© IGD 2014

graham.mclean@igd.com +44(0)7809 583453

© IGD 2014

IGD’s Four for ’14 are still those to plan for

The hunt

for value

Evolving

channel mix

Inspiration,

new and loyalty

Trust and

transparency

© IGD 2014

More shoppers feel the worst is behind them...

Source: IGD ShopperVista, January 2014

% of shoppers who say they will...

0%

5%

10%

15%

20%

25%

DEC'12 MAR'13 JUN'13 SEP'13 DEC'13

Focus on quality in

next year

Be better off in the

next year

Christmas’13

Christmas’12

© IGD 2014

Source: IGD ShopperVista, base: all main shoppers, Jan’14

...with January confidence at its highest level to date

17

24 22

28

24

30

26

31 31 33

21

32

27 30

25

37

31

38 40

38 36

40 43

37

47 48

0%

10%

20%

30%

40%

50%

60%

0

20

40

60

Confidence index Grocery price increase expectation index

© IGD 2014

Recovery won’t be evenly spread

Base: All main shoppers Oct-Dec’13

© IGD 2014

Recovery won’t be evenly spread

Discounter fanatics – visited a food discounter in the last month

Total: 47%

North West: 57%

Scotland: 54%

(London 37%)

Provenance promoters – willingness to pay extra for country of origin

Total: 20%

Scotland: 37%

(South West: 13%)

Organic endorsers – purchased organic food in the last month

Total: 21%

London: 33%

(Wales: 15%)

Online enthusiasts – purchased groceries online in the last month

Total: 24%

South East: 29%

London: 29%

(North East: 17%)

Regional shopper behaviour

Base: All main shoppers Oct-Dec’13

© IGD 2014

London will be the focus of much attention

Images: Thinkstockphotos, January 2014

Higher-than-average wealth

Vibrant, diverse food culture Opportunity to “showcase” capability

Large, fast-growing population

© IGD 2014 IGD ShopperVista December 2013

It’s all relative, though...more expect to be worse off overall

46% 51% 49% 46% 45% 42% 40% 40% 43%

38% 38% 41% 39%

42% 34% 39% 36% 42%

42% 44% 45% 42% 46% 46%

44% 43%

12% 15% 12% 17% 14% 16% 16% 15% 15% 15% 16% 15% 18%

Dec'12 Jan'13 Feb'13 Mar'13 Apr'13 May'13 Jun'13 Jul'13 Aug'13 Sep'13 Oct'13 Nov'13 Dec'13

Better off

About the same

Worse off

Personal financial expectations for the next 12 months

© IGD 2014

Cost of living concerns still persist

Base: all main shoppers, all shoppers expecting to be worse off Jan’14

I will be worse off...

Food prices (81%)

Utility bills

(80%)

Fuel prices (56%)

Wages 46%

Taxes & benefits

(31%)

Job security (17%)

© IGD 2014

Savvy shopping is cemented as the new norm...

Base: all main shoppers, all shoppers expecting to be worse off Jan’14

Jan'13 Jan'14

Main priorities for food and grocery shopping in 2014

64% 68%

47% 48%

47% 46%

28% 26% 23% 21% 19%

© IGD 2014

...but it continues to evolve

Base: all British grocery shoppers, Jan’13

© IGD 2014

The search for the best deals drives multichannel

Online promotional cherry pickers

2010 6%

2013 30%

Base: all main grocery shoppers, Oct’13

© IGD 2014

Multi-store missions move mainstream

visited 2+ grocery stores on the same trip in March

42% “I now shop at [discounter] and then go across the road for the rest at [supermarket]”

“I go to three stores in one big round trip, so as not to spend any more on petrol”

© IGD 2014

Majority use 1+ stores for their main shop

Base: all main grocery shoppers, October’13

% using same or different supermarkets for main shop

Always loyal

Sometimes switch

Often switch

Motivations for switching

Promotional disappointment

Price comparison

Retailer proliferation

Discounter improvement

© IGD 2014

Food discounters are moving mainstream...

Base: all British grocery shoppers, Jan’14

JAN'11 JAN'12 JAN'13 JAN'14

USED IN

THE

PAST

MONTH

MY

MAIN

STORE

39% 41%

46%

51%

5% 5%

9% 12%

Food discounters

© IGD 2014

“It’s won awards and lost a bit of

stigma”

...as shoppers continue to discover the benefits

“It’s quicker to get round and the checkout’s a

lot quicker”

“They have things that are a bit different”

“They’ve decided which one offers the best value”

Source: IGD ShopperVista

© IGD 2014

Growing levels of connectivity

Base: all main grocery shoppers, Oct’13

© IGD 2014

Growing levels of connectivity among shoppers

47%

15%

60%

35%

2012 2013

% of shoppers who own a smartphone or tablet device

Base: all main grocery shoppers, Oct’13

© IGD 2014

The benefits of technology are already apparent

% of shoppers who say technology (mobile, tablet & computer) helps them with each of the following for their food and grocery shopping

Saving time 74%

Saving money 69%

Product sourcing 63%

Following a healthier diet 49%

Source: IGD ShopperVista, Oct’ 2013

© IGD 2014

..but most engagement is in the pre-shop phase

30

47 % say they are using the internet to search for recipes for meal inspiration

% say they are using the internet to search for the best deals and then shopping from a variety of stores

40 % say they are checking their loyalty points online or on a mobile app

% say they are watching food channels online

Established shopper engagement using technology

23

© IGD 2014

21

Focusing on promotions could grow engagement

56% I’m in

different parts of the store

54% I enter a

competitors store

56% I’m near another

store that has better offers

(if I redeem the offer quickly)

53% When I’m

nearby to a good offer

% who would like to be notified of special offers on my mobile phone when...

