retail-predictions2013.pdf
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retail-predictions2013.pdfTRANSCRIPT
Introduction
Welcome to our forecast for UK retail in 2013
UK retailing is set for another year of tough trading as the hoped for economic recovery is put back
further and austerity continues to reign. This Verdict/SAS research shows those sectors and retail
channels best placed to weather the storm, and those that will struggle and sets the scene for retail
in 2013, highlighting the strategies, trends and innovations that will best ensure survival and aid
growth.
Cindy Etsell
Industry Marketing Manager – Commercial
SAS UK & Ireland
Wittington House
Henley Road
Marlow SL7 2EB
Tel:: +44 (0)1628 490 929 ■ Mobile 07918 724 381
www.sas.com/uk
Maureen Hinton
Practice Leader UK Retail
Verdict Research
119 Farringdon Road
London
EC1R 3DA
Tel: +44(0) 207551 9423
www.verdict.co.uk
For more information contact:
About SAS
SAS is the leader in business analytics software and services, and the largest independent vendor
in the business intelligence market.
About Verdict
Verdict Research is the leading authority on retailing. Its research and publications provide
executives in a wide range of business sectors with unrivalled independent analysis of retail sectors
& trends.
SECTION ONE INTRODUCTION & SUMMARY
UK retail in 2013 – summary of key points
UK retail set to grow by 1.8% in 2013 to £300.7bn – the highest rate
of growth since the recession began
Larger growth in food retail (2.9%) compared to non-food retail
(0.8%) but this is being driven by price inflation
In reality, food retail volumes are set to grow by just 0.2% while
volume in non-food retail will grow by 1.0%
Food spending will grow by £15.9bn between 2009 and 2013, up
from the £15.4bn growth seen between 2004 and 2008
Non-food spending returns to growth but spending levels are still
behind the pre-recession peak of £173.3bn in 2007
DIY & gardening will be retail’s best performing sector in 2013, but
the 3.3% growth is reflective of declines in the preceding two years
Home entertainment sectors will decline the largest, with music &
video spending set to fall by 6.3% in 2013
Online will overtake bricks & mortar retail in the books sector
market share in 2013, accounting for 52.9% of all sector sales
Retailers with international expansion plans will continue this in
2013, with Europe, India and the USA offering attractive prospects
Primark is signalling further commitment to expansion in
Germany, while Tesco, Topshop and Ikea mull moves into India
Stronger performing channels will be grocers, online and
shopping centres, due to convenience and competitive pricing
Specialist stores, in particular, music & video and book stores will
suffer, as their reliance on a single product will hit volume growth
Amazon will benefit from the demise of bricks & mortar retailers in
music & video and the casualty of Comet in late 2012
Older shoppers will increasingly become an important
demographic to retailers, particularly online
We forecast that shoppers aged 55+ will be the fastest growing
demographic online, rising by 31.9% between 2011 and 2016
The tablet boom, both as gifts and to shop with, and m-commerce
will continue strongly in 2013, so website optimisation is a must
Highest growth rate since recession began – but
largely down to rising prices
UK retail expenditure year-on-year growth (%) 1973-2013e
UK retail is set to grow by 1.8% in 2013 – the highest rate of growth since the recession began.
Growth is, particularly the all-important food & grocery sector largely attributed to price inflation,
meaning that in reality, we are spending more to buy pretty much the same amount. Price inflation
across total retail in 2013 will be 1.1%, compared to a volume growth of 0.7%, but this is the first
positive growth in retail spending volumes since 2010, and the highest since 2007.
Food remains the main driver behind retail growth, at 2.9%, but this is vastly due to price inflation,
with volume growth of just 0.2%. Food spending will have grown by £15.9bn in the five years to
2013, slightly higher than the £15.4bn growth between 2004 and 2008.
Non-food returns to growth after a two-year hiatus, with a forecast growth rate of 0.8% in 2013.
Since a peak of £173.3bn in 2007 non-food spending will have shrunk by £8.5bn by the end of
2013.
