Sarah Coleman Senior Retail Analyst. October 2015

Transcription

1 Sarah Coleman Senior Retail Analyst October 2015

2 IGD is a research and training charity that helps the food and consumer goods industry deliver the needs of the public

3 Setting the scene economic backdrop

4 Real annual UK GDP growth (%) UK growth outlook now improving average: 3.1% Source: OBR & ONS, January 2015

5 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Annual CPI inflation (%) Deflation in food and drink is easing Shoppers Economy Retailers All items (D7G7) Food and drink (D7G8) Source: ONS, June 2015

6 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Volume growth, rolling 3m vs same 3m one year ago (%) At last, volume growth seems to be returning Source: OBR & ONS, April 2015

7 Shoppers are more optimistic about the future % of shoppers who say their financial situation will change in the year ahead 60% 55% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% MAY'14 JUL'14 SEP'14 NOV'14 JAN'15 MAR'15 MAY'15 Stay the same Be worse off Be better off Source: IGD ShopperVista, June 2015

8 UK market & channel forecasts to 2020

9 Grocery retail market size ( bn) YOY growth (%) UK grocery market forecast market recovery will be modest % 9% 200 8% % 6% 5% 4% 3% 2% 1% % Source: IGD channel forecasts , years to April

10 The outlook to 2020 all of the growth will come from discount, online & convenience Superstores and Hypermarkets Small supermarkets Convenience Discount Online Other > 25k sq ft 25-3k sq ft < 3k sq ft Source: IGD channel forecasts , years to April

11 Larger stores: shopping habits forcing change Source: IGD ShopperVista, base: all main shoppers, Aug 13 Significant reduction in new space Sales moving to home delivery / click & collect Still the dominant grocery format in 2020 Proposition has to be compelling Source: IGD research

12 Small supermarkets: meeting shopper demands Benefitting from trend to easier-toshop formats Low risk investment at time of reduced capital expenditure Effective format for fresh focused offer Source: IGD research

13 Discount: the new normal Food & variety retailers Will generate greatest growth Established mainstream positioning New entrants eg. Netto Continued evolution of ranges and quality Source: IGD research

14 New solutions will grow online grocery further New retailers and formats entering the market Click & Collect expanding rapidly Delivery passes Source: IGD research

15 Convenience: new ideas to drive a maturing sector Multiples driving store numbers and proposition Shopper preference for little and often Products: relevant and aligned with core mission and local demographic Source: IGD research

16 Implications for Agri-food in Northern Ireland

17 Implications for the Agri-food industry in N.Ireland Sourcing a clear indicator of quality Meat is a more impulsive purchase = opportunity Expensive so promotions a key driver, willing to stock up Freshness key packaging innovation to support this Sourcing to reinforce quality Retailers overtrading include Morrisons, Sainsbury s & Waitrose -17 -

18 Implications for the Agri-food industry in N.Ireland Flavour is a key indicator of quality comms and sampling Price is the top driver for purchase so value for money is important Importance of the convenience channel for milk (top up) Appearance is a key indicator of quality Clear and growing demand for fresh fruit & vegetables in discounters Purchasing is less habitual opportunity to encourage shoppers to try something new Mindful of waste regarding promotions -18 -

19 Implications for the Agri-food industry in N.Ireland 1 In order to further increase sales to the GB consumer, the Northern Ireland agri-food industry needs to be focussed on the consumer and their requirements. The resurging interest in the quality and provenance of food products is particularly relevant. 2 Discount, online and convenience channels will be increasingly important in the next 5 years, therefore suppliers need to think about adapting their products to take account of the specific requirements in these channels. 3 In a crowded marketplace, GB retailers are looking to differentiate. This creates opportunity for agile producers/suppliers to work closely with the retailers and create products that will allow them to offer something unique

20 GET IN TOUCH