UK Non-food in Grocers 2010

Introduction

Verdict Research: Grocers non-food sales have been boosted by a number of factors and particularly the onset of recession and continued aggressive space expansion. We highlight the key trends and drivers which are set to impact the channel going forward as well as providing forecasts for grocers sales in each of the non-food categories which they operate.

Scope

*Market size, sales and growth rates for the main non-food sectors in which the grocers operate.

*The grocers' performance within these non-food sectors including individual growth rates and market share analysis for the Big Four.

*Comprehensive profiles of the Big Four players: Asda, Morrison, Sainsbury, Tesco and analysis of the non-food propositions at smaller grocers.

*Year-on-year category forecasts to 2013 for grocers' non-food sales.

Highlights

The recession has provided a clear fillip to grocers with consumers becoming increasingly frugal and significant capacity falling out the market with high street specialists in particular being affected. The grocers have also benefitted from their robust footfalls, continued space growth and more focus on less-mature non-food categories.

Such impressive non-food value growth will be harder to achieve going forward. Space growth has slowed and non-food offers have now been rolled out to the majority of viable stores. Moreover, many weaker specialists have now exited the market and the remaining players tend to be more resilient, authoritative and less likely to cede market share.

Direct and online non-food propositions will form the basis through which long term non-food growth is driven. These can serve to enhance range credentials and help grocers to respond to changing consumer shopping habits by utilising the advantages that their large physical estates present.

Reasons to Purchase

*The report explains in detail the issues and changing dynamics of the market.

*Establish how non-food in grocers will perform up until 2013 and the opportunities that individual categories present.

*Gain competitive advantage by understanding the strengths and weakness of the Big Four grocery players' non-food offers.


