WindowOn... Shopper StockTake 2020

This report is based on: 1024 online interviews amongst a nationally representative sample of UK shoppers aged 18+ .

Fieldwork was conducted in December 2019

by Populus Data Solutions Ltd.

SPECIAL SPECIAL

ISSUE ISSUE 2020 2020 SHOPPER STOCKTAKE

SHOPPER STOCKTAKE

PUBLISHED BY: Shoppercentric EDITOR: Danielle Pinnington DESIGN: Mike Higgs

e: mikehiggs@mac.com We welcome ideas for future articles and reports. Guidelines on our preferred format and style are available from info@shoppercentric.com

Š Shoppercentric 2020 All copyright is vested in Shoppercentric unless expressly stated otherwise. No permission is granted for reproduction, use or adaptation of the material, save as to provide for under Statute, and any such use must be accompanied by the appropriate accreditation.

Because turning shoppers into buyers matters

Welcome...

Jamie Rayner,

Managing Director, Shoppercentric

With store closures in 2019 hitting a 6 year high it’s clear that the retail sector is still in the middle of major change.

The election may have delivered a government determined to ‘get Brexit done’, but 2020 is likely to be just as challenging for retail as the previous year - almost regardless of what Brexit looks like, how the China-US Trade War shapes up or whether new boundaries are drawn in the Middle East. It’s all very VUCA! For some time, the industry and its commentators have been speculating on how our High Streets might look in the medium term, and potentially the biggest impact will be driven by changes in our shopping habits. At Shoppercentric we have seen how these habits have adapted, and it is clear that those retailers and manufacturers who are winning are really observing and listening to their shoppers and stepping up where their competitors aren’t.

We encourage the industry to embrace the changes that are occurring and find their own way through ‘this’. One thing is for sure: inaction is a slow death.

This, our 50th trends report, seeks to give you a flavour of the shopper perspective on the changes taking place: how they feel about the retail channels available to them; how their habits are changing; and what they think might be coming up in the future.

SPECIAL

ISSUE

Trends Research...

The High Street is changing

2

But it’s not dead! Positive retail experiences will get shoppers back through the door.

The competition is hiding in plain sight

4

1 in 10 shoppers say their food to go habit is impacting on their supermarket spending, and the grocers need to take stock.

Can Goliath fend off David?

10

The Discounters aren’t just about value now in shoppers minds, so how are the Big 4 grocers going to challenge back?

The future is still in the future

12

If you want your innovation to stick in retail, its got to be something that genuinely improves the purchase process or experience for shoppers.

X THOUGHT PIECE The Quadruple Win opportunity – 6 putting sustainability strategy into action Many companies have signed up to the UK Plastics Pact 2025 Targets.

We discuss how a category strategy framework can be adapted to take leading insight into strategic action, so that your brands deliver on their promises.

Regular Features...

The BIG Picture...

An Experts View Shopper Talk...

Celebrating 50 Shopper Trends Reports

8 14 16 17

Written by

Danielle Pinnington danielle@shoppercentric.com

The high street is changing 2019 was yet another tough year for the UK retail sector. Big names like Mothercare and Links of London were among the casualties; M&S continued to battle the strong headwinds; and John Lewis proved to be less immune than we thought. Even the online retailers started to feel the strain, with ASOS issuing profit warnings mid-year. The key challenges that impacted on these previously successful businesses are familiar to all of us agencies, retailers and manufacturers alike: the search for growth; increasing complexity of choice; increasing pace of change; the shift from mass marketing to personalisation; and the need to better connect with shoppers.

We all spend a lot of time thinking about what is happening to our sector, but how do shoppers feel – do they even notice? Well the answer is a resounding yes! 9 in 10 shoppers have seen changes on the high street they used most often in 2019. Those changes ranged from store closures, to the opening of more coffee or charity shops (see Fig 1)

2

There was, however, a marked difference by region.

Those shoppers living in London were much less likely to have noticed store closures, a reduction in chain stores or stores overall. That’s something we should all be mindful of if we are based in London offices – what we see or experience in our own areas could be quite different from the wider country.

WO Special Issue | Shopper StockTake 2020

Figure 1 – Changes seen on the High Street in 2019 Q Which of these changes, if any, have you noticed in the last year on the High Street you use most often?

