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Shopper Trend Report Shopper Insights | Reports | Consultancy | Strategy
Morrisons' Dalton Philips accused of 'butterfly thinking'
Aldi to open bigger stores
Asda's prices rose before its 'biggest ever rollback' Former Tesco boss Sir Terry Leahy blames successor for firm’s woes Aldi introduces pheasant to its growing stock of luxury items Fish processing to double as Morrisons expands Grimsby site
Issue 29 | February 2015
Coming soon Planning 2015- The use of lists and pre shop knowledge In our Planning 2015 report we will explore the extent that shoppers pre-plan before entering the store. We examine what characteristics shoppers know about the items they plan to buy and if those who use a shopping list will know more or less characteristics about the item they plan to buy than shoppers who don’t use a list. We will also give insight into how likely a shopper is to pick up an unplanned product on impulse from different locations in store.
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This report will tell you: The use of shopping lists, by mission. Age differences in the type of shopping list used. Why shoppers do not use a shopping list. How much information shoppers know about the items they plan to buy before entering the store.
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How likely shoppers are to pick up an item on impulse, by mission.
For further information contact… t. 0113 394 4670 e. craig.bradley@evolution-insights.com
Greetings…
Michael Symonds
Research Manager, Evolution Insights
Welcome to Issue 29 of our Shopper Trend Report January is always a tough time for families as they rebalance the books after the Christmas holidays, but there is good news for the shopper - with prices falling steadily at the pumps as well as at checkouts, families across all regions of the UK will have on average £15 per week more in their pockets according to Asda’s income tracker. The average UK household had £180 a week of discretionary income in December 2014.
In this month’s issue... EVO COMMENT: Dalton Philips: Wrong place, wrong time (and a few bad decisions) FOOD & GROCERY NEWS
Morrisons' Dalton Philips accused of 'butterfly thinking' Aldi to open bigger stores Asda's prices rose before its 'biggest ever rollback'
EVOLUTION REPORT: Loyalty Cards & Price Matching 2015
Households are currently experiencing a considerable boost to their finances from the combined effects of rapidly falling, record low inflation, rising employment, and wage growth at its fastest since the financial crisis.
PRIMARY RESEARCH: Loyalty Cards & Price Matching 2015
It’s encouraging to see the economic tide finally turn in the favour of UK households, after a long and difficult period since the 2008-09 recession.
EVOLUTION REPORT CATALOGUE 2015
With families set to enjoy further falls in utility bills and the cost of filling up the car in the coming months, it looks likely households will enjoy a strong start to 2015.
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FOOD & GROCERY NEWS
Former Tesco boss Sir Terry Leahy blames successor for firm’s woes Aldi introduces pheasant to its growing stock of luxury items Fish processing to double as Morrisons expands Grimsby site
EVO COMMENT: Green shield stamps to modern day loyalty cards
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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.
INNOVATION IN RESEARCH: Mobile Phone Surveys… (Geo-fencing)
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NEW IN 2015: Evolution Consumer
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© Evolution Insights Ltd 2015
Issue 29 | February 2015
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EVO COMMENT
On the back of another disastrous set of trading results it was inevitable that Dalton Philips tenure at Morrisons had to come to an end.
DALTON PHILIPS: WRONG PLACE, WRONG TIME (AND A FEW BAD DECISIONS) Morrisons appointed Dalton Philips in March 2010 who was then the chief operating officer of Canada's largest retailer, Loblaw. The choice surprised the city as Philips had not been previously linked to the job and was relatively unknown in the British retail world. Philips certainly hasn’t had an easy ride since he took over Britain’s fourth biggest grocer. You may sympathise and say the tough economic climate has had a large part to play in Morrisons’ decline but when he took over from Marc Bolland in 2010 the UK economy returned to growth albeit anaemic growth. So what went wrong? Much has been made of Morrisons not having an online grocery offering, and small convenience presence. But this only tells part of the story. While online food shopping is growing fast, online grocery is one of the least profitable activities of the big supermarkets, although it is now crucial to hanging on to existing customers. The bottom line is that Philips pursued too many vanity projects, such as the much talked about ‘fresh format’ which in all honesty was just an expensive gimmick… who really cares if their cucumbers are chilled by dry-ice? A significant number of Morrisons' customers found the new fresh offer and refurbished stores weren’t to their taste. In essence Morrisons lost traditional customers who liked the traditional Morrisons proposition. Dalton tried to appeal to young professional in the south but took his eye of his core customers in Morrisons northern heartland and paid the price as they flocked to discounters Aldi and Lidl.
