Top-Up Shopping: Trends and Behaviors in an Economic Downturn

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1 Brochure More information from Top-Up Shopping: Trends and Behaviors in an Economic Downturn Description: This report analyzes key trends affecting top-up grocery shopping (i.e. grocery shopping trips made to fill gaps or supplement main grocery shops). In doing so, it assesses the frequency of top-up versus main grocery shops in 15 countries across 4 regions and how this is affected by the economic downturn. Scope - Detailed insights and analysis documenting the drivers and inhibitors of top-up shopping and the broad opportunities associated with the trend. - Insights highlighting consumers changing priorities in an economic downturn and how this will impact shopping habits. - Top-up shopping prevalence data by country, age and gender. Additional primary insight covering consumers general shopping attitudes in 15 countries. - Countries covered: France, Germany, Italy, the Netherlands, Spain, Sweden, UK, US, Australia, Japan, South Korea, China, India, Brazil and Russia. Highlights of this title The "credit crunch" and consumers financial concerns are resulting in large numbers of people seriously reappraising their shopping habits, with a particular emphasis on keeping their grocery bills low. Up until very recently the frequency of top-up grocery shopping has been growing, but this is no longer the case in all countries. The overwhelming majority of global consumers are more likely to not even notice new products than to actively monitor new products. This is symptomatic of how capturing consumers imagination with new launches is a difficult task despite the fact that consumers are highly attracted to new things or new experiences. Brazilian, Spanish and UK shoppers all make a substantially greater number of top-up shops each year compared to main shops. Australia, China, Germany and the US can be seen as a following group behind these countries which show a relatively small but nonetheless significant bias towards greater number of top-up shops. Key reasons to purchase this title - Gain an understanding of consumer attitudes towards shopping and how this impacts both main and topup shopping behavior. - Use the latest evidence based insights to launch and/or reposition products, so that they capitalize on pertinent consumer trends. - Access unique and insightful primary research across 15 countries in order to better support your decision making during the recessionary climate. Contents: Overview 1 Catalyst 1 Summary 1 THE FUTURE DECODED

