1. shopping
2. retail

Nielsen
Market Overview
David Glennon
Forest of Arden Hotel 2010

Overview of Market performance 2009

How is the Convenience and Impulse sector
performing?

Market is responding to post recessionary shopper

Impact on sustainability and ethical issues

Outlook for 2010 and beyond
What
Who
Is being bought
Is buying it where
Nielsen Scantrack
Nielsen Homescan
EPOS sales transactions
across 15,000 food and drink
stores
14,500 GB households
Consumer Panel Grocery
purchase transactions
Nielsen On Line
Why
Are they buying it
Nielsen Customised Research
Online panels for tracking
visits to e commerce sites
and collection of CGM
Attitudes & behaviour
of consumers /shoppers
Understanding of food retailing from Nielsen
External forces impacted the UK shopper in 2009
Recession
FALLING
DEMAND
•
•
•
•
House price deflation
Much tighter credit
Rising unemployment
Wage freezes so less spending power
Shoppers have remained cautious
INCREASED
COSTS
Global
Outlook
•
•
•
•
Food prices
Fuel & travel costs
Cost of credit
Weakening currency
UK food retail has weathered the recession storm....
6.7%
5.5%
0.2%
5.3%
2.0%
5.0%
1.8%
4.4%
4.4%
0.3%
2.8%
4.8%
3.4%
Volume change
Unit value change
Nominal growth
5.3%
3.3%
4.7%
5.1%
-0.7%
4.9%
1.6%
1.4%
2008
2009
Q4'08
Q1'09
Q2'09
Q3'09
Q4'09
Source: Nielsen Growth Reporter (Grocery Multiples)
In a continuous search for value shoppers
shopped differently
Inflation : the coping strategies
1.
Shopping
less often
2.
Reduce
Basket size
3.
Switch
Channels
Recession : different strategies
1.
shopping
MORE often
2.
Switch
Channels
3.
Different
Pack Sizes
Last year the convenience sector outperformed out of
town stores
Total All Food Retailers
£130b
+4.0%
Out of Town
£68b
High Street
£33b
Convenience
£28b
+4.2%
+2.3%
+5.6%
>25,000 sq ft
3,000 -25,000 sq ft
<3,000 sq ft
Large Stores
£20b
Small Stores
£13b
+2.7%
+1.6%
10,000 -25,000 sq ft
3,000 -10,000 sq ft
Source: Nielsen Scantrack
Growths :52 weeks to 20th March 2010
Channel sizes : £ per annum
Out of Town store growth slowed as inflation slowed
Total All Food Retailers
£130b
+2.4%
Out of Town
£68b
High Street
£33b
Convenience
£28b
+2.3%
+2.1%
+2.9%
>25,000 sq ft
3,000 -25,000 sq ft
<3,000 sq ft
Large Stores
£20b
Small Stores
£13b
+2.4%
+1.7%
10,000 -25,000 sq ft
3,000 -10,000 sq ft
Source: Nielsen Scantrack
Growths :12 weeks to 20th March 2010
Channel sizes : £ per annum
Against low year ago comparatives, most categories are now showing
positive unit growths.
Year on Year Growths in Value and Unit Sales, y/e 20th March 2010
Delicatessen
Meat, Fish & Poultry
4%
General Merchandise
3%
BWS
4%
6%
3%
2%
Health & Beauty
1%
Frozen
Produce
2%
Total GB
2%
Crisps & Snacks
2%
2%
2%
2%
Soft Drinks
4%
4%
5%
1%
Tobacco
5%
1%
Packaged Grocery
5%
1%
Dairy
1%
Household & Petcare
0%
0%
Bakery
Confectionery
6%
5%
5%
-1%
1%
4%
Value
0%
8%
Units
Source: Nielsen Scantrack Total Store Read Total GB
Total Convenience Market is worth £28bn
(+5.6% vs +0.5% prior year).
£m
+5.3%Tobacco
8,225
Alcohol
+1%
4,415
+9.4 General Merchandise
3,957
+4.7% Confectionery
2,404
+4.6 Soft Drinks
+6.7
1,869
Chilled
2,876
+8.1 Packaged Grocery
1,278
+5.4 Bakery
+15.5
936
Meat Fish Poultry
580
+11.8
605
Produce
+5.4 Household & Pet
+6.0
Frozen
726
473
up
Source: Nielsen Scantrack –
Convenience Stores Total Store Read
52 w/e 20.03.2010 v year ago
Slowing ambient food inflation and a cautious consumer is impacting
growths in packaged grocery which is now seeing negative value growths
for the first time ... in over 2 years
Packaged Grocery 4 Weekly Growths
14.0%
2008
2009
Units
Value
2010
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
22
-M
ar
19 -08
-A
p
17 r-0
-M 8
ay
14 -0
-J 8
un
12 -08
-J
u
09 l -08
-A
u
06 g -0
-S 8
ep
04 -08
-O
c
01 t-0
-N 8
o
29 v-0
-N 8
ov
27 -0
-D 8
ec
24 -0
-J 8
an
21 -09
-F
eb
21 -0
-M 9
ar
18 -09
-A
p
16 r-0
-M 9
ay
13 -0
-J 9
un
11 -09
-J
u
08 l -0
-A 9
u
05 g -0
-S 9
ep
03 -09
-O
c
31 t-09
-O
ct
28 -09
-N
ov
26 -0
-D 9
ec
23 -0
-J 9
an
20 -10
-F
eb
20 -1
-M 0
ar
-1
0
-6.0%
*BRC-Nielsen SPI Feb10 Ambient Food Inflation +3.6% vs 7.1% Feb09
Source: Nielsen Scantrack Grocery Multiples
Fresh categories continue to fuel growth in Convenience stores whilst their
core categories BWS, GM and Tobacco are finding it tougher.
Year on Year Growths in Value and Unit Sales, 12w/e 20th March 2010
