verdict – 27 years of retail research think retail, think verdict

Verdict – 27 years of retail research

Think Retail, Think Verdict

Verdict overview

EconomicOutlook

Shoppingbehaviour

Retailerreaction

Food & Grocery Retail in 2012

Inflation &volumes

Verdict overview

Who we are Our credentials

UK market leader in retail research & analysis

In-house team of analysts covering all major retail sectors globally

Strong relationship with leading retailers & unique in-house data

Culture of high quality analysis and independent opinion backed up by robust data

VerdictOverview

Verdict core output

What we do Products and services

SectorsConsumers Channels Locations Forecasts News, comment

Food & grocery

How Britain Shops

Where Britain Shops

Customer Satisfaction

Customer Insight

E-Retail

Remote Shopping

Home Delivery & Fulfilment

Click & Collect

Neighbourhood retailing

Convenience retailing

Regional briefs

Retail Futures:

Annual five year sector forecasts

Quarterly two year forecasts

by sector

+ online

Daily retail news via e-mail

Regular opinion & comment on new

stories and breaking news

Updates & comment on

retailer results

VerdictOverview

Space

Channels

New entrants

Costs

Demographics

Economy

Housing market

Treasury/BOE

Item Club, consensus

Press, media

Consumer trends

Retailers

Regulation

Market sizing & shares

Briefings

Interviews

Results meetings

Forecasts

Trade associations

Govt statistics

Historical data

Company accounts

Retailers

Press, media

Consumer research

How we do itSector and retailer research - methodology

VerdictOverview

Recovery from the recession

Changes to store development plans

Transactional websites

High/low growth areas

New product areas

Changes in price positioning

Provide strategic insight…

How we do itTrade interviews

VerdictOverview

Important to have a feel for the retailers you are profiling…

How we do itStore audits

Price positioning

Visual Merchandising

Stock Density

Fixtures

Mix of Product – Sub brands

Store format/Ambiance

Customers

VerdictOverview

Economicoutlook

EconomyYearly GDP view

2009

-4.4 +2.1

GDP growth patterns, year-on-year change (%)

2010 2011 2012 2013 2014 2015

+0.7 +0.6 +1.6 +2.3 +2.5

NormalityRecession RecessionRecovery

Economicoutlook

EconomyUnemployment (national)

5.4 5.7 7.8 8.0 8.2 8.6 8.3 7.7 7.5

2007 2008 2009 2010 2011 2012 2013 2014 2015

Unemployment rate by year, % LFS measure

Economicoutlook

EconomyInflation prospects

Inflation forecasts for RPI and CPI

2.83.2

4.34.0

-0.5

4.65.2

3.4 3.2 3.3 3.4

2.1 2.3 2.3

3.6

2.2

3.3

4.4

2.92.5 2.3 2.2

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

RPI measure CPI measure

%

Economicoutlook

2.9% 1.9% 2.0%

Retail inflation rates for 2012

EconomyInflation

Economicoutlook

EconomyConsumer confidence index

Nationwide consumer confidence index

0.0

20.0

40.0

60.0

80.0

100.0

120.0

Nov

-04

Mar

-05

Jul-0

5

Nov

-05

Mar

-06

Jul-0

6

Nov

-06

Mar

-07

Jul-0

7

Nov

-07

Mar

-08

Jul-0

8

Nov

-08

Mar

-09

Jul-0

9

Nov

-09

Mar

-10

Jul-1

0

Nov

-10

Mar

-11

Jul-1

1

Nov

-11

Nationwide consumer confidence index Spending index

Economicoutlook

EconomyHousehold income

Real household disposable income (year on year change, %)

2009 2010 2011 2012 2013 2014 2015

+1.6% -0.2% -1.2% -0.7% +0.3% +1.1% +1.5%

Economicoutlook

Inflation &volumes

UK Food & Grocery MarketMarket growth

Inflation&

Volumes

0.3

2.93.2

2012

%

Volume growth Inflation Total growth

UK Food & Grocery MarketImpact of inflation on volumes

0.4

2.13.0

6.4

4.5

2.43.0 2.9 2.8 2.7 2.6

1.2 1.0

-0.9

0.9 1.10.1 0.3 0.5 0.5 0.5

1.6

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

%

Food Inflation Food Volume

Inflation&

Volumes

UK Food & Grocery MarketWhat does low volumes mean for retailers?