2 INTRODUCTION: Top-up grocery shopping is under threat in the near future 5 Definitions and why top-up shopping should not be confused with more "traditional" retailing 5 The economic slowdown and rising food prices combine to place grocery shopping under pressure 5 The effects of these trends can already be seen in peoples grocery shopping habits 8 The better off, as well as low income groups, are concerned about their spending 8 Middle income groups are also cutting back 8 "Value-for-money" is now the key determinant of grocery choices 10 Products and channels which typically serve top-up shoppers are under pressure 12 C-stores, especially smaller independents, will struggle to compete on price 12 The US is seeing a cut-back in top-up shopping, but not all countries will follow this pattern 13 TREND: Top-up shopping has established itself as a major part of shopping occasions in recent times as consumer lifestyles have evolved 14 In absolute terms top-up shopping is now more common than main shops 14 The share of top-up shops is highest in Brazil, Russia and Spain 15 Several reasons account for the level of top-up shoppings popularity 16 TREND: Levels of top-up shopping are shaped by traditional retailing habits 19 The average Russian shopper makes nearly 60 more top-up shopping trips per year than main shops 19 Brazil, Russia and India display a strong top-up shopping tendency 21 TREND: Top-up shopping continue to be relied upon, but not in all countries 22 Overall there is an increasing reliance on top-up shopping despite the economic trends 22 In the US, Germany and the Republic of Korea, Datamonitor expects top-up shops to decline in the future 22 Many countries will see the reliance on top-up shopping grow, despite economic concerns 23 INSIGHT: In most countries women are marginally more likely to top-up shop than men 24 In ten out of the 15 countries covered women are more likely to top-up shop than men 24 And the only very strong male bias in top-up shopping is in India 24 INSIGHT: The increasing reliance on top-up shops varies more greatly between the sexes 26 Overall, men are becoming more reliant on top-up shopping 26 Women will become more important in Australia, Japan and the UK 27 In the Republic of Korea and Germany, where top-up shopping is set to decline, men will be less likely to give up top-up shopping 28 INSIGHT: Mid-lifers are the key top-up shoppers 28 Mid-lifer consumers aged between 25 and 49 years old are the core top-up shoppers today 28 Within each country, rates of top-up shopping vary little by age, but country differences are substantial 30 INSIGHT: Young Adults and Early Mid-lifers are increasingly reliant on top-up shops 31 The core top-up shoppers tomorrow will continue to be aged under INSIGHT: While the economic downturn will negatively impact top-up shopping, the smaller store formats typically associated with top-ups have the potential to better meet other important needs 32 Around the world consumers feel that there is often too much choice in stores 32 C-stores in particular can play a key role in simplifying choices for consumers 34 Despite being attracted by the prospect of trying new things, many consumers adopt a passive, inattentive mindset towards shopping 35 Store formats associated with top-up shops can potentially meet consumers intensifying desire for local products 38 FUTURE OUTLOOK: the BRICs, the UK, Spain and Australia are the most attractive top-up shopping markets for the future 39 Key findings and conclusions 40 ACTION POINTS 41 INTRODUCTION: The need to rethink approaches and be consumer driven 41 ACTION: Product positioning needs to strategically align with high-low shopping behavior 41 ACTION: Manufacturers and retailers should check offerings against the nine-box consumption grid 42 Use a high-low strategy to successfully align products with different income groups 43 Private label perhaps offers an opportunity in c-stores because it is associated with value-for-money 44 Several countries are already seeing private label growth in c-stores 44 ACTION: Dont forget to target the consumer trends that have shaped recent behavior 44 ACTION: Ensure that the key year old age group is well catered for 47 ACTION: Ensure women and men are equally well catered for 48 ACTION: Target specific top-up occasions, especially the need for an inexpensive night in 49 Marks & Spencers Dine in for two for 10 highlights how retailers can act as an alternative to a night out 50 ACTION: Target on-the-go consumption through updated offerings and offering "value for time" 51 There are also on-the-go opportunities in personal and even household care 52 Retailers should also seek to find new ways to offer consumers time-saving benefits 53 ACTION: Target the emerging national opportunities by the consumer groups driving them 54

