the UK's second biggest supermarket, is suffering hardest from the squeeze as customers switch to cheaper rivals and the number three supermarket, Sainsbury's, threatens its position. It’s only a matter of time before Asda loses it’s coveted second spot to Sainsbury’s.
June also saw Sir Terry Leahy's reign as Tesco chief executive come under criticism by his predecessor and mentor, Lord MacLaurin, at the supermarket's annual general meeting. Lord MacLaurin is right, Sir Terry Leahy's reign at Tesco was not all it was cracked up to be. Fresh & Easy, the near-£2bn disaster in the US, is the most obvious example; the UK business has lost its edge and the international business requires further surgery. For example, Tesco still isn't turning a profit in China after a decade of trying. However MacLaurin's intervention is excellent news for Philip Clarke, Leahy's successor, who may now get a proper crack at the job?
Website: www.evolution-insights.com
Justin King calls for universal food labelling Asda to expand it’s Click & Collect service
Housing market continues to gain pace
3
UK mortgage approvals at three year high
5
UK average weekly earnings UK inflation rate
8
Predicting the future of Grocery retailing
9
Contactless payment
11
Supermarkets face fines for mistreating suppliers
12
Sainsbury’s in mobile deal with Vodaphone
Regular features 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
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Shopper Trend Report July 2013 Issue 12
Quick Poll: Cross Channel Promotional Activity In last months issue we ran a “Cross Channel Promotional Activity” Quick Poll for your chance to win two free questions in our Monthly Shopper Survey. We are pleased to announce that…
Janine Piper – Consumer Insights Manager at Kerry Foods was June’s winner. Please find the Quick Poll results below…
100%
63% FMCG’s would like the ability to have online promotions that cover more items (e.g. 4 for 2 rather than 2 for 1) FMCG
FMCG’s think offering larger pack SKUs for the online channel is beneficial to everyone
FMCG
FMCG
Cross Channel Promotional Activity FMCG
61% FMCG’s would like the ability to have convenience store promotions that cover fewer items)
Website: www.evolution-insights.com
Telephone: 0113 336 6145
specialists in understanding supermarket shoppers
2
©
Shopper Trend Report July 2013 Issue 12
Justin King calls for food industry to adopt universal food labelling
Asda to expand it’s clickand-collect service
Justin King, Chief Executive of Sainsbury’s, recently pledged the company’s support for the Department of Health’s new universal front--of-pack nutritional labelling and called on others in the food industry to commit to the new scheme. Last October, King called for the industry to put aside their differences on nutritional labelling and work together to align behind a common format. Commenting on the new format combining multiple traffic light (MTL) and Reference Intakes (RIs), which the Department of Health has recently published, King said: "Sainsbury’s has always championed simple, clear nutritional labelling. We were the first to use traffic light nutritional labelling on front-of-pack eight years ago, and with traffic lights on over 9,000 lines we are the biggest user in the UK. We know they are the most effective way to help customers make at-a glance healthier choices.” "The food industry has a once-in-a-lifetime opportunity to take a consistent approach to front-of-pack labelling that will make it easier for customers to make informed healthier eating choices about the foods they buy. We hope all food retailers and manufacturers will sign up to the scheme for the benefit of UK consumers.“ Sainsbury’s new tabular format for front-of-pack nutritional labelling is shown above.
Asda is looking at expanding its “click-and-collect” delivery service to business parks, universities, train stations and park-and-ride schemes as it explores new ways to help customers shop until they drop. The supermarket will launch the service at a park-andride scheme later this year in Nottingham as part of a £700m investment this year to accelerate its multichannel business. The service will allow commuters to order online and pick up their shopping from a delivery van when they return to their vehicles after work. Kieran Shanahan, multi-channel operations director, said it could be extended to train stations and other transport hubs. “When you jump off the train to go home you could collect your groceries from us and be on your way,” he added. Asda’s click-and-collect service has surpassed expectations and now accounts for four per cent of all grocery home shopping orders since launching last autumn. It’s growth has been fuelled by the increasing use of smartphones which allow consumers to shop on the move. Mr Shanahan said click and collect can be as big as the home delivery service. “That’s because of the way I see customers respond to it,” he added. “In areas of the country where perhaps my fulfilment capacity has reached its peak because I have not got any more stores to pick from, it opens up more capacity for me to be able to deliver to more customers.”
