ISBN 1-85765-671-7

Table of Contents

Executive Summary

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TABLE OF CONTENTS

Executive Summary

Introduction

RECENT PERFORMANCE

MAIN ECONOMIC INDICATORS

HOUSING MARKET TRENDS

SOCIAL TRENDS

HOUSEHOLD EXPENDITURE

DISPOSABLE INCOMES

Table 1.1: Retail Sales Volume Index (at 1990 prices seasonally adjusted), 1991-1996

Table 1.2: Gross Domestic Product (annual average percent change), 1980-1996

Table 1.3: UK Manufacturing Output (annual average percent change), 1980-1996

Table 1.4: UK Consumer Expenditure (annual average percent change), 1980-1996

Table 1.5: Retail Sales for All UK Retailers at Constant 1990 Prices (£bn), 1992-1996

Table 1.6: All-Items Retail Price Index (annual average percent change), 1992-1996

Table 1.7: New Business Consumer Finance (£m), 1995 and 1996

Table 1.8: UK Seasonally-Adjusted Claimant Unemployment - Annual Averages (million), 1992-1996

Table 1.9: Employees in Employment in the Wholesale and Retail Trades in Great Britain (000 seasonally adjusted), 1992-1996

Table 1.10: Average Gross Weekly Earnings for Full-Time Employees in Great Britain (£), 1992-1996

Table 1.11: Number of Households in England by Structure (000), 1981-2006

Table 1.12: Relative Changes in the UK Population by Age and Gender (000), 1994-2031

Table 1.13: Household Structure in Great Britain ( percent), 1961-1994/1995

Table 1.14: Dependent Children in Great Britain by Family Type ( percent) 1972-1995

Table 1.15: Average Household Weekly Expenditure on Commodities and Services - All UK Households (£ and percent), 1992-1995/1996

Table 1.16: Household Expenditure as a percentage of Total Expenditure by Gross Weekly Income Group ( percent), 1995/1996

Table 1.17: Personal Disposable Incomes, Consumers' Expenditure and Personal Savings (£m seasonally adjusted), 1991-1996

Industry Structure

PERFORMANCE OF UK RETAILING

SIZE OF RETAIL BUSINESSES

TYPES OF RETAIL BUSINESS

THE MAJOR GROUPS

SMALL RETAILERS

OUTSIDE SUPPLIERS TO THE MARKET

FASHION

FINANCIAL SERVICES

INFORMATION TECHNOLOGY

DESIGN AND MARKETING

TRAINING

THE ENVIRONMENT

EMPLOYMENT

TRADE ASSOCIATIONS

EXHIBITIONS

Table 2.1: Performance of UK Retailing (£m, 000 and £), 1992-1996

Table 2.2: UK VAT-Registered Retail Businesses by Turnover Size (number of businesses), 1990-1996

Table 2.3: Annual Sales of UK Large and Small Retail Businesses at Current Prices (£m not seasonally adjusted), 1992-1996

Table 2.4: Sales by Retail Sector at Current Prices (£bn and percent), 1992-1996

Table 2.5: Top 12 UK Retailers by Annual Sales and Operating Profit, 1996

Table 2.6: Diversified Interests of Major UK Retailers, 1996

Table 2.7: UK Retail Businesses by Outlets and Annual Sales (number and £m), 1994

Table 2.8: Full and Part-Time Employment in the UK Wholesale and Retail Trades (000 not seasonally adjusted), 1992-1996

Consumer Profile

INTRODUCTION

CONSUMER CONFIDENCE

FOOD AND DRINK

CLOTHING AND FOOTWEAR

HOUSEHOLD ITEMS

OTHER ITEMS

Table 3.1: Consumer Confidence in UK Households ( percent), 1992-1996

Table 3.2: Comparative Expenditure of UK Adults by Age and Gender ( percent), Christmas 1996 versus Christmas 1995

Table 3.3: Frequency of Grocery Shopping by Housewives in Great Britain ( percent), 1993 and 1996

