The latest quarterly data from Kantar Worldpanel showed that the discounters, Aldi and Lidl in particular, continue to dramatically outperform their larger rivals in a virtually static grocery market, as they have done throughout 2014. At the top end, Waitrose continue to perform strongly despite the difficult market conditions. Since the arrival of the economic downturn five years ago, many factors have conspired to put pressure on the market for food purchased via the traditional supermarket model.
Consumers have become increasingly ‘savvy’ in their passionate quest for ‘value for money’. Many have become more astute in seeking out bargains and have adopted more promiscuous and ‘segmented’ shopping habits, as they are prepared to shop more regularly. Other factors, such as wasting less food and turning to online food shopping in greater numbers, have also added to the pressures on the more traditional and larger retail formats.
A recent IGD (Institute of Grocery Distribution) report ‘The next five years : how the grocery market will evolve’ suggested that there are some discernible longer term trends already in place in the UK grocery market. They forecast that the ‘convenience’ format will increase its share from 21% to 24%, ‘discounters’ will grow from 6% to 11% and ‘online’ sales will double from 4% to 8% - all at the expense of larger retail formats.
Some recent news from some of the big names in the UK retail grocery sector included an announcement by Aldi of a 65% profits increase and plans to create 35,000 new jobs in the years ahead.
Lidl restated its position as a ‘market challenger’ as it sought to mock new marketing initiatives introduced by their competitors, such the Morrisons ‘price match pledge’ and the Sainsburys ‘50p challenge’.
The first new Netto outlet opened its doors for business in Leeds in November to ‘kick off’ the new venture between Sainsbury and the Danish venture, with a strategy based on ‘fresh’ ‘cheap’ and ‘Scandinavian’.
Booths revealed plans to develop a more national presence away from its ‘heartland’ in the North West and the Co-op announced that it was to embark on the conversion of 63 former Marston’s pubs to their own convenience format.
Asda returned the best results among the ‘Big Four’ and Morrisons, Sainsburys and Tesco continued to put a brave face on some disappointing results.