Shopper trend report issue 28 january 2015 v1 by Michael Symonds

specialists in understanding supermarket shoppers

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Shopper Trend Report Shopper Insights | Reports | Consultancy | Strategy

Tesco reshuffles executive team

Ocado reports strong sales growth

Barclaycard trials contactless payment gloves Waitrose sales up 6.5% in runup to Christmas

Harris + Hoole make £12.8m annual loss after storeopening spree

Social supermarket launches in London

Issue 28 | January 2015

Coming soon Loyalty Cards & Price Matching in the UK Food & Grocery Market 2015

This research will examine the different loyalty schemes being offered by the UK’s Food & Grocery retailers. We will determine shopper understanding when it comes to loyalty cards, price matching and the vouchers/coupons that are incorporated. Since Tesco introduced the Clubcard in 1995 many retailers have followed suit, using the data collected to tailor their product offering and reward customers. We discuss which schemes/aspects shoppers like, and which they don’t, alongside how much they trust the retailers with their personal data. Price matching is now a prominent feature of the major supermarkets’ value proposition; we look at adoption, usage, understanding and trust.

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This report will help you understand… The proportion of shoppers that have a loyalty card for their primary store, and which other loyalty cards they carry around in their purse/wallet The different barriers to using a loyalty card by segment’ How much of a driver loyalty cards are to store choice, how likely shoppers would be to switch stores/visit less if their loyalty scheme ended How the different loyalty schemes fare in terms of rewards and level of shopper understanding Awareness and usage of the different price match schemes, across all participating retailers How easy shoppers find it to understand the price matching scheme at their primary store; from how it is calculated to which products are included

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For further information contact… t. 0113 394 4670 e. craig.bradley@evolution-insights.com

Greetings…

Michael Symonds

Research Manager, Evolution Insights

Welcome to Issue 28 of our Shopper Trend Report Waitrose has emerged as one of the Christmas winners after posting record festive sales. The grocer said that sales in the five weeks to January 3 rose 7pc to £728m. On a like-for-like basis, sales rose 2.8pc compared to last year, which itself was a record Christmas performance. The rise in sales for Waitrose is likely to be in stark contrast to the performance of the "big four" supermarkets. Tesco and Sainsbury’s are believed to have struggled over Christmas in the face of the rise of the discounters, while Marks & Spencer continues to be dragged back by its clothing sales. Tesco’s trading update will be accompanied by plans to sell off assets and lay off staff as it reduces its 23 UK offices, according to The Telegraph. This week Tesco boss Dave Lewis is also expected to scrap the system of rebates and penalty fees the supermarket forces on suppliers and instead focus on a scheme based on sales volume alone. Tesco house broker Deutsche Bank has forecast that Tesco will report a 5% slump in like-for-like sales for the quarter, to the end of November and a 4.3% sales fall over Christmas. Meanwhile, analysts at Bernstein expect rival Sainsbury’s to post a decline in like-for-like sales of 1.8%.

In this month’s issue... EVO COMMENT: Black Friday: Here to stay?

FOOD & GROCERY NEWS

Tesco reshuffles executive team Ocado reports strong sales growth Barclaycard trials contactless payment gloves

EVOLUTION REPORT: Digital: The use of smartphones and digital devices for grocery shopping 2014

PRIMARY RESEARCH: Digital: The use of smartphones and digital devices for grocery shopping 2014

EVOLUTION REPORT CATALOGUE 2015

FOOD & GROCERY NEWS

Waitrose sales up 6.5% in run-up to Christmas Harris + Hoole make £12.8m annual loss after storeopening spree Social supermarket launches in London

EVO COMMENT: Supermarket Price Match, the modern day Da Vinci Code

Please note No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written consent of Evolution Insights Ltd.

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INNOVATION IN RESEARCH: ShopperTrack

NEW IN 2015: Evolution Consumer

Issue 28 | January 2015

EVO COMMENT

Black Friday: Here to stay?