Report Highlights

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TABLE OF CONTENTS
CHAPTER 1 EXECUTIVE SUMMARY 26
Key findings 26
Main conclusions 27
Grocers share of non-food consumer spend has continued to increase 27
The channel attracts robust footfall 27
Specialists fight to remain relevant; 27
Non-food growth will be harder for grocers to achieve 27
Grocers need to compete on range, service and merchandising 28
Space expansion and Direct propositions will drive gains 28
Asda and Tesco’s respective Direct offers will become an increasingly important avenue through which to drive growth 28
But non-food standalones could fill geographical gaps 29
Sainsbury enjoys high growth rate, albeit from a low base 29
Morrison should stick to traditional non-food categories and those that complement its core food offer; 29
Grocers adopt felxible approach to non-food space allocation as they eye long term growth potential 30
CHAPTER 2 KEY ISSUES 31
Robust footfall in recession boosts grocers non-food market share 31
Heightened austerity and robust footfall 31
Demise of specialists 31
Changing out-of-town retail mix 32
Decline of town centres 33
Grocers will have to work harder for non-food growth 34
Growth is already more elusive 34
New arrivals out-of-town 35
Consumer demand changing 36
Restictive legislation 36
Specialists react to the threat posed by grocers 38
Cultivating a niche becomes essential 38
High street retailers diversify to survive 39
Grocers should fight specialists strengths 41
Need to compete with specialists on more than price 41
Strong range architecture can heighten destination status 41
Improving service credentials a priority 42
Merchandising standards gradually improve 42
Standalones offset restrictions and improve retail brand perceptions 43
Direct propositions tackle long term non-food growth 44
Bridging range gap 44
Grocers should seek closer synergies between instore and online 45
Direct will change role of instore non-food space 46
Smaller grocers should consider linking with an online pureplay 46
CHAPTER 3 MARKET ANALYSIS 47
Definitions 47
Summary 48
Non-food market 49
Grocers non-food sales 2000-2010e 52
Grocers non-food space 55
Non-food market forecast to 2013 57
Grocers non-food sales forecast to 2013 58
CHAPTER 4 LEADING COMPANY DATA ANALYSIS 60
Non-food market shares 60
Operating Statistics 63
Space allocation 64
Standalone non-food format space allocation 67
Advertising spend 69
CHAPTER 5 ASDA 71
Thrives in tough conditions 71
Financials 72
Sales growth accelerates during downturn 72
Space 75
Space expansion and rising densities both help growth 75
Sector performance – non-food 77
Space allocation 77
Continues to drive impressive year-on-year uplifts 79
Market share gains continue 80
Outlook 81
Must regain focus if share gains are to continue 81
CHAPTER 6 WM MORRISON 84
Non-food remains down the list of priorities 84
Financials 85
Focus on food expertise helps profits 85
Space 87
Rapid growth after earlier consolidation 87
Sector performance – non-food 89
Space allocation 89
Non-food sales growth stagnates 91
Market share falls back as a result of core food focus 92
Outlook 94
Recovery shaken by departure of chief executive 94
CHAPTER 7 SAINSBURY 96
Success of market repositioning continues 96
Financials 97
Financial recovery contines with like-for-like growth 97
Growth continues through 2009 99
Space 100
Sector performance – non-food 102
Space allocation 102
Steady growth with non-food development 104
Market share gains continue unabated 106
Outlook 108
Abundant opportunities 108
CHAPTER 8 TESCO 110
Market share gains continue unabated as specialists falter 110
Financials 111
Trading performance shows ability to defy recession 111
Space 114
Sustains space growth despite recession 114
Sector performance – non-food 116
Space allocation 116
Non-food sales remain resilient 118
Market share gains continue 119
Outlook 121
Tesco must up its game to offset mounting competitive threats 121
CHAPTER 9 SMALLER COMPANY COMPARISONS 123
Market positions 123
Co-operative Group 123
Waitrose 124
Financials 125
Co-operative Group 125
Waitrose 126
The Co-operative Group 127
Waitrose 128
Sector performance – non-food 129
Co-operative Group 129
Waitrose 131
Non-food sales 133
Space allocation and sales mix 134
Other smaller grocers non-food offers 135
Discounters 135
Ocado 137
Iceland 138
Spar 138
Outlook 139
