The UK Convenience Market

Transcription

1 The UK Convenience Market Michael Freedman, Senior Shopper Insight Manager 30 th January 2019 IGD 2019 Page 1

2 IGD: global membership organisation, retail insight specialists IGD 2019 Page 2

3 Heritage and experience Over 100 years experience developing learning and capability programs across the FMCG industry Range of blended solutions Blended solutions to create modern and engaging learning for all participants Real world experience Our team all have real world industry experience, and regularly work with all types and sizes of companies across the industry. They can relate theory to practice in the day job Global, leading research and insight Supported by globally leading research teams who offer unparalleled insight into international consumer goods retailing, supply chains, and shopper trends to ensure best practice Real results Deliver lasting results and ROI for your business by integrating into your ways of working and business cycles, and designing comprehensive embedding and support methods IGD 2019 Page 3

4 Today s presentation 1 Market outlook to Focus on UK convenience 3 The shopper of the future and the future of convenience 4 Q&A IGD 2019 Page 4

5 Different tactics being deployed to save money Shop at reduced to clear section 32% IGD ShopperVista; Base: 1,700+ ALL shoppers, Jan 18. IGD 2019 Page 5

6 Forecast themes Brexit countdown gathers pace Modest market growth Increasing quest for scale IGD 2019 Page 6

7 Grocery retail market size ( bn) YOY Growh (%) UK market set to grow by 15% by bn 218.5bn 10% ,0 177,5 178,2 179,6 185,2 190,3 195,1 200,3 206,1 212,2 218,5 9% 8% 7% 150 6% 5% 100 3,5% 3,1% 2,8% 2,5% 2,7% 2,9% 3,0% 3,0% 4% 3% 50 1,4% 0,4% 0,8% 2% 1% % Market value ( bn) YOY % Change IGD 2019 Source: IGD Retail Analysis Page 7

8 INFLATION VOLUME POPULATION GROWTH VOLUME CONSUMPTION / TRADE-UP Inflation will drive growth 190.3bn 22.2bn 4.3bn 1.7bn 218.5bn IGD 2019 Source: IGD Retail Analysis Page 8

9 The channel landscape in % 50% 46,8% 40% 30% 20% 10% 8,6% 21,1% 12,1% 6,0% 5,4% 0% Hypermarkets Supermarkets Convenience Discount Online Other 2018 IGD 2019 Source: IGD Retail Analysis Page 9

10 Online and discount will capture half of market growth 60% 50% 46,8% 43,9% 40% 30% 20% 10% 8,6% 7,6% 21,1% 21,6% 12,1% 14,4% 7,9% 6,0% 5,4% 4,5% 0% Hypermarkets Supermarkets Convenience Discount Online Other bn change Total IGD 2019 Source: IGD Retail Analysis Page 10

11 Shoppers use an average of 4 to 5 channels per month 98% 89% 78% 65% 43% 42% 42% Supers/Hypers Convenience Variety discount Food discount Specialist / ethnic stores* Online Frozen food IGD 2019 Source; IGD ShopperVista Base: 1,700+ ALL shoppers, Aug 18. * Specialist stores include butchers, greengrocers, bakers etc. Page 11

12 and increasingly shopping across channels IGD 2019 Source: IGD ShopperVista Base: 1,700+ ALL shoppers, May 18 Page 12

13 bn YOY Growh (%) Hypermarkets Channel Performance Marginal growth, with inflation just compensating for declining volumes and space reduction + 0.2bn Change in value +1.4% Change in value +0.3% CAGR Continuing challenge to repurpose stores 20 1,4% 2% No new stores expected to open 19 0,6% 0,3% 0,3% 0,3% 0,3% 0,3% 1% 18 0% Consolidated non-food offer 17 16,4 16,4 16,5 16,6 16,6 16,6 16,7-1% Online order fulfilment 16-2% 15-3% % Market value ( bn) YOY % Change IGD 2019 Source: IGD Retail Analysis Page 13

