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MAPS : C2 D E Consumers : April 2004

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This report covers: C2 D E Consumer, Household Tenure, Car Ownership, household expenditure, eating habits, clothes, food, home, Leisure and Travel, The US, Wal-Mart,

Companies covered include: ASDA, Iceland, Kwik Save, Morrisons, B & Q, Sainsbury's, Littlewoords, Thomson, Low-Cost Airlines, Travelodge, KP Sancks,Wal-Mart, Target, the EU, Aldi Stores, Big Food Group, Matalan, WM, Morrison, New Look Group, Primark Stores, Somerfield, Kwik Save Stores,

EXECUTIVE SUMMARY

Executive Summary

The socio-economic base of the UK population is changing, marked by a shift towards the ABC1 groups away from the C2DE groups. In 2003, 46.8% of the population fell into the latter, compared with 51.5% in 1999.

A number of trends in the retail sector are relevant to the C2DE consumer base. There has been a tendency for major food retailers to move upmarket, introducing higher-value own-label ranges and widening their product base to include items catering for more sophisticated tastes. However, there has been a parallel trend — prompted initially by US retailer Wal-Mart's purchase of ASDA in 1999 and set to gather pace with the sale in April 2004 of the Safeway chain to WM Morrison — for retailers to show consumers that they are offering value for money. Key Note's exclusive consumer research shows that, although supermarkets' economy food ranges are, as one might expect, more popular among C2DE consumers than their luxury ranges, a significant minority say that they often buy the latter — and those with part-time jobs (usually mothers of young children) are slightly more likely to buy them than the economy ranges.

Factors influencing the market for home-related products for C2DE consumers include the growth of home ownership among this group, the popularity of property-related television programmes and the increasing concentration on non-food products among major grocery retailers, many of which have revamped their existing ranges of home products, or introduced new ones.

The clothing sector has also been influenced by the expansion of supermarkets' non-food ranges, with discount chains and budget high-street retailers, in particular, suffering from the competition. Key Note's research shows that a fairly high proportion of C2DE consumers — especially those with young children — buy clothes from discount outlets and very few say that they would never do so.

The original consumer research indicated that the greatest divergence between C2DE and ABC1 consumers is in terms of holiday habits; the ABC1s are much more likely to say that they try to avoid commercialised tourist areas. C2DEs show considerably more reluctance to book travel and accommodation themselves, making them a key target for the mainstream travel industry, which has suffered considerably from the trend towards independent holidays.

Other research conducted for Key Note demonstrates that C2 consumers, in particular, are very important to certain sectors of the leisure industry, being more likely than any others to attend sporting events, visit theme parks and subscribe to satellite or cable television.

TABLE OF CONTENTS

Executive Summary

1. Introduction

OVERVIEW

Definitions

The Social Grade System

National Statistics' Socio-Economic Classification

2. Strategic Overview

SOCIO-ECONOMIC BACKGROUND

Table 1: The UK Adult Population by Socio-Economic Group (% of adults), 1999-2003

Figure 1: The UK Adult Population by Socio-Economic Group (% of adults), 1999-2003

Table 2: Profile of C2DE Adults by Socio-Economic Group (% of respondents), 2004

Household Tenure

Table 3: Household Tenure (% of respondents), 2004

Figure 2: Household Tenure (% of respondents), 2004

Car Ownership

Table 4: Car Ownership (% of respondents), 2003

Figure 3: Car Ownership (% of respondents), 2003

Internet Access and Home Shopping

Table 5: Households with PC and Internet Access at Home (%), 2002 and 2003

Table 6: Consumer Penetration of Home-Shopping Activities (% of respondents), 2003

Figure 4: Consumer Penetration of Home-Shopping Activities (% of respondents), 2003

HOUSEHOLD EXPENDITURE

Table 7: Average Weekly Household Expenditure by Socio-Economic Classification of Household Reference Person† (£), 2002/2003

Table 8: Average Weekly Household Expenditure by Socio-Economic Classification of Household Reference Person† (%), 2002/2003

3. Food

BACKGROUND

CONSUMER TRENDS

Influences on Eating Habits

Table 9: Factors Influencing Eating Habits by Socio-Economic Group (% of respondents), 2003

Figure 5: Factors Influencing Eating Habits by Socio-Economic Group (% of respondents), 2003

Influences on Grocery-Shopping Habits

Table 10: Factors Influencing Grocery-Shopping Habits by Socio-Economic Group (% of respondents), 2003

Own Labels

Table 11: Attitudes Towards Own-Label Products by Socio-Economic Group (% of respondents), 2003

MARKETING AND SUPPLIER ACTIVITY

ASDA

Iceland

Kwik Save

Morrisons

ADVERTISING EXPENDITURE

Table 12: Main Media Advertising Expenditure by Selected Supermarket and Grocery Chains (£000), Years Ending 31st December 2002 and 2003