Table 3.4: Weekly Expenditure on Grocery Items for Eating at Home by Housewives in Great Britain ( percent), 1993-1996

Table 3.5: Weekly Expenditure on Fresh and Frozen Food Items by Housewives in the UK by Amount Spent ( percent), 1993 and 1996

Table 3.6: Sourcing of Fresh and Frozen Meat, Fish, Fruit and Vegetables by Housewives in Great Britain ( percent), 1993 and 1996

Table 3.7: Food Preferences of UK Adults by Sex, Age and Social Class ( percent), 1996

Table 3.8: Drink Preferences of UK Adults by Sex, Age and Social Class ( percent), 1996

Table 3.9: Anticipated Expenditure on Food and Drink by UK Adults by Sex, Age, Social Class and Region ( percent), 1997 Versus 1996

Table 3.10: Comments by UK Adults on Current Issues When Shopping for Food by Sex, Age, Social Class and Region ( percent), January 1997

Table 3.11: Habits of UK Adults When Shopping for Clothes and Footwear by Sex, Age, Social Class and Region ( percent), August 1996

Table 3.12: Comments by UK Adults on Shopping for Clothing and/or Shoes by Sex, Age, Social Class and Region ( percent), January 1997

Table 3.13: Clothing Purchased by UK Women by Amount in Last 12 Months ( percent of women spending), 1996

Table 3.14: Clothing Purchased by UK Men by Amount Spent in Last 12 Months ( percent of men spending), 1996

Table 3.15: Comments on Shopping for Household Items from UK Adults ( percent), January 1997

Table 3.16: Purchases of Household Items by Adults in Great Britain ( percent), 12 Months to March 1994 and March 1996

Table 3.17: Comments by UK Adults on General Shopping by Sex, Age, Social Class and Region ( percent), January 1997

Table 3.18: Attitudes to Shopping by Sex, Age, Social Class and Region ( percent), January 1997

Food Retailers

INTRODUCTION

MARKET POSITION

MARKET SECTORS

SIZE ANALYSIS OF BUSINESSES

CONVENIENCE STORES

SUPERMARKETS

THE DISCOUNTERS

THE MAJOR FOOD RETAILERS

RECENT DEVELOPMENTS

FUTURE PROSPECTS

Table 4.1: Trends in UK Food Sales at Current Prices (£m), 1992-1996

Table 4.2: Trends in UK Food Sales by Non-Specialised and Specialised Food Stores at Current Prices (£m), 1992-1996

Table 4.3: Trends in UK Food Sales in Specialised Food Stores by Type at Current Prices (£m), 1992-1996

Table 4.4: UK Non-Specialised Food Store Outlet Sales at Current Prices (£m), 1992-1996

Table 4.5: Distribution of UK Retail Food Businesses by Number of Outlets, Sales and Average Annual Sales per Outlet (number, £m and percent), 1994

Table 4.6: Estimated Number of UK Convenience Stores by Sector, 1996

Table 4.7: Estimated Sales of UK Convenience Stores by Sector by Sales (£m), 1996

Table 4.8: Market Shares of the Leading UK Supermarket Food Retailers ( percent), 1996

Table 4.9: Leading UK Supermarket Retailers by Number of Stores and Sales (£m), 1996

Table 4.10: The Leading Discounters in UK Food Retailing by Number of Outlets and Sales (number and £m), 1996

Table 4.11: Profile of Tesco PLC, 1992-1996

Table 4.12: Profile of J Sainsbury PLC, 1992-1996

Table 4.13: Profile of Safeway PLC, 1992-1996

Table 4.14: Profile of ASDA Group PLC, 1992-1996

Table 4.15: Profile of Kwik Save Group PLC, 1992-1996

Table 4.16: Profile of Spar Landmark Ltd, 1991-1995

Table 4.17: Forecast UK Food Sales at Current Prices (£m), 1997-2001

Table 4.18: Forecast UK Food Sales at Constant 1996 Prices (£m), 1997-2001

Non-Specialised Stores

INTRODUCTION

MARKET POSITION

SIZE ANALYSIS OF BUSINESSES

THE MAJOR RETAILERS

RECENT DEVELOPMENTS

FUTURE PROSPECTS

Table 5.1: Trends in UK Non-Specialised Predominantly Non-Food Sales at Current Prices (£m), 1992-1996

