Post brexit vote GB & Wales Grocery

performance; retailer, market and

shopper insightsFraser McKevitt, Head of retail & consumer insight

2 November 2016

Take home

grocery

30,000households

Continuous scanning

Consumption

11,000individuals

Food on

the go

5,000individuals

Continuous texting2x 1 week online diary

3

Average ‘Grocers’ Growth Rate

+4.4%1993-2013

+0.7%2014-2016

Till Roll. KWP 2016 10. 12 w/e 09 Oct 16

4

3.8%October 2006

10.7%August 2016

Aldi + Lidl Market Share

10.9%October 2016

Till Roll. KWP 2016 10. 12 w/e 09 Oct 16

5

main

shop

top up

main

shoptop up

Online

main

shop

top up

Convenience

main

shop

top up

Discounters

main

shop

top up

High streetSupermarket

Top 5 switches(55% of market switching)

£340m

Bubble size = £ sales

£128m

£208m

£167m

RT43 (Grocery). KWP 2015 0952we 14 Sep 2016

£124m

6

Frequency Repertoire

Basket size Mission

Slow

change

2562011

2592016

5.12011

5.12016

9.92011

9.92016

60.6%2011

62.5%2016

Annual

FMCG

Annual

FMCG

12we

Till Roll

Grocers

Annual %

spend from

Top up trips

7

0 5 10 15 20 25 30 -10 -5 0 5 10 15

1.9 -7.4Indeps & symbols

4.6 8.4Lidl

6.2 11.4Aldi

5.4 3.5Waitrose

2.1 6.9Iceland

6.5 3.1Co-Operative

10.4 -3.0Morrisons

16.0 -0.4Sainsbury's

15.6 -5.2Asda

28.2 1.3Tesco

100.0 0.8Grocers

Growth

Share

% spend growth% spend share

Till Roll. KWP 2016 10. 12 w/e 09 Oct 16

vs a year ago

TILL ROLL MARKET SHARE AND GROWTH

8

0

5

10

15

20

25

30

35

IndepsLidlAldiWaitroseIcelandCo-opMorrisonsSainsbury'sAsdaTesco

Scotland

Wales

England

% spend share

Welsh retail scene really not that different to England

Retail shares by country within GB

9

The Welsh shopper

Annual spend £4,176 (+0.8% vs England)

Annual trips 220 (-1.7% vs England)

Average trip £19.01 (+2.5% vs England)

