Supermarket Market Analysis

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{text:bookmark-start} {text:bookmark-start} {text:bookmark-start} {text:bookmark-end} {text:bookmark-end} Executive Summary {text:bookmark-start} {text:bookmark-end} {text:bookmark-end} In the UK, the supermarket and superstore market continues to grow. In 2002, retail sales of food through supermarkets and superstores reached an estimated £83.68bn, a growth of 5.1% on the previous year. {text:bookmark-start} {text:bookmark-end} The market is composed primarily of major chains, with outlets nationwide. Alongside these are smaller operations with a traditionally regional bias, although most of these chains are currently expanding nationwide. In addition to these are the limited assortment discounters (LADs). In general, these are operated by European firms and offer basic food products aimed at the lower end of the mass market. {text:bookmark-start} {text:bookmark-end} In 2002, the threat of a slowdown in consumer spending contributed to a renewal of competition on price. The major companies are also carrying out large-scale store refit programmes, in addition to the expansion of outlet numbers. Smaller-format stores are becoming more frequent, resulting in increased competition with smaller, independent retailers. Supermarkets are expanding further into the convenience market. This is a further means of securing customer loyalty, and comes in a year when customer-loyalty schemes have been rejuvenated. {text:bookmark-start} {text:bookmark-end} Wal-Mart's acquisition of ASDA Group Ltd in 1999 has seen the company's stores offer a greater range of non-food products — a move that has been followed by Tesco PLC. Most of the major multiples are incorporating rising numbers of non-food lines into their future development plans as a means of competing with Wal-Mart. Larger superstores are increasingly moving away from traditional, basic food lines to include a wider variety of products and services. {text:bookmark-start} {text:bookmark-end} As store refit programmes roll out, it is expected that non-food products, and other services, will play an increasingly important role for many of the major supermarket chains. New technology is being implemented across the supply chain to monitor food and increase automation of distribution networks. {text:bookmark-start} {text:bookmark-end} Key Note estimates that the value of retail sales of food by supermarkets and superstores will grow by 16% between 2003 and 2007. Sales of non-food items will increase at a much faster rate, becoming a more dominant part of supermarket and superstore sales. Market Definition REPORT COVERAGE This report covers the UK supermarket and superstore market. The definition includes multiple supermarket chains, such as J Sainsbury PLC and Tesco PLC, in addition to the limited assortment discounters (LADs), such as Aldi Stores Ltd and Netto Foodstores Ltd, and regionally-based chains, such as Wm Morrison Supermarkets PLC. The report includes only chains with an annual turnover in excess of £5m. The coverage of this report has changed since the previous edition to reflect changes in the market. There is a trend for the major supermarket chains in the UK to open dedicated food stores, and stores on petrol forecourts, specialising in grab-and-go' food retailing: such stores include Tesco Extra and Marks & Spencer's Simply Food. These stores are generally no smaller than 2,500 square feet of selling space; however, they can be as small as 1,500 square feet. The definition ofsupermarket' has been amended accordingly. {text:bookmark-start} {text:bookmark-end} Supermarkets {text:bookmark-start} {text:bookmark-end} For the purpose of this report, a supermarket is defined as a self-service grocery store selling food, beverages and other goods, with a selling space of between 1,500 and 12,000 square feet. A large supermarket has a selling space of between 12,000 and 25,000 square feet. Supermarkets are located primarily in town centres, on high streets, or...
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