17%
18%
Meat, Fish & Poultry
12%
Produce
10%
Delicatessen
8%
Frozen
5%
Bakery
Packaged Grocery
Soft Drinks
4%
Dairy
3%
Tobacco
1%
Household & Petcare
3%
5%
4%
-3%
-3%
-4%
Health & Beauty
BWS
-5%
-9%
-7%
7%
8%
4%
-3%
Confectionery
12%
6%
0%
Crisps & Snacks
13%
5%
1%
Total Store Read
General Merchandise
6%
6%
18%
Value
-1%
Units
Source: Nielsen Scantrack Total Store Read Convenience
Promotional spend increased during 2009 and was a factor in
driving footfall during the recession
this trend looks set to continue in 2010
2007
2008
2009
30%
04
/1
1
30 /200
/1
2/ 6
24 200
/0
2/ 6
21 200
/0
4/ 7
16 20
/0 07
6
11 /200
/0
8/ 7
06 200
/1
0/ 7
01 200
/1
2/ 7
26 20
/0 07
1
22 /200
/0
3/ 8
17 200
/0
5/ 8
12 200
/0
7/ 8
06 20
/0 08
9
01 /200
/1
1/ 8
27 200
/1
2/ 8
21 20
/0 08
2
18 /200
/0
4/ 9
13 200
/0
6/ 9
08 200
/0
8/ 9
03 20
/1 09
0
28 /200
/1
1/ 9
23 200
/0
1/ 9
20 201
/0
3/ 0
20
10
28%
26%
37%
36%
35%
34%
33%
32%
31%
30%
29%
28%
27%
26%
25%
Annual Average
35%
% on Offer
Source: Homescan Grocery Multiples
% Exp On Offer: Total FMCG
4 weeks ending periods to 20th March 2010
/
The Shopper Agenda now includes
• Shopping at new retailers
• Buying more on promotion
• Spending relatively less on Own Label
• Questioning “ethical” values and relevance
A change in shopping behaviour
…and different to Europe and USA
We are buying
different packs
Smaller baskets (<5 items)
are 50% of all visits (+6%) and 15% of
spend(+10%)
With more visits to
buy less items
And shopping
more frequently
Source: Nielsen Homescan – Total FMCG (excl Gen Merchandise and Tobacco)
52 w/e 26th December 2009 vs 2008
How shoppers attitudes towards spending changed
during the recession
Managed
absolute spend
Used
Value Retailers
Making-do
Good is Good
Enough
As food inflation slowed, retailers encouraged shoppers to
buy more through Multibuys
Multibuy
53%
Price Reduction
Food Inflation High Point
51%
49%
47%
Share of Spend On Offer
annual average
45%
43%
41%
9
ec
-0
26
-D
No
v09
28
-
-0
9
31
-
O
ct
-0
9
O
ct
03
-
Se
p09
05
-
Au
g09
9
Ju
l-0
11
-
08
-
9
Ju
n0
13
-
M
ay
-
09
9
16
-
Ap
r-0
18
-
21
-
M
ar
-
09
9
Fe
b0
21
-
24
-
Ja
n0
9
39%
Source: Nielsen Homescan – Total FMCG
4 week ending periods to 26th December 2009
/
Shoppers have been sticking with brands
helped by the increased promotional support
“As a result of the economic climate, I have changed the way I shop.
.. I buy more own label products”
Feb-09
Oct-09
64%
58%
% Respondents that AGREE
Source: Nielsen Homescan Survey
Shoppers still plan to make savings
“…which of the following actions would you take in order to stay
within your budget: ? ”
Try to save on gas and electricity
40%
Cut down on take-away meals
23%
Switch to cheaper grocery brands
23%
21%
Spend less on new clothes
Look for better deals on home loans,
insurance, credit cards
Cut down on out-of-home entertainment
Use my car less often
Delay the replacement of major
household items
Delay upgrading technology, eg. PC,
Mobile, etc
Cut down on holidays / short breaks
Cut out annual vacation
20%
17%
16%
10%
10%
8%
6%
Post
Recessi
on
Source: Nielsen – Global Online Survey December 2009
Consumer Confidence – GB results
Although the proportion of shoppers who prefer to buy products that are
ethically produced or kinder to the environment has not changed – the
number who believe it is worth paying extra for these products has not
improved since January 2009 giving further credence that some
shoppers are being forced to compromise their ethical and
environmental credentials
“I try to buy products that are
ethically produced or kinder to the
environment”
“It is worth paying extra for products
that are ethically produced or kinder
to the environment”
% respondents who AGREE
44%
43%
42%
43%
October 2006
October 2007
January 2009
January 2010
36%
37%
October 2006
October 2007
28%
28%
January 2009
January 2010
Source: Nielsen Homescan Survey (GB)
January 2010, January 2009, October 2007 and October 2006
Climate change and packaging waste continue to be the most important
environmental issues for consumers. With increased global focus on
our planet, this trend looks set to continue
“Which of these environment and related issues concerns you the most?”
33%
Climate change
34%
28%
30%
Packaging waste
29%
28%
15%
Pollution
15%
15%
7%
Pesticides
Sustainable farming
Fuel emissions