Table 5.2: Sales by Non-Specialised Predominantly Non-Food Stores at Current Prices (£m), 1992-1996

Table 5.3: Profile of Boots the Chemists Ltd (£m), 1992-1996

Table 5.4: Profile of John Lewis Partnership PLC (£m), 1992-1996

Table 5.5: Profile of Woolworths (£m), 1992-1996

Table 5.6: Woolworths' Market Share by Key Product Categories (£m and percent), 1996

Table 5.7: Profile of John Menzies Retail (£m), 1992-1996

Table 5.8: Profile of House of Fraser (£m), Years to January 1994-1997

Table 5.9: Forecast Sales of Non-Specialised Predominantly Non-Food Stores at Current Prices (£m), 1997-2001

Table 5.10: Forecast Sales of Non-Specialised Predominantly Non-Food Stores at Constant 1996 Prices (£m), 1997-2001

Textiles, Clothing, Footwear and Leather

INTRODUCTION

MARKET POSITION

ANALYSIS BY SIZE OF BUSINESS

MARKET SECTORS

MARKET OUTLINE

THE MAJOR RETAILERS

RECENT DEVELOPMENTS

FUTURE PROSPECTS

Table 6.1: Trends in UK Retail Sales of Textiles, Clothing, Footwear and Leather Items at Current Prices (£m), 1992-1996

Table 6.2: UK Retail Sales of Textiles, Clothing, Footwear and Leather Items at Current Prices (£m), 1992-1996

Table 6.3: UK Retail Sales of Textiles, Clothing, Footwear and Leather Items by Segment at Current Prices (£m), 1992-1996

Table 6.4: Profile of Marks & Spencer (£m), 1992-1996

Table 6.5: Profile of the Burton Group PLC (£m), 1994-1996

Table 6.6: Profile of The Burton Group PLC (£m), 1992-1996

Table 6.7: Profile of Storehouse PLC, 1992-1996

Table 6.8: Turnover Analysis for Storehouse PLC by Product ( percent), 1993-1996

Table 6.9: Profile of Next PLC (£m), 1993-1996

Table 6.10: Market Shares in the UK Shoe Market ( percent), 1996

Table 6.12: Forecast Sales of Textiles, Clothing, Footwear and Leather Stores at Current Prices (£m), 1997-2001

Table 6.13: Forecast Sales of Textiles, Clothing, Footwear and Leather Stores at Constant 1996 Prices (£m), 1997-2001

Household Goods Stores

INTRODUCTION

MARKET POSITION

ANALYSIS BY SIZE OF BUSINESS

MARKET OUTLINE

THE MAJOR RETAILERS

RECENT DEVELOPMENTS

FUTURE PROSPECTS

Table 7.1: Trends in UK Retail Sales of Household Goods Stores at Current Prices (£m), 1992-1996

Table 7.2: Retail Sales of Household Goods Stores at Current Prices (£m), 1992-1996

Table 7.3: UK Retail Sales of Household Goods by Segment at Current Prices (£m), 1992-1996

Table 7.4: Profile of MFI Furniture Group PLC (£m), 1992-1996

Table 7.5: Profile of DFS Furniture Company PLC (£m), 1992-1996

Table 7.6: Profile of Courts PLC (£m), 1993-1996

Table 7.7: Other Significant Retailers of Furniture, Lighting and Other Household Goods by Total Sales (£m), 1996

