SHELF LIFE: THE IRREPRESSIBLE GROWTH OF SUPERMARKETS
Our second edition focuses on UK supermarkets, a now ubiquitous retail force and one of the most dynamic areas of growth in UK retail. While supermarkets attract controversy because of their power and size, an ever growing number of shoppers are using them because they cater so well to modern consumers’ requirements. However they are facing a new stage of growth evolution, set against a backdrop of market maturity, food price inflation and recession, and this not only applies to UK supermarkets but also those on the Continent.
MORE THAN THEIR FAIR SHARE?
We have seen how supermarkets use online channels to muscle in on non-food sectors and as they move into bigger premises they have invested in higher-margin product categories such as clothing & footwear and homeware in-store as well. Asda, with its George clothing brand has become one of the market leaders in clothing with 4.3% of the market. In childrenswear, George and Tesco rank second and third in the sector with 16.7% combined market share. Meanwhile, Tesco has exploited the opportunities in non-food over the last decade and Sainsbury is catching up fast, while Waitrose is using its connection with John Lewis to enhance its offer.
FORMAT FRAGMENTATION AND BRAND CONVERGENCE IN UK AND EUROPE
UK supermarkets have developed from small format town-centre stores to large out-of-town superstores on retail parks but now, as they reach maturity, the model is fragmenting again into a range of store sizes and locations. In the UK, Tesco continues to be the most advanced in format development with its Extra, Express and Metro stores as well as its general supermarkets and Home Plus stores. Sainsbury’s is close behind with its Local and Central formats. Meanwhile others are at the beginnings of the growth / format trend.
SUPERMARKETS: PROTECTING THEIR POSITION
At a time when price is important to all consumers, how do supermarkets use their brand to win new business? Tesco’s extensive store estate has meant that it is often the nearest. Now, £3.00 out of every £4.00 we spend on food is going to one of the top five supermarkets. As these players have extended their locations and formats, shoppers are more likely to have a choice of all of the top five supermarkets near them. Convenience thus becomes less of a defining factor and the decision of where to shop is more brand related with values and reputation coming strongly into play.
RETAIL '09 - THE STORY SO FAR
Having a distinctive brand is a common feature of those retailers who will be able to trade through the recession successfully. Counter Culture looks at who’s on the up, who has gone down and who is static in the retail sector as well as why and how their strategies are affecting their business. Among the movers Next, Kurt Geiger and River Island are on ascendancy, making the most of the current climate, meanwhile Superdrug, Signet and JJB are losing out.
THE FUTURE OF SHOPPING?
In the race to win larger shares of the market and reduce operating costs, supermarkets are at the forefront of developments in the retail sector and the drive to attract and retain customers. The sector is already researching technology, which could change our shopping habits forever – we look further at what the future could bring from new technologies speeding up automation and improving customer service in retail purchasing, to improvements in sustainability store-wide.
RETAIL '09 - THE STORY SO FAR
With such a high share of consumer spending, all supermarkets will have higher public profiles and will have to manage public perception very carefully. Our next issue will focus on how retailers are tackling this. In the meantime, the following piece by Dan Rees, Director at the Ethical Trading Initiative, provides food for thought. Reports of the death of ethical trade have been greatly exaggerated. Only last year, many predicted that recession-hit companies would slash spending on ‘unnecessary add-ons’ like ethical trade, and that shoppers would ditch their ethical sensibilities in pursuit of a bargain. However, this proves not to be the case…