14 bn YOY Growh (%) Supermarkets Channel Performance Modest growth from improvements to shopper experience Forecast lifted by trading momentum at Big Four + 6.9bn Change in value +7.7% Change in value +1.5% CAGR Some new store opening and downsized hypermarkets Most growth from improved trading at existing stores ,5% 88,0 1,3% 89,1 1,0% 89,9 1,5% 91,3 1,6% 92,7 1,7% 1,7% 94,3 95,9 2,0% 1,5% 1,0% 0,5% ,0% Market value ( bn) YOY % Change IGD 2019 Page 14

15 bn YOY Growh (%) Discount Channel Performance Faster expansion plans and store renewal from Aldi and Lidl + 8.5bn Change in value +36.7% Change in value +6.5% CAGR Targeted improvements to key categories Mixed performance among variety discounters ,0% 21,0 23,1 10,0% 24,8 26,4 28,1 29,8 31,5 16% 14% 12% 10% 8% 15 7,5% 6% 10 6,6% 6,4% 6,0% 5,8% 4% 5 2% % Market value ( bn) YOY % Change IGD 2019 Source: IGD Retail Analysis Page 15

16 bn YOY Growh (%) Online Channel Performance Maturing channel + 6.0bn Change in value +52.4% Change in value +8.8% CAGR Renewed investment in online by multiples Smaller operators will drive growth Investment in new services ,7 11,4 12,1 13,2 14,5 15,8 17,3 20% 15% 10 10% 5 8,5% 5,9% 6,5% 9,4% 9,3% 9,4% 9,4% 5% % Market value ( bn) YOY % Change IGD 2019 Source: IGD Retail Analysis Page 16

17 Online market shares 91% of total UK online grocery market in 2017 ( 10.4 Bn) 43.8% 14.9% 13.6% 12.7% 3.6% 2.6% operating in a growing number of areas of London, sales unknown, but not yet significant. IGD 2019 Source: IGD Retail Analysis Page 17

18 Today s presentation 1 Market outlook to Focus on UK convenience 3 The shopper of the future and the future of convenience 4 Q&A IGD 2019 Page 18

19 bn YOY Growh (%) Convenience Channel Performance Most operators focused on expansion but short term challenges P&H collapse disrupts supply chain + 7.1bn Change in value +17.6% Change in value +3.3% CAGR Tobacco tax impact Recovery expected from ,7% 60 2,9% 3,3% 3,3% 2,7% 3,1% 3,1% 50 More conservative multiple expansion 39,1 40,1 41,6 43,0 44,4 45,8 47, % 3% 2% 1% % Market value ( bn) YOY % Change IGD 2019 Source: IGD Retail Analysis Page 19

20 UK Convenience 2018 category growth Total growth 1,100.9 IGD 2019 Source: IGD Research Page 20

21 UK convenience, segment size & growth 2018 Symbols 15,080m +1.7% Unaffiliated Inds 6,613m +2.1% Multiples 9,619m +5.3% Forecourts 4,166m +2.6% Co-ops 4,647m +1.8% IGD 2019 Source: IGD Research Page 21

22 Convenience segment shares % 50% 40% 38,0% 37,6% 30% 23,4% 24,0% 20% 10% 16,6% 16,5% 10,4% 10,4% 11,7% 11,6% 0% Symbols Unaffiliated Multiples Forecourts Co-ops Total Cash growth m ,055 IGD 2019 Source: IGD Research Page 22

23 UK convenience - major banners by segment Multiples Symbols Co-ops 1,754 stores 948 stores 1,242 stores 714 stores 605 stores 3,343 stores 2,555 stores 1,957 stores 2,005 stores 1,776 stores 975 stores Forecourts 1,968 stores 885 stores 525 stores IGD 2019 Source: IGD Research (includes stores <300 sq m) Page 23

24 Top-up mission still dominates NON-FOOD (5%) FOOD-TO-GO (30%) MAIN SHOP (4%) TOBACCO, NEWS, LOTTERY (21%) TOP-UP SHOP (51%) EVENING MEAL (23%) IGD 2019 Base: 1,024 All Convenience store shoppers, March-May 18.. Page 24