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It was also Philips’s decision to snap up smaller stores from the collapsed retail chains HMV, Jessops and Blockbuster and ex-Netto stores from Asda. The feeling at the time was that it bought Philips more time. While these acquisitions significantly added to its existing Morrisons M Local portfolio, questions were raised about the desirability of the locations of some stores. There was a reason why Asda decided to sell the stores they did; interestingly the 10 stores that Morrisons announced it was to close this week are mainly ex-Netto stores they bought from Asda. On reflection Morrisons were far too hasty when they rolled out their convenience proposition and some bad decisions were made. To his credit Philips will be remembered for introduced Morrisons.com and notably overhauling Morrisons IT systems which he referred to as “the worst systems in retail”. In all honesty whoever was in the hot seat at Morrisons at the time would have done exactly the same! So who do Morrisons turn to next…Matthew Barnes from Aldi?? Michael Symonds Research Manager – Evolution Insights
FOOD & GROCERY NEWS ©
Morrisons' Dalton Philips accused of 'butterfly thinking' A former director of Morrisons has renewed his criticisms of the departing chief executive, Dalton Philips. Roger Owen (pictured) was the company's property director for 22 years until he retired in 2009. On Radio 5 live, he accused Mr Philips of being responsible for "butterfly thinking" by the company's directors. "My brutal assessment is that Dalton Philips should have gone at least two-and-a-half years ago," said Mr Owen. In common with the other large UK supermarkets, Morrisons has suffered from falling sales and declining profits, due to competition from smaller discount chains such as Aldi and Lidl. It has also been hit by the changing shopping habits of customers, prompted by the long squeeze on living standards. As well as pushing Mr Philips out, the chain is bringing in a new chairman, Andrew Higginson, and closing 10 unprofitable stores. Mr Philips joined Morrisons as chief executive in January 2010 and will leave at the end of March this year. In the past, some investors have criticised him for being too slow in copying his rivals' moves into selling goods
Aldi to open bigger stores Aldi recently announced it would be building its biggestever store in the UK: the first of many the same size. Scheduled to open in October this year, the store in Lincolnshire will be 19,000 sq.. ft.. large, an upgrade on the average 16,500 sq. ft. size of other Aldi stores. “This will be the new standard size for all future Aldi UK stores” explains Mark Taylor, Aldi’s Property Director for Yorkshire and Lincolnshire, “the new larger size will enable us to display our products in a more consumer friendly way.” In Summer 2014, the German discounter announced plans of a £600m expansion, which will see 60 new stores open this year as well as new regional distribution centres in Barnsley and Cardiff and a major revamp across existing stores. Staff numbers are expected to increase to as much as 24,000 – double the current number and by 2023, Aldi expects to be trading from as many as 550 new outlets, employing another 35,000 employees. Aldi’s growth comes as Big Four grocers shake up staff numbers. Tesco, the UK’s biggest grocery chain, announced the closure of 43 stores and a head office and Sainsbury’s followed suit, revealing that 500 jobs are to be axed across all divisions and store support centres. In a downward trend, Morrison’s also confirmed rumours that it would stop trading at “10 loss making outlets”, putting some 400 jobs at risk. Source: The Retail Gazette
online and opening smaller convenience stores. But on Radio 5 live, Mr Owen repeated his point that these strategies were either wrong or had been implemented badly, and that the company had been deflected into sideshows. "We investigated all that [convenience and online] several times over the years and we concluded that in the case of online, there's not much of a profit, if any, in it," he said. "Online is possibly a necessary adjustment, but it's not a beall and end-all that Dalton Philips has made it. "In terms of convenience, they've come to that, but almost in a panic. Location is everything and you look at a lot of the initial convenience stores that they opened, they are in the wrong place and they've overpaid on rents," Mr Owen added. Source: bbc.co.uk/news
Asda's prices rose before its 'biggest ever rollback' Asda put up the prices of almost 5,000 items in the weeks before it announced £350million of reductions in its ‘biggest ever rollback’. The figures raise questions about the price-cutting claims of Britain’s second-biggest supermarket, under pressure from the booming budget chains Aldi and Lidl. A total of 4,718 products, including many household essentials, went up in price in the five weeks before Asda announced its cuts last week. Of those, 2,178 were direct rises, while the remainder reverted to the price they had before an earlier ‘rollback’. At the same time these prices were going up, there were reductions on 4,125 other items. Almost 600 products were therefore more expensive at the end of the survey period from December into January. The big four supermarkets – Asda, Tesco, Sainsbury’s and Morrisons – are all being squeezed by the budget chains, which are snatching away millions of customers. This has dragged the big retailers into a price war, competing with each other to offer price cuts to bolster their business. However, the latest Asda figures suggest price-cut claims may be exaggerated. Source: The Daily Mail
Issue 29 | February 2015
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Recently released Loyalty Cards & Price Matching in the UK Food & Grocery Market 2014
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
Loyalty Cards & Price Matching Report 2015
98%
PRIMARY RESEARCH ©
of primary shoppers have at least one supermarket loyalty card
On average shoppers carry 3 supermarket loyalty cards in their purse/wallet
72%
of shoppers think that it is important to collect loyalty points/rewards of shoppers at their primary think that it is store important to collect loyalty points/rewards at their primary store
54%
of shoppers trust that their primary retailer genuinely compares the prices of its competitors
45%
of shoppers say they don’t understand how price match is calculated (at their store only)
Only
52%
of shoppers scan their loyalty card when purchasing food/drinks to consume on-the-go
For further information about this report contact… t. 0113 394 4670 e. craig.bradley@evolutioninsights.com
Issue 29 | February 2015
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REPORT CATALOGUE 2015
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
Published
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.