71% 53% 49% 39% 23% 9% 7% 6% 10%

More stores have closed More coffee shops have opened More charity shops have opened Fewer shops overall Fewer chain stores More independent stores More packaging-free stores Fewer restaurants No change noticed

Whilst these observed changes seem to support talk of the demise of the High St, UK shoppers still see real value in bricks & mortar stores, and the changes to the High Street are going to concern them. As a nation we may well have embraced online shopping like almost no other globally, but there remains a clear role for real stores. When asked to list the best 3 things about actual shops, shoppers mentioned the following:

UK shoppers also recognise that real stores can have some good real staff! And that going to a store can make getting hold of or exchanging products easier and quicker. Compare that to the world of automated customer service calls, chatbots and 12-hour delivery windows, and it’s easy to see why shoppers are unlikely to be quite so convinced the high street is dead.

/ touching / experiencing 79% seeing products before they buy them the shape or style 57% seeing before they buy comparisons 32% making between products

Change is very clearly happening in the retail sector, but if shoppers can get quality and choice, at a fair price, in an environment that encourages them to enjoy shopping, then they will come back. There is plenty of room on every high street for positive retail experiences – it just takes a bit more thought from the businesses involved than it used to.

These feel pretty obvious benefits – but how often do retailers talk about or even sell these to shoppers? To what extent are today’s retail environments being designed to encourage shoppers to explore the ranges available?

WO Special Issue | Shopper StockTake 2020

3

Written by

Kristen Campbell Davis kristen@shoppercentric.com

The competition is hiding in plain sight What are you planning to have for lunch today? Have you made something at home, hoping to be a little healthier as you look forward to a beach holiday in the summer? Did you grab something on the way to the office? Or will you escape the desk around midday for some fresh air and a bite to eat?

If you are relying on a Food To Go (FTG) outlet, such as Pret or Greggs, then you will know how popular these are. It isn’t just coffee shops that are snapping up empty retail sites on our high streets, it is also FTG brands. In fact, even the Discounters are looking to grab some of the action, with Aldi and Lidl including FTG sections in some of their newer stores (see photo).

4 out of every 5 shoppers in the UK have eaten a meal that wasn’t prepared at home in the last month. That might not surprise you, but had it occurred to you that eating out in general, and more specifically the explosion in FTG, is having a direct impact on the grocery sector? Already 1 in 10 shoppers believe that their household food spending has reduced as a direct result of their FTG spending habits. The growing spectrum of choices, the easy accessibility, the variety of foods and pricing to cater for all tastes and budgets, means that many users of FTG stores believe

4

their spending in these outlets will increase. Which means more pressure on grocery spending.

Perhaps most worryingly for our already underpressure grocery retailers is that cash rich Millenials, and GenZ, are at the heart of this trend. They are the age groups who are most likely to have eaten food when out, or that was prepared away from the home. They are doing this more often than 2 years ago, and they are the age groups most likely to say FTG means they are spending less on groceries.

Of course, those of us who can use the benefit of hindsight to think that these younger shoppers will turn into budget conscious, cook at home parents once they settle down might think this is just a passing phase. However, the fact that the FTG category is embracing healthier options and sustainability more quickly than grocery retailers means that no one in the grocery sector can afford to turn a blind eye to this challenge.

WO Special Issue | Shopper StockTake 2020

Aldi, Hemel Hempstead

If you work in, or with, grocery retailers or brands this is a trend you need to be thinking about, because this competitor hiding in plain sight could be a big challenge to grocery retailers. So, even if you did bring lunch in today, make a note in your diary to get out and take an objective look at the FTG sector in your area – it might to be quite an eye opener.

WO Special Issue | Shopper StockTake 2020

5

THOUGHT PIECE Introduced by: Sarah Banks: sarahb@shoppercentric.com Written by: Adam Briggs: adam.briggs@jbcommunications.co.uk

Sustainability Strategy into Action is no longer a choice. But there is a Quadruple Win Opportunity Following our widely read Sustainability report in September 2019 we have continued to interact with manufacturers and retailers on this topic and the conversation and speed of desire to do the ‘right thing’ has escalated. Hence, we are allocating more time, resource and expertise in this space.

Figure 1

As always, we work with experts where there is a complimentary skillset and in this instance we have been working alongside Adam Briggs of JB Communications Ltd. Adam is the Director for Category, Shopper Insight and Sustainability, having recently acquired qualifications from University of Cambridge’s Institute for Sustainability Leadership.

Prior to this Adam worked at Unilever and Johnson and Johnson in various global and local roles, including: Category and Channel Development, Customer Marketing and Insight.

