Chris Kirkland, Senior Business Analyst, IGD Chris ...€¦ · Chris Kirkland, Senior Business...
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Transcript of Chris Kirkland, Senior Business Analyst, IGD Chris ...€¦ · Chris Kirkland, Senior Business...
© IGD 2016
IGD is a global research and training charity that helps the food and consumer
goods industry
Economic overview
IGD grocery forecast: Why convenience and online are important
The convenience channel
The online channel
© IGD 2016
+0.6%
£466,944
350,000
370,000
390,000
410,000
430,000
450,000
470,000
-3
-2
-1
0
1
2
Q1 2003 Q1 2005 Q1 2007 Q1 2009 Q1 2011 Q1 2013 Q1 2015
Qu
arte
rly
UK
rea
l GD
P %
val
ue
gro
wth
vs.
pre
vio
us
qu
arte
r Economic recovery has slowed
Source: ONS September 2016 and nowcast forecast
Quarterly UK real GDP value (£millions) and % growth vs. previous quarter
0.42%
current Q3 nowcast for quarterly GDP growth rate
Qu
arterly UK
real GD
P valu
e (£m
illion
s)
© IGD 2016
Consumers have felt the effects for even longer
£6846 Q1 2008
£6861 Q2 2015
4,000
6,000
8,000
Q1 2000 Q1 2002 Q1 2004 Q1 2006 Q1 2008 Q1 2010 Q1 2012 Q1 2014 Q1 2016
UK
rea
l GD
P v
alu
e p
er c
apit
a (£
) 7.25 years of lost growth
Source: ONS September 2016
UK real GDP value per capita (£)
© IGD 2016
Recovery slowed pre EU referendum
© IGD 2016
-4
-2
0
2
4
6
8
2010 2011 2012 2013 2014 2015
Gocery value sales % change
Food and drink inflation % change Food and drink volume sales % change
Tracking food and drink % volume sales change and food and drink inflation
Inflationary pressures saw shoppers reduce consumption
Source: ONS data to December 2015 (IEFB)
© IGD 2016
Food and drink inflation % change Food and drink volume sales % change
2.1%
4.7% 3.2% 3.5%
1.3% 0.4%
-4
-2
0
2
4
6
8
2010 2011 2012 2013 2014 2015
Gocery value sales % change
Tracking food and drink % volume sales change, food and drink price inflation and grocery value sales % change
Industry growth has decelerated despite volume gains
Source: ONS and IGD data to December 2015 (IEFB)
© IGD 2016
Economic overview
IGD grocery forecast: Why convenience and online are important
The convenience channel
The online channel
© IGD 2016
163.8 169.1 175.0 177.4 178.0 179.1 181.6 184.8 188.6 192.8 196.9
4.7%
3.2% 3.5%
1.3%
0.4% 0.6%
1.4% 1.8% 2.1% 2.2% 2.1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
0
50
100
150
200
250
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
YOY
Gro
wth
(%
)
Gro
cery
ret
ail m
arke
t si
ze (
£b
n)
Grocery retail market size (£bn) and YOY % growth 2016 - 2021
Current (pre-Brexit) forecast anticipates modest growth
Source: IGD Research, Grocery Retail forecast 2016 - 2021
© IGD 2016
Grocery retail market size and growth contributors 2016 - 2021
Population growth has the most significant impact
Source: IGD Research, Grocery Retail forecast 2016 - 2021
£179.1
£196.9 £2.3
£7.3
£8.1
170
175
180
185
190
195
200
2016 Inflation Volume 2021
Gro
cery
ret
ail m
arke
t si
ze (
£b
n)
© IGD 2016
Online and convenience will account for 60% of market growth
£ +0.2%
£0
+0.8%
£0.7bn
+39.5%
£7.1bn
+11.7%
£4.4bn
+68.3%
£7.2bn
Hypermarket Supermarkets Discount Convenience Online
Source: IGD Research, Grocery Retail forecast 2016 - 2021
© IGD 2016
Large stores will continue to attract the majority of transactions
9.2%
48.4%
21.0%
10.0% 5.8% 5.6%
8.4%
44.3%
21.3%
12.7% 9.0%
4.3%
0%
10%
20%
30%
40%
50%
60%
Hypermarkets Supermarkets Convenience Discount Online Other
Gro
cery
ret
ail m
arke
t sh
are
(%)
£ Source: IGD Research, Grocery Retail forecast 2016 - 2021
Grocery retail market share 2016 vs. 2021
© IGD 2016
We continue to shop little and often, more frequently
Source: IGD ShopperVista, February 2016
46%
46% are top-up shopping more frequently
London: 56% 18-34: 55%
Families with children aged 5-10: 52%
41% buy more items per
trip
© IGD 2016
Economic overview
IGD grocery forecast: Why convenience and online are important
The convenience channel
The online channel
© IGD 2016
Independent and symbol retailers need further support
11.9% 12.1% 13.2%
16.5% 22.4%
25.1%
36.1%
37.9%
36.2% 21.8%
16.9%
15.3%
13.7%
10.7%
10.3%
0
10
20
30
40
50
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
UK
co
nve
nie
nce
sal
es (
£b
n)
Co-Ops Multiples Symbols Independents Forecourts
Organised chains will grow fastest as the channel matures
30bn
37.5bn
41.9bn
+2.2% CAGR
+4.6% CAGR
Source: IGD Research, Grocery Retail forecast 2016 - 2021