The talking point of the last couple of weeks (aside from Christmas) has to be the latest Americanism to grace our shores – Black Friday. Retailers tried their best to make this a ‘thing’ in the UK this year, with many advertising big reductions for this one day only. Unfortunately for them, most Brits were simply not interested. Further to them not being interested, most people didn’t even know what it is. I heard many a discussion of ‘but what is it?’, ‘why is it called Black Friday?’, and simply just ‘…huh?’ For those of you that don’t know, Black Friday is an American tradition (since the early 2000’s) that falls on the day after Thanksgiving. It marks the start of Christmas shopping, where retailers stop pushing their Thanksgiving merchandise and move on to Christmas. They ‘slash’ prices to certain items to encourage the shopping to begin. One of the first retailers that people really noticed trying to make this popular in the UK was Asda (Walmart), who only announced its first Black Friday event last year (hence the confusion still as to what it is). But this year every Tom, Dick and Harry jumped on the band wagon, with a lot of retailers having a Black Friday ‘Weekend’. But does this ‘tradition’ translate well to the UK market?

Maybe over time it will. Everyone likes a bargain, especially if they can get the things they were going to get for Christmas anyway, but at a cheaper price. Why would you not want that? Maybe when people get used to the idea of Black Friday being an event and having a specific day, they will wait until then to do their Christmas shopping. However, it will need to be marketed differently to how it is in the US. Having it known as ‘the day after Thanksgiving’ isn’t going to work here, because we don’t have Thanksgiving. Also, only having about five TV’s on sale isn’t going to work either. Retailers either have to go for it or not bother at all. Shoppers, well those that have heard of it, have been keen to grab a bargain, with seven police cars and two ambulances being called to a Tesco this year thanks to a bit of over-zealousness from some people. But the majority were happy to bag a bargain from the comfort of their sofas. Retailers who offer online deals are likely to be the winners in the long run as most shoppers can’t be bothered with the hoo-ha of getting into a brawl in Tesco at 1am over a second-rate coffee maker. But somehow, I can’t see Black Friday disappearing anytime soon.

Laura Sanderson

Senior Shopper Insight Analyst Issue 28 | January 2015

FOOD & GROCERY NEWS ©

Tesco reshuffles executive team Tesco has announced a shake-up of its executive team. The new structure also includes chief executive Dave Lewis heading up the supermarket's UK operation on a temporary basis. Chief customer officer Jill Easterbrook will lead the business transformation programme while Benny Higgins will take on responsibility for group strategy. This will be in addition to his role leading the Tesco Bank and the international financial services business. Group corporate affairs director Rebecca Shelley will head up corporate communications while group chief finance officer Alan Stewart will be responsible for the investor relations team. In further moves, Jason Tarry has been appointed as the head of commercial for the UK and the group, and Robin Terrell will become head of customer. Tesco said the changes meant that two roles will no longer be needed. These include Matt Atkinson's role as chief creative officer and David Hobbs’ as group business planning and strategy director. The changes will take effect on 1 January. During the transition Dave Lewis will take over the day to day

leadership of the UK operation on a temporary basis. Meanwhile, Matt Simister, one of the eight executives suspended in the wake of the supermarket’s profit overstatement, will make a return as group food sourcing director next week. Lewis said: "During our work it became clear that Matt, in fact, worked tirelessly to resolve the issues we faced. Matt is one of our most capable leaders, and I am confident his leadership will support our agenda in commercial going forward.” Source: The Retail Bulletin

Ocado reports strong sales growth Online grocery retailer Ocado saw its group sales climb by 18.6% to £331.9 million in its fourth quarter. In the 16 weeks to 30 November, retail sales grew by 14.9% to £311.4 million. The retailer also increased its average orders by 16.4% to 177,000 but the average order size declined by 1.7% to £109.74. The results mean that in the full year group sales rose by 20.4% to £1,026.5 million and retail sales climbed by 15.3% to £972.4 million. Tim Steiner, Ocado's chief executive, said: "We are pleased with the continued steady growth in our business against the backdrop of a more competitive grocery market. This performance reflects an increasing number of customers who value the wide range of products, keen prices and great service made possible by Ocado's unique operating model, and further demonstrates the ongoing shift to online grocery shopping. "We remain committed to constantly improving the quality of the proposition to customers, which we believe will support continued growth, and although we anticipate the retail environment to remain challenging, we expect to continue growing sales slightly ahead of the online grocery market." Source: The Retail Bulletin