Adam is clear about the realities of the need to act with some real practical considerations: “The time is

6

now, and the clock is ticking. With rising consumer focus on climate change, single-use-plastic and ocean pollution, activism in the broadest sense is no longer abnormal. ‘Greenwashing’, perceived lipservice or inactivity in the sustainability space is now a clear and present danger to corporate and brand reputations. The only solution is for sustainability thinking to be truly baked into internal strategies and retail-facing category strategies. With decades of Cat Strat experience at JB Communications, we believe the pivotal leap is to go from the classic ‘Triple Win’ mindset to a ‘Quadruple Win’.” See Figure 1.

On the UK retail side, Tesco is a notable example,

WO Special Issue | Shopper StockTake 2020

where the gauntlet was clearly laid down in the mass media back in August 2019, highlighting their right to refuse product listings in cases of excessive packaging, or packaging that does not meet

defined recyclability criteria. Embedded Quadruple Win thinking will get ahead of the curve, to be more prepared with retailers for the future based on emerging insights from your common shoppers.

Plastics Judgement Day is coming in 3 years’ time: Many companies have now signed up to the UK Plastics Pact 2025 targets (has yours?).

Considering extended supply chain lead-times and the benefits of getting ahead, we strongly suggest that the plans themselves need to be constructed in 3 years – that’s 2023. This is the perfect time horizon for a classic Category Strategy framework in which solutions with true scale can be prioritised, communicated and delivered. Having openly signed up to targets, the spotlight will be unforgiving if the stage performance is poor.

JB Communications and Shoppercentric are working together in this space to create a seamless solution from leading insight into strategic action and professional content design.

An audit of your current category strategy could reveal more commercial, sustainable opportunities than you realise.

We ask you to consider these four key provocations:

01 Are your sustainability plans truly embedded in your category strategies with compelling communication material?

02 Are your sustainability

initiatives under the correct growth pillars to be future proofed? A common focus is on ‘Trade Up’ options.

This taps into ‘motivators for the few’ while the sands may be shifting to drive core shopper penetration losses from not meeting new ‘hygiene factors for the many’.

03 Are your consumer

insights up to date to help prioritise future projects and measure success for your big bet projects in the pipeline?

04 Is your planning

and communication strategy aligned across your organisation, e.g. with sustainability metrics reviewed alongside financials in Annual Planning?

Please do get in touch for an initial FREE consultation: hello@shoppercentric.com

To read our WindowOn Shoppers & Sustainability report: www.shoppercentric.com/windowon-sustainability

WO Special Issue | Shopper StockTake 2020

7

8

WO Special Issue | Shopper StockTake 2020

thebigpicture

By Evie Brien

Glossier, London Since its launch in 2014, Glossier has been somewhat of a breakthrough in the beauty market, with its ‘skin first, makeup second’ approach to cosmetics and skincare. Over the years the brand – complete with its infamous millennial pink bubble wrap pouches (if you know, you know) – has grown in popularity. CEO Emily Weiss has cautiously expanded their exclusively online presence into stores in key US cities, starting with their New York flagship, into Los Angeles, Boston and more. And luckily for British fans, Glossier crossed the pond and opened its London pop up store in November 2019.

The store stands proudly on Covent Garden’s Floral Street, so of course it is adorned with floral wallpaper! Upon entering you are met with the light scent of Glossier’s now iconic perfume, You, along with American-standard customer service from the boiler suit-cladded reps.

They stand ready with iPads and big smiles, to help customers pick from the simplistically-presented tester products and process their orders. Weiss explained the store design was based on “a Mary Poppins, Willy Wonka, British social club mashup… London through Glossiercoloured glasses”, with which one cannot argue.

It is the perfect British take on a proudly American brand and one not to be missed before its closure in February 2020.

WO Special Issue | Shopper StockTake 2020

9

Can Goliath fend off David?

When we started our series of StockTake reports in 2016 the Discounters were still enjoying the benefit of the recession but weren’t necessarily snapping at the heels of the mainstream grocers. For 43 percent of UK shoppers they were a handy option in their repertoire of stores, like standard convenience stores in that, for many, they had a role but weren’t the mainstay of grocery shopping habits.

10

WO Special Issue | Shopper StockTake 2020

Written by

Sarah Lacey sarah@shoppercentric.com

Fast forward to 2020, and there is clear evidence that the Discounters are part of a seismic shift in UK grocery shopping habits: l 67 percent of UK shoppers have shopped in Discounters in the last month – a growth of 56 percent since 2016 l In comparison the supermarkets have remained almost static at 84 percent l 17% percent of UK shoppers now shop little and often, avoiding a large main shop – a 55 percent increase since 2016 Mainstream grocers are challenged by the fact that the appeal of the Discounters is no longer all about value. Of course, low price is at the core of their appeal, but shoppers recognise that there is more to their offer now. The effort the Discounters have put in to improve their product quality, demonstrated by the awards they regularly win, is paying dividends.

