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Transcript
Eyeing up the cost of UK groceries STORE Introduction BeMyEye used its crowd of more than 350,000 ‘Eyes’ to source prices of 10 products to capture the pricing discrepancies between grocers, convenience stores, off licences and independent supermarkets. The intention was to uncover insights into the cheapest, and/or most varied pricing throughout the country across a typical UK consumer’s shopping basket. These changes in the market have been widely reported in the past decade. The large scale hyper markets seen in the last two decades have begun to retreat, replaced by smaller local convenience stores that better cater to the modern consumer. The financial crisis of 2008 created an ideal opportunity for supermarkets such as Aldi and Lidl to serve customers who wanted to make their money stretch further. This ‘savvy shopping’ trend looks certain to continue now that consumers know they can get more for less. Consumer behaviour will dictate the future of the grocery market. Recent reports have demonstrated a shift away from the big weekly shop towards “little and often” shopping habits. According to IDG, discount and convenience, as well as online, are predicted to grow as the size of UK baskets fall. These changing shopping attitudes and habits are placing pressure on retailers and brands, which strive to understand and stay one step ahead of consumers in order to survive in a competitive landscape. Consumers are now bombarded with more choice, not only in store but also online. Developing and maintaining the loyalty to retailers is becoming tougher and tougher due to convenience shopping. For brands, this means their remit now must cover every relevant touch point. With these increasing market pressures, it’s more important than ever for brands to keep up with the rapid pace of change and to have a constant view of how their products are performing across all environments. 2 The Eyes were tasked with collecting unique insights on prices of a range of different products; eggs, bread, milk, a can of Coca Cola, Kit Kat, hummus, avocado, lager, a Pot Noodle and a tin of Baked Beans. These products were selected based on a typical basket of an everyday consumer, with an additional focus on some essentials required by university students. BeMyEye’s real-world data gathers collect insights for brands through challenges that are set in their close vicinity. Through a map view in the BeMyEye Smartphone App, insights are collected and supported with photographic evidence taken by the Eyes in-app. The information can be tracked back to the individual store level, allowing a census instead of sample approach that supplies brands and retailers with actionable intelligence in a fast and affordable way. The report includes 414 total responses over four days by the Eyes in the UK across: »» 67 Convenience stores »» 61 Off licences »» 285 Grocers About the research 4 Food prices are lower than they have ever been; in fact grocery prices fell 0.8% in June, marking the deepest deflation in food for over a year, according to the British Retail Consortium-Nielsen Shop Price Index. Stocking up on essentials However, the price for essential items is now comparable to packaged foods. The average price of bread is 68p, milk is 82p and eggs are 90p – so it’s actually cheaper to buy a tin of Baked Beans at an average price of 40p than any of these staples. In addition, the Eyes were just as likely to find a Pot Noodle instore as they were eggs. This would suggest that shelf space is just as dedicated to convenience foods as it is fresh produce in stores today. For a long time, supermarkets have been able to offer cheaper prices than convenience stores and local independents because of their size, allowing them to take control of the UK’s grocery sector. The Grocer recently reported that the price of milk is beginning to rise. Asda, which was the first to slash the cost of four pints by 6p to 89p in January, pushed its back up to 95p in May. 82p MILK p 90 40p 68p With such a fierce battle for custom however, now there is an inevitable price war amongst supermarkets, convenience stores and off licences. The Eyes actually found that for all of the basics put together (bread, milk and eggs) the cheapest average total price is in off-licences at £1.46, followed by supermarkets, then convenience stores. In two out of three cases, shoppers will spend less than £2.32 on their grocery essentials; milk, bread and eggs. The cheapest these items can be purchased for in a supermarket is £1.81. Asda and Tesco are the cheapest of the big four supermarkets for these basket essentials. The most expensive loaf of bread is found in Londis convenience stores, specifically in Greater London on Albert Embankment (SE1 7TJ), Abington, Oxfordshire on Vineyard (OX14 3PB) and in Beaconsfield, Buckinghamshire on Mayflower Way (HP9 1UG). The cheapest pint of milk identified by the Eyes is in Northern Ireland. In Tesco in Derry at the Quayside Shopping Centre on Strand Road (BT48 7PX), in Asda, Gwynedd on Market Lane (BT20 4SU) and in Asda in Antrim on the Junction 1 Retail Park (BT41 4JG) consumers can find the lowest prices. The average price of bread is 68p, milk is 82p and eggs are 90p – so it’s actually cheaper to buy