25 Younger shoppers are driving convenience store growth Top missions claimed to be conducted on last c-store trip 44% MORE LIKELY TO MAINLY SHOP IN CONVENIENCE STORES 30% 23% 31% Food-to-go Evening meal All c-store shoppers IGD 2019 Source: IGD ShopperVista, March-May 18, Page 25

26 Younger shoppers have different priorities Attributes that c-store shoppers use to help to define a product as higher quality (top ranking) Brand 39% Flavour 27% Product appearance 18% British or local 18% Ingredients 17% Ethical standards 16% Healthier 16% Freshly prepared 15% Envir. friendly 12% Packaging design 11% Premium PL 10% % 34% 26% 9% 27% 18% 39% 21% 10% 13% 24% 7% IGD 2019 Base: 1,022 All Convenience store shoppers, March-May 18

27 More willing to spend extra to save time Sometimes I go to the NEAREST STORE even if it is more expensive % % choosing last convenience store as it is quicker and easier in-store % 60% 53% IGD 2019 Base; 212 shoppers aged 18-25; 1,511 shoppers aged 26+ Sep 16; 583 adults aged 18-25; 3,798 adults aged 26+, Sep 16-Aug 17 Page 27

28 Encourage trade-up with time saving solutions SPAR, Aldridge Often buy meals in c-stores that take less than 30 minutes to prepare % % Often buy food-to-go in c-stores % % % claiming to buy from a secondary location on last Convenience store trip 41% 28% M&S Simply Food, Ludgate Circus, London Often buy pre-cut products in c-stores % % Often buy meal kits in c-stores % 26+ 9% IGD 2019 Base: 143 adults aged 18-25; 888 adults aged 26+, June-Aug 17 Page 28

29 yet little overall change in shopping missions Top missions claimed to be conducted on the last c-store trip 54% 51% May'17 May'18 29% 30% 25% 21% 21% 23% 6% 4% 4% 4% 5% 2% Top-up Food-to-go Tobacco/news/lottery Evening meal Main shop Health and beauty Non-food IGD 2019 Source: IGD ShopperVista, March-May 18, Page 29

30 Delivering the top-up mission IGD 2019 Source: IGD Retail Analysis

31 Standing out for the evening meal IGD 2019 Source: IGD Retail Analysis

32 Evening meal some good examples, but hardly universal IGD 2019 Source: IGD Research Page 32

33 Improving the food-to-go counter offer SPAR IGD 2019 Source: IGD Retail Analysis

34 Blurring grocery retail, food-to-go and foodservice

35 Food-to-go: bringing focus Shell, St Albans Londis, Leeds IGD 2019 Page 35

36 Today s presentation 1 Market outlook to Focus on UK convenience 3 The shopper of the future and the future of convenience 4 Q&A IGD 2019 Page 36

37 Yet fundamental truths remain VALUE TIME CHOICE Help me get quality at fair prices Don t make me spend more time than I want to Help me find the products I want to buy IGD 2019 Page 37 Source: IGD ShopperVista

38 but expectations and behaviours do change 5 MEGA-TRENDS SET TO SHAPE OUR INDUSTRY IGD 2017 Page 38

39 Shoppers will 1. BE TIME-OPTIMISERS The grocery shopping experience will have to work harder so shoppers can optimise and make the most of their time. IGD 2019

40 We re choosing to be busier we re not actually busier! 5bn 28 The number of times we check our phones each day 6 The number of hours we spend online per day 2 The number of hours we spend on social media each day value of the UK fitness industry IGD 2019 Source: Ofcom; Deloitte

41 Food and grocery shopping is very time consuming 16.7 HOURS A MONTH 9.8 HOURS TRAVEL 6.9 HOURS IN-STORE IGD 2019 Source: IGD ShopperVista Base: 1,811 shopping trips, April 2017 Page 41