2013 UK retail expenditure to grow by 1.8%
Source: Verdict Research
14.415.6
20.5
15.214.713.7
16.3
12.0
7.1 7.48.5
7.18.3
9.18.2
9.0
7.1 7.16.1
4.8 4.5 4.9 4.8
7.15.5 5.0 5.4
4.2 4.6 5.03.4 3.8
1.32.7
3.62.0
-0.4
1.60.9 1.0
1.8
1973 1978 1983 1988 1993 1998 2003 2008 2013
UK retail expenditure growth year-on-year 2008-13e (%)
Total Non-food Food
+1.8%
0.8%+3.1%
£300.7bn £164.8bn £135.9bn
Source: Verdict Research
2008 2009 2010 2011 2012 2013e
Total retail Food & grocery Non-food
%
UK retail expenditure 2013 value (£bn) and year-on-year growth (%)
Source: Verdict Research
Home entertainment sectors in biggest loss
Volume growth in non-food, while only 1.0% in 2013, is at its strongest rate since 2007 when it
was 4.3%. As confidence starts to cautiously improve later in the year, spending in clothing &
footwear will increase, while homewares and furniture & floorcoverings will benefit from people
making smaller alterations and decorating projects to their homes as they prepare to potentially
sell up once housing transactions pick up in 2014.
Food & grocery spending will add another £4.1bn in 2012, owing to price inflation and pressures
on global pricing.
Clothing & footwear growth will dip below £1bn in 2013, but this can be attributed to the vicious
circle of discounting seen in 2012 that is set to continue into the start of 2013. It is thought that
retailers will try and encourage investment from consumers into ‘full price’ spending rather than
waiting for promotions, but this will require effort and a need to push value-for-money and product
quality to get consumer buy-in into spending more.
The biggest loser in 2013 will be the home entertainment sector, with declines in books, news &
stationery of 2.8% and a steep fall of 6.3% in music & video. The lure of online away from brick &
mortar retail is due largely to cheaper prices, as well as the increasing traction towards digital
formats in place of physical items in these sectors, owing to streaming services and e-
readers/tablets meteoric rise in popularity.
2013 retail spending
Change in value of expenditure (£m) 2013 on 2012
Source: Verdict Research
£457m
-£165m
-£432m
£489m
£913m
£4,116m
Home entertainment
Other markets
Home related sectors
Health & beauty
Clothing & footwear
Food & grocery
1.1
2.9
-0.2
0.70.2
1.0
1.8
3.1
0.8
Total retail Food & grocery Non-food
Inflation/deflation Volume Value
%
Growth drivers year-on-year in total retail, food and non-food (%) 2013 on
2012
Source: Verdict Research
26.0
15.4
10.6
15.2 15.9
0.7
Total retail Food & grocery Non-food
2004-2008 2009-2013
£bn
Growth in retail spending
Source: Verdict Research
2013 – UK retail sector forecasts
Food & grocery volume growth will stutter as global food price rises
fuel growth
• Volume growth in food & grocery will be just 0.2% in 2013. With increased prices in-store, shoppers
will have very little room to buy more as many struggle to keep up with inflation.
• Global food prices look set to continue to rise in the next year. Increases in grain prices are having a
knock-on effect on wheat, meat and dairy, while rising fuel prices will continue to exert an upward
pressure on supply chain and logistics costs.
• In 2012, the sector came under intense scrutiny for the prices paid to dairy farmers. This has brought
the issue of food prices to the fore with consumers now more aware of industry practices.
• Suppliers have long been at the mercy of larger supermarkets, which have been able to negotiate so
as to not pass increased costs onto shoppers. But with a heightened focus on fair payments to
suppliers and increasing global food prices, even retailers better equipped to absorb price rises into
margins will struggle not to pass inflation onto shoppers.
• Not only will 2013 be a difficult year for suppliers, retailers and consumers will continue to feel
increased inflationary pressures, and with the global food supply set to remain volatile, we expect this
to continue in the future.
Growth returns to DIY & gardening, while food price
inflation lifts food & grocery
3.3 3.1 2.6 2.0 1.0
-1.1-2.8
0.4-0.5
DIY & gardening Food & grocery Health & beauty Clothing &
footwear
Homewares Electricals Other markets Furniture &
floorcoverings
Books, news &
stationery
Music & video
-6.3
Growth 2013 on 2012 by sector (%)
Source: Verdict Research
• DIY & gardening is set to become retail’s strongest performing sector in 2013 as it receives a
bounce-back performance from gardening. The challenging growing conditions caused by the
wettest April and June on record severely impacted the market in 2012. Against such harsh
comparatives, we forecast that the greenstock and growing sectors in particular will achieve
exceptional growth in 2013.