Barclaycard trials contactless payment gloves Barclaycard launched a trial of innovative gloves that allowed people to pay contactlessly for their Christmas shopping. The move followed a survey of 2,000 people on their Christmas shopping habits where “gloves you could pay with” were voted the most popular wearable item consumers would like to see created, followed by rings and bracelets. Barclaycard developed a small number of ‘pay-glove’ prototypes which were trialled as a test-and-learn exercise across some of the UK’s 300,000 contactless locations during the busy Christmas shopping period. The woollen gloves, which are also touchscreenenabled, are embedded with a bPay contactless chip that can be linked to a credit or debit card and used to pay for transactions of up to £20. Mike Saunders, managing director of digital consumer payments at Barclaycard, explained: “At some point most of us have experienced the stress of holding bags full of shopping while trying to find a spare hand to get our card out of our purse or wallet to pay. Some may have even been subjected to frustration from those piling up in the queue behind them! So when people told us that being able to pay with gloves would take some of the stress out of their Christmas shopping, we wanted to respond positively to shoppers’ demand.” Source: The Retail Bulletin

Issue 28 | January 2015

Recently released Digital: The use of smartphones and digital devices for grocery shopping 2014 The digital landscape is growing at an exceptional rate, with new technologies being introduced into our daily lives on a regular basis. Digital media allows the user to turn into shopper mode on a greater number of occasions, at more remote locations - the shopper no longer has to be in-store, or sat at their home PC, to interact with a retailer or brand. This report looks at how these technologies are being adopted by shoppers

This report will:

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Online grocery shopping (primarily on a smartphone): Who does it, when, why and how; Who doesn’t do it and why; What devices are used and how. Apps: Which retailer apps shoppers have and how often they use them Contactless payment: Awareness; Bank cards and mobile Wallets; Ownership and use; Drivers & barriers; Occasions of use Social media: How shoppers interact with retailers and brands on various social media platforms

Smartphones: Awareness and usage of using smartphones for various grocery shopping related activities e.g. creating lists, scanning items and ‘checking out’

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For further information contact… t. 0113 394 4670 e. craig.bradley@evolution-insights.com

PRIMARY RESEARCH ÂŠ

81%

of shoppers own a smartphone

Shopping for food & groceries using a smartphone

53%

of which

of smartphone owners shopped for food & groceries using their phone

51% use a retailer app

% of shoppers who regularly use social media

83% 52% 42%

For further information about this report contactâ&#x20AC;Ś t. 0113 394 4670

e.craig.bradley@evolutioninsights.com

Issue 28 | January 2015

REPORT CATALOGUE 2015 Loyalty Cards & Price Matching

This is a new report that will look into the main retailers offering of loyalty cards in terms of what they offer and how they work, who used them and if they are redeemed. Brand match is a concept that has been taken up by most of the large retailers, so we will look at how individual retailers define their brand match, what they offer in return, and what shoppers think of it. We will also see how many people are using vouchers in Food & Grocery.

Not published Due February 2015

Planning & Store Influence

In this report we look at shoppers’ behaviour both before and after the shop but not at their behaviour whilst in-store. We will see how shoppers plan their grocery shop (if at all) and how much food they have in their homes in stock. Then we take a look at when individual meals are planned. We will also look at decision making in-store - when a shopper is confronted by a number of products they have to make a decision based on a number of different criteria which they will choose on that particular occasion. In the main (and in the interests of simplicity) we categorise these as Price Vs Taste/Quality Vs Health Vs Brand.

Health & Product Information

Explores shoppers’ attitudes to health and healthy eating, nutrition labels and how healthy shoppers are in their own opinion. We will also provide an overview of the drivers associated with buying healthy products

The Use of Digital Devices for Food & Grocery Shopping

The Digital Shopping report looks at how these technologies are being adopted by shoppers. Specifically, we will look at technology penetration and usage, apps, contactless payment and social media – all in relation to the Food & Grocery sector.

