Non-food in the UK | Verdict Sector Report

Discover which non-food sectors provide the most growth in grocers over the coming five years, enabling you to effectively plan your non-food strategy Understand how the grocers are improving their use of space in store and identify opportunities to further improve your performance Benchmark your performance against the Big Four grocers and the remainder of the market by non-food sector in order to identify opportunities

Scope

Total non-food has struggled compared to total retail in recent years; however, the grocers have outperformed both, as their high levels of footfall have provided them with a captive audience of shoppers looking for value and convenience in non-food.

In the five years to 2014 each of the Big Four grocers has increased its share of the non-food market, as these sectors became more important to help improve the performance of their larger stores in particular. Tesco remains dominant thanks to its significant space advantage and market leading position in the food & grocery sector.

Health & beauty continues to dominate the grocers' non-food offer and will be the fastest growing sector. This is a reflection of the continued improvements that the grocers have made to their offers. The addition of services such as cosmetics counters, nail bars and pharmacies has all helped make them more competitive.

Reasons to buy

Which retailer will gain the most market share in non-food in 2014 and why

What impact will smaller stores have on non-food sales, and how will grocers incorporate an effective online offer

What sectors are the grocers underperforming in and how can they turn their performance around in these sectors

How does the growth in the grocers non-food market compare to total retail and the total non-food market