• DIY will also report growth, albeit on a smaller scale, with decorative materials being the most
buoyant sub-sector. Shoppers conducting small decorating projects to freshen up their homes and
make minor repairs, as they start to consider putting their house on the market, will be the main
factor for this. Inflation will drive growth in DIY though it is set to decline for the third consecutive
year as retailers work harder to improve efficiencies, with savings being passed on to customers.
• Another trend we forecast happening will be DIY specialists rationalising space, which is set to
decline by 1.1%. As well as weaker independents being forced out of the market, DIY superstores
are in the process of reducing their footprint, either by closing stores or sub-letting excess space
to third party retailers. The superstores are using online not just as a sales channel, but as a
means to drive footfall into stores, especially through reserve & collect facilities. However, retailers
must ensure they get the right balance between maintaining sales while reducing space.
DIY & gardening: 2013’s best performing retail sector bounces
back – but from a low base
2013 – UK retail sector forecasts
• Recovery in 2013 will be far more gradual than initially anticipated, as consumers remain very
cautious about spending on discretionary items. Consumer confidence will gradually improve,
accelerating expenditure growth and volumes of clothing & footwear items.
• Space expansion will slow as protecting profitability remains a priority after four years of increased
pressure on margins. Many mature UK retailers now have large store portfolios, so we expect retailers
to slow opening plans and rationalise their existing store presence to ensure all outlets are profitable.
• The vicious cycle of discounting will continue in 2013, but retailers will try to escape the pressure of
markdown and encourage consumers to invest in full-price items. This will be a gradual process.
Consumers have become accustomed to discounting and will initially be reluctant to pay full price for
brands that were more accessible due to lower price points. It is essential that retailers provide good
value for money through range and product quality so consumers can justify spending more.
• In 2013, we expect online to overtake bricks & mortar as the primary books retail channel,
accounting for 52.9% of the market. The driving factor will be price, with Amazon and Play.com able to
offer lower prices than those typically found on the high street. Increased ownership of e-readers will
lead to a further fall in sales, due to the lower cost of e-books. We expect the overall book market to
shrink by 4.6% in 2013.
• The knock-on effect of online and e-reader growth to bricks-and-mortar retail will not be too severe.
The tangible qualities of physical books help maintain their appeal, as does visiting bookshops and
taking one’s time to decide on purchases. But nostalgia will only help physical retailers so much, and
as the market leans towards digital, we will see a notable contraction on the high street in 2013, in
terms of both sales and physical presence.
• News retail sales are expected to fall by 1.2%, while WH Smith’s poor performance and the demise
and subsequent takeover of Clinton Cards highlight the fragility of the stationery sub-sector. Our
forecasts predict a 3.5% decline. As consumer budgets remain strained, premium stationery is one of
the first luxuries to be sacrificed, while the budget end of the spectrum is increasingly covered by
grocers and general merchandisers, leaving little room for specialists to grow.
Clothing & footwear grows as confidence rises and retailers try to
end discounting cycle
Health & beauty – premium products encourage higher prices, but
price wars remain for everyday items as grocers gain traction
• While volumes will be up in 2013 compared to 2012, it will be another difficult year as consumer
confidence remains low and disposable incomes are squeezed. We expect health & beauty to be
one of the more resilient sectors but the difficult economic climate will have an impact.
• Inflation will be higher in premium products but will stay very low in everyday items, driven down
by intense price competition from grocers and general merchandisers. While some products are
necessity-driven such as OTC medicine, consumers are unwilling to cut back or trade down in
areas such as skincare and cosmetics despite the weak economy.
• New space is coming from grocers and general merchandisers. Boots and Superdrug are not
expanding as competition is intensifying and Boots has such a saturated store portfolio in the UK.
The Perfume Shop continues to expand their presence in the UK but this will slow over the next two
years. Smaller specialists such as Lush and Molton Brown are opening new space.
