The changing landscape of grocery retail
The UK retail landscape has changed considerably over the last decade.
The days of shoppers doing a weekly ‘big shop’ at single retailers and a regular location are gone. The emergence of online grocery shopping, new convenience store formats and hard discounter growth is changing the way consumers buy their groceries and therefore meat.
Hard discounters began to see growth after the 2008 banking crisis and subsequent recession. Initially attracted by low prices and good value, customers are increasingly satisfied by the quality and freshness offered by this channel (IGD in March 2017).
Protein sales, in particular red meat, are crucial to continued growth for the hard discounters. Both Aldi and Lidl back British farming and the Red Tractor Mark, making the most of this in their advertising. Many meat, fish and poultry products are priced very competitively compared to the rest of the market. In the year to June 2017, beef steak in this channel was on average 78p/kg cheaper, compared to the big four supermarkets.
However, looking ahead, the rate of growth is unlikely to be as fast. The major supermarkets are increasingly influenced by the trading model of the hard discounters, who in turn are operating a little more like mainstream grocers. Although, uncertain economic conditions and ambitious store expansion plans should ensure good growth in the medium term.
Albeit from a small base, online shopping is the fastest-growing retail channel, primarily due to its convenience, and it is likely to continue to develop quickly. However, the challenge across food categories, and in particular red meat, has been the consumer desire to see fresh produce before buying. Initiatives like the Quality Guarantee are ways for retailers to encourage more shoppers into the online channel and buy meat, fish and poultry when there.
Convenience stores are also expanding, as shopping for groceries is now done more often on an as-needed basis. A recent survey showed that 21% of all shopping trips were for tonight’s evening. According to Mintel, in 2011 there were 21,000 convenience stores in the UK; by 2015, this number had increased to more than 26,000. The future could even include unmanned and digitally enabled stores.
Looking forward, big-format stores are forecast to continue losing share. When compared to previous forecasts, the decline for bigger stores and expansion of other channels is accelerating. A deeper understanding of the shopper mission and the reasons why the various channels are used will mean retailers and suppliers alike will be better positioned to meet shopper needs, thereby boosting sales.
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Stewart Batchelor, Consumer Insight Analyst
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