Consumers like names they can trust and symbol groups are the perfect combination of local faces with trusted brands, thus encouraging return trade and a relationship between shopper and store.

The latest data from Kantar Worldpanel to 14^th May 2023, shows the Northern Irish grocery market saw sales grow by 8.5% in the year to 11^th June 2023, with shoppers spending an additional £308.4 year-on-year.

With grocery inflation at 16.1% for June, the average grocery bill is set to rise by £840, from £5221 to £6061 if consumers don’t make changes to what they are buying.

But shoppers are savvy, and are continuing to look for ways to manage household bills and as part of this, they are returning to store more often, picking up less each time.

What they are choosing to buy is also changing, as own-label items now account for a bigger share of the sector year-on-year. Indeed some €2.9 billion was spent on own-label groceries in NI in 2022 (estimated), with Mintel noting that 71% of Northern Irish consumers avoided buying premium products due to the cost-of-living crisis in 2022.

“Irish shoppers have felt the impact of increased grocery prices in 2022, and have shifted their shopping behaviour accordingly, with a greater level of consumers reporting that they are avoiding premium brands and many using more own-label brands and discounter retailers,” said Brian O’Connor, Senior Consumer Analyst at Mintel.

Convenience is key and is fast becoming the cornerstone of everyday life. Gone are the corner shops of yesteryear. It’s all about the customer experience – and symbol stores have taken that concept to heart – by making the efficiency and ease of shopping at the core.

The symbol sector has actively capitalised on making the ‘shopper experience’ at the centre of their business ethos – smart, stylish, well lit, clean, clear labelling – with value for money being the driving force – this savvy sense of driving the sector forward has its roots in research, category management, and sound business sense.

THE SHIFT TO SYMBOLS

Retail analysts are identifying a clear shift in consumer behaviour and attitudes that is favouring the convenience sector.

On average, shoppers are returning to store nearly 17 times more, but are picking up less volume -2packs when compared to this time last year.

These new attitudes towards grocery shopping are supporting growth in the convenience sector, meaning retailers should adapt to drive change and keep pace with these new shopper behaviours.

These trends are presenting the symbol sector with a new raft of opportunities. Along with technology developments, it’s a clear response to customer needs and demands. It’s being predicted that these trends are likely to continue to evolve rapidly over the next five to 10 years.

Travel and movement patterns have altered in recent years, with more people working from home, resulting in people travelling on the road at different times of day. These pattern shifts are also changing the way consumers view and use convenience stores – but most importantly, consumers want the assurances and certainty that a recognised symbol secures – that meets their expectations.

THE ’CONSUMER EXPERIENCE’

At the cutting edge of change, the symbol sector is creating great shopping experiences for consumers, alongside the essential services and facilities they are known for.

The Henderson Group, which boasts some 500 stores across Northern Ireland – a mix of company-owned and independent retailers – has committed to significant investments throughout 2023, with a capital programme of over £60 million to be invested.

“We are a successful, independent, family-run, family-owned business and we have an ethos and culture of continual reinvestment to drive the business,” said Paddy Doody, Sales and Marketing Director.

“That’s about partnering with our independent retailers, investing in their business, investing in new stores, investing in promotional and price activity to give better value to the shopper, and investing in our infrastructure.”

‘Shoppers in Northern Ireland spent an additional £6.7 million in symbols versus last year, with 76.7% of Northern Ireland households purchasing their groceries in a symbol group over 2023’

As food and drink prices continue to climb, with average prices up 10.1% compared to last year, the impact on shoppers’ budgets is unavoidable for many Northern Irish consumers.

As shoppers look for ways to manage costs, many are turning to cheaper alternatives such as retailer own-label lines, where sales are up £193 million compared to last year and versus branded products, which are up £119m year-on-year.

All retailers are seeing year-on-year growth in the latest 52 weeks. Total symbols are seeing the slowest growth among retailers, at 2.4% year-on-year.

Shoppers in Northern Ireland spent an additional £6.7 million in symbols versus last year, with 76.7% of Northern Ireland households purchasing their groceries in a symbol group over 2023.

On average shoppers pick up groceries in a symbol group 65.3 times over the course of the year, which is down only slightly, at 0.1% on last year.

LOOKING TO THE FUTURE

Retailers will need to continue to make efforts to be more sustainable, as 78% of Northern Irish consumers noted they consider their lifestyle to be environmentally friendly to at least some degree, notes Mintel.

Some 71% of Northern Irish consumers believe that unless there are changes from big businesses, the planet cannot be saved. As such, grocery retailers that can successfully display green/ethical initiatives to support sustainability, will likely appeal more to shoppers.