• The quarter-on-quarter easing of steep declines we have seen from Q2 2012 onwards are set to
continue into 2013, with growth returning to the sector in Q3. This will be driven by a rise in the
number of housing transactions in Q3 as more affluent shoppers start to move house. However, it
should be noted that the initial increase will be due to inflation and in monetary terms is only a rise of
£9m. For the majority of customers, their economic position will encourage them to defer larger
purchases until later.
• Upholstery and beds & bedroom furniture are forecast to grow in 2012. This will be largely due to
the expansion of upholstery retailers, such as DFS and CSL, and the closer links between beds and
the wellbeing of customers. There is a question mark over the future of Dreams and if this results in
a number of store closures, there will be opportunity for other bed retailers to gain market share.
• All other sub-sectors are forecast to contract as shoppers hold off on big ticket discretionary
purchases until the housing market and their personal financial position improves. We forecast this to
occur in 2014, the first year of growth since 2007.
Furniture & floorcoverings declines slow, returning to growth later in
2013 Books, news & stationery increasingly threatened by web presence and e-
readers
2013 – UK retail sector forecasts
• The electricals market in 2013 is likely to spend time adjusting to life without Comet. While some of
its 243 stores may remain as electrical outlets, the likelihood is that the brand will only survive online,
and a handful of stores will be bought by competitors such as Dixons, Maplin and Staples.
• One of Comet’s problems was its reliance on large appliances, demand for which has been hit by the
stagnant property market. We see no significant uplift in housing transactions before the second half
of 2014 so demand for white goods will be restricted mainly to the need to replace broken ones.
• Tablet demand will continue throughout 2013 and beyond. What was once a market Apple had for
itself has been expanded exponentially by cheaper, but extremely capable, devices from Amazon,
Asus and Samsung.
• The price of gold will remain high, driving inflation in this category though volumes will be impacted.
• Volumes in toys and games will remain high with parents not willing to cut back on spending for
children. Retailers will take advantage by pushing up prices, but this will partly be offset by grocers
expanding in this area and general merchandisers growing space, increasing price competition.
• The sports market will continue to be dominated by Sports Direct at the value end targeting the mass
market, and smaller specialists at the premium end targeting more serious sports enthusiasts. Price
competition will remain rife at the value end, mainly from Sports Direct, but also grocers gaining
traction in this area.
• 2012 saw a boost in bicycle sales due to the Olympics and Bradley Wiggins winning the Tour de
France. This will see sales lift in bicycle accessories such as baskets, padlocks and bells in 2013.
Moreover, increasing popularity in the cycle-to-work scheme in 2013 will boost the category.
Other markets: price competition rife in niche retail sectors
Homewares sees meaningful recovery as cooking and baking work
to stem deflation from promotional activity
• For the first time since 2008, volume growth will be positive in homewares in 2013, as the sector
begins to head towards a meaningful recovery. 2013 will be the first significant year of growth
following a marginal rise in 2012. The housing market is unlikely to see a significant recovery until
2014 but consumers are likely to spend more in anticipation of better market conditions.
• Due to a high level of promotional activity, and significant market share being held by grocers and
value players, inflation will be low in 2013, at just 0.1%. This price competition, especially with
textiles & soft furnishings, combined with the relief of cotton price increases, will put real downward
pressure on deflation.
• Scratch cooking, home baking and television cookery programmes will yet again be a driving
force in homewares, with more shoppers picking up the trend, along with associated products.
Volume will grow, and with high innovation in products contributing to high price points, will work to
counteract deflationary pressure on the sector.
• Online will be a key battleground between the established players and bright new entrants in
2013. While some of these plucky new pretenders have been snapping at the heels of the
established players for a while now, their high design and unique offers will be more widely
recognised in 2013, generating interest and buzz in the homewares sector.
Electricals holds on with growth in tablet sales, but Comet demise
will take adjustment
• Brown goods will struggle to make much impact in 2013 without any major sporting events to boost
TV sales and the ongoing failure of 3D and “Smart” technologies, to drive earlier replacement of
existing panels. Japanese TV manufacturers have slashed global production capacities, and retailers
will need to upsell customers to larger and higher quality screens to compensate for lower volumes.
