ISBN 1-85765-857-4

Table of Contents

Executive Summary

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TABLE OF CONTENTS

Executive Summary

Market Overview

DEFINITION

INTRODUCTION

MARKET STRUCTURE

CONSUMER EXPENDITURE

EMPLOYMENT

TRADE ASSOCIATIONS

PEST ANALYSIS

TOTAL MARKET SIZE

MARKET SEGMENTATION

KEY TRENDS

EUROPEAN/GLOBAL PERSPECTIVE

Table 1.1: UK VAT-Registered Retail Businesses by Number and Turnover (£000), 1990-1997

Table 1.2: UK Sales of Large and Small Retail Businesses at Current Prices (£bn), 1990-1997

Table 1.3: Sales by Major Retail Sector at Current Prices (£bn and percent), 1993-1997

Table 1.4: Average Gross Weekly Earnings for Full-Time Employees in Great Britain (£), 1993-1997

Table 1.5: Personal Disposable Income, Consumer Expenditure and Personal Savings (£m seasonally adjusted), 1993-1997

Table 1.6: Full and Part-Time Employment in the Wholesale and Retail Trades in the UK (000), 1993-1997

Table 1.7: Volume of UK Retail Sales at Constant 1990 Prices (1990=100), 1993-1997

Table 1.8: Value of UK Retail Sales at Current Prices (£m), 1993-1997

Table 1.9: Sales by Retail Segment at Current Prices (£bn), 1993-1997

Table 1.10: Largest European Retail Markets by Total Sales and Inhabitants per Outlet (Ecu bn and number of outlets), 1996

Table 1.11: Number of Employees in Retailing by Country (000), 1996

Key Note Field Research

SHOPPING FOR FOOD AND DRINK

SHOPPING FOR CLOTHING AND FOOTWEAR

HOUSEHOLD ITEMS

GENERAL SHOPPING PREFERENCES

GENERAL SHOPPING HABITS

NEW SHOPPING PRACTICES

Table 2.1: Comparative Expenditure on Shopping for Food and Drink Items by UK Adults by Sex, Age, Social Class and Region ( percent), July 1998

Table 2.2: Comparative Expenditure on Shopping for Clothes and Shoes by UK Adults by Sex, Age, Social Class and Region ( percent), July 1998

Table 2.3: Comparative Expenditure on Shopping for Household Items by UK Adults by Sex, Age, Social Class and Region ( percent), July 1998

Table 2.4: Comparative Expenditure on Shopping for Luxury Items, by UK Adults by Sex, Age, Social Class and Region ( percent), July 1998

Table 2.5 General Shopping Habits by UK Adults by Sex, Age, Social Class and Region ( percent), July 1998

Table 2.6: New Shopping Practices by UK Adults by Sex, Age, Social Class and Region ( percent), July 1998

Competitor Analysis

INTRODUCTION

MAJOR RETAILERS

Table 3.1: Selected UK Retailers by Turnover (£m), 1998

Table 3.2: Diversified Interests of Major UK Retailers, 1998

Table 3.3: Financial Profile of Tesco PLC (£m), 1994-1998

Table 3.4: Financial Profile of J Sainsbury PLC (£m), 1994-1998

Table 3.5: Financial Profile of Marks & Spencer PLC (£m), 1994-1998

Table 3.6: Financial Profile of ASDA Group PLC (£m), 1994-1998

Table 3.7: Financial Profile of Safeway PLC (£m), 1994-1998

Table 3.8: Financial Profile of Kingfisher PLC (£m), 1994-1998

Table 3.9: Financial Profile of Somerfield PLC (£000 and 000 square feet), 1996 and 1997

Table 3.10: Financial Profile of The Boots Company PLC (£m), 1995-1998

Table 3.11: Financial Profile of John Lewis Partnership PLC (£m), 1994-1998

Table 3.12: Financial Profile of Great Universal Stores PLC (£m), 1995-1998

Table 3.13: Financial Profile of Dixons Group PLC (£m), 1994-1998

Table 3.14: Financial Profile of WH Smith Group PLC (£m), 1994-1998

Food Retailers

DEFINITION

KEY TRENDS

MARKET SIZE

MARKET STRUCTURE

EMPLOYMENT

DISTRIBUTION

TRADE ASSOCIATIONS

SUPERMARKETS

THE DISCOUNTERS

CONVENIENCE STORES

ADVERTISING AND PROMOTION

BUYING BEHAVIOUR

FORECASTS

Table 4.1: Trends in UK Food Retailers' Sales at Current Prices (£m), 1993-1997

Table 4.2: Trends in UK Food Retailers' Sales in Non-Specialised and Specialised Food Stores at Current Prices (£m), 1993-1997