Website: www.evolution-insights.com
Telephone: 0113 336 6145
specialists in understanding supermarket shoppers
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Shopper Trend Report July 2013 Issue 12
Remote Moderated Usability Tests (RMUT’s)…
At Evolution we understand online shopping in food & grocery at a macro level, all the research time (and money) is spent on a better understanding of your category. So how does this information help you? Online shopping revolves around convenience for the shopper, they do not want to spend more time than necessary finding the right products Improved taxonomy leads to quicker search Eradicating key word search errors leads to quicker search Quicker search = Increased sales For more detailed information on our RMUT’s and how they work please contact: craig.bradley@evolution-insights.com or michael.symonds@evolution-insights.com
Website: www.evolution-insights.com
Monthly Shopper Survey We provide the most cost-effective snapshot of ‘shopper’ opinion that is accurate and robust. • • •
1000 Primary Food & Grocery Shoppers Findings are exclusive to you and aren’t shared with any third parties Prices start from as little as £200 per question
Don’t forget our newly launched Omni (Pay-as-you-go) Focus Groups This unique proposition enables our clients to purchase 15 minute slots within our monthly shopper focus groups. Please contact Michael Symonds or Dale Henry by the 1st of each month with any questions.
t. 0113 336 6036 e.dale.henry@evolution-insights.com e. michael.symonds@evolution-insights.com
Telephone: 0113 336 6145
specialists in understanding supermarket shoppers
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Shopper Trend Report July 2013 Issue 12
Housing market continues to gain pace
UK mortgage approvals at three-year high
House prices increased by 0.4% in May, according to figures from Britain's biggest building society, which said there are "reasons for optimism" that activity will continue to gain momentum.
UK Mortgage Approvals 70,000 60,000 50,000
51,098 44,523
47,312 47,665
50,024
55,785 54,719 52,982 54,036 51,653
58242 53,504
53,710
40,000 30,000
Average House Prices 180,150
Average house price
0.0
140,150 0.3
1.1 -0.5
-0.4
-0.7
0.6
0.0
0.0
0.5
0.2
0.0
0.0
0.4 -5.0
100,150 80,150
-10.0
60,150 40,150
-15.0
20,150
May-13
Apr-13
Mar-13
Jan-13
Feb-13
Dec-12
Nov-12
Oct-12
Sep-12
Jul-12
Aug-12
Jun-12
-20.0
May-12
150
Month-on-month change(%)
10,000
160,150
120,150
20,000
5.0
Nationwide's latest house price index showed the average price of a UK home increased to ÂŁ167,912 during the month, up 1.1% on May 2012's figure. That is the highest annual inflation figure recorded by the society since November 2011, and compares with a 0.7% year-on-year fall seen a year ago. The three-month on three-month figures, which offer a less volatile picture of the housing market than single monthly figures, were in positive territory for the eighth consecutive month and showed a rise of 0.4%. The figures are the latest sign of life in the housing market, which has been gaining momentum since autumn when the government's plan to make more mortgages available through its funding for lending scheme started to filter through to buyers.
0
More mortgages are being approved than at any time in the past three and a half years, according to the latest figures from the Bank of England. Some 58,242 home loans were approved in May 2013, up from 54,354 in April. The figure is the highest since December 2009, and will be seen as further evidence of a recovery in the housing market. But the amount of money being lent to businesses is continuing to fall. Loans to non-financial businesses fell by ÂŁ1.3bn in May compared with the previous month, the Bank of England's figures showed. Over the past year, business lending has fallen by 3.6%, in spite of the government's Funding for Lending Scheme (FLS). The scheme was supposed to encourage banks and building societies to make more loans. But since the scheme started in August 2012, it appears to have benefitted homeowners more than businesses. The Bank of England figures confirm a strong recovery in the mortgage market which was reported by the banks last week. The British Bankers' Association (BBA) said mortgage approvals had increased by 24% in May, compared with a year earlier. "No real surprise that the mortgage approvals numbers were strong," said Philip Shaw, an economist with Investec. "They had been flagged from a firm report from the BBA a week or so ago. The Funding for Lending scheme is helping to increase mortgage availability and push down mortgage rates," he said.