Table of Contents

1 Outlook

1.1 Overview

1.2 Main Conclusions

1.2.1 Grocers set to outperform wider non-food market

1.2.2 Health & beauty will continue to dominate…

1.2.3 …while music & video loses share

1.2.4 Big Four grocers gain market share as Tesco remains dominant

1.2.5 Grocers must increase the appeal of their non-food offer

1.2.6 Offering all products to customers regardless of channel must be the aim for grocers

1.2.7 Grocers are underperforming in three growing sectors

2 Recommendations

2.1 Overview

2.2 Retailer Strategies

2.2.1 Instore services will drive non-food sales

2.2.2 Specialist service vital to support big ticket sales

2.2.3 Improvements to visual merchandising will drive footfall increases

2.2.4 Multichannel offer must be consistent across channels

2.2.5 Customer focus is essential

3 Market Size

3.1 Overview

3.2 Market Definitions

3.3 Non-food Market

3.4 Grocers' Non-food Sales

3.5 Market Segmentation

4 Market Forecast

4.1 Overview

4.2 Market Definitions

4.3 Non-food Market

4.4 Grocers' Non-food Sales

4.5 Market Segmentation

5 Channel Shares

5.1 Overview

5.2 Grocers Steal Share from Specialists in Key Sectors

5.2.1 Music & video declines mirror wider sector woes

5.2.2 Sainsbury’s to achieve fastest growth

5.3 Health & Beauty in Grocers

5.3.1 Sector expenditure

5.3.2 Market shares

5.4 Clothing & Footwear in Grocers

5.4.1 Sector expenditure

5.4.2 Market shares

5.5 Electricals in Grocers

5.5.1 Sector expenditure

5.5.2 Market shares

5.6 Homewares in Grocers

5.6.1 Sector expenditure

5.6.2 Market shares

5.7 Music & Video in Grocers

5.7.1 Sector expenditure

5.7.2 Market shares

5.8 Other Non-food in Grocers

5.8.1 Definition

5.8.2 Sector expenditure

6 Market Shares

6.1 Overview

6.2 Big Four Still Enjoying Growth in Non-food Sector

7 Sector Trends

7.1 Overview

7.2 Improved use of Space can Make Grocers Non-food Destinations

7.3 Partnerships Drive Better Engagement and use of Space

7.4 Online Non-food is Taking off for Grocers

7.4.1 Sainsbury’s case study

7.4.2 AO.com: online best practice

8 Methodology

8.1 Methodology: Outlook Market size

8.1.1 Market shares

8.1.2 Sales density calculation

8.2 Methodology: Market Size

8.2.1 Market size

8.2.2 Market shares

8.3 Methodology: Market Forecast

8.3.1 Market size

8.3.2 Market forecast

8.4 Methodology: Channel Shares

8.5 Methodology: Market Shares

8.5.1 Market size

8.5.2 Market shares

8.5.3 Sales density calculation

8.6 Methodology: Sector Trends

8.6.1 Market size

8.6.2 Market shares

9 Appendix

9.1 Appendix: Outlook

9.1.1 Abbreviations

9.1.2 Definitions

9.2 Appendix: Recommendations

9.2.1 Abbreviations

9.2.2 Definitions

9.3 Appendix: Market Size

9.3.1 Abbreviations

9.3.2 Definitions

9.4 Appendix: Market Forecast

9.4.1 Abbreviations

9.4.2 Definitions

9.5 Appendix: Channel Shares

9.5.1 Abbreviations

9.5.2 Definitions

9.6 Appendix: Market Shares

9.6.1 Abbreviations

9.6.2 Definitions

9.7 Appendix: Sector Trends

9.7.1 Abbreviations

9.7.2 Definitions

10 Appendix

10.1 About Verdict Retail

10.2 Disclaimer

List of Tables

Table 1: Non-food in grocers definitions, 2015

Table 2: Food & grocery, non-food and total retail market sizes (£m), 2005–15e Total retail

Table 3: Non-food in grocers definitions, 2015

Table 4: Food & grocery, non-food and total retail market sizes (£m), 2010–20e

Table 5: Grocers’ share of total health & beauty sector (%), 2010–15e

Table 6: Grocers' share of grocers' health & beauty sector (%), 2010–15e

Table 7: Big Four grocers' share of total clothing & footwear sector (%), 2010–15e

Table 8: Big Four grocers' share of grocers’ clothing & footwear sector (%), 2010–15e

Table 9: Big Four grocers' share of total electricals sector (%), 2010–15e

Table 10: Big Four grocers’ share of grocers’ electricals sector (%), 2010–15e

Table 11: Big Four grocers’ share of total homewares sector (%), 2010–15e

Table 12: Big Four grocers' share of grocers’ homewares sector (%), 2010–15e

Table 13: Big Four grocers' share of total music & video sector (%), 2010–15e

Table 14: Big Four grocers' share of grocers' music & video sector (%), 2010–15e

Table 15: Grocers' shares of total non-food market (%), 2010–15e

Table 16: Grocers' shares of total grocers' non-food market (%), 2010–15e

Table 17: Online non-food market split by fulfilment method (£m), 2015 and 2020e

Table 18: Preferred method of fulfilment for food & grocery shopping if all were available (%), 2015

Table 19: Online satisfaction from non-food purchases

List of Figures

Figure 1: Year-on-year expenditure change in food & grocery and non-food (%), 2010–15e

Figure 2: Total non-food market expenditure (£m) and year-on-year change (%), 2010–15e

Figure 3: Total non-food market sources of growth (%), 2010–15e

Figure 4: Non-food share of Big Four grocers' retail sales (%), 2010–15e

Figure 5: Total non-food sales via grocers (£m) and year-on-year change (%), 2010–15e

Figure 6: Total non-food growth, grocers' non-food growth and total retail growth (%), 2010–15e

Figure 7: Sector shares of grocers' non-food market (%), 2010–15e

Figure 8: Year-on-year expenditure change in food & grocery and non-food (%), 2015e–20e

Figure 9: Total non-food market expenditure (£m) and year-on-year change (%), 2015e–20e

Figure 10: Total non-food market sources of growth (%), 2015e–20e

Figure 11: Total non-food sales via grocers (£m) and year-on-year change (%), 2015e–20e

Figure 12: Total non-food growth, grocers' non-food growth and total retail growth (%), 2015e–20e

Figure 13: Sector shares of grocers' non-food market (%), 2015e–20e

Figure 14: Non-food in grocers sector summary, 2015e

Figure 15: Grocers' share of total non-food market by sector (%), 2015e–20e

Figure 16: Grocers' share of total non-food in grocers market by sector (%), 2015e–20e