Table 4.3: Trends in UK Food Retailers' Sales in Specialised Food Stores by Type at Current Prices (£m), 1993-1997

Table 4.4: Sales of UK Non-Specialised Food Store Outlets at Current Prices (£m), 1993-1997

Table 4.5: Distribution of UK Retail Food Businesses by Type and Turnover (£000), 1997

Table 4.6: Employment Trends of Retail Grocers ( percent), May/June 1998

Table 4.7: Employment Trends for Retail Specialist Food ( percent), May/June 1998

Table 4.8: UK Cash and Carry Trade by Depot Numbers and Sales by Sector (£m), 1992-1996

Table 4.9: Market Shares of the Leading Supermarket Food Retailers in the UK ( percent), 1997

Table 4.10: Customer Spend and Price Comparisons (£), October 1997

Table 4.11: Safeway Specialist Department Developments (number of departments), 1994 and 1998

Table 4.12: Reasons for Shopping at Convenience Stores and Superstores ( percent), 1998

Table 4.13: Top Ten Convenience Store Purchases by Product ( percent), 1998

Table 4.14: Estimated Sales of UK Convenience Stores by Value (£bn), 1997

Table 4.15: Profile of Spar, 1998

Table 4.16: Forecourt Retailing - Who Has What?, 1998

Table 4.17: Main Media Advertising Expenditure by Non-Specialised and Specialist Food Retailers (£000), Year Ending March 1998

Table 4.18: Frequency of Grocery Shopping for UK Adults ( percent), 1993 and 1997

Table 4.19: Weekly Expenditure on Grocery Items in the UK for Eating at Home ( percent of female housewives), 1993-1997

Table 4.20: Weekly Expenditure on Fresh and Frozen Food Items in the UK ( percent of female housewives), 1993-1997

Table 4.21: Sourcing of Fresh and Frozen Meat, Fish, Fruit and Vegetables ( percent of UK housewives), 1993-1997

Table 4.22: Forecast Sales of Grocery and Specialist Food Items at Current Prices (£m), 1998-2002

Non-Specialised Stores

DEFINITION

KEY TRENDS

MARKET SIZE

MARKET STRUCTURE

EMPLOYMENT

MAJOR PLAYERS

ADVERTISING AND PROMOTION

BUYING BEHAVIOUR

FORECASTS

Table 5.1: Trends in UK Non-Specialised Non-Food Sales at Current Prices (£m), 1993-1997

Table 5.2: Sales of UK Non-Specialised Non-Food Business at Current Prices (£m), 1993-1997

Table 5.3: Distribution of UK Non-Specialised Businesses by Turnover (£000), 1997

Table 5.4: Employment Trends of All Retail Outlets ( percent), May/June 1998

Table 5.5: Employment Trends of Large Multiple Retailers ( percent), May/June 1998

Table 5.6: Woolworths:Market Share by Key Product Types (£m and percent), 1997

Table 5.7: Main Media Advertising Expenditure by Non-Specialised Stores (£000), Year Ending March 1998

Table 5.8: Average Monthly Expenditure on Skincare ( percent of female housewives), 1997

Table 5.9: Average Monthly Expenditure on Cosmetics ( percent of female housewives), 1997

Table 5.10: Toiletry Products Purchased by Women for Men ( percent of female housewives), 1995 and 1997

Table 5.11: Shopping for Toiletries and Cosmetics by Sex, Age, Social Grade and Region ( percent of adults), July 1998

Table 5.12: Forecast Sales of Non-Specialised Stores at Current Prices (£m), 1998-2002

Textiles, Clothing, Footwear and Leather

DEFINITION

KEY TRENDS

MARKET SIZE

MARKET STRUCTURE

EMPLOYMENT

MAJOR PLAYERS

ADVERTISING AND PROMOTION

BUYING BEHAVIOUR

FORECASTS

Table 6.1: Trends in UK Retail Sales of Textiles, Clothing, Footwear and Leather Items at Current Prices (£m), 1993-1997

