Triggers and barriers to frozen food specialists ShopperVista Hot Topic Report – May 2014 Triggers and barriers to frozen food specialists

Frozen food specialists Retailers defined as frozen food specialists:

Snapshot Frozen food specialist snapshot Key insights from our research conducted during Apr’14 Shopper numbers have remained static over the last 12 months Frozen food specialists are firmly established with the lower socio-economic shopper group The greatest challenge appears to be offering and communicating a range beyond frozen Around 3 in 10 shoppers used frozen food specialists in the last month, a consistent penetration over the last year. While frozen food specialists penetration has remained static, food discounters and online have seen their shopper numbers grow considerably faster. Maintaining share indicates a strong offer which resonates with a core group of shoppers. Attracting shoppers to switch from other channels is proving more challenging. Frozen food specialists over-index with a lower socio-economic group of shoppers. 31% of frozen food specialist shoppers are from a DE socio-economic group, compared to 25% of supermarket shoppers and 26% of food discount shoppers. At the same time frozen food specialists under-index with the higher socio-economic group of shoppers. Just 13% of shoppers are from an AB socio-economic group compared to 27% of supermarket shoppers and 26% of food discount shoppers. 54% of non-users of frozen food specialists claim they do not use the channel because they do not buy much frozen food. This dismissal of the channel based on a lack of need for frozen may indicate a lack of awareness of the full range available. 24% of shoppers claim there is not enough fresh food and 8% claim the stores do not have the brands the shopper wants. Both of these groups, alongside the 30% of non-users that claim they cannot do a full shop there, must be convinced of the range beyond frozen to be encouraged to enter the channel. Contents IGD ShopperVista Frozen Food Specialist Hot Topic Report May 2014 (Base: main grocery shoppers)

3 in 10 shoppers use frozen food specialists in a one month period Penetration of frozen food specialists has remained flat over the last 12 months 31% of shoppers shopped at a frozen food specialist Apr’14 vs. 31% May’13 (0% growth in shopper penetration) Growth in shopper penetration for other channels across the same period: Food Discounters 17 basis points Online 14 basis points Frozen food specialist usage Apr’13-Apr’14 Implication There is an opportunity for Frozen food specialists and suppliers to the channel may to explore how they can attract a higher proportion of shoppers to visit the channel, through range and value communication. Frozen Food specialists are not yet fully capitalising on shoppers’ increased multichannel shopping Contents IGD ShopperVista Core Tracking Survey April 2014 (Base: main grocery shoppers)

Frozen food specialists have established a core shopper base among lower income families Implication Taking a lead from the food discount channel, frozen food specialists have an opportunity to establish themselves with the affluent AB shopper group. Tailoring ranges according to their needs may attract more AB shoppers into the channel The frozen food specialist shopper The non frozen food specialist shopper Key socio economic profiles by channel Frozen Food Specialists More DE shoppers (31% vs. 22%) More AB shoppers (33% vs. 13%) More renting (49% vs. 31%) More owning (69% vs. 51%) More with children at home (41% vs. 28%) More without children at home (72% vs. 59%) Supermarkets Food Discounters More shoppers in the North (28% vs. 22%) More shoppers in the South (35% vs. 28%) Contents IGD ShopperVista Frozen Food Specialist Hot Topic Report May 2014 (Base: main grocery shoppers)

The higher the socio-economic grade, the more likely a shopper is to agree that there is a stigma attached to shopping at frozen food specialists I think there is stigma attached to shopping at frozen food specialists Frozen food specialist shoppers attitude towards ... I don’t think there is anything wrong with shopping at frozen food specialists % agree by social grade AB shoppers C1 shoppers 47% 36% Disagree (net) Agree strongly Agree (net) Implication While ensuring a key focus remains on the needs of the core lower income shopper group, frozen food specialists may wish to consider communicating current AB shoppers drivers to the channel, to remove any preconceived stigma and encourage further participation from this shopper group C2 shoppers DE shoppers 27% 27% Contents IGD ShopperVista Frozen Food Specialist Hot Topic Report May 2014 (Base: existing frozen food specialists shoppers)

Products are the key drivers to the frozen food specialist, while shoppers believe product quality has improved Main reasons for visit to frozen food specialists % of shoppers that agree the quality of frozen food specialists products has improved over the last couple of years Buy exclusive frozen food specialist products Buy products prefer in frozen food specialists Buy a specific promoted item Top-up on staple items (bread, milk, etc) Bulk-buy or stock up on items Buy something for evening meal Buy something which was advertised Buy something for a special occasion Do a main shop Top-up on fruit and vegetables Buy non-food items Other 73% Implication Communicating the strength of the product offering, highlighting improvements or any awards won may act as a driver to store for new shoppers Contents IGD ShopperVista Frozen Food Specialist Hot Topic Report May 2014 (Base: existing frozen food specialists shoppers)

35% of C2DE shoppers with children visit to conduct a bulk-buy mission Some of the less common drivers to store are more important for particular shopper groups 35% of C2DE shoppers with children visit to conduct a bulk-buy mission Main reasons for visit to frozen food specialist Buy exclusive frozen food specialist products Buy products prefer in frozen food specialists Buy a specific promoted item Top-up on staple items (bread, milk, etc) Bulk-buy or stock up on items Buy something for evening meal Buy something which was advertised Buy something for a special occasion Do a main shop Top-up on fruit and vegetables Buy non-food items Other Implication As a key shopper group, focussing activity in-store to meet the needs of the bulk-buy mission may provide opportunities for growth 31% of shoppers renting a council house property visit to buy something for the evening meal 22% of shoppers aged 18-34 visited to conduct a main shop (vs. 5% of shoppers aged 55+) 18% of shoppers with children visited to conduct a main shop (vs. 9% of shoppers without children) Contents IGD ShopperVista Frozen Food Specialist Hot Topic Report May 2014 (Base: existing frozen food specialists shoppers)