Not published Due February 2015

Not published Due November 2015

Shopper Missions (6 Individual Report)

These reports takes an in-depth look at Shopper Missions and examines shoppers’ behaviour across all missions in relation to frequency, patterns, channel, planning, spend and more. The Mission reports are made up of four separate reports, of which one will be split into three occasions:

Not published Due – Phased between AugustOctober 2015

Channels (7 Individual Reports)

These reports will give a holistic view on where shoppers go, how frequently and most importantly why they choose the different channels to fulfil their shopping needs. This collection will be comprised of the seven following reports: Online | Click & Collect | Supermarket | Convenience | Discounter | High Street Discounter | Non-Standard Grocery Channel

Issue 28 | January 2015

Not published Due – Phased between AprilNovember 2015

FOOD & GROCERY NEWS ©

Waitrose sales up 6.5% in run-up to Christmas Waitrose enjoyed strong trade in the run-up to Christmas with sales rising by 6.5% yearon-year in the two weeks to 27 December. Champagne sales were up 14% compared to the same period in the previous year, while sales of sparkling wine and whisky increased by 20% and 22% respectively. Sales of table stationery, including napkins and tablecloths, climbed by 24% on the year, while baubles and decorations surged by 143%. Sales of crackers rose by 13%. Turkey sales continued to be strong, rising by 10.9%. Other popular items included frozen lobster, up 51%, and party foods such as

Harris + Hoole make £12.8m annual loss after store-opening spree

Harris + Hoole, the coffee chain partowned by Tesco, made a loss of nearly £13m last year after a store-opening spree that saw it more than double in size. Accounts filed at Companies House show the brand, named after the coffee-loving characters in the Diary of Samuel Pepys, made a pre-tax loss of £12.8m on sales of £6.6m in the year to 23 February. During the period it opened 18 outlets taking the number of shops to 30. That figure has since risen to 45 – two-thirds of which are in Tesco stores – despite the decision to close a total of six branches which did not meet expectations. The coffee brand was founded by Australian siblings Nick, Laura and Andrew Tolley who are also behind the upmarket Taylor Street brand. Source: The Guardian

mini beef Yorkshire puddings and savoury pastry whirls. Meanwhile, sales of Waitrose's Christmas cheese range grew by 38.8% for the Christmas week with sales of top tier cheeses climbing by 35.7%. Source: The Retail Bulletin

Social supermarket launches in London

IN BRIEF Spar brings back Shop & Win promotion

Spar is giving away drinks brands including beers from Heineken and Molson Coors when it brings back its Shop & Win mobile promotion in January. The retail chain is targeting younger audiences by offering daily prizes such as free drinks and money off vouchers to drive them into Spar stores.

Sainsbury's celebrates 20 years of Fareshare by donating 10,000 Christmas dinners

Sainsbury's pledged a donation of nearly 10,000 turkeys together with a range of fruit and vegetables to offer a Christmas dinner to those in need over the week of Christmas.

Sainsbury's teams up with GLA to keep exploitation out of the supply chain

The UK’s first full-scale social supermarket started its national rollout in December, selling surplus food and drink to people on the verge of food poverty for up to 70% less than high street prices. The first Community Shop, in West Norwood, south London, is backed by the mayor, Boris Johnson, and Rosie Boycott, chair of the London Food Board, which helped find its premises. Its launch – with a further 20 in the pipeline across the UK – follows the success of a pilot scheme in Goldthorpe, near Barnsley, South Yorkshire, which opened a year ago. The model was highlighted in a report last week by an all-party parliamentary inquiry as one that should be developed to “make a real and positive difference to people’s living standards”. Community Shop will work on a membership basis, each involving 750 members all living locally and on income support.

Sainsbury's has teamed up with investigator of labour exploitation The Gangmasters Licensing Authority to deliver bespoke training for its product suppliers. The training will be aimed at assisting Sainsbury’s suppliers in identifying whether hidden exploitative practices exist at the farms, pack houses, processing plants and factories throughout the global supplychain. New format Nisa stores deliver sales increases for retailers Nisa says it has now converted 50 stores to its new 'Store of the Future 2' formats and has a further 50 retailers in the process of converting. The announcement comes seven months after the launch of the first of the new concept stores.