The long rumored arrival of an Apple-manufactured TV set does not seem to be imminent, which is
disappointing as TV is an area desperately in need of innovation.
• One area where this may come from is cheap internet connected set top boxes, which can make
any TV a “Smart” TV. Google and Apple are developing in this area, and if the products they release
can demonstrate smooth integration with Android/iOS smartphones and tablets, and deliver the
content consumers want, they could change the way we view, and interact with, TVs forever. Internet
connected devices are infecting all areas of the electicals sector, and audio - which has suffered in
recent years as hi-fi sales have given way to cheaper iPod sales which then fell away when replaced
by smartphones – is seeing some benefit as more consumers look to fit multi-room systems in their
houses which are connected wirelessly to their digital music collections. While this sort of
implementation has been seen as expensive and complicated in the past, a number of products are
being released which attempt to make such set-ups more accessible. We expect these to be major
sellers in 2013, though retailers must invest in strong customer service to communicate the benefits.
2013 – UK retail sector forecasts
Music & video spending set to fall to £2.7bn as cheaper prices online
and streaming and downloading continues its dominance
• Customers continue to eschew the high street in favour of the cheaper online channel. This
will result in further consolidation in bricks & mortar retail, with the last remaining specialist,
HMV, likely to close further stores throughout the year. Non-specialists such as the grocers will
sweep up some of HMV’s share, though their limited offer – typically focused around chart
releases – will not cater for everyone, driving greater traffic online, with Amazon the main
beneficiary.
• Overall, we expect online to account for 80.1% of total music & video sales in 2013, and by
2017, this will stand at 97.7%, highlighting the bleak outlook for physical retailers.
• Also affecting sales is the continued popularity of streaming services such as Spotify and
LoveFilm Instant, increasingly negating the need to own physical media. With increased
smartphone/tablet ownership and improved mobile data allowances, subscribers can now
access media on the move.
• Illegal downloading is another thorn in the side of the sector, and this is set to continue in
2013. Though the government has made a token effort to curb online copyright theft, it has
not been enough of a deterrent. The continued bleak economic outlook in the UK will only
serve to exacerbate this, with many consumers downloading illegally to save money.
Proposed further legislation is not scheduled to come in until 2014, and even then it will
not truly curb piracy. In addition, those that are deterred are unlikely to return to the retail
channel, favouring streaming services.
• In contrast to music & video, the video games market will remain relatively buoyant, with
a number of marquee titles helping to maintain sales. Annually released titles such as EA
Sports’ FIFA series also guarantee a steady revenue stream. The concern is the lack of
forthcoming next generation consoles from Sony and Microsoft, mooted for release in
2014/15. This prospect of new hardware will lead to a reluctance among gamers to invest
too much money in their current consoles, though for 2013 at least, this should not have
too much of an impact.
80.1
52.9 42.3
14.3 11.4 5.5 6.1 5.5 5.5 Music & video Books Electricals Clothing &footwear Homewares DIY & gardening Furniture & floorcoverings Food & grocery Health & beauty
Online penetration by sector (%), 2013
Source: Verdict Research
Retailers continue movements to foreign shores for
growth opportunities
• Those struggling to grow share in the UK will seek growth opportunities abroad. In the clothing &
footwear sector Eastern Europe, China and North America are sought after markets by the likes of
Primark, H&M, Topshop and Marks & Spencer.
• The developments and changes to foreign direct investment in India has made the country
attractive to retailers. Ikea is considering investment for 25 stores and Tesco currently has no
physical presence in the country but runs the infrastructure for its joint venture partner Trent’s Star
Bazaar chain. Topshop, Uniqlo and Max Mara are also considering entry.
• Furthermore, a number of European retailers already established in India have expansion plans.
Examples include Marks & Spencer, whicih opened its 25th India store in Bangalore in April 2012
and has plans for around 60 outlets by 2014. Debenhams has plans for 30 stores in 13 cities.
• Moves into Europe in 2012 have included Marks & Spencer launching transactional websites in four
countries (Germany, Spain, Austria and Belgium). H&M has opened stores in Bulgaria, the latest in
its capital Sofia, and Priimark continues to roll out stores in Germany, with as many as 150 planned
from just eight at present.