© IGD 2016
The convenience channel is not without competition
© IGD 2016
Convenience stores must become more competitive
Source- IGD ShopperVista, Base: All grocery shoppers, March’16
© IGD 2016
CONVENIEN CE T
© IGD 2016
Convenience retailers are not winning in key missions
Source- IGD ShopperVista, Base: All grocery shoppers, March’16
TOP
RET
AIL
ERS
USE
D
MIS
SIO
N
Staple top-up Fresh top-up Evening meal
© IGD 2016
Fresh fish is a key category within the ‘evening meal’ mission
63%
13%
top-up shopping in convenience stores purchasing fresh fish in convenience stores
…and yet only a minority of us are purchasing fresh fish within convenience stores
Source- IGD ShopperVista 2016 convenience penetration data, Category Benchmarks 2015
© IGD 2016
We need to take shopper preferences into account
50% enjoy shopping fish
48% like to browse
51% want increased choice
21% find it confusing
Fresh fish purchase drivers vs. fresh average
36%
34%
25%
24%
23%
21%
Health
Price
Familiarity
Quality
Sell by
Origin
28%
44%
29%
28%
24%
11%
Fresh fish shopper feedback vs. fresh average
35%
31%
11%
32%
Source- IGD ShopperVista, Category Benchmarks 2015
© IGD 2016
Mission-based formats – Sainsbury’s UK
Source- IGD Research
Sainsbury’s Holborn Circus
© IGD 2016
Mission-based formats – The Co-operative
Gen 2 format caters to
short-term meal solutions and top-up shopping missions Credited with an average sales
uplift of +6%
Source- IGD Research
The Co-operative, Whitstable
© IGD 2016
Better catering to specific meal solutions – Demark/Netherlands
Source- IGD Research
MAD Cooperativet, Denmark Bilder & De Clerq, Netherlands
© IGD 2016
Bringing fresh fish and meat to life – Spar UK
Source- IGD Research
SPAR Parkfoot Petrol Forecourt, UK
© IGD 2016
Economic overview
IGD grocery forecast: Why convenience and online are important
The convenience channel
The online channel
© IGD 2016
Online channel size (£bn) and YOY % growth 2016 - 2021
Online will be the fastest growing channel in the UK
Source: IGD Research, Grocery Retail forecast 2016 - 2021
5.4 6.4
7.3 8.4
9.3 10.5
11.8 13.1
14.6 16.2
17.6 16.6%
17.7%
14.2% 15.6%
10.7%
12.5%
12.4% 11.5% 11.6% 11.0%
8.6%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
0
2
4
6
8
10
12
14
16
18
20
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
YOY
Gro
wth
(%
)
On
line
chan
nel
siz
e (£
bn
)
© IGD 2016
Established players dominate, but disruptors are innovating
48.1%
15.1%
13.1%
11.7%
3.5%
1.4%
7.0%
Source: IGD Datacentre research
Sales are ex VAT for 2015 financial year. Others includes Amazon, M&S, Iceland, meal kit providers, online food/drink specialists etc.
© IGD 2016
Development focuses on loyalty, convenience and experience
Convenience Loyalty Experience
Source- IGD Research
© IGD 2016
Prioritising search and navigation aids fulfilment and convenience
80%
59%
43%
20%
11%
19%
It’s easier or more convenient
It’s quicker
It helps me save money
It’s more enjoyable
It’s better for the environment
Other
38%
20%
18%
13%
4%
2%
Favourites/previous orders
Search function
Special offers
Category Menus
Express shopping list
Recipes/meal suggestions
Reasons for shopping online First approach when online grocery shopping
IGD ShopperVista Channel Focus, past month online shoppers Nov – Jan’16
© IGD 2016
But we’re frequently left to do a lot of the figuring out
Source- IGD Research
© IGD 2016
And it doesn’t always go to plan
© IGD 2016
Work still to be done to bring high engagement categories to life
Source- IGD Research
SuperValu, Ireland
© IGD 2016
But progress is being made
Source- IGD Research
SuperValu, Ireland
© IGD 2016
We need to treat online as a shop window
Source- IGD Tesco online event 2016
© IGD 2016
Disruptors raise the bar & create new consumption opportunities
Source- IGD Research
© IGD 2016
Disruptors raise the bar & create new consumption opportunities
Source- IGD Research
© IGD 2016
Focussing on the mission
Winning the fresh top-up shop
Digital engagement
Industry leading food-to-go
Innovate!
Closing thoughts
© IGD 2016
• Convenience and online are strong growth opportunities
• Convenience must become more convenient
• Online must move beyond functionality
• Take opportunities to engage around fresh
fish
• Look out for new opportunities from technology disruptors
Source- IGD Research
Chris Kirkland, Senior Business Analyst, IGD
[email protected], +44 1923 857141
