Global Inspiration and UK Retail in 2022

Global inspiration and UK retail in 2022

Nick Downing Commercial Director, IGD

February 22nd 2018

FRESH CONVENIENT FOCUSED SOLUTIONS

CREATING FOOD-TO-GO TESTING NEW EXCITING FUSION CONCEPTS DESTINATIONS

Jumbo Foodmarkt, Netherlands Rewe, Berlin, Germany

Coop Norge, Oslo, Norway Mercadona, Valencia, Spain

Fairprice, Singapore Alibaba Group, Beijing, China

Dairy Farm, Singapore Tops Market, Bangkok, Thailand

Coop Norge, Oslo, Norway Kesko, Helsinki, Finland

Iceland, Clapham Asda, Didcot

Tesco, Swansea Tesco, Swansea

ago (%) ago yr

-2

Growth, last 3m on same 3m 3m same on 3m last Growth,

Jul-15 Jul-16 Jul-17

Jan-15 Jan-16 Jan-17

Value sales Volume sales

+£28bn +15% +2.9% Change in Change in CAGR value value

250 5% 213 208 ) 196 202 bn 200 185 190 4% 178 178 180 169 175 3.2% 3.1% 2.9% 150 3.2% 3.5% 2.7% 3% 2.5% 2.3%

100 1.4% 2%

1.2% YOY Growh (%) YOY

50 0.4% 1% Grocery retail market size size (£ retail market Grocery

0 0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Market value (£bn) YOY % Change

Products/services shoppers would spend more on if they had more disposable income

In-house supply chains

982 stores £450m £900m £1,800m 2,200 stores £600m

668 stores £250m

370 stores £90m 540 stores £120m

128 stores £80m

Latest like for like sales

% 0

-2

-4

-6

-8 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013 2014 2015 2016 2017

Asda M&S Morrisons Sainsbury's Tesco

© IGD 2018 Source: Retailers. Note reporting periods vary. Sainsbury’s LFL includes Argos and Habitat from Q3 2016. Morrisons includes contribution from wholesale Page 19 UK grocery, sales by channel, 2017-2022

50% 47% 45% 43%

40%

35%

30% 2017 2022

25% 22% 22% 20%

15% 14% 11% 9% 10% 8% 8% 6% 6% 6% 5%

0% Hypermarkets Supermarkets Convenience Discount Online Other +0.2bn +5.1bn +7.1bn +10.0bn +5.6bn +0.4bn +28.4bn

% of British grocery shoppers who claim to have shopped online for food/groceries with these online retailers in the last 4 weeks

© IGD 2017 Page 22 18-25 shopping more at • Most still shop in larger stores • One in five post-millennials mainly shop in convenience stores, convenience stores influenced by their preference for little and often shopping and smaller basket sizes • Less likely to mainly shop online, influenced by smaller household size and fewer having children

% of shoppers claiming to use these channels for most of their grocery shopping

63%

53%

18-25 26+

19% 17% 17%

7% 7% 5% 3% 2% 2% 3%

Supers & hypers Convenience Food discount Online High street discount Frozen food

31% Main shop Food-to-go 30% 28% 18-25 24% 13% 26+ Do you have a complete understanding of how to generate more sales from different missions for 16% 21% 22% post-millennials? Evening 23% 18% Non-food meal 23% How are your channel plans adapting to take Health & account of changing shopper missions? beauty

Are you flexing your channel strategies to appeal to post-millennial shopper needs by mission?

IGD forecasts growth of 6.2% per year over 2017-22, lifting the value of the food-to-go market from £17bn to £24bn.

CAGR 2017-2022 2017 £bn 2022 £bn %

Coffee specialists 2.9 7.4% 4.2

Quick Service 5.4 3.4% 6.3 Restaurants

FTG specialists 5.1 8.4% 7.7

Convenience, forecourt & other retailers 2.7 6.1% 3.6

Supermarkets & hypermarkets 1.3 5.9% 1.7

Store choice drivers (18-25s)

60 59%

50 44% 40 41%

33% 30

21% 20 8%

Convenient Quicker Save Product Product Enjoyment location in-store money choice quality

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