Website: www.evolution-insights.com
Telephone: 0113 336 6145
Evolution Insights Ltd, Prospect House, Sovereign Street, Leeds LS1 4BJ
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Shopper Trend Report July 2013 Issue 12
SHOPPER HEALTH INDEX Attitudes towards Health Year-on-Year
Attitudes towards Health Month-on-Month
No change
+3% June 2012
May 2013
June 2013
June 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
+6% June 2012
June 2013
No change
May 2013 2011
June 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
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Shopper Trend Report July 2013 Issue 12
FOOD & GROCERY
Ocado's losses widen despite sales increase
Aldi beats ‘big four’ to win supermarket of the year again
Budget supermarket Aldi has beaten the 'big four' to be named the UK's best supermarket for the second year in a row. The chain, which has 421 stores in the UK, has been given the title by consumer watchdog Which? at its annual awards ceremony. The organisation said the Aldi took the title "for its impressive range of best buys, quality food and good pricing", trumping competition from major players such as Sainsbury's, Tesco, Asda and Morrisons. Aldi UK's joint group managing directors Matthew Barnes and Roman Heini said: "Being awarded Which? best supermarket is a real reflection of Aldi's success in 2013.” "Winning this award for the second year in a row just goes to show that consumers in the UK are moving away from the big four supermarkets, realising that swapping to Aldi can save them a significant amount of money on their weekly shop, without having to compromise on quality.“ Other winners at the ceremony were John Lewis, who were named best retailer.
Website: www.evolution-insights.com
Ocado has seen its losses widen despite increasing sales. The firm reported a loss of £3.8m for the 24 weeks to 19 May due to costs linked to its distribution deal with supermarket chain Morrisons and the opening of new warehouses. However, sales rose 15.6% to £355.9m, with the average order size up 1.6% to £114.90. Ocado chief executive Tim Steiner said it had been an "extremely busy" first half of the year. "We remain well placed to take advantage of the accelerating structural changes in the industry," he added. Ocado now has 360,000 customers and said the rate at which it was acquiring new customers was up 50% for the period compared with last year. The firm opened its first non-food distribution centre in Hertfordshire in the period, which it said would enable it to take advantage of the rising number of customers purchasing items other than food. It also opened its second warehouse in Warwickshire, which it will use mainly to fulfil its joint venture deal with Morrisons. In May, Morrisons announced a deal with Ocado that it said would enable it to launch an online grocery service by January 2014. Delivery vans will carry the Morrisons brand, with logistical support from Ocado. Ocado was set up in 2000 by three former Goldman Sachs bankers and has yet to report an annual pre-tax profit. In May, the former Marks and Spencer boss, Sir Stuart Rose, was appointed as its chairman. Shares in Ocado fell almost 6% to 295p following the latest update, but still remain well above the 180p price that the shares floated at in July 2010. The shares have more than quadrupled over the past year.
Telephone: 0113 336 6145
specialists in understanding supermarket shoppers
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Shopper Trend Report July 2013 Issue 12
UK Average Weekly Earnings
0.5%
1.3%
Month-on-Month
Year-on-Year
UK Inflation Rate (CPI) May-12 2.8% May-13 2.7%
4%
Year-on-Year
13%
Apr-13 2.4% May-13 2.7%
Month-on-Month Website: www.evolution-insights.com
Telephone: 0113 336 6145
Evolution Insights Ltd, Prospect House, Sovereign Street, Leeds LS1 4BJ
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Shopper Trend Report July 2013 Issue 12
Craig’s thoughts…
Predicting the Future of Grocery Retailing As the leading research agency into the attitude and behaviours of shoppers in the grocery sector, and following a large number of projects undertaken relating to channels (both in the UK and Europe) I felt it was time to use this knowledge to try and predict the future. In this brief overview, I will attempt to demonstrate why it is so important to invest research into channels outside that of the superstore, where, let’s be honest, we know quite a lot!! For simplicity, I am considering discounters by their store type rather than their business models. Superstores are more and more being seen by shoppers as the channel to avoid if at all possible “Can I manage without ever going in one?”….”Who wants to trail round a superstore in their leisure time?”….
”I dread the experience”….”We pile our trolley high with things we probably won’t even eat”….people love eating, but don’t particular like shopping. How different this is from our French neighbours whose mission is to find the best quality food, in the UK it is so much more functional than that. So, what are the alternatives? The rise of the convenience sector, driven by the increasing store estates of the multiples have given shoppers the wider choice to buy just what they need, when they need it. This all from retailers they know and trust (most of the time!), where the biggest brands are still available at reasonable prices (although they also recognise they are paying for the privilege,
they seem happy to do so). And convenience really is the key as they combine their commutes with manageable quantities of product, where the consumption occasion is already known…”Maybe I spend a bit more, but I know that it’ll all get eaten with no waste”. Online continues to grow at above 20% per year, but from a low base, this is still pretty small in the whole scheme of things, but our research suggests we are nearing the tipping point for even faster expansion in this channel. The introduction of click & collect in the way they have in France (where one can order at work in the afternoon, and two hours later drive to a designated car park – dark store or
Continued…. 9
Shopper Trend Report July 2013 Issue 12
Craig’s thoughts…
Predicting the Future of Grocery Retailing
store car park - and have their goods loaded into their Renaults), will revolutionise the online channel beyond recognition. No longer will waiting at home for a two hour slot be seen as convenient, and if they forget to order something, they can still nip into the store to augment their online order at the same time. I also predict a dramatic rise in shoppers using non-standard grocery channels such as Amazon, where they benefit from big discounts on non-perishable produce, and larger SKU’s which they don’t mind storing if the price is right.
