A Description of the Structure and Operation of Grocery Retailing and Wholesaling in Ireland: 2001 to 2006 Grocery Monitor: Report No. 1 March 2008 Grocery Monitor: Report No. 1. 1 Table of Contents List of Figures...................................................................................... iii List of Tables........................................................................................v Executive Summary.............................................................................. ix 1. Introduction and Background .....................................................1 Introduction.................................................................................1 The Grocery Monitor Project ...........................................................1 Boundaries of this Report...............................................................5 Structure of this Report .................................................................6 2. The Grocery Sector: Overview.....................................................9 Introduction.................................................................................9 The Groceries Orders ....................................................................9 Definition of “Grocery Goods” used in this Report ............................ 13 The Grocery Supply Chain............................................................ 15 Summary .................................................................................. 30 3. Grocery Sector Structure: Wholesale Level ...............................33 Introduction............................................................................... 33 Grocery Good Wholesaling ........................................................... 33 Grocery Goods Wholesale Turnover ............................................... 36 Composition of Wholesale Level of the Grocery Sector ..................... 42 Geographic Distribution of Distribution Centres ............................... 47 Buying Groups ........................................................................... 52 Summary and Comment.............................................................. 53 4. Grocery Sector Structure: Retail Level ......................................57 Introduction............................................................................... 57 Grocery Good Retailing................................................................ 57 Grocery Goods Retail Turnover ..................................................... 59 Composition of the Retail Level of the Grocery Sector ...................... 70 Geographic Distribution of Retail Outlets ........................................ 82 Summary and Comment.............................................................. 89 5. Competition at the Wholesale Level..........................................95 Introduction............................................................................... 95 Wholesaler-Franchisor Services .................................................... 95 Terms and Conditions of the Franchise Agreement .......................... 98 Terms of Trade......................................................................... 103 Grocery Monitor: Report No. 1. i Geographic Scope of Wholesaler-Franchisor Activity ...................... 104 Switching Behaviour ................................................................. 111 Summary and Comment............................................................ 115 6. Competition at the Retail Level ...............................................119 Introduction............................................................................. 119 Irish Grocery Consumer Profile ................................................... 120 Competition and Retailer Pricing Behaviour .................................. 127 Competition and Product Range .................................................. 141 Competition and Retailer Location Choice..................................... 152 Summary and Comment............................................................ 174 7. Concluding Comments............................................................181 Principal Trends........................................................................ 181 Barriers to Entry at the Retail Level: Planning ............................... 185 The Supply Level ...................................................................... 186 APPENDICES A. List of Grocery Monitor Meetings ............................................ A-1 B. Information Sources ............................................................... A-5 Questionnaire Issued to Vertically-Integrated Retailers, Wholesaler Franchisors and Buying Groups....................................................A-5 Questionnaire Issued to Sample of Small Retailers .........................A-6 Other Information: AC Nielsen Ireland ..........................................A-9 Other Information: CACI Ltd .....................................................A-10 Independent Cash and Carry Centres .........................................A-11 C. Market Player Profiles........................................................... A-13 Vertically-Integrated Retailers ...................................................A-14 Wholesaler-Franchisor Groups ...................................................A-26 Buying Groups ........................................................................A-49 D. Grocery Goods...................................................................... A-51 Grocery Monitor: Report No. 1. ii LIST OF FIGURES Figures from Report Body Figure 1: Grocery Supply Chain............................................................. 15 Figure 2: Vertically-integrated Retailers.................................................. 18 Figure 3: Affiliated Retailers.................................................................. 21 Figure 4: Independent Retailers ............................................................ 22 Figure 5: Traditional Wholesaling Model.................................................. 23 Figure 6: Wholesaler-franchisors ........................................................... 27 Figure 7: Wholesaler-Franchisor Distribution Centres (2006) ..................... 48 Figure 8: Cash and Carry Centres (2006) ............................................... 50 Figure 9: Vertically-Integrated Retailers’ Distribution Centres (2006).......... 52 Figure 10: Outlets of Vertically-Integrated Retailers active in March 2007 ... 83 Figure 11: Outlets of Vertically-Integrated Retailers opened since 2001 ...... 84 Figure 12: Outlets of Affiliated Retailers active in March 2007.................... 87 Figure 13: Outlets of Affiliated Retailers opened since 2001....................... 88 Figure 14: Gala Wholesalers’ Distribution Centres and Affiliated Retailers (2006).............................................................................. 106 Figure 15: Mangan Wholesale Distribution Centres and Affiliated Retailers (2006).............................................................................. 107 Figure 16: ADM Londis Distribution Centres and Affiliated Retailers (2006) 108 Figure 17: Barry Group Distribution Centres and Affiliated Retailers (2006) 109 Figure 18: BWG Foods Distribution Centres and Affiliated Retailers (2006) 110 Figure 19: Musgrave Distribution Centres and Affiliated Retailers (2006)... 111 Figure 20: Most Important Factors Considered When Selecting a Regular Place of Grocery Shopping ........................................................... 119 Figure 21: ‘Top Up’ Shopping.............................................................. 121 Figure 22: Number of Supermarkets/Hypermarkets visited in the Past Four Weeks .............................................................................. 123 Figure 23: Mode of Transport to the Main Shop ..................................... 124 Figure 24: Brand Loyalty: What Shoppers would do if their Normal Brand was not available? .................................................................... 125 Figure 25: Consumer Perception of Own-label versus Branded Goods ....... 127 Figure 26: Consumer Attitudes to Promotions........................................ 141 Figures from Report Appendices Figure C.1: Tesco Retail Outlets .........................................................A-15 Figure C.2: Superquinn Retail Outlets .................................................A-17 Figure C.3: ALDI Retail Outlets...........................................................A-19 Figure C.4: Marks & Spencer Retail Outlets ..........................................A-21 Grocery Monitor: Report No. 1. iii Figure C.5: Lidl Retail Outlets ............................................................A-23 Figure C.6: Dunnes Stores Retail Outlets .............................................A-25 Figure C.7: Musgrave Affiliated Retail Outlets .......................................A-30 Figure C.8: BWG Foods Affiliated Retail Outlets ....................................A-34 Figure C.9: Barry Group Affiliated Retail Outlets ...................................A-38 Figure C.10: ADM Londis Affiliated Retail Outlets ..................................A-41 Figure C.11: Mangan Wholesale Affiliated Retail Outlets.........................A-45 Figure C.12: Gala Affiliated Retail Outlets ............................................A-48 Grocery Monitor: Report No. 1. iv LIST OF TABLES Tables from Report Body Table 1: Definition of Grocery Goods.....................................................