Daily Research News Online no. 1189 - Limited Loyalty Among UK Grocery Shoppers

Limited Loyalty Among UK Grocery Shoppers

October 15 2001

A new report on Food Retailing in the UK from Mintel finds just 15% of shoppers loyal to their main grocery shop.

Latest research from Mintel questioning around 1,000 consumers finds the top three multiples, Tesco, Sainsbury and Asda, now accounting for 59% of main grocery trips, an increase from 48% in 1994. Between 1994-2001, all three multiples have increased their share, but Asda has increased by the most. Safeway and Morrison's maintained their positions as the fourth and fifth-most popular choices for main grocery shopping.

Only 15% of all grocery shoppers are completely loyal to the store where they do their main grocery shop, while 29% use one other store and 22% use two others. Men are more likely than housewives to shop at only their main store or their main store and one other, with this group representing 46% of all men. Housewives are the most likely to visit four or more stores in addition to their main store (24% in total).

The report found that many British consumers have lost faith in produce after the recent food safety issues such as the BSE and foot-and-mouth crisis. Some 25% of the population usually buy organic fruit and vegetables as part of their main grocery shop, making organic food and drink one of the fastest growth areas of the UK food retail market. Organic ranges have expanded considerably in the supermarkets over the last year, and now include products in almost every grocery sector.

Despite the growth in organic produce, consumers highlight lack of organic vegetables and packaged produce as a key area of dissatisfaction among organic food purchasers.

According to Richard Caines, Retail Consultant "With general food sales pretty well static, and fewer opportunities for innovation, organics have provided the multiples with a new field for achieving market leadership, in the development of their own organic brands and unique selling points."

The battle over organics is likely to be even fiercer than in other sectors, given the scarcity of supplies. Around 80% of organic fruit and vegetables eaten in Britain is imported. Demand is likely to increasingly outstrip supply over the next few years, with annual spending on organics predicted to reach £1 billion by the end of 2001.

Food retailing is the largest of all retail sectors in the UK, with sales amounting to £93.2 billion in 2000, representing almost 45% of all retail expenditure. The sector witnessed growth of just 3.3% over 1999. Sales through non-specialised food stores, which include the major grocery multiples, did not fare much better, increasing by 4% to £77.75 billion, compared with annual growth rates during the mid-to-late 1990s of over 6%. However, within this sector, the large businesses (the multiples) witnessed sales growth of 30% between 1995 and 2000 to reach £71.34 billion, while sales of the smaller players grew by just 12% to £6.41 billion. Large businesses now account for a massive 92% of sector sales.

It is interesting to note, however, that the smaller food retail businesses are witnessing something of a revival, and have shown slightly stronger growth during 1999 and 2000 (+7.7%) than their larger rivals (+7.4%). The recovery in sales is almost certainly as a result of growth in convenience store sales, while the independent high street butcher, baker, greengrocer and fishmonger continues to decline.

"These smaller businesses are gradually getting their act together and are repositioning themselves as small neighbourhood convenience stores, with a useful role to play for top-up and distress shopping" added Richard Caines.