• The merger between Boots and American pharmacy chain Walgreens means we should see Boots
launching own labels in Walgreens over the next five years.
Global moves in 2013
Topshop
Boots
Retailer Destination
America
Marks & Spencer
H&M
Primark
Europe
India
House of Fraser
Ikea
Tesco
Topshop
Middle East
Examples of global retail moves
Winners & losers 2013 – channels
• Channels that offer shoppers convenience and flexibility will be the
strongest performers.
• The ‘all in one place’ element of online, shopping malls (which offer a
multitude of retail brands) and large supermarkets is a draw for busy
shoppers. Supermarkets are continuing to expand non-food offerings,
particularly online, and the ease of finding large, sometimes unique
product ranges across a variety of online retailers will remain appealing.
• Those retailers that offer a click & collect/reserve & collect facility will offer
even more flexibility to consumers. Supermarket chains have charged on
this in Christmas 2012.
• Online offers strong price competition across a number sectors but this is
particularly a challenge for books and music & video retailers, the former
of which will see online overtake bricks & mortar in terms of sales in
2013. Music & video is already dominated by online, and the last
remaining specialist on the high street, HMV, will face a struggle and is
likely to close more stores.
• In 2013, online will account for more than 11% of total retail spending,
with Verdict forecasting a 15.0% share of total retail for the channel in
2017.
Convenience, digital and pricing remain winning
strategies
Online
Grocers/supermarkets
Shopping malls
General merchandisers
Specialist retailers
Music & video/book retailers
(brick & mortar)
Need high volumes but
reliant on single product type
Struggle to compete on price
Convenience,
Large product ranges
Competitively priced
Click & collect will win out
UK online retail expenditure (£bn) 1998- 2013e and share of total
£6.0
£7.8
£10.4
£13.9
£17.2
£20.1
£23.6
£27.1
£31.1
£35.3
£0.4
£1.8
£3.2
£1.0
£3.8
£4.8
0.2 0.5 0.8 1.4 1.6 1.9 2.3 3.0 3.8 4.9 6.0 7.0 8.1 9.3 10.5 11.7
1998 2000 2002 2004 2006 2008 2010 2012e
Value (£bn) Share of total retail (%)
Source: Verdict Research
Retailer highs 2013
• The big news for homewares in 2012 was Dunelm Mill overtaking long term market leader John Lewis to the top of the homewares sector. 2013 will see further growth from Dunelm Mill, as it extends its new found lead at the top from 0.1 percentage points to 0.4. John Lewis is picking up share however, and its stylish design led homewares ranges will prove a genuine thread to Dunelm.
• The fight over Comet’s market share will result in a major boost for Dixons’ PC World and Currys fascias. Dixons has been brazen in targeting Comet stores over the last 18 months, investing heavily in branches located near Comet ones, and so it should be able to attract the largest slice of Comet’s sales. Dixons is now the only major retail electricals chain, but there are dangers to being the last man standing in that without a large physical presence of shops, consumers being to think of that sector’s items as being natural online purchases. Amazon is likely to be the other major beneficiary of Comet’s demise, and so even more of the electricals market will migrate online, never to return. Independents are unlikely to benefit much, as few were located near to Comet’s exclusively out of town locations. They will need to concentrate on customer service and showcasing best in class products to maintain their existence.
• The dominance of online in the music & video sector will result in further consolidation in bricks and mortar retail, with the last remaining specialist HMV likely to close further stores throughout the year. Amazon is likely to be the major beneficiary of the continued push into online
Amazon to benefit from online push into books and
demise of Comet
Amazon
Dunelm Mill
Amazon
HMV
Independents Online continues to pose
competitive threat
One-stop shop
Convenience
Competitive pricing
Food & grocery retailer musts in 2013
• Winners in food & grocery in 2013 will be those who remain customer focused,
providing shoppers with solutions that make grocery shopping better value for
money. Consumers are building a level of immunity to promotional activity now,
often unable to decipher which retailer is the cheapest. So it will be those which
offer a combination of product quality, freshness and convenience alongside price
which will win.