4. Home

BACKGROUND

CONSUMER TRENDS

Table 13: Penetration of Selected DIY Activities by Socio-Economic Group (% of respondents), 2004

Table 14: Comparison of Penetration of Selected DIY Activities by Socio-Economic Group (% of respondents), 2001 and 2004

Table 15: Distribution Channels for DIY Tools or Materials by Social Grade (% of respondents), 2004

MARKETING AND SUPPLIER ACTIVITY

Sainsbury's

B&Q

Morrisons

ASDA

ADVERTISING EXPENDITURE

Table 16: Main Media Advertising Expenditure by Selected Retailers of Furniture and Furnishings (£000), Years Ending 31st December 2002 and 2003

5. Clothes

BACKGROUND

CONSUMER TRENDS

Table 17: Penetration of Selected Clothing and Footwear Brands by Socio-Economic Group (% of respondents), 2003

Table 18: Penetration of Selected Clothing and Footwear Brands by Socio-Economic Group (% of respondents), 2001 and 2003

MARKETING AND SUPPLIER ACTIVITY

Littlewoods

ASDA

Tesco

Sainsbury's

ADVERTISING EXPENDITURE

Table 19: Main Media Advertising Expenditure by Selected Discount Clothing Retailers (£000), Years Ending 31st December 2002 and 2003

Table 20: Advertising Expenditure on Clothing Brands by Tesco and ASDA (£000), Years Ending 31st December 2002 and 2003

6. Leisure and Travel

BACKGROUND

CONSUMER TRENDS

Table 21: Penetration of Leisure Activities by Socio-Economic Group (% of respondents), 2003

Table 22: The Most Popular Evening and Weekend Leisure Activities by Socio-Economic Group (% of respondents), 2003

Table 23: Factors Influencing Holiday Choices by Socio-Economic Group (% of respondents), 2003

Figure 6: Factors Influencing Holiday Choices by Socio-Economic Group (% of respondents), 2003

MARKETING AND SUPPLIER ACTIVITY

Thomson

Low-Cost Airlines

Travelodge

KP Snacks

7. An International Perspective

THE US

Wal-Mart

Target

THE EU

8. PEST Analysis

POLITICAL AND ECONOMIC FACTORS

SOCIAL FACTORS

TECHNOLOGICAL FACTORS

9. Consumer Dynamics

RESEARCH SUMMARY

Table 24: Summary of Attitudes Towards Finance and Expenditure by Socio-Economic Group (% of respondents), March 2004

Financial Situation

Food

Home

Clothes

Leisure and Travel

FINANCIAL SITUATION

My Financial Situation Is Better Now Than It Was 2 Years Ago (S1)

My Financial Situation Is Worse Now Than It Was 2 Years Ago (S2)

Table 25: Comparison of Financial Situation (% of respondents), 2004

FOOD

I Often Buy Supermarkets' Own-Brand Food Products In Luxury Ranges (e.g. Tesco Finest) (S3)

I Often Buy Supermarkets' Own-Brand Food Products In Economy Ranges (e.g. Tesco Value) (S4)

Table 26: Purchasing of Supermarkets' Own-Brand Luxury and Economy Ranges (% of respondents), 2004

HOME

I Enjoy Improving My Home, And We Do Most Of The Decorating Ourselves (S5)

I Enjoy Improving My Home, And Usually Employ A Professional To Do The Decorating (S6)

I Am Very Worried About The Possibility Of A Fall In House Prices (S7)

Table 27: Habits and Attitudes in Home Decorating (% of respondents), 2004

Table 28: Concerns Related to Falling House Prices (% of respondents), 2004

CLOTHES

I Buy Clothes For Myself And/or Others From Discount Shops Such As Matalan (S8)

I Would Never Buy Clothes From Discount Shops (S9)

Table 29: Attitudes Towards Buying Clothes from Discount Shops (% of respondents), 2004

I Prefer To Shop For Clothes In Independent Designer Shops Rather Than High-Street Chains (S10)

It Is Good To Be Able To Buy Designer Goods In Supermarkets (S11)

Designer Labels Have Lost Their Value As They Are So Widely Available (S12)

Table 30: Attitudes Towards Designer Shops and Designer Labels (% of respondents), 2004

LEISURE AND TRAVEL

On Holiday, I Would Try To Avoid Very Commercialised Tourist Areas (S13)

Availability Of Cheap Travel Means That Only A Few Places Are Really Special For A Holiday (S14)

On Holiday I Would Prefer To Book Travel And Accommodation Myself Rather Than Use A Travel Agent (S15)

Table 31: Attitudes Towards Holiday Destinations (% of respondents), 2004

Table 32: Attitude Towards Booking Holiday Travel and Accommodation (% of respondents), 2004

10. Company Profiles

ALDI STORES LTD

Corporate Strategy

Profitability

Table 33: Financial Results for Aldi Stores Ltd (£000 and %), Years Ending 31st December 2000, 30th December 2001 and 29th December 2002