Published
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.
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
Main shop | Top-up | Meal for Tonight | Breakfast On the go | Lunch On the go | Snacking On the go
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
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Issue 29 | February 2015
Not published Due – Phased between AprilNovember 2015
FOOD & GROCERY NEWS ©
Former Tesco boss Sir Terry Leahy blames successor for firm’s woes The former chief executive of Tesco, Sir Terry Leahy, has broken his silence on the crisis engulfing the country’s biggest retailer by claiming there was a failure of leadership under his successor, Philip Clarke. Leahy, who stepped down in 2011 after 14 years at the grocer’s helm, said: “People tried very hard to do the right thing; it clearly has not worked. In the end, that’s a failure of leadership, not a failure of the business, not a failure of the people who work hard every day in the business. When you’re the CEO, if it goes well, you get credit, if it doesn’t go well, you must take responsibility
Aldi introduces pheasant to its growing stock of luxury items
Where would you expect to find West Country game on sale in the UK? M&S? Waitrose? How about Aldi? Yes, in it's latest bid to expand it's range of luxury goods the discount supermarket has added pheasant to its food repertoire. The plucked and oven-ready birds may seem a little alien to the German supermarket chain however the birds promise the same low price going on sale for just £3.99 under the brand Brookfield Game. The game birds have been shot on sporting estates around the West Country and are being supplied by Dorset-based DB Foods, one of Britain's largest meat processors. Source: The Daily Mail
and Phil Clarke has taken that responsibility and paid the price with his job.” After a series of profit warnings, Clarke was sacked last summer and replaced by former Unilever executive Dave Lewis. Tesco has since become embroiled in an accounting scandal that is now the subject of a Serious Fraud Office investigation. Source: The Guardian
Fish processing to double as Morrisons expands Grimsby site
Morrisons has announced that it is acquiring a new site in Grimsby close to its existing fish manufacturing site. The retailer said the move will double its fish processing capability (currently 250 tonnes per week) and bring efficiencies to Morrisons processing, with new packing, chilling and filleting divisions. It said the acquisition of the second site will see the space increase from 35,000sq ft. to cover more than 120,000sq ft.. Morrisons group manufacturing director Mark Harrison said: “Due to the success of our first site and the growing demand for fresh fish from our customers we are expanding our entire seafood manufacturing operation. “Not only will we be able to supply a wider product range but we’ll also be increasing the number of skilled jobs available in the local area. The new space will mean we can manage the entire process of preparing fish ourselves and because that’s efficient we’ll be able to offer even better value to our customers.” Source: Talking Retail
IN BRIEF Morrisons' online MD to leave
Morrisons’ online managing director is leaving the business. Simon Thompson will leave at the end of the month. Previously internet store director at Apple, Thompson joined the Bradfordbased retailer in 2011, as it prepared for its online launch.
Ex-Costcutter boss Nick Ivel joins Accelerus Former group chief executive and stakeholder of Costcutter Supermarkets Group, Nick Ivel, has joined business growth specialists Accelerus to head up its retail and distribution division.
Dairy Crest retains Morrisons contract
Dairy Crest Group has retained its contract to supply fresh Morrisons for the next three years, but said that purchase volumes would be reduced by about a third from March. Britain’s largest dairy food company said it did not expect reduced purchase volumes to materially affect its full-year results.