Smaller grocers should look to create concession and online partnerships 139
CHAPTER 10 SECTOR COMPARISONS 142
Main non-food markets in which grocers participate 142
Grocers non-food components 145
Grocers non-food space allocation by sector 149
Grocers non-food sales forecasts by market component 150
CHAPTER 11 CLOTHING & FOOTWEAR 152
Recession drives first decline since Verdict records began 152
Key players/Channels of distribution 154
Value and premium specialists drive market polarisation 154
Grocers sales 156
Outperform market but hit by decline in discretionary demand 156
Grocers shares 159
Sainsbury the main winner, with non-food focus paying off 159
Leading grocers clothing & footwear product offers 160
Asda 160
Morrison 161
Sainsbury 161
Tesco 162
Price 163
Pricing architecture 163
Range architecture 172
Outlook 178
Grocers forced to focus on attributes other than price 178
CHAPTER 12 ELECTRICALS 180
Electricals feels full impact of recession 180
Key players/Channels of distribution 183
Specialist channel continues to cede share 183
Grocers sales 186
Grocers achieve significant market share gains 186
Grocers shares 190
Electricals becomes an increasingly important category 190
Leading grocers electricals product offers 193
Asda 193
Morrison 194
Sainsbury 195
Tesco 196
Price 197
Pricing architecture 197
Range architecture 207
Outlook 209
market share gains become harder to achieve 209
CHAPTER 13 HEALTH & BEAUTY 212
Sector demonstrates its resilience 212
Key players/Channels of distribution 214
Smaller value specialists struggle in increasingly competitive market 214
Grocers sales 216
Continue to benefit from superior value and convenience credentials 216
Grocers shares 219
Market share gains driven by continued space expansion 219
Leading grocers health & beauty product offers 220
Asda 220
Morrison 221
Sainsbury 222
Tesco 223
Price 224
Pricing architecture 224
Range architecture 232
Outlook 234
Premium ranges and enhanced healthcare services to be major focus 234
CHAPTER 14 HOMEWARES 236
Struggles in wake of recession and a depressed housing market 236
Key players/Channels of distribution 238
Specialist channel weakens further as capacity falls out of the market 238
Grocers sales 240
Sales increases driven by space growth and range development 240
Grocers shares 243
Sainsbury major winner in increasingly mature homewares 243
Leading grocers homewares product offers 244
Asda 244
Morrison 245
Sainsbury 245
Tesco 247
Price 248
Pricing architecture 248
Range architecture 258
Outlook 261
Range architecture widens 261
CHAPTER 15 MUSIC & VIDEO 263
Digital downloading yet to compensate for fall in physical sales 263
Key players/Channels of distribution 266
Specialist channel evaporates as pureplay market share gains continue 266
Grocers sales 268
Music & video increasingly less of a focus 268
Grocers shares 272
Tesco’s digital download proposition an advantage 272
Leading grocers music & video product offers 275
Asda 275
Morrison 276
Sainsbury 277
Tesco 278
Outlook 279
Big Four digital download progress is mixed 279
CHAPTER 16 OTHER NON-FOOD 281
Other non-food – discretionary categories hit harder by recession 281
Grocers sales 283
Grocers march on following 2008 blip 283
Grocers other non-food offers 286
Books, news & stationery 286
Asda 286
Morrison 286
Sainsbury 286
Tesco 286
DIY & gardening 288
Asda 288
Sainsbury 288
Tesco 288
Furniture & floorcoverings 289
Asda 289
Sainsbury 289
Tesco 289
Sports equipment 291
Asda 291
Sainsbury 291
Tesco 291
Toys & games 292
Asda 292
Sainsbury 292
Tesco 292
Outlook 293
Major focus on wider range architectures 293
CHAPTER 17 GLOSSARY 294
Financial Statistics – VAT 294
Trading Profile 294
Physical Development 294
Abbreviations 295
Technical Appendix 296
Clothing & footwear 296
Electricals 296
Health & beauty 296
Homewares 296
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LIST OF TABLES
Table 1: Non-food definitions 2010 47
Table 2: Food & grocery market size vs. non-food market size 2000-2010e 49
Table 3: Spend on non-food at current and constant prices 2000-2010e 51
Table 4: Grocers non-food sales 2000-2010e 53
Table 5: Total consumer spend on non-food 2004-2009 & forecast to 2013e 57
Table 6: Grocers non-food sales 2004-2009 and forecast to 2013e 58
Table 7: Grocers proportion of non-food in grocers sales 2005-2010e 60
Table 8: Grocers non-food market shares 2005-2010e 60
Table 9: Grocers key operating statistics – trading 2008/09 63