0.80.3 0.2 0.2 0.4

3.2

2.4

3.2 3.5 3.4 3.3

1.7

-1.4

0.5

-1.4-1.7 -1.7

-1.5 -2.0

-1.0

0.0

1.0

2.0

3.0

4.0

2010 2011e 2012e 2013e 2014e 2015e

Grocers space growthGrocers sales density growth (current)Grocers sales density growth (constant)

Inflation&

Volumes

UK Food & Grocery MarketGrowth of expenditure online vs total

Inflation&

Volumes

4.8 5.6 6.5 7.5 8.5 9.5

124.1 127.9 132.0 136.4 140.7 145.1

2010 2011 2012 2013 2014 2015

£bn

Online F&G expenditure Total F&G expenditure

UK Food & Grocery MarketGrowth of sales in convenience vs total

Inflation&

Volumes

32.3 33.7 36.4 37.6 38.9

133.6 137.9 142.5 147.3 152.1 157.2

35.2

2010 2011 2012 2013 2014 2015

£bn

Convenience sales Total F&G sales

Shoppingbehaviour

UK Food & Grocery MarketWhat it all means for shopper behaviour

Shoppingbehaviour

Save money

Save time Trade up

Retailerreaction

Shopper trendsWhat it means for retailers

Retailerreaction

Be Cheaper

Enable Quicker

Offer Better

Better: Affordable indulgence Quicker: Top-up shopping

Cheaper: Pricing & promotions

Retailerreaction

Shopper trendsRetailer reaction

Better – affordable indulgence

Polarisation of demand

Quality & Freshness Alternative to dining out

Respite from austere climate

Disposable incomestight

Own label alternatives Price sensitivity



Quality perception – Cooking from scratch drives demand



Trading up in own brand – product innovation



Providing respite from restricted budgets, alternative to dining out


Convenience as driver of loyalty

45.3 45.0 46.1 48.4 46.2 47.4 45.842.335

2005 2006 2007 2008 2009 2010 2011 2012

%


Quicker – more convenient shopping

Grocers expansion

Top-up shopping

Online shopping

Further consolidation

Space churn

New entrantsbring innovation

Declining salesdensities

Changing market dynamics for convenience retailers


New strategies for gaining loyalty


Quicker – Growth in c-stores


Quicker – Innovation in convenience food

Fresh & food to go focus

Click & collect

Price focus

Engaging with local community

SpecialisationInsulation from inflation

Increased spend in convenience sectorLeverage local loyalty

Local retailer loyalty

Leveraging buying power

Retaining over recruiting

Grocers

Symbols

Indies

Shopper trendsShopper reaction

Cheaper- pricing & promotions

Price sensitivity

45.8

47.348.0

49.9

47.1

42.142.6

46.8

48.6

50.9

48.2

40.0

45.0

50.0

55.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

%

UK Food & Grocery MarketInflation impacts price sensitivity

2.33.6

2.21.3

3.0

6.4

-9.0

4.7

-7.5

-1.9

6.1

14.5

1.5

-1.2-0.6

4.0

1.3 1.4

1.3

3.34.4

2.32.1

4.5

2.4 3.0

-0.1

2.2

2.10.4

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

%

Price sensitivity yoy change CPI Inflation Food Inflation

at round price

Price comparison

Multibuys Meal Deals

Extension of multibuys to meal solutions

Price focus

Discounting Meal planners & Fuel promotions

Culture of promotional activity

Shopper focus


Cheaper – price focus


Cheaper – Price comparison & matching

at round price

Price comparison

Shopper trendsRetailer reaction - Couponing

Cheaper – pricing and promotions

Retailer positioningWhere they are – and where they are going

Thanks for listening

verdict – 27 years of retail research think retail, think verdict

Documents

affordable indulgencequicker

year change

retail inflation rates

topup shoppingcheaper

cpi rpi measure cpi

gdp growth patterns

low volumes

dining outbetter