a tin of Baked Beans at an average price of 40p than any of these staples 6 7/10 Our real world data gathers reveal that seven out of the 10 items we researched are cheaper individually in a supermarket compared to a convenience store or off licence. Convenience stores and off licences will always struggle to compete on price. In fact, of the items we surveyed, convenience stores were only able to offer Kit Kats and avocados at more competitive prices than supermarkets. Pot Noodles were cheaper in off licences. Where these stores can compete however, is by appealing to the UK’s appetite for convenience. Lifestyle changes mean that people are not making the time to do a weekly shop. People have never been busier than they are now; 62% of people say that a busy work schedule and social life mean that they don’t have hobbies. Sainsbury’s made the decision to stop doing multi-buy offers last year because the average shopper now goes to the supermarket twice a week to buy “what they need, when they need it”. Buying more than you need because of a multi-buy means that shoppers are now unnecessarily spending more than £1,270 a year says MASA. UK consumers are moving away from bulk buying and towards little and often shopping. Are people paying for convenience? Amazon Dash could be what the next phase of convenience looks like. Prime customers in the UK can now order essentials from 48 brands, including Air Wick, Andrex, Ariel, Brabantia and Fairy, at the push of a button. While the Dash Button saves time for shoppers, each product ordered from Amazon Dash currently costs £4.99. It seems surprising that consumers will pay £10 for a couple of household items like coffee and toilet roll but the service has proven popular in other markets. Since launching in the US last year, the Dash Button programme has seen continued growth, with the number of brands, orders and items available all increasing at a rapid pace. As people do smaller, more regular shops, it’s becoming clearer that consumers are happier to pay more for the luxury of shopping locally and conveniently. 8 Prices in convenience stores compared to supermarkets in the same area vary hugely across the country. For example, for a basket of basics (milk, bread and eggs) in Oxfordshire it is 58% more expensive than in a supermarket in the same location. In Buckinghamshire the gap is even wider, with a 75% difference between the price of the goods in a convenience store and supermarket. In Greater London it’s 23% more expensive to shop in a convenience store. However, in Gloucestershire the difference is only 6%, lowering the price of convenience for the consumer. According to The Local Shop Report for 2016, convenience stores have invested over £600m in their businesses over the last year to improve their stores. James Lowman, chief executive of the Association of Convenience Stores supports this, explaining that its members have invested millions of pounds in refrigerators and new equipment to cater for shoppers’ habits. 9 The type of products that convenience stores are able to offer more cheaply are interesting; it never used to be that common to find an avocado in a convenience store. However the Eyes reveal that a convenience store is now the cheapest place to buy one. In addition, off licences offer KitKats and Pot Noodles more cheaply than other stores. Local shops cannot continue to rely on tobacco, newspapers and confectionery alone. There is demand amongst customers for a wider range of goods in convenience stores, including fresh food and quality ready meals. Shop owners should investigate the appetite for new Kit Kats and avocados were sold at a more competative price in convenience stores. Pot Noodles were cheaper in off licences product ranges within their stores to unlock new brand and sales opportunities. Eat 17 in East London, which is an affiliate to Spar, is an interesting example of a local store that has expanded to provide convenient and fresh products. It sells items you would usually find in Spar shops but has also branched out to sell its own microwavable meals, pizza and prosecco. By keeping an eye on the latest food trends, and stocking fresh ingredients that are best-selling foods, convenience stores and off licences may be able to open new revenue streams. By moving away from the products they are currently stocking and making space for fresh produce and convenience foods, they can appeal to the little and often shopper that offers a huge growth opportunity. Our Eyes reveal that a convenience store is now the cheapest place to buy an avocado STORE Brands need to make sure that because of the increased competition between convenience stores, independents and supermarkets their products are competitively priced. However, because it’s difficult for brands to visit and analyse their presence across thousands of these independent stores due to the time and cost to collate data from all of these locations, it’s difficult for them to get a complete understanding of the market instantly. 