Table 10: Grocers key operating statistics – stores 2008/09 63
Table 11: Grocers space allocation 2009 64
Table 12: Grocers space allocation 2009 65
Table 13: Asda Living/Tesco Homeplus space allocation 2009 67
Table 14: Asda Living/Tesco Homeplus space allocation 2009 68
Table 15: Major grocers advertising media spend 2003-2008 69
Table 16: Major grocers advertising spend by media type 2008 69
Table 17: Asda company overview 2010 71
Table 18: Asda key retail operating statistics 2005-2010e 72
Table 19: Asda UK trading record 2000-2010e 73
Table 20: Asda store profile 2000-2010e 75
Table 21: Asda store portfolio at June 2009 75
Table 22: Asda space allocation 2009 77
Table 23: Asda space allocation 2009 78
Table 24: Morrison company overview 2010 84
Table 25: Morrison key retail operating statistics 2005-2010e 85
Table 26: Morrison UK trading record 2000-2010e 86
Table 27: Morrison store profile 2000-2010e 87
Table 28: Morrison store portfolio at January 2009 87
Table 29: Morrison space allocation 2009 89
Table 30: Morrison space allocation 2009 90
Table 31: Sainsbury company overview 2010 96
Table 32: Sainsbury key retail operating statistics 2005-2010e 97
Table 33: Sainsbury UK trading record 2000-2010e 98
Table 34: Sainsbury store profile 2000-2010 100
Table 35: Sainsbury space allocation 2009 102
Table 36: Sainsbury space allocation 2009 103
Table 37: Tesco company overview 2010 110
Table 38: Tesco key retail operating statistics 2005-2010e 111
Table 39: Tesco UK trading record 2000-2010e 112
Table 40: Tesco store profile 2000-2010e 114
Table 41: Tesco store portfolio at February 2009 115
Table 42: Tesco space allocation 2009 116
Table 43: Tesco space allocation 2009 117
Table 44: Smaller grocers overview 2009 123
Table 45: Smaller leading grocers key comparisons 2009 123
Table 46: Smaller leading grocers UK turnover record 2004-2009 125
Table 47: Smaller leading grocers UK op profit and margins 2004-2009 125
Table 48: Smaller leading grocers space analysis 2004 to 2009 127
Table 49: Co-operative Group non-food coverage 2009 129
Table 50: Waitrose non-food coverage 2009 131
Table 51: Non-food sales of smaller players in calendar years 2004-2009 133
Table 52: Smaller leading grocers space allocations and sales mixes 2009 134
Table 53: Non-food sales by main product categories 2000-2010e 142
Table 54: Grocers non-food sales by category 2000, 2005 & 2010e 145
Table 55: Big four non-food space percentage point change 09 on 08 149
Table 56: Grocers non-food sales by main categories 2004-2013e 150
Table 57: Leading grocers clothing & footwear market shares 2005-2010e 159
Table 58: Shares of grocers clothing & footwear sales 2005-2010e 159
Table 59: Comparison of opening price points in selected clothing & footwear categories Asda and Marks & Spencer 2009 vs 2008 163
Table 60: Comparison of opening price points in selected clothing & footwear categories Matalan and Next 2009 vs 2008 164
Table 61: Comparison of opening price points in selected clothing & footwear categories Sainsbury and Tesco 2009 vs 2008 165
Table 62: Comparison of closing price points in selected clothing & footwear categories Asda and Marks & Spencer 2009 vs 2008 166
Table 63: Comparison of closing price points in selected clothing & footwear categories Matalan and Next 2009 vs 2008 167
Table 64: Comparison of closing price points in selected clothing & footwear categories Sainsbury and Tesco 2009 vs 2008 168
Table 65: Numbers of options in bras and dresses 2009 vs 2008 172
Table 66: Numbers of options in jeans and casual skirts 2009 vs 2008 173
Table 67: Numbers of options in boys pyjamas and boys trousers 2009 vs 2008 174
Table 68: Numbers of options in girls dresses and girls trousers 2009 vs 2008 175
Table 69: Numbers of options in boxer shorts and formal shirts 2009 vs 2008 176
Table 70: Numbers of options in jeans and outer jackets 2009 vs 2008 177
Table 71: Leading grocers electricals market shares 2005-2010e 190
Table 72: Shares of grocers electricals sales 2005-2010e 192
Table 73: Comparison of opening price points in selected electricals categories Asda and Comet 2009 vs 2008 197
Table 74: Comparison of opening price points in selected electricals categories Currys and Morrison 2009 vs 2008 198
Table 75: Comparison of opening price points in selected electricals categories Sainsbury and Tesco 2009 vs 2008 199
Table 76: Comparison of closing price points in selected electricals categories Asda and Comet 2009 vs 2008 200