Table 6.2: UK Retail Sales of Textiles, Clothing, Footwear and Leather Items at Current Prices (£m), 1993-1997

Table 6.3: UK Retail Sales of Textiles, Clothing, Footwear and Leather Items by Segment at Current Prices (£m), 1993-1997

Table 6.4: Distribution of UK Textiles, Clothing, Footwear and Leather Businesses by Type and Turnover (£000), 1997

Table 6.5: Employment Trends in Retail Clothing Stores ( percent), May/June 1998

Table 6.6: Employment Trends in Footwear and Leather Stores ( percent), May/June 1998

Table 6.7: Increase in Sales of Marks & Spencer by Product Group ( percent), 1998

Table 6.8: Profile of the Arcadia Group PLC by Retail Brand, 1998

Table 6.9: Fashion Retailing at Sears PLC by Brand, 1998

Table 6.10: UK Retail Sales of Footwear by Volume and Value (£m and million pairs), 1992-1997

Table 6.11: UK Retail Sales of Footwear by Type of Outlet ( percent), 1996

Table 6.12: Main Media Advertising Expenditure by Clothing and Footwear Retailers (£000), Year Ending March 1998

Table 6.13: Clothing Purchased by Product Type ( percent of female housewives), Year Ending March 1997

Table 6.14: Clothing Purchased by Product Type ( percent of men), Year Ending March 1997

Table 6.15: Forecast Sales of Textiles, Clothing, Footwear and Leather Items at Current Prices (£m), 1998-2002

Household Goods Stores

DEFINITION

KEY TRENDS

MARKET SIZE

MARKET STRUCTURE

EMPLOYMENT

MAJOR PLAYERS

ADVERTISING AND PROMOTION

BUYING BEHAVIOUR

FORECASTS

Table 7.1: Trends in UK Retail Sales of Household Goods Stores at Current Prices, (£m) 1993-1997

Table 7.2: UK Retail Sales of Household Goods Stores at Current Prices (£m), 1993-1997

Table 7.3: UK Retail Sales of Household Goods by Segment at Current Prices (£m), 1993-1997

Table 7.4: Distribution of UK Household Goods Businesses by Type and Turnover Size (£000), 1997

Table 7.5: Employment Trends in Household Textiles, Furniture and Carpets Stores ( percent), May/June 1998

Table 7.6: Employment Trends in Durable Household Goods Stores ( percent), May/June 1998

Table 7.7: Employment Trends in Hardware, China and DIY Goods Stores ( percent), May/June 1998

Table 7.8: Other Retailers of Furniture and Lighting by Turnover (£m), 1997

Table 7.9: Retail Sales Mix of Dixons Group PLC by Product Group ( percent), 1997

Table 7.10: Comet PLC's View of the UK Electrical Market (£m), 1996 and 1997

Table 7.11: Other Electrical Retailers by Total Sales (£m), 1997

Table 7.12: UK DIY Market and B&Q Share (£m and percent), 1995-1998

Table 7.13: Main Media Advertising Expenditure by Household Goods Stores (£000), Year Ending 1998

Table 7.14: Purchases of Household Items by UK Adults ( percent), Year Ending March 1996 and 1997

Table 7.15: Purchases of Selected DIY Items by UK Adults ( percent), Year Ending March 1997

Table 7.16: Forecast Sales of Household Goods Stores at Current Prices (£m), 1998-2002

Other Stores

DEFINITION

KEY TRENDS

MARKET SIZE

MARKET STRUCTURE

EMPLOYMENT

MAJOR PLAYERS

ADVERTISING AND PROMOTION

BUYING BEHAVIOUR

FORECASTS

Table 8.1: Trends in UK Retail Sales of Other Stores at Current Prices (£m), 1993-1997

Table 8.2: UK Retail Sales of Other Stores at Current Prices (£m), 1993-1997

Table 8.3: UK Retail Sales of Other Stores by Segment at Current Prices (£m), 1993-1997

Table 8.4: Distribution of UK Other Retail Stores by Type and Turnover (£000), 1997

Table 8.5: Employment Trends in Booksellers and Stationers ( percent), May/June 1998

Table 8.6: Employment Trends in Retail Chemists ( percent), May/June 1998

Table 8.7: Employment Trends in Other Goods ( percent), May/June 1998

Table 8.8: Top Five UK Book Retailers by Value ( percent), 1997

Table 8.9: Estimated Market Size of Selected UK Health and Beauty Market Sectors by Value (£m), 1998