Base: all main grocery shoppers, Oct’13

© IGD 2014

95%

18% 14%

95%

20% 16%

91%

25% 18%

Jun'13 Oct'13 Jan'14

More shoppers trial click & collect services Used in the last month

Home delivery

Click & collect

Used both

© IGD 2014 IGD ShopperVista Channel Focus, past month online shoppers Nov-Jan 2014

19% 16%

63%

39%

20% 18%

63%

38%

20% 22%

64%

34%

Jun'13 Oct'13 Jan'14

And more shoppers are using tablets for their shop Used in the last month

© IGD 2014

Disappointment with promotions

30%

40%

50%

Dec'10 Feb'11 Apr'11 Jun'11 Aug'11 Oct'11 Dec'11 Feb'12 Apr'12 Jun'12 Aug'12 Oct'12 Dec'12 Feb'13 Apr'13 Jun'13 Aug'13 Oct'13 Dec'13

Type of promotions available Level of savings provided Promotions in stock Types of promoted products

Period of decreased satisfaction

with promotions

% who are extremely or very satisfied

Base: All main shoppers Dec’13

© IGD 2014

Brand challenge – waning influence of a name

Base: all British grocery shoppers, indexed to 2006/2005

0

25

50

75

100

125

2006 2007 2008 2009 2010 2011 2012 2013

Brand name as a driver of product choice

© IGD 2014

...as price and quality perceptions of PL improve

Base: those who’ve bought more standard private label in the last six months, May’13

Reasons for buying more standard private label

67%

63%

60%

50%

42%

Tighter budgets

Price inflation

Forensic shopping

Quality improvements

Range expansion

© IGD 2014

© IGD 2014

...as they move towards becoming exclusive brands

1 Base: those who have bought more private label in the past six months, others based on: all British grocery shoppers, May’13

identify the improved ‘branding’ of private label products as a reason for

buying more1

believe private label is made by different

companies to brands

do not associate supermarket discount or

venture brands as a private label option

© IGD 2014

A year on from ‘horsegate’

Source: IGD ShopperVista, December 2013

30%

40%

50%

60%

70%

80%

90%

100%

NOV'12 MAR'13 JUN'13 SEP'13 DEC'13

...OF REASONABLE

QUALITY

...THAT ARE SAFE TO

EAT, DRINK OR USE

...THAT DO WHAT

THEY'RE MEANT TO

© IGD 2014

I trust British grocery companies to...

11% 6%

15% 16%

11% 13%

24 34

23 21

10 6

2009 2013

Do the right thing at all times

Do the right thing almost

always - mistakes happen

Do the right thing as it's

usually in their own interests

Follow the law, but not do

the right things voluntarily

Follow the law, but exploit

loop holes

I don't trust them at all

Base: all main grocery shoppers, April 2009 and July 2013

© IGD 2014

Desired transparency

Base: all main grocery shoppers, July’13

Knowledge of how grocery products are made

2011 2013

Know a lot/a little

Would like to know a lot/a little

34%

19%

56%

12%

© IGD 2014

Desired transparency

Base: all main grocery shoppers, July’13

... % who can imagine restricting to fully traceable items

% who would boycott products that have not met high ethical standards

2010 2013

60%

73%

2010 2013

60% 75%

© IGD 2013

The value agenda still strong

Base: all main grocery shoppers, Sep’13

Most important driver of product choice

15%

37%

19%

41%

SEP'12 SEP'13

Quality Price

© IGD 2013

The value agenda still strong

Base: all main grocery shoppers, Sep’13

17%

39%

26%

46% Sep'12 Sep'13

Quality assurance

standards

Locally produced

items

Willingness to pay extra for....

40%

60%

80%

SEP'10 SEP'11 SEP'12 SEP'13

Standard

Value

% purchased private label in the last month

© IGD 2014

0%

10%

20%

30%

40%

50%

60%

70%

5-A-Day Low fat Low salt Free from

preservatives

Functional

foods

Added Omega

3

Healthy eating vulnerability is emerging

20

11

64% 60%

56%

45% 43%

36%

41%

36% 33%

20

12

20

13

35% 34%

28% 35% 34%

28% 35%

34% 28%

Base: All main shoppers Oct -Dec’13

© IGD 2014

Affordability is a growing concern for shoppers Top ten barriers to eating a healthy diet compared to 2008

Younger families

1 Health foods are too expensive

2 Conflicting messages about what’s healthy

3 Healthy foods are not on promotion

4 I like to comfort eat

5 Promotions encourage me to buy ‘unhealthy’ foods

Base: all British grocery shoppers, May’13,

© IGD 2014

29%

20% 20%

42%

19%

57%

26% 23% 23% 22%

2008 2013

Affordable healthy options are a priority today

Source: IGD ShopperVista, base: main shoppers, Feb’13

Cheaper

products

More choice in

supermarkets

Healthier snack

foods

Clearer

labelling

Healthier fast

foods

What would make it easier for you to choose a healthier diet?

© IGD 2014

Shoppers feel empowered to influence sustainability

Base: all main shoppers, Aug'13, 7% none of these

© IGD 2014

..but responsibility falls to industry

Base: all main shoppers, Aug'13

% agree

Expect food and grocery companies to constantly

check that suppliers provide healthy products

and act responsibly

believe food and grocery companies should just

get on with doing the right thing for their health

Want to be inspired by food and grocery products that are healthy and that impact the environment

positively

© IGD 2014

IGD’s Four for ’14 are still those to plan for

The hunt

for value

Evolving

channel mix

Inspiration,

new and loyalty

Trust and

transparency