Table 77: Comparison of closing price points in selected electricals categories Currys and Morrison 2009 vs 2008 201
Table 78: Comparison of closing price points in selected electricals categories Sainsbury and Tesco 2009 vs 2008 201
Table 79: Numbers of options in selected electricals categories A-H 2009 207
Table 80: Numbers of options in selected electricals categories H-P 2009 208
Table 81: Numbers of options in selected electricals categories P-Z 2009 208
Table 82: Leading grocers health & beauty market shares 2005-2010e 219
Table 83: Shares of grocers health & beauty sales 2005-2010e 220
Table 84: Comparison of opening price points in selected health & beauty categories Asda and Boots 2009 vs 2008 224
Table 85: Comparison of opening price points in selected health & beauty categories Morrison and Sainsbury 2009 vs 2008 224
Table 86: Comparison of opening price points in selected health & beauty categories Superdrug and Tesco 2009 vs 2008 225
Table 87: Comparison of closing price points in selected health & beauty categories Asda and Boots 2009 vs 2008 226
Table 88: Comparison of closing price points in selected health & beauty categories Morrison and Sainsbury 2009 vs 2008 226
Table 89: Comparison of closing price points in selected health & beauty categories Superdrug and Tesco 2009 vs 2008 227
Table 90: Numbers of options in selected health & beauty categories A-S 2009 232
Table 91: Numbers of options in health & beauty categories S-Z 2009 233
Table 92: Leading grocers homewares market shares 2005-2010e 243
Table 93: Shares of grocers homewares sales 2005-2010e 243
Table 94: Comparison of opening price points in selected homewares categories Asda and Debenhams 2009 vs 2008 248
Table 95: Comparison of opening price points in selected homewares categories IKEA, John Lewis and Morrison 2009 vs 2008 249
Table 96: Comparison of opening price points in selected homewares categories Sainsbury and Tesco 2009 vs 2008 249
Table 97: Comparison of closing price points in selected homewares categories Asda and Debenhams 2009 vs 2008 251
Table 98: Comparison of closing price points in selected homewares categories IKEA, John Lewis and Morrison 2009 vs 2008 251
Table 99: Comparison of closing price points in selected homewares categories Sainsbury and Tesco 2009 vs 2008 252
Table 100: Numbers of options in selected homewares categories A-C 2009 258
Table 101: Numbers of options in selected homewares categories C-E 2009 259
Table 102: Numbers of options in selected homewares categories F-Z 2009 260
Table 103: Leading grocers’ music & video market shares 2005-2010e 272
Table 104: Shares of grocers music & video sales 2005-2010e 272
LIST OF FIGURES
Figure 1: Factors boosting grocers non-food market share gains 2010 31
Figure 2: Town centre sales growth % 1999-2009 33
Figure 3: Responses for grocers to threats to non-food growth 2010 35
Figure 4: Specialist proposition diversification – HMV 2009 39
Figure 5: Grocers take on pureplays 2010 45
Figure 6: Summary of the UK retail market 2010e 48
Figure 7: Y-o-Y change in spend on food & grocery and non-food 2000-10e 50
Figure 8: Non-food via grocers as a % of their total sales 2000-2010e 52
Figure 9: Estimated grocers non-food space 2004-2009 55
Figure 10: Estimated grocers non-food space allocation 2004-2009 55
Figure 11: Grocers share of non-food sales 2004-2009 & forecast to 2013 59
Figure 12: Asda non-food sales year to December 2005-2010e 79
Figure 13: Asda share of total grocers non-food sales 2005-2010e 80
Figure 14: Asda share of total non-food sales 2005-2010e 80
Figure 15: Morrison non-food sales adjusted to calendar years 2005-2010e 91
Figure 16: Morrison share of total grocers non-food sales 2005-2010e 92
Figure 17: Morrison share of total non-food sales 2005-2010e 93
Figure 18: Sainsbury non-food sales adjusted to calendar years 2005-2010e 104
Figure 19: Sainsbury share of total grocers non-food sales 2005-2010e 106
Figure 20: Sainsbury share of total non-food sales 2005-2010e 107
Figure 21: Tesco non-food sales adjusted to calendar years 2005-2010e 118
Figure 22: Tesco share of total grocers non-food sales 2005-2010e 119
Figure 23: Tesco share of total non-food sales 2005-2010e 120
Figure 24: Split % of grocers non-food sales by sector 2005 and 2010e 146
Figure 25: Clothing & footwear sales & growth at current prices 2000-2010e 152