Table 8.10: Main Media Advertising Expenditure on Other Stores (£000), Year Ending 1998

Table 8.11: Purchases by UK Adults of Toys and Games ( percent), Year Ending March 1997

Table 8.12: Purchases of Board Games by UK Adults ( percent), Year Ending March 1997

Table 8.13 Purchases of Selected Jewellery and Watches by UK Adults ( percent), Year Ending March 1997

Table 8.14: Purchases of Cameras by UK Adults ( percent), Year Ending March 1997

Table 8.15: Forecast Sales of Other Retail Stores at Current Prices (£m), 1998-2002

Non-Store Retailing and Repair

DEFINITION

KEY TRENDS

MARKET SIZE

MARKET STRUCTURE

MAJOR PLAYERS

ADVERTISING AND PROMOTION

BUYING BEHAVIOUR

FORECASTS

Table 9.1: Trends in UK Sales of Non-Store Retailing at Current Prices (£m), 1993-1997

Table 9.2: UK Sales of Non-Store Retailing at Current Prices (£m), 1993-1997

Table 9.3 UK Sales of Non-Store Retail by Segment at Current Prices (£m), 1993-1997

Table 9.4: Distribution of UK Mail Order, Other Non-Store Retail and the Repair of Personal and Household Goods Businesses by Type and Turnover (£000),

1997

Table 9.5: Mail-Order Business of Great Universal Stores (£m), 1995-1997

Table 9.6: Main Media Advertising Expenditure by Leading Home Shopping Companies (£000), Year Ending March 1998

Table 9.7: Main Media Expenditure on Mail Order by Sector (£000), Year Ending September 1996 and 1997

Table 9.8: Use of Mail-Order Catalogues ( percent of adults),1997

Table 9.9: Penetration of Mail-Order Catalogue Purchasers by Age, Social Grade and Region ( percent of adults), 1997

Table 9.10: Penetration of Magazine Mail-Order Purchasers by Age, Social Grade and Region ( percent of adults), 1997

Table 9.11: Penetration of CDs Purchased by Post by Age, Social Grade and Region ( percent of adults), 1997

Table 9.12: Consumer Response to Offers or Appeals Made via TV or Newspapers ( percent of adults), 1997

Table 9.13: Method of Response to Offers or Appeals Made via TV or Newspapers ( percent of adults), 1997

Table 9.14: Forecast Sales of Non-Store Retailing and Repair at Current Prices (£m), 1998-2002

Strengths, Weaknesses, Opportunities and Threats (SWOT)

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

The Future

CONSUMER SPENDING

FUTURE DEVELOPMENTS

FORECASTS 1998 TO 2002

Table 11.1: Forecast Sales by Main Retail Sectors at Current Prices (£m), 1998-2002

Further Sources

ASSOCIATIONS

PERIODICALS

DIRECTORIES

GENERAL SOURCES

HBI UK INFORMATION SOURCES

GOVERNMENT PUBLICATIONS

OTHER SOURCES

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EXECUTIVE SUMMARY

In the UK, the strength of High Street spending in 1997 made it the most buoyant year of the 1990s. At its close, the total retail market was valued at £178.3bn. Since 1993, sales at current prices had increased by 21.9 percent, more than 10 percent ahead of inflation and 8 percent ahead of the growth in average gross weekly earnings.

The largest increase has been in sales through household goods stores, which include furniture and lighting, electrical appliances, hardware and do-it-yourself (DIY). It is these retailers which have benefited most from the recovering housing market and the bonus of building society windfall tax payments. Over the period, their sales have increased by slightly more than 30 percent, with the largest contribution (39.7 percent) coming from retailers of electrical household appliances.

Predominantly food stores represent the largest segment of UK retailing, with 37.6 percent of the total market. Since 1993, total food sales have increased by 23 percent, but in the more vibrant supermarkets and convenience store sector, which represents 37.6 percent of total retail sales, growth has been 29.6 percent, which compares with a suffering specialist food sector in which sales have declined by 3.6 percent

Measured by the volume of sales, the UK is the fourth largest retail market in Europe, behind Germany, Italy and France, but it is the second largest, just behind Italy, when measured by the number of people employed.