AB shoppers are more likely to visit frozen food specialists for a specific offer, or for a top-up of staple products Implication Targeting key missions for key groups may provide opportunities for growth within the channel. For example, identifying and promoting products with particular appeal to AB shoppers can act as a draw into the channel for this key group Top 3 reasons for visit to frozen food specialist All shoppers AB Shoppers 1st 1st 2nd Buy a specific promoted item Buy exclusive frozen food specialist products 2nd Top-up on staple items (bread, milk, etc) Buy products prefer in frozen food specialists 3rd 3rd 44% Buy products prefer in frozen food specialists Buy a specific promoted item 39% 37% 36% 34% 32% Contents IGD ShopperVista Frozen Food Specialist Hot Topic Report May 2014 (Base: existing frozen food specialists shoppers)

Not buying into the macro frozen category is the number one barrier for shoppers visiting frozen food specialists % of current non-visitors to frozen food specialists claiming that not buying much frozen is a key reason for not visiting the channel Illustrative data: Proportion of market not shopping at frozen food specialists because they do not buy much frozen (if the 54% figure had remained constant over the last 12 months) 54% Implication This large band of non-users that claim their avoidance of the channel is based on the consumer barrier (not buying into much frozen), and may not be aware of the full range on offer in these specialists stores. Raising the profile and awareness of the non-frozen mix may encourage more shoppers to enter the channel Contents IGD ShopperVista Frozen Food Specialist Hot Topic Report May 2014 (Base: current frozen food specialists non-users)

Our recent multichannel report identified that few frozen food specialist shoppers prefer to buy non-frozen categories from this channel IGD ShopperVista Multichannel Shopping Report – May 2014 Contents

Perceived limitations with the range act as a barrier for the non-user and the existing frozen food specialist shopper % of existing frozen food specialist shoppers that agree they would use the channel more if ... Main reasons for not visiting frozen food specialists (non-users) Don’t buy much frozen Cannot do full shop there Not enough fresh products No stores near me to walk to No stores near me to drive to Don’t have the products I like to buy I go there less than once per month It’s hard to park Don’t have the brands I want Don’t offer as good value as other store Promotions are not as good Hard to find products in store Other % of existing frozen food specialist shoppers that agree they would use the channel more if ... ... ... they could get more of their main shop there 56% ... they stocked more branded products 32% IGD ShopperVista Frozen Food Specialist Hot Topic Report May 2014 (Main reason base: current frozen food specialist non-users, agreement statements base: existing frozen food specialist shoppers) Contents

There is an expectation that shoppers will increase the number of channels they use in the future, while there does appear to be pent up desire to shop at frozen food specialists Contents IGD ShopperVista Multichannel Shopping Report – May 2014

One potential barrier to the introduction of new shoppers into the channel is the distribution of frozen food stores % of existing frozen food specialist shoppers that agree they would use the channel more if ... Main reasons for not visiting frozen food specialists (non-users) Don’t buy much frozen Cannot do full shop there Not enough fresh products No stores near me to walk to No stores near me to drive to Don’t have the products I like to buy I go there less than once per month It’s hard to park Don’t have the brands I want Don’t offer as good value as other store Promotions are not as good Hard to find products in store Other % of existing frozen food specialist shoppers that agree they would use the channel more if ... ... ... there was a store near to where I live or work 37% Implication There is an untapped desire for more from the frozen food specialist channel. Exploring the opportunities provided through better communicating the range currently available, expanding the range further and potentially expanding store numbers could lead to a period of growth for the channel IGD ShopperVista Frozen Food Specialist Hot Topic Report May 2014 (Main reason base: current frozen food specialist non-users, agreement statements base: existing frozen food specialist shoppers) Contents

The frozen food specialist channel is fairly well entrenched with it’s current shopper base, though less so than food discounters Benchmarked vs. food discount shoppers Frozen food specialist shoppers attitude towards ... 58% of food discount shoppers agree they would use food discounters more if their personal economic situation worsened If my personal economic situation worsened, I would use frozen food specialists more If my personal economic situation improved, I would use frozen food specialists less 64% of food discount shoppers disagree they would use food discounters less if their personal economic situation improved Implication Frozen food specialists are not as firmly entrenched into the repertoire of channels with their existing shopper base as food discounters are with theirs. If, as expected, personal economic circumstances improve, frozen food specialists will need to ensure the focus remains on satisfying existing shoppers Disagree (net) Agree strongly Agree (net) Contents IGD ShopperVista Frozen Food Specialist Hot Topic Report May 2014 (Base: existing frozen food specialists shoppers)

How can we help you further? IGD is a research and training charity that helps the food and consumer goods industry deliver the needs of the public How can we help you further? Want to understand more about how frozen food specialists fit into the multichannel mix? >> Read our in-depth report on multichannel shopping 1 Looking for more insight and best practice case studies from your industry peers on category management and shopper marketing? >> Book your place at our annual event 2 Report author: Rob Carpenter Shopper Insight Manager rob.carpenter@igd.com Build your customer engagement, shopper activation and Category Management capability with IGD’s Academy >> See IGD’s Academy 3 Useful links: Need something else? Email shopper@igd.com or call +44 (0) 1923 851954 Follow us on Twitter @IGDShopperNews Return to Contents