And whilst their stores are never going to be designed with comfort in mind, shoppers know what they are getting, and are willing to make the trade-offs required on a regular basis.

The challenge that the Discounters now present to mainstream grocers is around the dilution of shoppers’ loyalty. 1 in 3 UK shoppers say they spread their grocery spending more nowadays, so the store they use most often gets a smaller share than in the past. Combine this with the little and often trend mentioned above, and the danger for the large grocers is clear – loyalty is increasingly a luxury, and growth under these circumstances is not going to get any easier.

Since Discounters first appeared on the scene, the mainstream grocers have been able to talk about their ranges as being the big benefit to using their stores. Discounters can’t compete when they have small store formats, and their value model is based on limited stock availability. However, when more shoppers say they use Discounters to see new / different products than use Grocers for that same reason it is time for big business to really think through the challenge Discounters present.

There are plenty of signs that the UK grocery market is struggling to grow in the way it has in the past. UK shoppers are becoming more concerned about waste and are questioning their own spending veracity. If shoppers can’t be encouraged to spend more, then the existing retailers can only grow their share by stealing from the competition.

That’s easy if you are in a position of strength – and based on the shopping patterns evident in the UK it is now arguable the appeal of the Discounters as market disrupters is stronger than simply being one of the market big boys.

As Aldi and Lidl deliver more store openings in 2020 - giving them accessibility on a par with the big 4 – this really is the year where the mainstream grocers need to get to grips with the role they play in UK shoppers repertoires. With the current plans, how are they are going to even maintain their share going forward as the Discounters continue to ride their wave of success? What’s the plan ‘Goliath’ is going to use to fend off ‘David’?

WO Special Issue | Shopper StockTake 2020

11

Written by

Jon Darby jon@shoppercentric.com

The future is still...

Remember when QR codes arrived to revolutionise promotions in-store? Or when Lego’s brilliant Augmented Reality campaign showed how a combination of a box and a scanner could bring the latest Star Wars model to life? Or what about the AR mirrors John Lewis introduced to help shoppers ‘try on’ clothes more quickly?

12

Each of these innovations seemed to promise a real step forward in how we shop, and yet so far have failed to gain real traction within store design or the purchase journey. And there are plenty more innovations waiting in the pipeline or being tried out in flagship stores around the country. So, what exactly needs to happen for a great idea to become a geniunely useful new feature ?

It’s not rocket science – if you want your innovation to stick in retail, then it’s got to be something that genuinely improves the purchase process for shoppers. The problem is that so many apparent innovations complicate the process. QR codes all too often take shoppers to a website they could find themselves; these and AR assume you have downloaded a scanner app on your mobile; and John Lewis only had one ‘magic mirror’ per store, so why queue when you could be in the changing rooms instead?

WO Special Issue | Shopper StockTake 2020

in the future If UK shoppers are going to be persuaded to use Alexa et al to compile their shopping lists or allow companies to auto-replenish key household products, they need to see these innovations as a simplification of life, not making things more complicated. Only 4 percent of UK shoppers have used a smartspeaker, like Alexa, as part of a purchase process in the last month, and only 5 percent think they will use auto-replenishment in the next 5 years. And it’s taken years for smartphones to become properly involved in shoppers purchase journeys. These facts are hardly a ringing endorsement for innovations that we might think are genuinely beneficial for shoppers.

To avoid having a here-today-gone-tomorrow idea, you need to come at it from the shopper perspective, not just push the business angle.

How does your innovation improve the purchase process? What problem in that process does it

solve? And does it actually solve the problem or simply create new problems? Auto-replenishment sounds great in theory, but the gloss fades when shoppers realise they might need multiple accounts to cover multiple categories. Keeping track of different accounts which replenish at different frequencies, and then remembering to flex those frequencies as lifestages change all becomes a bit of a headache.

The future will always be in the future – but maybe you could bring it a little closer if you better connect with shoppers and include their perspective in your thinking. After all, they will always have the last word in driving the success of your innovation.