Over the next 5 years, between 1998 and 2002, Key Note forecasts total retail sales in the UK will increase at current prices by 20.3 percent, slightly less than in the previous period, but in real terms net of inflation (over the period forecast at a cumulative 9.6 percent), this still represents a growth of 1.4 percent. Sales are expected to slow from the middle of 1998 to the end of 1999, but thereafter are forecast to accelerate once more, reaching an average growth of 4.9 percent per annum towards the end of the forecast period.

Viewed by market, a major area of growth will be in electrical appliances, which will be a major contributor to the cumulative increase of 30.9 percent forecast in the household goods sector. Growth will be more modest in most of the other sectors of the market (around 18.5 percent), with the exception of `other retail stores' (22 percent) where opticians and some cosmetics, toiletries and specialist retailers are enjoying good business. The home shopping and non-retailing and repair segments are forecast to barely keep ahead of forecast inflation.

In the period from 1998 to 2002, there will be significant new influences on the UK retailing market.
With the arrival of the new Labour Government, the control of UK base rate management was passed to The Bank of England and, as a result, the market should anticipate continuing intervention by the Bank as it uses base rate to control inflationary pressures.

During 1999, the Government will introduce a statutory minimum wage at a level of £3.60 per hour, which will have a significant influence on many retailers. Also, probably before the year 2002, the UK will face a critical decision regarding the UK's future membership of the European Monetary Union (EMU).

Problems for smaller retailers will arise as a result of the Competition Bill, currently being progressed through Parliament, which will have an influence on resale price maintenance, and large food retailers will continue to suffer from the previous Government's planning restrictions on new out-of-town shopping developments, which are being maintained.

Demographic trends in the UK retail market include the continuing growth of single-person households; women taking an increasing share of the total workforce; and the ageing of the population.

More people are working from home and changing lifestyles are affecting shopping patterns, meaning less frequent trips for the once a week major shop and more top-up shopping in supermarkets, which are increasingly being used as convenience stores.

Six out of ten UK adults have some form of retailer loyalty card, and retailers are collecting huge amounts of information about their customers' shopping habits. Whether the retailers find a way of using the information to gain a bigger market share or more sales remains to be seen, but in the meantime most customers have said the shops they visit regularly are more interested in them now compared to 1995.

In 1997, shoppers in Britain spent nearly £100bn with their credit and debit cards; more than double the amounts of 4 years ago. People are carrying less cash, choosing instead to pay by plastic. In 1997, for each pound spent in the High Street using plastic, 34 pence was via credit cards, totalling £55bn in the year, with £45bn via debit cards.
The environment is an increasingly important concern of Government and the consumer, and, in response, major retailers are required to continuously demonstrate their endeavours to protect it.

Banking services are now offered by most major food retailers; and own-label sales are forecast to grow at a slower rate as consumers show signs of resenting the large-scale disappearance of branded products.

The UK retail industry is dominated by large food multiples, which in 1997 accounted for more than 37 percent of total retail sales. Increasingly, these retailers are expanding into other non-food segments, and in doing so they tend to mop up the business of smaller retailers operating within their catchment area. The latest inroads include pharmaceuticals, books, cosmetics and electrical home appliances.

Size is no protection in such a volatile market, and over the period from 1993 to 1997 there have been a number of major mergers and acquisitions. Within food, Kwik Save has been acquired by Somerfield; and in non-food Great Universal Stores (GUS) has gained Argos; Sears has disposed of its interests in shoe retailing; Littlewoods has sold a number of stores to Marks & Spencer; WH Smith has sold Waterstones, Our Price and its interests in Do-It-All; and J Sainsbury has acquired Texas Home Care.

With the launch of digital broadcasting, the market anticipates buoyant sales in electrical home appliances and, in time, spectacular development in home shopping services via television (TV) and the Internet. Before this happens, however, serious changes are needed in the infrastructure to allow more homes affordable access to the new services and more security in the transfer of payments.

The scope of developments in UK retailing is enormous. The potential of a true European market supported by a common currency, as an important player in a worldwide network of electronic retailing is very exciting. How long it takes to realise this objective and what will be its impact on the traditional retailing scene, is a problem that will be exercising the minds of many major retailers, as they move through the first 10 or 15 years of the next Millennium.

Text © 1998 Key Note

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Last updated by Duncan Nottage 12th February 1999