Table 7.8: Profile of Dixons Group PLC (£m), 1992-1996

Table 7.9: Sales by Product for Dixons Group PLC ( percent), 1996

Table 7.10: Profile of Comet PLC (£m) 1993-1996

Table 7.11: Profile of B&Q PLC (£m), 1993-1996

Table 7.12: Profile of the New Homebase/Texas Group (£m), 1996

Table 7.13: Profile of Do-it-All, 1992-1996

Table 7.14: Profile of AG Stanley, 1992-1996

Table 7.15: Profile of Focus Retail Group PLC (£m), 1992-1995

Table 7.16: Forecast Sales of Household Goods at Current Prices (£m), 1997-2001

Table 7.17: Forecast Sales of Household Goods at Constant 1996 Prices (£m), 1997-2001

Other Stores

INTRODUCTION

MARKET POSITION

ANALYSIS BY SIZE OF BUSINESS

MARKET SECTORS

MARKET OUTLINE

MAJOR RETAILERS

RECENT DEVELOPMENTS

FUTURE PROSPECTS

Table 8.1: Trends in UK Retail Sales of Other Stores at Current Prices (£m), 1992-1996

Table 8.2: UK Retail Sales of Other Stores at Current Prices - Large Versus Small Retail Businesses (£m), 1992-1996

Table 8.3: UK Retail Sales of Other Stores by Segment at Current Prices (£m), 1992-1996

Table 8.4: Profile of WH Smith Group PLC (£m), 1992-1996

Table 8.5: Profile of WH Smith Group PLC by Division, 1995 and 1996

Table 8.6: Financial Profile of Argos PLC (£m), 1992-1996

Table 8.7: Financial Profile of Boots Opticians (£m), 1992-1996

Table 8.8: Financial Profile of Halfords (£m), 1992-1996

Table 8.9: Financial Profile of Superdrug Stores PLC (£m), 1992-1996

Table 8.10: Profile of The Body Shop in the UK (£m), 1992-1996

Table 8.11: Forecast Sales of Other Stores by Segment at Current Prices (£m), 1997-2001

Table 8.12: Forecast Sales of Other Stores by Segment at Constant 1996 Prices (£m), 1997-2001

Non-Store Retailing and Repair

INTRODUCTION

MARKET POSITION

ANALYSIS BY SIZE OF BUSINESS

MARKET OUTLINE

MAJOR NON-STORE RETAILERS

RECENT DEVELOPMENTS

FUTURE PROSPECTS

Table 9.1: Trends in UK Non-Store Retail at Current Prices (£m), 1992-1996

Table 9.2: UK Non-Store Retail at Current Prices - Large Versus Small Businesses (£m), 1992-1996

Table 9.3: UK Non-Store Retail by Segment at Current Prices (£m), 1992-1996

Table 9.4: Profile of Great Universal Stores, 1993-1996

Table 9.5: Financial Profile of Grattan PLC (£m), 1994-1996

Table 9.6: UK Non-Store Retail by Segment at Current Prices (£m), 1997-2001

Table 9.7: UK Non-Store Retail by Segment at Constant 1996 Prices (£m), 1997-2001

Future Prospects

FACTORS INFLUENCING RETAILING

FORECASTS 1997 TO 2001

Table 10.1: Forecast Sales by Main Retail Sectors at Current Prices (£m), 1997-2001

Table 10.2: Forecast Sales by Main Retail Sectors at Constant 1996 Prices (£m), 1997-2001

Further Sources

ASSOCIATIONS

PERIODICALS

DIRECTORIES

GENERAL SOURCES

HBI UK INFORMATION SOURCES

GOVERNMENT PUBLICATIONS

OTHER SOURCES

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EXECUTIVE SUMMARY

1996 was a year in which UK domestic demand and consumer expenditure started once more to recover. Total retail sales are estimated to have increased by 5.4 percent, from £159.1bn in 1995 to £167.7bn in 1996. The largest sector of the market is food retailing, which represented 45.5 percent of sales, followed by clothing representing 20.6 percent of sales.

Looking ahead, Key Note is forecasting that UK total retail sales at current prices will increase by 22.8 percent between the end of 1997 and the year 2001. The largest increase will be in household goods (29 percent), as the housing market continues to improve. The lowest rate of growth is forecast for non-store retailing and repair (14.8 percent), largely comprising mail order (19 percent) and non-store (direct and door-to-door) sales (8 percent).