Figure 17: Grocers’ non-food sales growth rates by sector (%), 2010–20e

Figure 18: Big Four grocers' share of total non-food market (%), 2010–15e

Figure 19: Big Four grocers' share of total grocers’ non-food market (%), 2010–15e

Figure 20: Health & beauty sales via grocers (£m) and year-on-year change (%), 2010–20e

Figure 21: Total health & beauty growth and grocers' health & beauty growth (%), 2010–20e

Figure 22: Grocers’ share of total health & beauty sector (%), 2010–15e

Figure 23: Big Four grocers' share of grocers' health & beauty sector (%), 2010–15e

Figure 24: Clothing & footwear sales via grocers (£m) and year-on-year change (%), 2010–20e

Figure 25: Total clothing & footwear growth and grocers' clothing & footwear growth (%), 2010–20e

Figure 26: Big Four grocers' share of total clothing & footwear sector (%), 2010–15e

Figure 27: Big Four grocers' share of grocers' clothing & footwear sector (%), 2010–15e

Figure 28: Electricals sales via grocers (£m) and year-on-year change (%), 2010–20e

Figure 29: Total electricals growth and grocers' electricals growth (%), 2010–20e

Figure 30: Big Four grocers' share of total electricals sector (%), 2010–15e

Figure 31: Big Four grocers' share of grocers' electricals sector (%), 2010–15e

Figure 32: Homewares sales via grocers (£m) and year-on-year change (%), 2010–20e

Figure 33: Total homewares growth and grocers' homewares growth (%), 2010–20e

Figure 34: Big Four grocers' share of total homewares sector (%), 2010–15e

Figure 35: Big Four grocers' share of grocers' homewares sector (%), 2010–15e

Figure 36: Music & video sales via grocers (£m) and year-on-year change (%), 2010–20e

Figure 37: Total music & video growth and grocers' music & video growth (%), 2010–20e

Figure 38: Big Four grocers' share of total music & video sector (%), 2010–15e

Figure 39: Big Four grocers' share of grocers' music & video sector (%), 2010–15e

Figure 40: Other non-food sales via grocers (£m) and year-on-year change (%), 2010–20e

Figure 41: Total other non-food growth and grocers' other non-food growth (%), 2010–20e

Figure 42: Big Four grocers' shares of total non-food market (%), 2010–15e

Figure 43: Big Four grocers' shares of total grocers' non-food market (%), 2010–15e

Figure 44: Homewares offer at Tesco Extra Watford, 2014

Figure 45: Dinnerware product display at Sainsbury’s Epsom, 2014

Figure 46: : Product integration at a Wholefoods Market, London, 2014

Figure 47: Asda instore order point, 2014

Figure 48: Tesco offers technical support at its instore phone outlets, 2014

Figure 49: John Lewis promoting its five year guarantee on all televisions, 2014

Figure 50: Nail bar at Tesco Extra, Watford, 2014

Figure 51: Beauty area at Carrefour Planet

Figure 52: Argos within a Sainsbury’s store, 2015

Figure 53: Burrito Kitchen counter, Tesco, Villiers Street, London, 2015

Figure 54: Proportion of shoppers buying instore when collecting a click & collect order (%), 2015

Figure 55: Additional instore spend when collecting a click & collect order (£), 2015

Figure 56: Wiggle Cycle Advice & Service Centre, Homebase, St Albans, 2014

Figure 57: Non-food offer on Sainsbury’s website, 2015

Figure 58: Motivations for switching to another online store for food shopping (%), 2015

Figure 59: Proportion of shoppers buying instore when collecting a click & collect order (%), 2015

Figure 60: Additional spend among non-food click & collect shoppers instore (£), 2015

Figure 61: Motivation for repeat purchase of non-food items, market average versus grocers (%), 2015

Figure 62: Motivation for repeat purchase of non-food items, market average versus grocers, by retailer (%), 2015

Figure 63: Motivation for repeat purchase of non-food items, market average versus grocers, by retailer (%), 2015

Figure 64: AO.com delivery options, 2015

Figure 65: AO.com Eco delivery option, 2015

Figure 66: Autocomplete search function on AO.com, 2015

Figure 67: Market forecast methodology

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