With more consumers struggling to justify ‘splashing out’, adding a sustainable angle to grocery shopping may help to alleviate any ‘buyers’ guilt that consumers might feel in splashing out in a time where they may feel they need to deny themselves luxuries.

Having set out to achieve a 12% carbon reduction by the end of 2023, SuperValu and Centra retailers have achieved a 9% carbon reduction, a year on from the launch of the €25m Musgrave Sustainability Fund.

In June last year, Musgrave announced the first of its kind €25 million sustainability fund aimed at realising this target and reducing emissions across its operations, ultimately to achieve net zero by 2040. In order to reduce emissions to net zero by 2040, Musgrave is aiming to achieve a 46% reduction in carbon emissions (Scope 1 and 2) by 2030.

Ian Allen, Managing Director of SuperValu and Centra said: “Our stores are at the heart of communities around Ireland, and we are proud that our network of SuperValu and Centra retailers are on track to reach our carbon reduction goal by the end of this year.

“Our retailers have shown real passion and enthusiasm to continue to lead by example and implement sustainability measures across their leading supermarket and convenience stores.”

Retailer Philip Woods, who operates four SuperValu and Centra stores in the Armagh and Portadown areas, has invested £660,000 to reduce his store’s carbon emissions and make them more sustainable, supporting brand owner Musgrave Northern Ireland’s sustainability goals.

Investing in new energy efficient refrigeration, LED lighting, and solar panels, the retailer has also been supported by Musgrave NI’s £3.6 million Sustainability Fund.

Mr Woods is the first retailer in Musgrave NI’s network to use the Sustainability Fund for solar panels, which have been installed by local company Solmatix into SuperValu Fruitfield, Richhill and Tandragee, plus Centra Dobbin Road.

The solar panels will reduce carbon emissions by saving a predicted 49 tonnes of CO2 across the four sites each year helping to achieve Musgrave NI’s overall target of net zero carbon by 2040. This is the equivalent to planting 1,856 trees.

TO VIEW THE FULL MID-YEAR SYMBOL REVIEW IN THE NEIGHBOURHOOD RETAILER JULY ISSUE, CLICK HERE

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Soft drinks remain a dominant force in the market with a high proportion of Northern Ireland consumers purchasing each year.

Challenging conditions in 2022 left the sector, like so many others, facing its own hurdles, but producers in the category have shown adaptability and resilience amidst rising costs, labour shortages and upheaval in the supply chain.

Soft drinks sales across the grocery, foodservice and licensed channels hit £19.2bn in 2022, a 25.6% year-on-year rise, worth an impressive £3.9bn at the tills, according to NielsenIQ. Compared to pre-pandemic sales, volume sales have grown by 6%, with discounters, convenience retailers and supermarkets all driving strong growth. 1

And with the heatwave across Northern Ireland at the end of May and into June, hopes will be high that a similar effect will occur for 2023 figures.

Another area of growth was the fruit carbonate drinks, which witnessed sales grow by 12.5% year-on-year in the total market.

Britvic retail commercial director, Ben Parker said flavour innovation is “crucial” in helping to keep consumers excited by soft drinks, particularly as they are dealing with the continued cost-of-living crisis.

“It’s important to offer new products from well-known brands to help maintain basket spend,” he added.

1 Grocery Mults, Impulse & Discounters, NielsenIQ RMS – Foodservice & Licensed CGA – 52 w/e 31/12/2022 v 52 w/e 31/12/2019

YOU CAN SEE OUR SPECIAL FEATURE ON SUMMER DRINKS 2023 IN THE NEXT ISSUE OF NEIGHBOURHOOD RETAILER, COMING SOON!

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Launches of new seasonal Easter chocolate products have increased by 19% over the last 12 months, with this year set to be a bumper year for Easter treats.

When it comes to regional launch activity, the UK is officially top of the chocs leading the way in Easter innovation globally. From March 2022 to February 2023, the UK was responsible for an impressive one in eight (16%) Easter chocolate launches, leaving chocolate lovers spoilt for choice.

Easter innovation has come on leaps and bounds in the UK according to the research, as the number of Easter-specific launches has grown almost 40% over the past two years.

Overall, Easter innovation accounts for 41% of all seasonal chocolate launches.

SUSTAINABLE ATTRIBUTES

The Mintel research also found that over the last 12 months, nearly three in five (57%) of Easter chocolate launches globally carried an environmental/ethical claim, up from less than half (48%) the previous year.

However, while the confectionary industry continues to respond to a number of sustainability issues, consumers are not as enthusiastic about sustainable attributes.

In the UK, ethical certification (9%) does not rank highly among chocolate purchase factors compared to other criteria, such as a favourite flavour (37%) or interesting texture (16%). Meanwhile, a quarter (25%) of UK chocolate lovers would be enticed by recyclable packaging.