WO Special Issue | Shopper StockTake 2020

13

An Experts view on

‘2020 Vision’ for your category In today’s fast paced, multi-channel world it’s easy to lose sight of your category vision... retailers and manufacturers are often seduced into short term tactics in order to satisfy the needs of the timepoor, tech savvy shopper… shopper marketing, ecommerce and revenue growth management all combine to help squeeze every last drop of value out of a category... and yet, as David argues, a category vision - and a plan to execute it – has never been more important or relevant than now.

David Tittensor Co-Founder and Director of Catology Consulting and previously held the position of Category Director at Warburtons and various category and commercial roles at Kellogg’s, Kraft Foods, Smith + Nephew and Boots. He is an international conference speaker and university lecturer on Category Development. david@catologyconsulting.com

14

WO Special Issue | Shopper StockTake 2020

Nowadays manufacturers and retailers are demanding new things from category development, David explains “they want an ‘always on approach’ to shopper and consumer insights so that they can react to every opportunity and this means both sides having their databases and research findings up to date so that they are always on the front foot.” Increasingly, however, businesses are recognising the need for a medium to long term category vision which offers a roadmap for sustainable growth into the future.

As David points out, all the ingredients need to be in place for a successful category vision. Firstly, knowledge of market, channel, retail, lifestyle, innovation and consumption trends which then underpin a detailed understanding of: 1 consumer needs (the ‘what’) 2 consumption occasions (the ‘why’) and crucially...

3 shopper missions (the ‘where & when’)

Once all the insight is available, the trick is to determine the shopping behaviour that can be influenced in order to unlock the future category value growth. Then weave the strategic thread through every channel including digital, showing a level of logic and cohesion that makes sense to shoppers whenever they interact with the category.

And, as David maintains, not only preferred strategic partners need a category vision. In his opinion all companies should have one, if only to provide an objective view of how category growth can be achieved from the sub-sector your products play in. Buyers want an impartial view of how to satisfy their shoppers of the future. A brand-led vision simply doesn’t cut it anymore.

From David’s experience, the best category visions are the ‘simplest’ to explain. As he suggests “the acid test is whether all of your commercial team, including the leadership, can explain your category vision in the same few words without referring to PowerPoint slides? If not, then you’re going to find it difficult to embed it within your own organisation, let alone within a retailer.”

WO Special Issue | Shopper StockTake 2020

15

Out & about and in the press...

Real words from the high street.

Brought to you by the keen ears of the Shoppercentric team...

We’re exhibiting at...

I’ve started to feel guilty about plastic. It annoys me walking around the supermarkets, seeing all the plastic packaging It’s always on promotion, so they can clearly afford to take that money off, which means these foods are cheaper than they make out I’ve noticed quite a few shops debranding their plastic bags – it’s not going to fool me!

And you’ve got to love a good stereotype: l 56

percent of UK women had noticed more coffee shops on their High St vs 50 percent of men l 44 percent of 25-34 year olds have had food-to-eat-now delivered in the last month vs 9 percent of 65+ year olds

16

We’re exhibiting at the Shopper Insight, Behaviours & Winning Category Management Conference 26th February 2020 Cavendish Conference Centre Cavendish Venues 22 Duchess Mews Marylebone London W1G 9DT Find out more at: shopperinsightconference.com

WO Special Issue | Shopper StockTake 2020

Celebrating our 50th free Shopper Trends report

Just a selection of some of the

50 FREE

Shopper Trends Reports published since 2004 Available at: www.shoppercentric/reports

SPECIAL SPECIAL

ISSUE ISSUE 2020 2020 SHOPPER STOCKTAKE

SHOPPER STOCKTAKE

thelastword...

Brought to you by Shoppercentric, a full service shopper insight consultancy

We thought we’d let our clients have the last word by telling you what they think of us...

The research is creating a lot of excitement and positive change you’ll hopefully be glad to hear.

Shopper Insights Manager, Manufacturer

Wow there is some fantastic insight in here. Very thought provoking.

Marketing Director, Manufacturer

Did you enjoy this magazine?

Scan this code to be taken to more trends research from Shoppercentric.

We found your proposal really thought provoking & it’s given us a lot to consider.

Head of Insight, Manufacturer

A massive thanks for yesterday on behalf of myself and the team, it genuinely could not have gone better. And I promise you, I’ve never seen a round of applause in our business before.

Head of Insight & Strategy

A very insightful piece of analysis with some clear conclusions. Thank you for following up on this and providing such rich stimulus.

CEO of Global Manufacturer

The Gables Elmfield New Yatt Road Witney OX28 1GT

01993 223 223 info@shoppercentric.com www.shoppercentric.com