Till Roll. KWP 2016 10. 52 w/e 09 Oct 16

10

12we published till roll grocers growth

Grocers growing sales at +0.8% vs last year

-1

0

1

2

3

4

5

6

7

8

9

10

Total Grocers

% spend

growth

Till Roll. KWP 2016 10. 12 w/e 09 Oct 16

11

Inflation& prices

Shopping behaviour

Single market &

CAP

12

Like for like prices falling by -0.8%

Grocery inflation

-4%

-2%

0%

2%

4%

6%

8%

10%

OD JMM J S ND F A J AON JMM J AOD F AM J S N JMM J AOD F AM J S N JMA J AOD FMM J S N JMA J AOD JMM J S

Grocery inflation% inflation

20092007 2008 2010 2011 2012 20142012 2015 2016

RT43 (Grocery). KWP 2016 10. 12 w/e 09 Oct 16

13

Some staples (milk, fruit, bread) going up in price

Markets where prices are rising

0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1.4% 1.6% 1.8% 2.0%

LFL inflation

Chilled Ready Meals

Chilled Desserts

Total Bread

Fruit

Total Milk

Fresh Lamb

P/P Fresh Meat+Veg+Pastry

Frozen Potato Products

Skincare

Wet/Smoked Fish

LFL inflation

14

…yet vegetables, butter and pork/poultry are still seeing declining price

Markets where prices are falling

-7.0% -6.0% -5.0% -4.0% -3.0% -2.0% -1.0% 0.0%

LFL inflation

Vegetable

Yoghurt

Eggs

Butter

Fresh Sausages

Fresh Pork

Fresh Poultry

Savoury Snacks

Fresh Bacon Rashers

Machine Wash Products

LFL inflation

15

Packs and average packs per household

Volume trends for total market

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

J F M M A M J J A S O N D J J F M A M J J A S O

Packs perhousehold

Packs

% growth

2015 2016

RT43 (Grocery). KWP 2016 10. 12 w/e 09 Oct 16

16

2016 has seen a return to cheaper products, and some volume growth

Shopper trading up and trading down strategies

-5

-4

-3

-2

-1

0

1

2

3

4

J S N D F A M J S N J M M J A O D F A M J S N J M A J A O D F M M J S N J M A J A O D F A M J S N J F A J A

Volume HH

Store Choice

Promotion Choice

Product Choice

contribution to

change

%pts

20092008 2010 2011 2012 20142013 2015

TRADING

DOWN

TRADING

UP

TRADING

DOWN

2016

RT43 (Grocery). KWP 2016 09. 12 w/e 11 Sep 16

17

OUT OF HOME AND ‘ON THE GO’ BOOMING

£45bn +4.5%

22

8

7

5

3

Meals Snack Foods

Hot Beverages Sandwiches

Soft Drinks

OOH Value £bn Source: Kantar Worldpanel Out of Home

18

Inflation& prices

Expect price rises end of

2016

Anticipate value engineering as round £ points so important

Shopping behaviour

Volumes stable

Move to own label?

Out of home at risk

-5

-4

-3

-2

-1

0

1

2

3

4

J F MM A M J J A S O N D J F MM A M J J A S O N D J F MM A M J J A S O N D J J F M A M J J A S O

Tesco% spend growth

Till Roll. KWP 2016 10. 12 w/e 09 Oct 16

Tesco up +1.3%

TILL ROLL GROWTH

2016201520142013

20

Very much volume led, except for alcohol & toiletries

Tesco growth across the store – value & volume

-6

-4

-2

0

2

4

6

8

ToiletriesHouseholdHealthcareFrozenFresh+ChilledAmbientAlcoholTotal RST

Packs

Spend

Packs (000s)

Chart Footnote

RT43 (Grocery). KWP 2016 09. 12 w/e 11 Sep 16

21

0

5

10

15

20

25

30

35

40

D J F MM A M J J A S O N D J F MM A M J J A S O N D J F MM A M J J A S O N D J J F M A M J J A S

2016201520142013

Aldi

Lidl% spend growth

Till Roll. KWP 2016 09. 12 w/e 11 Sep 16

Slowing, but still spectacular

Aldi & Lidl growth

22

Now mainstream

+

Who

shops

there

Household

penetration

What people buy

How much they

spend on a trip

How much of the

store they visit

Shopping

mission

23

+5%

+7%*

*decline in Freedom Foods masking growth**launch of Waitrose One

Includes all premium own label, not just specific brand. RT43 (Grocery). KWP 2016 08. 12 w/e 14 Aug 16

-3% -4%

+8% +318%**

+23% +76%

24

Consumer choices drive shopping

25

Valuing time

16 of last 20 years

consumers had more money

(ONS)

19 of last 20 years shoppers spent less time

cooking(Kantar Worldpanel)

26

Solutions

5 x £ premium for a solution

27

Health

Food and drink

chosen in GB for

health is a £20.1

billion market

28

Less sugar especially, but all ‘sin’ nutrients growing behind overall volume

The nation is slowly buying healthier

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

FibreProteinSodiumSaturatesSugarsCaloriesVolume

Growth

% growth

KWP Nutrition Total nutrient % change from GB total take home food and drink march 2016 vs 2015

29

Move towards positive efforts, away from restriction & denial

Nature of health is changing

-6 -4 -2 0 2 4 6 8 10 12 14

12To get portion of fruit or

veg

8.9Lighter/not filling

7.6Time for a healthier meal

5.3More natural/less

processed

1.4Provide a varied diet

-3.1Health

benefits(fibre/vitamins)

-4.8Calorie or portion control

% change over 2 years

KWP Usage

30

Smaller households

1961 2011

40% 65%

% of households with 1 or 2 people

31

Tended to tap into multiple consumer trends, and always at a premium

Recent successful innovation

Deflation, discounters & move away

from large stores have shaped shopping

Brexit likely to fuel price rises, last

recession offers clues but not answers

to how shoppers will respond

Winning retailers & suppliers will

understand and activate for macro

consumer trends

Thank you

Fraser McKevutt

07943 811 672

fraser.mckevitt@kantarworldpanel.com

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