Director of Insight, Mintel Food and Drink, Marcia Mogelonsky said: “Following several subdued years of Easter celebrations, chocolate lovers are set to enjoy an impressive array of chocolate eggs and novelties this Easter.

“As the world becomes more relaxed about social gatherings, celebrations will be more plentiful, sparking improved revenue for seasonal chocolates, especially those linked with an interactive component, like Easter egg hunts.”

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While COVID-19 has proved catastrophic for many of retailers, new research from Mintel reveals that this year has been a success story for food discounters, such as Aldi and Lidl*, as sales grew 11% in 2020. Northern Ireland has no Aldi discount stores currently, however discounters such as Home Bargains, B&M, and Poundland are all increasingly cutting in to the food sales sector.

By the end of the year, shoppers will have spent an estimated  £24 billion at food discounters. And, according to Mintel research, the nation’s love of discounters is set to continue as by 2025 Mintel estimates that food discount sales will top £31 billion, an increase of almost 30%.

Strongest players

Overwhelmingly, the strongest players in the UK food discount sector, Aldi and Lidl account for around 67% of the discount market (including food and non-food) and 13% of the total UK grocery market.

Just under nine in 10 people (86%) shop at a food discounter, rising to 90% of 16-24s. Driven by more than just value, only 28% of discount shoppers agree that prices are more important than quality. Meanwhile, just over a fifth (22%) agree that having more money would make them less likely to shop at discounters.

In October 2020, nearly a quarter (23%) of consumers in the UK said that they were shopping locally more often since the COVID-19 outbreak. The convenience of food discounters is supported by over half (52%) of consumers who also said that they like the smaller range available at discounters because it allows them to shop more quickly.

Economic uncertainty

Piers Butel, Retail Analyst at Mintel, said “Food discounters have managed to successfully carve out a unique niche in the market and are well positioned to benefit from the economic uncertainty caused by the COVID-19 pandemic. In fact, it was during and immediately after the 2008 recession that the discounters started to grow in the UK and capture market share from the traditional retailers. The food discounters have been immensely successful at communicating their value proposition to consumers over the last decade. The combination of low prices, good value, and a simple shopping experience has proven very popular with customers.

“Their famous brand-beating luxury items may garner the headlines and attract new shoppers, but it’s the streamlined range, simple shopping experience, and good value that keep those customers loyal. While the COVID-19 pandemic represents an unprecedented challenge for UK retailers, we expect the discount market, with its focus on value, to benefit from these challenging times.

Blur the line

“In recent years we have seen the food discounters increasingly blur the line between discounter, convenience store, and supermarket. This drift into a more mainstream convenience position with, for example, the launch of smaller format Aldi Locals, may prove to be a positive move in the current climate. With many consumers in the UK working from home, shopping locally more often and keen to reduce time spent in stores, discount stores located in or near residential areas may benefit from increased custom.”

The COVID online challenge

While online grocery shopping has surged during the pandemic, few leading discounters offer online shopping. According to Mintel research, as many as three quarters (74%) of discounter shoppers do not shop at discounters online.

UK consumers are still concerned about the risk of being exposed to COVID-19 and in September 2020, 40% of people surveyed said that they had started shopping online more since the COVID-19 outbreak. While all parts of online retailing have seen rapid growth, given the focus on essential spending, it is online grocery which has seen the greatest impact with sales up 108% on average between April and August 2020.

Mintel’s Piers Butel continued “Consumers turning to online shopping as a result of the pandemic is the trend most likely to negatively impact discounters. The question for the future is how will the discounter business model, which values simplicity, grow to include full online retailing – which is both complicated and expensive? Only a limited number of discounters offer online services and even those that do are only attracting a tiny fraction of consumers. The key demographic for online retailing is the 16-34-year-old age group, who are also the most likely to use discounters – so this represents a big missed opportunity for discounters.

“We believe that the shift to online is here to stay for the long term, so over the coming years we expect more discounters will start to offer ecommerce options, even if they start off limited in scope, much as Aldi did. But until this happens, the more traditional retailers will have an advantage over the discounters in the digital market.”

Mintel’s expertise

Mintel is the expert in what consumers want and why. As the world’s leading market intelligence agency, analysis of consumers, markets, new products and competitive landscapes provides a unique perspective on global and local economies. Since 1972, Mintel’s predictive analytics and expert recommendations have enabled our clients to make better business decisions faster. Our purpose is to help businesses and people grow. Visit mintel.com.

*Food discounters refer to Aldi and Lidl combined. Other food discounters are very small and/or part of another discounter eg. Heron Foods (owned by BM Bargains).

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