• If Morrisons is able to meet its targets for convenience expansion, as well as break
ground on its online grocery offer, it will be able to pick up market share in both
channels, the two fastest growing for the sector; however it must make a firm
commitment to both.
• A shift of focus from Tesco will start to have an impact in 2013, as it aims to turn the
ailing UK business around. With so many stores in the UK, and its market-leading
position, it has everything to lose, at the expense of several rivals snapping at its
heels. Tesco is reaching maturity in the UK, and regardless of a shift in operational
focus growth through expansion, and therefore market share gains, will be
increasingly difficult to come by.
• Discounters Aldi and Lidl will continue their charge in the UK, though store
expansion will continue to prove difficult as both struggle to secure suitable sites for
new stores. Both have thrived throughout the downturn with their no-frills offer; but
2013 will be the year for discounters to shout about product quality. Shoppers –
especially those in the middle classes – are more comfortable than ever to shop with
the discounters, so to maintain momentum as the environment begins to improve
they must hook shoppers on quality in order to continue to gain market share.
Market leader Tesco has everything to lose as rivals
snap at its heels
Morrisons
Aldi and Lidl
Reinforce quality of
product offering to
shoppers
Give firm commitment to
online and convenience
retail in order to gain
market share
Retailer Must
Ageing popuplation grows in importance for retailers
• Shoppers aged 50+ will represent more than one-third of the UK population by 2016.
• This demographic will be very important to retailers and those that adapt their offering to
suit will benefit from the opportunities.
• We forecast that the 55+ demographic will be the fastest growing among online shoppers.
The fact that an ageing population means that overall those actively shopping will be less
mobile, so will appreciate the convenience, will be a contributor.
• The 55+ demographic will account for almost 10 million online shoppers by 2016, a
growth of 31.9% from 2011.
• The main barriers for shoppers aged 55+ going online to buy are a lack of home internet
access and a lack of confidence in online shopping. But we forecast this to be less of an
issue as more people get internet access. The popularity of tablets will also help. Tablets
are more user-friendly, and the ‘lean back’ approach aids the feeling of a more leisurely
experience, so those that are not familiar with computing will be more drawn to this.
• Therefore, ensuring that websites are tablet-optimised will be vital for retailers looking to
tap into this demographic.
• Grocers will also benefit from the ageing population, as will retailers that offer a large
product range. As older shoppers become less mobile, they will appreciate the
convenience on offer. This is seen particularly in sectors such as health & beauty, where
accessibility is important as certain products are essential for wellbeing.
Older shoppers will be more tech savvy and offer opportunities
3.5 3.8 3.53.0
4.13.5
2.82.1
1.51.0 0.8 0.5
4.33.8
3.12.4
6.5
5.55.0
4.0
2013 2014 2015 2016
15-24 25-34 35-44 45-54 55+
%
Growth among online shoppers by age group
Source: Verdict Research
2013 – changing shopping styles
• Convenience is a core factor in how we shop and with the event of
technology and retailers broadening their offering, consumers are zeroing in
on hassle free shopping.
• Shoppers don’t want to spend much time and money on travelling to shops
especially as home delivery is more convenient than ever before. Even
supermarkets are offering one-hour time slots to save people ‘waiting in’ for
their shopping for a long time.
• Consumers will still visit large shopping centres, but as a ‘destination’ day
out. Shopping centres also offer food outlets and entertainment/leisure
options so there is more to do than simply go shopping.
• Smaller, local convenience stores are more important than ever. Consumers
still do a large regular shop, but this is less often and they are more likely to
do ‘top up’ shopping at local stores
• There are fewer reasons to visit ‘big-box’ retail parks, which is where a
number of retail’s casualties since the recession have taken place. The most
recent of these was Comet in November 2012.
• Online will continue to grow and with the growing popularity of m-commerce
(shopping and paying for goods via a mobile phone) the channel will be more
important to retail. Ensuring that transactional websites are optimised for
mobile use is vital.
• The boom of tablets will also mean more access to online shopping for those
that previously have been put off as they are not familiar with computers.
Tablets, with their ‘lean back’ experience are more user friendly than a PC or
laptop, and they are more leisurely to use, being easy to boot up.
Technology and convenience win out
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