42 Online: Making in-store shopping frictionless How online is enhancing the in-store shopping experience 85% 84% of of convenience shoppers who store shoppers say they who would say they like would in-store like instore technologies to to help help them them with their grocery their grocery shopping shopping Make it quick and easy Coop provenance Give me the right choice UbaMarket scan and go with dynamic shopping list and geo location capability Give me the best value Sainsbury s is trialling a personalised loyalty app Aldi s app allows shoppers to buy Specialbuys before launch 16% of shoppers want to use technology to get more product information 37% of shoppers want to use technology to find products instore 39% of shoppers want to use technology to find out about offers in-store IGD 2019 Source: IGD ShopperVista The in-store technology opportunity Base: 1,721 British grocery shoppers, Dec 17 Page 42

43 Shoppers will 2. BE MORE HEALTH CONSCIOUS Health and wellbeing will grow in importance with subtle differences owing to individual motivations. IGD 2019

44 Strong interest in healthy options 87% IGD 2019 % of convenience store shoppers actively trying to improve their diet Source: IGD ShopperVista, Retail Analysis

45 Look good motivations driving health agenda for younger shoppers 42% of year old shoppers say in the next 5-10 years they will be more likely to eat healthily to look good (vs 24% of all shoppers) IGD 2019 Source: IGD ShopperVista, April and May 2018; Page 45

46 Meet c-store shoppers health needs 60% 51% Would like a bigger range of products for a healthy diet at c-stores Budgens, Islington IGD 2019 Source: IGD ShopperVista, April and May 2018; All c-store shoppers June-Aug 17 Page 46

47 Showcasing health and wellbeing IGD 2019 Source: IGD Retail Analysis

48 Shoppers will 3. EMBRACE PERSONALISATION Shoppers in the future will be open to a more personalised food and grocery experience, but only if there is a clear benefit to them with minimal effort. IGD 2019

49 Executed well personalisation could be game changing Drive better conversion rates Improve shopper retention Create useful marketing data IGD 2019 Source: IGD ShopperVista

50 Personalising the food-to-go offer IGD 2019 Source: IGD Retail Analysis

51 Smartphones could be key to unlocking personalisation instore 53% 44% My mobile phone is the one thing which connects so many aspects of my life together I d like to receive personalised offers sent to my phone when I m in different parts of a store

52 Shoppers will 4. BE MORE EXPERIMENTAL Shoppers in the future will increasingly experiment with their shopping and meal preparation to broaden their repertoires. IGD 2019

53 Experiment more 80% Open to trying new / different food and non-food products, services and experiences 45m Number of holiday visits abroad by UK residents in m Number of people living in the UK who were born outside the UK in 2017 IGD 2019 Source: IGD ShopperVista, April and May 2018; Page 53

54 What s different is how we re finding inspiration and how quickly IGD 2019 Source: Unilever

55 Experimentation and time saving Premier Victoria Dock, Hull Tesco Express, Jersey Farm IGD 2019 Source: IGD Retail Analysis

56 Experimental IGD 2019 Source: IGD Research Page 56

57 Shoppers will 5. BE MORE SOCIALLY CONSCIOUS Shoppers will want to make sustainable and ethical choices, but only if other needs are also satisfied. IGD 2019

58 Tipping points: Blue Planet effect I was quite surprised that my son said at university more of his friends watched that David Attenborough planet Earth than some of the football matches. They were glued to it. IGD 2019

59 Ethical shopping: here to stay IGD 2019 Source: IGD ShopperVista, June 2018;

60 Sustainability packaging innovation IGD 2019 Source: L Oreal, Method

61 Engage shoppers with the ethical agenda IGD 2019 Source: IGD Retail Analysis

62 Celebrating local IGD 2019 Source: IGD Retail Analysis

63 Celebrating local IGD 2019 Source: IGD Retail Analysis

64 Appealing to the shoppers of the future Optimise shoppers time in-store Help younger shoppers health aspirations Make it more personal Experiment more to appeal to shoppers Engage with shoppers on ethics IGD 2019

65 Thank you for listening Further insights can be found on retailanalysis.igd.com Or find me over lunch!

66 Questions IGD 2019 Page 66