ISN1: Q1. What has changed in consumer behaviour in the last decade?
In terms of grocery retail, consumers are less concerned about where they are shopping – and are more willing to shop at discounters or across multiple channels. This is mainly driven by discounters adapting their store formats to be more mass market – think more brands, a few more promotions, tiering in own label, fresh bakeries and so on.
Consumers are also more inclined to cherry pick products across various different retailers to ensure they get the best deals. Another area of change is around growing consumer desire for healthy eating – which is driving retailers to further develop ranges in this area, Tesco for example.
Other changes have been driven by technology – with mobile technologies driving consumer desire to shop online. Although online grocery sales are still a relatively small proportion of the overall grocery market – they are set to continue to grow.
There are also several demographic factors taking place in the UK that are driving changes to the grocery market. For example, households are gradually getting smaller – and this will and has fuelled strong growth of the convenience channel. We know that industry-wide frequency of shop is on the up but basket size on the way down, even at larger stores – demonstrating the impact of smaller households.
ISN2: Q2. Do you think the big Supermarkets as we know them TESCO ASDA SAINSBURY. took too long to adapt to the changes.(consumer demands)
I think the big supermarkets have actually done a fairly good job at adapting to changing consumer demands. For example, most of the big four have now shifted to EDLP over the high-low promotional programmes of traditional supermarkets. This was in response to consumer demand for lower prices, rather than multi-buys – mainly as there are now a greater number of smaller households in the UK.
ISM 3.Q3. (forecast) -Do you think marks and Spencer Waitrose. Tesco fine food will always have a place in the market?
Yes at the moment it looks like they will. Regardless of the growth of online food retail consumers will always need bricks & mortar stores to shop in, and this is the space in which Tesco, Waitrose, and M&S play most strongly.
How do you see the future of food retail?
The future of food retail will be influenced by technology, the need to keep costs down and the emergence of even more consumer data. Looking long-term, increasing staff costs associated with rising minimum wage levels will make technology that reduces the need for as many staff in stores more attractive. Expect gradual increase in the adoption of self-checkout technologies over time – though this will need to be carefully balanced with a need to maintain high customer service levels.
The increasing availability and depth of customer data will also have an impact on retail in the future. Should AI services such as Amazon Alexa and Google Home be adopted more widely there could be a big increase in the volume of customer data – and managing this will be a big challenge in the future, as well as providing opportunities.