1. Tomorrow’s food shopper Verdict Consulting

2. Agenda What we’ll talk about 123 what we’ve got how we shop what it means

3. But first A short story…

4. 1 what we’ve got

5. What we’ve got A squeeze incomingsoutgoings prices

6. What we’ve got The impact Before recession (2007) During recession (2009) After recession (2011) Disposable £29,982 Disposable £29,625 Disposable £29,005 Discretionary £9,301 Discretionary £12,903 Discretionary £8,788

7.  lack money I can’t spend  lack will I won’t spend  lack spontaneity I think, then spend What we’ve got Changing mindsets

8. 1.6% 1.8% 2.4% 2.7% 2.9% 20102011201220132014 2.8% 2015 What we’ve got Total retail spending growth Total retail consumer spending growth

9. 1.3% 1.7% 0.9% 0.8% 0.6% 0.3% 0.1% 1.5% 1.9%2.3% 1.6% 1.8% 2.4% 2.7% 2.9% Inflation growth Volume growth 0.4% 2.6% 2.8% 201020112012201320142015 What we’ve got Volume and inflation Total retail consumer spending growth

10. 2.4% +3.9% +4.0% ClothingTotalBeauty +3.4% Food +0.7% Furniture +0.6 ElectricalsHomewares +0.4 DIY What we’ve got Sector growth Average annual growth (2010-15)

11. What we’ve got Food and grocery growth Food and grocery growth (inflation and volume) Inflation growth Volume growth

12. 2 how we shop

13. How we shop Price sensitivity Percentage of food consumers mentioning price as a driver of store choice

14. How we shop Price sensitivity links Annual change in inflation and in price as a driver of store choice Food inflation Price mentions as driver Real household disposable income -0.3 -4.2 -0.5 -0.9 0.7 6.1 -6 -4 -2 0 2 4 6 8 2005200620072008200920102011 0.4 2.1 3.0 4.5 2.4 3.2 6.4 2.0 1.5 0.4 1.1 -0.5 -1.5

15. How we shop Price more important Forecast of price sensitivity for this year 20072008200920102011 42.1%48.2%47.3%48.0%50.5% Food inflationReal household disposable income

16. How we shop Dynamics of sensitivity Differences in those concerned about price (2003 v 2010) 20032010 24.6% 9.8% 32.2% 22.5%

17. How we shop It’s not all bad news Factors driving demand Cinema attendance Pub going Dining out Foreign holidays UK holidays

18. How we shop The premium honeypot Growth segments in food retail (2011 to 2012) PremiumMainstreamValue 6.7% 2.2% 5.1%

19. How we shop The premium honeypot Competitors will put effort behind ‘best’ (5%)(20%)(16%)

20. How we shop It’s easier to go down, than to go up What do attributes mean? PriceQuality

21. How we shop The great balancing act The parable of Neil’s shopping trip (based on a true story) What Neil wantedWhat Neil also purchased £21.94£42.69

22. How we shop In a nutshell ConstrainedFrugalSave moneyTrade up Market share Volume

23. 3 what it means

24. What it means Everyday value

25. What it means Innovation

26. What it means Clarity Layouts Ranges Promotions Stores

27. What it means Segmentation

28. What it means Stimulation Customer shares over Christmas 2010 Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 LevelPlayers operating at this levelUsual shopXmas shop 3.6%6.9% 16.9%15.5% 37.1%34.7% 35.7%33.4% 1.5%1.6% 4.1%3.2%

29. What it means The recipe for success EmpathyEditingEmotionExcitement

30. the end