Food retailing will remain the largest sector with its share of total retail sales declining only marginally from 45.1 percent in 1997 to 44.9 percent in 2001. The share taken by household goods is forecast to increase from 12.7 percent in 1997 to 13.4 percent in 2001.

Over the next 5 years, retail sales at constant 1996 prices are forecast to increase by 14.8 percent. This represents an average annual rate of growth of 3.7 percent per annum and compares with the average annual increase of 2.8 percent per annum achieved between 1992 and 1996 at constant 1990 prices.

In 1996, employment in the retail and wholesale trades, which represents 17.1 percent of the total workforce in Great Britain, increased by 1.6 percent against the previous year. Average gross weekly earnings for full-time employees in the sector reached £271.1 (up 4 percent), which compares with the average of £351.7 (up 4.6 percent) enjoyed by full-time employees in all forms of employment.

The recovery which has taken place in the UK economy over the past 2 years has prompted better fortunes for many of the country's retailers; sales have not, however, returned to the heady days of the 1980s. Early in 1997, retailers appealing to the upper end of the market are doing better than those focusing on lower-priced items, with money being directed mainly at cars, household durables, fashion goods and financial services.

The structure of UK retailing continues to consolidate, with big retailers taking an increasing share of total sales. Between 1990 and the third quarter of 1996, sales in large retailers at current prices increased by 27 percent, whereas in smaller retailers -- defined as those with annual sales of less than £4.5m -- the increase was just 1 percent. In large food multiples, growth since 1990 was 55 percent, compared with zero growth in small food outlets.

However, all is not well within some of the UK's top retailers. The end of 1996 brought a spate of profits warnings and lower than anticipated results, as the battle intensifies to grab an increasing share of markets which are growing at a lower rate than the aspirations of some boardrooms. Already, a number of leading retailers are in the throes of restructuring programmes brought about by declining profits. Whether they succeed or fail, merge, or get taken over, has yet to be determined.

In support of this report, Key Note commissioned Gallup to ask a representative sample of UK adults specific questions concerning their recent shopping practices. On food shopping, the replies received suggest that 40 percent of UK adults spent more on Christmas 1996 than they did on Christmas 1995; 53 percent expected to spend the same on food and drink in 1997 as they did in 1996 and 56 percent now regularly collect bonus or loyalty card points.

With only 9 percent of UK adults in favour and 90 percent against, there is strong resistance to the idea of petrol stations being allowed to sell alcohol. The idea of personal banking and other financial services at the supermarket received a more encouraging response, but even here, only 36 percent of UK adults said they were in favour, with 62 percent against. A majority (77 percent) of respondents felt that further supermarket development should be restricted to protect the smaller retailer, and only 31 percent said they were in favour of supermarkets staying open all night.

Four out of every ten respondents said they now regularly pay for their shopping with a credit or debit card, but only 14 percent said they did a lot of shopping via a mail order catalogue, slightly ahead of the 12 percent who said they had shopped via television using teletext and considerably more than the 4 percent who claimed to have shopped over the Internet.

Within large retailers, a number of trends are apparent. The expanding use of customer loyalty systems, started in food and spreading to other retailers, is now providing a solid base of information on customer purchasing habits. This allows retailers to more accurately target their marketing and develop more responsive customer services. Stemming from loyalty cards the market is already witnessing the launch of personal banking and other financial services within supermarkets.

Large food retailers, starved of out-of-town store developments, must now look elsewhere for profits growth. This is most likely to come from overseas expansion; further increases in non-food departments within existing large stores, and the acquisition of suitable UK non-food retail businesses to gain access to prime retail sites.

In non-food, the emerging trends include: a movement by variety chains towards a department store image for their larger outlets by increasing product ranges to include more household and `big ticket' items; and a growth in `specialogues'. These enable the retailer to offer a wider product range to the customer regardless of any limitations imposed by existing retail display space.

Text © 1997 Key Note

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