I am not worried about the environment
Food miles
7%
8%
5%
5%
7%
4%
4%
4%
3%
4%
6%
3%
3%
4%
Jul-07
Jul-08
Jan-10
%
Respondent
s
Source: Nielsen Homescan Survey (GB)
January 2010, July 2008 vs July 2007
For 1 in 4 shoppers “local” really does mean “local”, mileage is
important, and an increasing proportion of shoppers are looking to
support their local county
“I consider a product to be local when/ it has been grown or made by
a business situated ....”
% respondents
37%
Up to 10 m iles from w here I bought it from
26%
15%
11 to 20 m iles from w here I bought it from
21 to 30 m iles from w here I bought it from
31 to 40 m iles from w here I bought it from
16%
7%
9%
5%
4%
19%
Within the County w here I live e.g.
Yorkshire, Ham pshire
In the sam e Country that I Live (England,
Wales, Scotland, Ireland)
In the UK
It says ‘Local’ on the packet
Jul-08
Jan-10
23%
6%
9%
4%
5%
6%
8%
Source: Nielsen Homescan Survey (GB)
January 2010 vs July 2008
2/3 of shoppers desire to help local farmers and local business
with shoppers looking for evidence of provenance
“I try and buy local products because...”
% respondents
64%
66%
I like to support local farmers and
companies
54%
46%
51%
49%
I think it is important that food is not
transported too far
37%
32%
The supermarkets are too powerful
and I want to support small
businesses
32%
33%
Jul-08
Jan-10
26%
33%
24%
21%
It is cheaper than organic food
11%
13%
Source: Nielsen Homescan Survey (GB)
January 2010 vs July 2008
How we shopped in the last 3 months ….
1. Sales growths for Total GB food and drink slowed to +2.4% .
2. Unit growths have increased in the last 4 weeks due to
promotional activity.
3. Out of Town growths have slowed as food inflation continues
to slow.
4. Fuel prices are rising again which attracted additional Out of
Town spend over Easter * and we expect also for the Bank
Holidays.
5. Growths in the wider Convenience channel have now
stabilised after a strong end to 2009 and remain at +2.9%.
The Economic Outlook
2010 will be different to 2009
• General Election and need for a second budget within 6
months (whoever wins and reaches a deal)
• The subsequent reaction of the currency markets, and then
sterling, and possibly (or inevitably) the cost of imported
food/food stuffs.
• Global Harvests, Oil and Commodity prices – upward
pressures
• The magnitude of household and national debt (and so the
ongoing need to cut).
• Uncertainty of the consumer and investor sentiment for
when interest rates start to rise again (probably in the
second half of the year).
Source : Shore Capital , January 2010
The Retailer Outlook
2010 will be a lower growth environment than
2009
• Low to moderate food inflation (3%) which indicates more
stability.
• Promotions may fall back as brand owners discretionary
budgets are used to absorb cost price increases with
retailers using more Own Label promotions to compensate
• Own Label (and including Premium OL) growths could
accelerate as retailers focus on reclaiming that point of
difference in the ever more promotionally led and disloyal
market.
The Shopper Outlook
Promiscuous shoppers and a battle for loyalty
• More visits to more stores will continue to benefit
convenience sector
• Less frequency but with bigger baskets at out of town
stores.
• Discounters `keep` shoppers who had started to use their
stores during the recession, adding a Discounter to their
repertoire of food shops regularly used.
• Loyalty schemes, Coupons, Extra Reward Points and
Vouchers will be used more and by more retailers.
• Fuel savings (e.g. 5p a litre after spending £50 on food)
could be a tactic used more regularly by the TOP4.
Looking ahead for the next 12 months
• First quarter of 2010 has been be tough and slowing inflation
hasn’t helped
• Q2 will be another difficult quarter – versus inflationary
growths in 2009 and a slow economic recovery.
• Q3/Q4 ...shoppers start to feel the impact falling disposable
income (rising fuel bills, some inflation, increased taxes).
• Ethical and Health may return to the shopper agenda however
affordable luxuries and convenience/snacking are already in
the mindset of shopper.
• Continue to plan for a lower growth environment in 2010 as
the Post - Recession shopper remains cautious, savvy and is
still looking to make savings.
Thank You
david.glennon@nielsen.com