From Tesco to Waitrose, the UK’s main supermarkets have had to adopt increasingly innovative techniques to attract customers. This trend has increased in recent months and now Asda is reviewing its regional and local advertising as it battles against Sainsbury’s to be the UK’s second-largest supermarket (MW July 21).
The rise of “central” or “local” stores and the emphasis on non- grocery products has had a huge impact on the retail grocery sector. In addition, the market dominance of Tesco and the rise of Morrisons mean convenience and consumer choice are becoming ever more important.
Analysis of market share is usually calculated based on total monthly spend by customer. The latest data from the National Lifestyle Survey, compiled by Acxiom, looks at total customer spend as well as the number of customers who use each store for their main grocery shop. What is clear is that the most popular supermarkets are also the most convenient, based on location.
Tesco continues its dominance of the market with 11.4 per cent year-on-year spending growth (TNS, April 2005). The footfall analysis also reflects this trend, with 27 per cent of households opting to do their main shop at Tesco.
Sainsbury’s has achieved growth of 4.1 per cent year on year, while Asda achieved three per cent growth. However, in terms of footfall, analysis shows that Asda is ahead of Sainsbury’s: 20.2 per cent do their main shop at Asda, compared with 12.4 per cent choosing Sainsbury’s.
These findings indicate that although Sainsbury’s may have fewer customers, the larger average basket spend could be the result of higher prices or customers spending more on their main shop. Morrisons, on the other hand, records a 14.4 per cent customer share. In the wake of recent sales declines and profit warnings, this suggests Morrisons is not optimising its significant customer share. The survey found that the most important considerations for Morrisons’ customers are, in order of preference: convenience, price, location and quality of products.
In addition, the majority of consumers do not view Marks & Spencer as a main shopping destination, with a footfall share of just 0.9 per cent. This is also true of Waitrose; however, the analysis shows it accounts for 1.9 per cent of footfall. Despite this, it should be noted that both Marks & Spencer and Waitrose pick up a very high volume of secondary spend.
The figures themselves are interesting, but what are the main reasons why consumers visit certain stores? The analysis is based on asking shoppers to select (in no order of preference) two factors that motivate them to shop at a certain supermarket. Convenience was the most important consideration for consumers whose main shop was at Waitrose and M&S, although more than 45 per cent of Asda, Morrisons, Sainsbury’s and Tesco customers cited it as a motivating factor. This could explain why Tesco and Sainsbury’s have extended their brands with the Metro and Local stores – by improving their reach the supermarket giants make it easier for shoppers to visit their stores.
Closely linked to convenience, location was cited as the second most decisive factor in encouraging people to visit one supermarket as opposed to another. There is very little fluctuation in this trend, whether the shopper is a regular visitor to Waitrose, Asda or other supermarkets.
The quality of products is most important to Waitrose and M&S customers, with 34 per cent and 31 per cent respectively listing this as a preference. This drops slightly for Sainsbury’s customers (29 per cent), Asda and Morrisons (both 27 per cent) and Tesco (26 per cent). However, although quality is a more decisive preference for Waitrose and M&S customers, more than two-thirds of people who shop at these outlets do not consider quality to be one of their main motivators for opting to shop there.
Of the major supermarkets, the analysis suggests that price is of most importance to Asda shoppers, 37 per cent of whom listed it as a motivating factor and a further six per cent rated special offers as important. Morrisons, Sainsbury’s and Tesco customers were all similar in their choice of price as a motivating factor, with Waitrose and M&S customers being least concerned about price. Morrisons customers were most influenced by special offers, with about nine per cent highlighting this as a motivating factor.
Although supermarkets offer different propositions that appeal to their target markets, the deciding factor for many is location and convenience. Price and quality are of secondary importance in terms of preferring one supermarket to another. If Tesco’s dominance is to be challenged, location and convenience, coupled with relevant brand communications promoting food and non-food product ranges, are required to influence customers. v