Asda marketing director Chris McDonough frozen out amid shake up McDonough was appointed marketing director for Asda in May 2013 from Molson Coors where he had been managing director for UK and Ireland since 2010. Prior to that he had been marketing director at Muller. Asda confirmed he had left the business as it sought to "consolidate exec positions". The news comes days after Asda announced chief customer officer Steve Smith is leaving the business to re-join Walmart after a two year secondmentthough his new role has yet to be finalised. Barry Williams, currently chief merchandising officer at Asda, will replace him
Issue 29 | February 2015
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EVO COMMENT
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GREEN SHIELD STAMPS TO MODERN DAY LOYALTY CARDS Green Shield stamps were introduced in the UK in 1958 and became hugely popular in the 60’s and 70’s. The concept was inspired by the stamp collecting culture in America at the time, and soon a variety of retailers were on board from the Cooperative to Tesco. On making purchases shoppers were given a number of stamps proportionate to their in-store spend, which eventually evolved into today’s loyalty points system. The stamps were then collected in books to be presented at showrooms (which later became Argos), or shoppers could order their ‘free gift’ from a catalogue. The stamps were a catalyst in driving customer loyalty, offering ‘free gifts’ as a reward for making frequent purchases in one (or more) of the participating stores. Macro-environmental factors played a big part in the success of the scheme, inflation was high reaching 20pc and the average person had less; the idea of a ‘free gift’ was greatly appealing. Retailers were also less strict about how stamps could be earned and spent for example you could collect stamps from cigarette packets, and in turn use stamps to buy cigarettes; something which would not be condoned today. To complete a single book of stamps in the 60’s it would have cost around £30; one of these books could buy things such as a set of mugs, a music record or a hair brush. Although, it was possible to save up over a hundred books to earn items such as televisions or thousands to buy a car, or even a speed boat. Over time stamps became less popular as supermarkets such as Kwik-Save began selling
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products cheaper without offering any stamps in return, this lead shoppers to believe that they were actually paying for their ‘free gift’. In the early 90’s Green Shield stamps were discontinued and shortly after in 1995 Tesco introduced the first card of its kind… the Clubcard. The Clubcard paved the way for a revolution in loyalty cards and data collection, many other retailers followed suit developing their own loyalty schemes in a bid to improve their value proposition. A major change for shoppers was that they no longer had to physically collect stamps gaining digital points instead, for many this was a much more practical and convenient system. However for those who collected Green Shield stamps the fact that they were given something ‘real’ was encouraging, you felt like you were getting something in return, and you could see how many you stamps you had collected. History has a tendency of repeating itself and over the past few years we have seen a polarisation in the market; as shoppers head to discounters in search of cheaper deals. High-end retailer Waitrose doesn’t offer loyalty points instead offering a free hot drink and magazine to improve the in-store experience. Retailers Asda, Iceland, Aldi and Lidl don’t offer loyalty points in a bid to keep prices low. Loyalty cards do still have a high adoption rate, but have they really improved since the stamp collecting days? Terri Hampsey – Shopper Insight Analyst
INNOVATION IN RESEARCH ©
Mobile Phone Surveys… (Geo-fencing) Mobile device usage has reached unprecedented levels in many countries around the world, with some emerging markets even surpassing developed markets in adoption rates. This could change the face of fieldwork, but the possibilities and limitations of mobile must first be understood for it to achieve its potential.
Mobile Capabilities
For further
Geo-fencing/Location-based research information Push notifications alerts contact… Rich media responses Barcode/QR scanning for validation White-label app solutions for custom Michael Symonds branding Michael Symonds t. 0113 394 4672 Live reporting link e. 336 michael.symonds@evolution-insights.com t. 0113 6000 e. michael.symonds@evolution-insights.com
Issue 29 | February 2015
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NEW IN 2015
Just launched‌
www.evolutionconsumer.com
We are more than just a research agency, we bring consumers and insight to life through a range of innovative research methodologies‌
Packaging testing
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In-home filming
Online communities
V-logs
Remote eye tracking
Bulletin board focus groups
For all your consumer enquiries call us on 0113 394 4670 email on info@evolutionconsumer.com Issue 29 | February 2015
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CONTACT US Š
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.
Get in touch and find out more The Round Foundry Media Centre Foundry Street Leeds LS11 5QP
info@evolution-insights.com
0113 394 4670 www.evolution-insights.com
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Our series of off-the-shelf publications offer research and insight into to shopper motivation and behaviour
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