Figure 26: Clothing & footwear sales at constant 2004 prices 2000-2010e 153
Figure 27: Channel breakdown of clothing & footwear 2004 154
Figure 28: Channel breakdown of clothing & footwear 2009e 155
Figure 29: Grocers share of the clothing & footwear market 2005-2010e 156
Figure 30: Grocers clothing & footwear sales and growth rate 2005-2010e 157
Figure 31: Grocers growth vs total clothing & footwear growth 2005-2010e 158
Figure 32: Womenswear price architecture and choice 2009 169
Figure 33: Childrenswear price architecture and choice 2009 170
Figure 34: Menswear price architecture and choice 2009 170
Figure 35: Grocers clothing & footwear sales and growth 2009-2013e 178
Figure 36: Total electricals sales and growth at current prices 2000-2010e 180
Figure 37: Total electricals sales at constant 2004 prices 2000-2010e 181
Figure 38: Channel breakdown of electricals 2004 183
Figure 39: Channel breakdown of electricals 2009e 184
Figure 40: Grocers share of the electricals market 2005-2010e 186
Figure 41: Grocers electricals sales and growth rate 2005-2010e 188
Figure 42: Grocers growth vs total electricals sales growth 2005-2010e 189
Figure 43: DVD player price architecture and choice 2009 202
Figure 44: Flat screen TV price architecture and choice 2009 203
Figure 45: Hairdryer price architecture and choice 2009 203
Figure 46: Kettle price architecture and choice 2009 204
Figure 47: Microwave price architecture and choice 2009 204
Figure 48: PC price architecture and choice 2009 205
Figure 49: Pay as you go mobile phone price architecture and choice 2009 205
Figure 50: Toaster price architecture and choice 2009 206
Figure 51: Grocers electricals sales and growth 2009-2013e 209
Figure 52: Health & beauty market and growth at current prices 2000-2010e 212
Figure 53: Health & beauty sales at constant 2004 prices 2000-2010e 213
Figure 54: Channel breakdown of health & beauty 2004 214
Figure 55: Channel breakdown of health & beauty 2009e 215
Figure 56: Grocers share of the health & beauty market 2005-2010e 216
Figure 57: Grocer’s health & beauty sales and growth rate 2005-2010e 217
Figure 58: Grocers growth vs total health & beauty growth 2005-2010e 217
Figure 59: Mouthwash price architecture and choice 2009 228
Figure 60: Razor blades price architecture and choice 2009 229
Figure 61: Sanitary protection price architecture and choice 2009 229
Figure 62: Shampoo price architecture and choice 2009 230
Figure 63: Toothpaste price architecture and choice 2009 230
Figure 64: Vitamins price architecture and choice 2009 231
Figure 65: Health & beauty market and growth at current prices 2009-2013e 234
Figure 66: Homewares market and growth at current prices 2000-2010e 236
Figure 67: Homewares sales at constant 2004 prices 2000-2010e 237
Figure 68: Channel breakdown of homewares 2004 238
Figure 69: Channel breakdown of homewares 2009e 239
Figure 70: Grocers share of the homewares market 2005-2010e 240
Figure 71: Grocers homewares sales and growth rate 2005-2010e 241
Figure 72: Grocers growth vs total homewares growth 2005-2010e 241
Figure 73: Bathmats price architecture and choice 2009 253
Figure 74: Baking sheets price architecture and choice 2009 254
Figure 75: Chopping board price architecture and choice 2009 254
Figure 76: Corkscrews price architecture and choice 2009 255
Figure 77: Double duvet covers price architecture and choice 2009 255
Figure 78: Dinner plates price architecture and choice 2009 256
Figure 79: Frying pans price architecture and choice 2009 257
Figure 80: Mugs price architecture and choice 2009 257
Figure 81: Grocers homewares sales and growth 2009-2013e 261
Figure 82: Total music & video sales & growth at current prices 2000-2010e 263
Figure 83: Total music & video sales at constant 2004 prices 2000-2010e 264
Figure 84: Grocers share of music & video market 2005-10e 268
Figure 85: Grocers music & video sales 2005-2010e 269
Figure 86: Year-on-year music & video sales growth: grocers vs. total 2005-2010e 271
Figure 87: Grocers music & video sales and growth 2009-2013e 279
Figure 88: Other non-food market and growth at current prices 2000-2010e 281
Figure 89: Other non-food sales at constant 2004 prices 2000-2010e 282
Figure 90: Grocers other non-food sales and growth rate 2005-2010e 283
Figure 91: Grocers growth vs total other non-food sales growth 2005-2010e 284
Figure 92: Grocers other non-food sales and growth 2009-2013e 293
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