3 Women will be increasingly important in the UK, Japan and Australia 54 Retail formats can be introduce to help target women more effectively 54 The year old group offers new opportunities in Brazil, Germany, Sweden and the Netherlands 55 ACTION: Adjust retail offerings to target local demographics and serve under-provided for groups 55 ACTION: Simplify the in-store experience for consumers and enhance the retail environment 56 Well-thought out product ranges are key, as is the retail environment 56 ACTION: Ensure pricing differentials between the convenience and other channels dont grow 57 Recognize that the perception of price is as important as the actual prices themselves 57 Recognize that consumers are increasingly able to research prices independently 57 APPENDIX 59 Definitions 59 Methodology 59 Further reading and references 60 Ask the analyst 61 List of Tables Table 1: Consumer survey: the propensity to choose food and beverages, cosmetics and toiletries, household and laundry care and alcoholic drinks on the basis of value/cost in the previous six months, in 15 countries across Europe, Asia Pacific, South America and the US, by country, Table 2: Number of top-up versus main shops (millions and per cent), in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 by country, Table 3: Number of top-up and main shops per capita- per year and difference, in 15 countries across Europe, Asia Pacific, South America and the US, by country, Table 4: The percentage of consumers who are becoming either more or less reliant on top-up shopping over the last six months, and the difference between them, in 15 countries across Europe, Asia Pacific, South America and the US, by country, Table 5: Male and female top-up shopping occasions by country, and the difference between them, in 15 countries across Europe, Asia Pacific, South America and the US, by country, Table 6: Percentage of consumers stating whether they are either increasingly and decreasingly reliant on top-up shopping over the past six months, in 15 countries across Europe, Asia Pacific, South America and the US, by country and gender, Table 7: Share of top-up shops (% of all top-up shops), in 15 countries across Europe, Asia Pacific, South America and the US, by country and age group, Table 8: Per capita number of shopping trips by age group and overall-, in 15 countries across Europe, Asia Pacific, South America and the US, by country and age group, Table 9: Net differences between those who are more and those who are less reliant on top-up shopping over the past 6 months, in 15 countries across Europe, Asia Pacific, South America and the US, by country and age group, by age, Table 10: Consumer survey: attitudes towards whether there is too much choice when doing grocery shopping in 15 countries across Europe, Asia Pacific, South America and the US, by country, Table 11: Consumer survey: percentage of respondents who "dont seem to notice new products" versus those who "actively monitor new products", by FMCG product type, in 15 countries across Europe, Asia Pacific, South America and the US, by country, Table 12: The penetration, increasing reliance on, and total number of top-up shops by country, in 15 countries across Europe, Asia Pacific, South America and the US, by country, List of Figures Figure 1: The majority of consumers recognize they are immune to the current economic downturn 7 Figure 2: Consumers are making efforts to save in light of the current downturn 7 Figure 3: Ratio of household debt to gross disposable income (percent) Figure 4: The nine box consumption grid shows that consumers will move away from unattractive product and retail propositions, leaving poorly positioned products misaligned to their needs 13 Figure 5: Top-ups share of combined top-up and main shops is over 50% in eight of the countries covered 15 Figure 6: A reliance on time saving products and services is a driver of top-up shopping 17 Figure 7: The stores facilitating top-up shops should appeal to the overwhelming majority of consumers who are attracted by the idea of living a less complicated lifestyle 18 Figure 8: A quick top-up shop will appeal to the high numbers of consumers who dislike grocery shopping 18 Figure 9: Per capita- analysis of the difference between the number of top-up and main shops reveals more significant country differences in shopping behaviors 20 Figure 10: Analysis of the difference between the number of male and female per capita- top-up shops shows some significant gender biases by country 25 Figure 11: Consumers aged between 25 and 49 years old dominate top-up shopping 29

4 Figure 12: A large proportion of consumers already feel there is too much choice when doing grocery shopping: this helps explain the appeal of smaller store formats facilitating top-up shops 34 Figure 13: Consumers have an innate interest and desire to try new things but it appears that does not fully manifest in their shopping habits 37 Figure 14: Consumers are expressing a growing preference for things produced locally - something that smaller stores associated with top-up shopping can potentially capitalize upon 38 Figure 15: Opportunities exist in the BRIC countries, but some more developed markets also offer growth potential for top-up shops 39 Figure 16: High-low behavior will see consumers frequently substitute medium price and medium quality products for those with a different positioning 42 Figure 17: On-trend products can be used to target high-low consumption 43 Figure 18: Amidst all the focus on value driven shopping, industry players must not forget to target the consumer trends that have shaped recent behavior 45 Figure 19: On-trend innovations targeting trends existing prior to the downturn will continue to do well 46 Figure 20: Product positionings must be checked against the latest consumer behavior to confirm that they are still "on-trend" 47 Figure 21: Within the year old age range, similar needs will often result in different purchases for the two main age groups within this range 48 Figure 22: More clearly differentiated male and female offerings can be offered in-store within a single category to maximize in-store relevance for all consumers 49 Figure 23: Marks & Spencers "Night in" campaign highlights how retailers and manufacturers can offer consumers a cost-effective alternative to going-out 50 Figure 24: Consumers will continue to seek out new on-the-go style products 52 Figure 25: On-the-go personal care items are ideally suited to top-up shopping, especially in convenience channels 53 Figure 26: New store concepts, such as those targeted women in Japan, highlight that the retail environment can be updated to target emerging consumer groups 55 Figure 27: Consumers are increasingly able to research prices independently, facilitated by new initiatives in pricing transparency such as that offered by GROCERYchoice in Australia 58 Ordering: Order Online - Order by Fax - using the form below Order by Post - print the order form below and send to Research and Markets, Guinness Centre, Taylors Lane, Dublin 8, Ireland.

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