10 Spotlight on two customer segments Online shopping has allowed brands to use data to target their customers based on who they are and recommend products based on their behaviour across digital channels. However, in the real world, retailers and brands face a blind spot when it comes to identifying their different audience segments and how they’re purchasing in individual stores. We looked at the shopping habits of two types of shoppers; the health conscious shopper and the penny pinching student to understand how brands can best engage these audiences based on price information. 1) The rise of the health conscious shopper Earlier in the year we heard of a potential avocado shortage, sparking concern amongst a fresh breed of health conscious millennials. According to Morgan Stanley, nowadays, millennials care more about food being “fresh, less processed and with fewer artificial ingredients”, as opposed to fewer calories. Luckily for this group, the avocado shortage didn’t appear to materialise, and we’ve continued to see the rise of health icons, such as The Body Coach, dominate TV screens and social media. This has ultimately changed the modern-day shopper and their needs, fuelling the rise of the diet focused individuals. Whilst something like an avocado may have been an occasional purchase for a particular recipe a few years ago, items such as these have quickly become an everyday essential for many – The Grocer reported last year that Brits spent £142 million on the fruit! 12 52% 2) University students – a breed of their own You are far more likely to find an avocado in UK shops, than a can of Coca Cola The Eyes found that, nowadays, you are far more likely to find an avocado in UK shops, than a can of Coca Cola. 62% of the Eyes found an avocado in stores, as opposed on only 52% finding a can of the famous fizzy drink. In fact, the only supermarkets that regularly stock cans of Coca Cola are Tesco and Sainsbury’s. The Eyes only found cans in four of the 167 Morrison’s and Asda stores they visited. Similarly, you’re also more likely to find a pot of hummus in shops, with our Eyes finding this item 66% of the time. It’s now cheaper to buy an avocado at a convenience store, as opposed to a supermarket. This highlights the increased demand 13 for such items as a convenient purchase. Paired with this, the average price for a Pot Noodle is £1.02, whilst a pot of hummus is £1.01 and an avocado is just 62p. As the diets of the UK shoppers change and people become inherently more health conscious, off licences can benefit from stocking fresh food alongside packaged goods. If completely visible to the shopper on the shelf, avocados are something that the modern-day shopper is compelled to buy. With limited funds, but often a full social calendar, bargainsavvy students are no strangers to sourcing the cheapest priced items. With research from UNiDAYS showing that two thirds of students spend their time shopping, these individuals dedicate lots of their time to perusing shop aisles and picking out the best offers. With this in mind, data from the Eyes suggests that Tesco offers the best value out of the big four supermarkets. Essentials including Baked Beans and a Pot Noodle are identified as cheaper at Tesco than at Asda, Sainsbury’s or Morrison’s. The cheapest that a student can source these essential goods for is £2.02, whilst the average for all three items comes in at £4.08. The region where students can purchase the cheapest basket of goods is the West Midlands and it’s most expensive in Lancashire. While this is great news for students at the University of Warwick and University of Birmingham, it’s bad news for students of University of Manchester and University of Salford. A four-pack of lager is the product that sees the widest variation in cost, with £7.50 being the most expensive, found at a Londis store on the Kings Road in London, and 88p the cheapest at Morrison’s. For those extra cost-conscious students, it is worth visiting different types of stores to find items at the lowest possible cost. Supermarkets aren’t always cheapest, with the Eyes finding that actually, the best place to buy a Pot Noodle is at an offlicence, as opposed to one of the big four supermarkets, or even a convenience store. Brands need to make sure that their student-friendly goods are priced competitively. These individuals are prone to sniffing out discounts and deals, so ensuring promotions are displayed correctly and competitively is vital. 62% The report demonstrates the huge differences between stores, regions and products across the UK. With the grocery market constantly shifting and competition increasing across all channels, retailers and brands have to make rapid decisions based on specific data in target markets. Those that understand the context behind exactly how products are performing and how their customer segments react will ultimately win out. Businesses need to use technology and the scale it offers to source location-specific information in real time. The insights they uncover will enable them to observe, audit and take control of their physical presence; providing the intelligence to identify new revenue streams, uphold brand integrity and make savings quickly. The method of mobile crowdsourcing empowers businesses to “see” thousands of locations in quasi real time. Looking to the crowd is the new era of real world data capture – it’s revealing actionable insights about the real world, in real-time, that retailers and brands have never had access to before. David Miller 020 3808 5245 BeMyEye.com Conclusion 15