K E N P A R S O N S
A rapidly changing market -how should village shops
adapt to survive?
A FAIRLY SAFE PREDICTION General Election May 2015
THEGROCERYMARKET2015
WHO LIVES IN RURAL AREAS?
Usual resident population by ageEngland and Wales
2011 PercentageAge Urban Rural0-14 18.0 16.215-29 21.1 14.830-44 21.2 17.745-59 18.8 22.360-74 13.6 19.675+ 7.4 9.4Source: Office for National Statistics
YOUR POTENTIAL CUSTOMERS 3/10
UNDER 30
4/10 30-59
3/10 60 AND OVER
MAJOR MARKET TRENDS
Overall market slight decline Price deflation Discounters doing very well Big 4 losing business Top end of market doing well Internet growing strongly Total convenience sector flat Multiple convenience growing Own label outperforming
GROCERY PRICE INCREASES IN RECENT YEARS
2008 9% pa peak2011 6% pa2013 4% pa2014 now
negative
40% of all sector sales on promotion
HOUSEHOLD GROCERY SHOPPING BEHAVIOUR
No massive change – “movement at the margin”
Average customer makes 4 grocery shopping trips per week
Average of 3.25 different fascias visited per 4 weeks
Average basket size fallen a bit Average pack size fallen a bit
MARKET SHARE CHANGESData 12 weeks to November 2014
Aldi +25% Lidl + 17% Waitrose +6% Asda 0% Co-operative -1% Sainsbury’s -3% Morrisons -3% Tesco -4%
Pincer challenge to the major multiples from both sides
The Discounters
Aldi basket size has now caught up with Tesco
Aldi average trip includes a lot of different product groups
Aldi and Lidl are building loyalty Discounters’ share of trade is
highest on Thursdays, supermarkets’ at weekend
Aldi now has average shopper profile
Tesco & Asda share losses to discounters most marked amongst higher earners
YOUNGER DOWN MARKET
Asda
YOUNGERUP MARKET
OLDERDOWN MARKET
MorrisonsLidlCo-operativeIndependents
OLDERUP MARKET
SainsburysWaitroseMarks & Spencer
AVERAGE
AldiTesco
Discount share across Europe
Germany 25% Spain 18% Netherlands 15% Italy 14% France 12% Britain 7%
The rapid growth of discounters is the mirror of the pattern that happened in Germany, France & Spain.
IS IT A WATERSHED?
Discounters now acceptable to mainstream shoppers
Supermarket chains peaked, now declining. Future of giant bricks & mortar???
Supermarket diversification into on-line and convenience
Morrisons decline may be terminal – the Big 3?
Increased threats to branded products
MILK
* For 4 pints
“When we dropped our milk price to 89p* it was all funded by our business and it was at a substantial loss. It’s the most emotive product – it’s the one that gives the most reaction to footfall because it is a daily purchase…..in a tough industry, we have to invest in the products that drive the best footfall….”
Nigel Broadhurst, MD, Iceland
EGGS Six medium free range eggs:89p at Aldi and Asda£1 at Tesco, Waitrose and Morrisons£1.25 at Sainsburys Farm gate prices fell by over 10%
between quarter 1 of 2013 andquarter 3of 2014.
PRICE Economic conditions – falling
real incomes Market research findings suggest
rising importance of price Rise of discounters Price differences between stores
increasing Proportion of goods sold on offer
increasing
SO HOW IMPORTANT ARE PRICES TO YOUR STORE???
HOME DELIVERIES
Now about 7% of the market More in remote rural areas? Delivery cost coming down Ease of use of sites increasing Fits with 24/7 lifestyle
CONVENIENCE SECTOR
Customers shopping more frequently
Customers shopping more locally Customers shopping for fewer
items per trip Customers buying smaller pack
sizes
Major investments from supermarket chains
PREDICTIONS FROM RURAL RETAILERS
WINNERS
On-line Discounter Specialist retailers Vending machines
Chilled foods Food to go Bread & cakes Fresh fruit & vegetables Local products Health & beauty E-cigarettes
PREDICTIONS FROM RURAL RETAILERS
LOSERS
Superstores Smaller supermarkets
Tobacco News & magazines Stationery Post Office
WWW.RURALSHOPS.ORG.UK
Village shops – from Surviving to Thriving
THRIVING Financial – reasonable profit Job satisfaction – enjoy what you
are doing - worthwhile The community benefits from
having a shop
Surviving into the long term
THE WORLD IS CHANGING
EMBRACE CHANGE
PLAN FOR CHANGE
FINANCIAL
Turnover
Gross Profit margin
Costs
THAT’S ALL THERE IS TO IT!
TURNOVER
Consciously rebalance the store towards growth ranges and away from declining product categories
Special offers, PMPs, deals Maximise space utilisation Use EPoS data to spot winners
and losers
WINNERS? Chilled foods Fresh fruit & vegetables Food to go Bread & cakes Local products Health & beauty E-cigarettes
PROFIT MARGINIt is not a dirty word
Review suppliers – including symbol group membership
Maintain GP margins – negotiate with suppliers
Pressure on wholesalers – resist the “waterbed effect”
Optimise range Take a margin Know when not to Demand good fresh
COSTS Energy Staffing Property acquisition
COMMUNITY
Shopping is an emotive activity
Customers need to like you and your staff – loyalty
Local staff Local suppliers Community involvement Communication – newsletter,
website, Twitter, Facebook Special events – added interest Opening hours
BUTIt is a two way relationship
THRIVING Widen appeal to more age groups A huge target – most village shops
have a small local market share Change means opportunity as
well as threat Waitrose shows that it is not all
about price Customers have fallen out of love
with supermarkets, behaviour is changing
Some trends in shopping favour local shops
WWW.RURALSHOPS.ORG.UK