Manufacturers will ignore this at their cost, with the opportunity to sell SKU’s that superstores will not stock, there should be no issues. I believe shoppers will change their mind-sets on where to buy certain products, fresh is one thing…but boxes of their favourite brands is another, and anyway they already have an account! So in summary, the market will demand less supermarkets, continuing growth in the convenience sector, whilst online will establish itself as the
Website: www.evolution-insights.com
key channel for larger shopping missions with a shift to more click & collect methodology and the growth of non-standard grocery channels (like Amazon).
Craig Bradley Managing Director Evolution Group
Telephone: 0113 336 6145
specialists in understanding supermarket shoppers
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Shopper Trend Report July 2013 Issue 12
Contactless Payment: Convenience or Con?
Last month we ran a feature on Contactless Payment. We asked our shopper panel about ‘ownership’, ‘frequency of use’ and ‘security’. Please find the results below…
55%
65%
8%
Think Contactless Payment is less secure than a debit card
Use their Contactless Payment card less frequently than monthly
7%
Don’t know if they have a contactless payment card
Think Contactless Payment is more secure than a debit card
Website: www.evolution-insights.com
Telephone: 0113 336 6145
Evolution Insights Ltd, Prospect House, Sovereign Street, Leeds LS1 4BJ
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Shopper Trend Report July 2013 Issue 12
Supermarkets face fine for mistreating suppliers
The UK's new supermarket watchdog wants to fine retailers a percentage of their turnover if they mistreat suppliers. Christine Tacon, the groceries code adjudicator who started her role recently, is able to impose fines and force supermarkets to apologise publicly with ads in national newspapers if they do not treat suppliers fairly. She is in charge of overseeing a legally binding code of practice, put in place more than three years ago, for supermarkets with a turnover of more than £1bn, such as Tesco, Sainsbury's and Asda. The code does not govern the prices retailers agree with their suppliers, but aims to prevent changes partway through the contracts. It covers groceries including food, drink and toiletries, but does not include clothing or tobacco. Speaking on her first day in office, Tacon said her first job is to recommend the rules under which investigations would occur and the maximum fines that could be imposed. Those recommendations are expected to be published in the next few weeks and will then undergo a 12week consultation. The new system must be in place before Christmas Day, before which MPs will have to approve the maximum fine. Tacon said she was inclined to base fines on supermarkets' turnover as this was a straightforward approach similar to that used by the Office of Fair Trading. She said: "Fines are there as the ultimate deterrent. I am prepared to use my powers but I hope we don't have to get to that stage."
Website: www.evolution-insights.com
Sainsbury’s in mobile deal with Vodafone
Sainsbury’s has become the latest firm to enter the increasingly-crowded mobile market, launching a tieup with Vodafone that will go live later this summer. The supermarket chain announced the joint venture, Mobile by Sainsbury’s, promising to “reward customer loyalty [and] offer great quality value-for-money mobile products together with attractive offers”. In a clear indication that it is targeting its current customers, Sainsbury’s also said that its deals will include its Nectar points reward scheme. The company is likely to offer a budget, no-frills, range of tariffs in a similar way to Tesco, which entered the mobile market 10 years ago and now has a 3m-strong customer base. “Together with Vodafone, we’ll be able to develop mobile products and services that represent great value for Sainsbury’s customers,” Justin King, the supermarket giant’s chief executive, said. Rather than a traditional wholesale network deal, in which an operator pays a network to use its airwaves, Mobile by Sainsbury’s is being set up as a 50/50 joint venture between the two companies. Sainsbury’s said the partnership would take advantage of “Vodafone’s expertise, technology and network”.
Telephone: 0113 336 6145
Evolution Insights Ltd, Prospect House, Sovereign Street, Leeds LS1 4BJ
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specialists in understanding supermarket shoppers
Find us at Prospect House 32 Sovereign Street Leeds LS1 4BJ www.evolution-insights.com Contact us on
0113 336 6000 Follow us at
@evocomment @craig_evolution
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