Source: The Guardian

Issue 28 | January 2015

EVO COMMENT

Supermarket Price Match, the modern day Da Vinci Code

“As the price war wages on, all of the major supermarkets are now on board with price matching, which from the outset appears to be a simple concept.” They promise to refund the difference of the cheapest (comparable) competitor, or in Asda’s case reduce the price by a further 10%. This leads one to believe that shopping around is no longer of paramount importance - the best prices under one roof, or your money back. What’s not to understand? First of all you must qualify for the price match. The different retailers have different policies regarding a ‘comparable basket’ which must include 1 ‘comparable item’, simple enough right? First of all let’s examine ‘comparable items’ I believe a degree in cryptography would have been helpful in decoding this enigma. Reading through the terms and conditions it has become apparent that the term ‘comparable item’ is a way of moving the goal posts, making it difficult to understand what is cheaper and where. Supermarkets are setting their own rules for what can be compared, on one end of the spectrum Waitrose will only compare branded items and on the other Sainsbury’s will only match items that can be compared in every way possible, including ethics and provenance. I don’t even know where to begin with own label products, fresh produce, buy-one-get-free so on and so forth. I have managed to find an item that has been ‘comparable’; it is cheaper elsewhere so they will give me the difference (voucher/points), right? WRONG.

Issue 28 | January 2015

In order to meet the criteria for a ‘comparable basket’ you need to have a minimum number of items and/or spend a certain amount of money. Let’s say I’m in Tesco and I finally meet the all of the criteria, I get a voucher for the difference. The voucher is printed on till roll, now I don’t know about you but 90% of the time I say ‘don’t bother with the receipt’ or throw it away myself. If it’s not printed on till roll it’s a separate voucher which could easily be mistaken for typical promotional material, which again I would throw away or stuff into my handbag never to be seen again. The one benefit of the Morrisons ‘Match & More’ card is that the difference comes in the form of points, but obviously one must remember to hand over your card at the till. If you would like a breakdown of the calculation you must input the receipt number into the online price checker, or if you shop at Morrisons you have to call customer services. Furthermore, if you shop at Asda you have to input the receipt to claim anything anyway, 3 hours after your shop, which may take up to 1 week to process. I wonder how many people have reaped the rewards of price match. How many have thrown away the price difference. More importantly, who just went to Aldi instead?

Terri Hampsey – Shopper Insight Analyst

ShopperTrack ShopperTrack is a new methodology that allows mobile apps to recognise when a mobile device is near small wireless sensors called iBeacons. The iBeacon can transmit data to a mobile device and vice-versa using Bluetooth.

This technology allows you to track how shoppers navigate a store and where dwell time is whilst they are on their in-store journey. ShopperTrack has the ability to identify where shoppers have stopped in-store (e.g. promotional ends) ; we can then push an exit survey to the shopper to see if they bought the product. Please note: This methodology is in it’s infancy and requires respondents to install an app on their smartphone

For further information contact…

Michael Symonds

Michael Symonds t. 0113 394 4672 e. 336 michael.symonds@evolution-insights.com t. 0113 6000 e. michael.symonds@evolution-insights.com

Issue 28 | January 2015

NEW IN 2015

Coming February 2015

We are more than just a research agency, we bring consumers and insight to life through a range of innovative research methodologiesâ&#x20AC;Ś

Packaging testing

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For all your consumer enquiries call us on 10

Issue 28 | January 2015

Remote eye tracking

Bulletin board focus groups

0113 394 4670 10

We are specialists in understanding supermarket shoppers Evolution Insights delivers off-the-shelf, tailored and bespoke research for manufacturers, retailers and agencies. Our research and analysis helps clients develop targeted shopper marketing initiatives designed to influence shoppers at the point of purchase. As a leading publisher of shopper research, we are ideally placed to offer your business actionable shopper insight.

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