Summary
Key Market Trends
Recession and unemployment: Since the global financial crisis began in September 2007, consumer confidence has declined and substantial pressure has been put on retailers. The lack of confidence can be directly related to the current slowdown, and the associated fear of job losses. This has driven a substantial expected fall in full-year 2009 retail sales.
Lower household costs and recovering confidence: Households in the UK that have remained untouched by the job cuts have seen increased disposable income due to declining interest rates. Mortgage payments in the UK have declined by 25% by mid-2009 over the previous year. The average UK household is spending ￡200 ($371.0) less per month than in 2008 on essentials, primarily due to lower mortgages, low interest rates, and drop in petrol, electricity and gas prices.
Key Channel Trends
Supermarket dominance: The UK retail market is dominated by generalist retailers-a group which is itself dominated by supermarkets and hypermarkets. The UK's largest supermarket chain, Tesco, is reported to account for one in every seven pounds spent in the country.
Online growth: The UK's online retailing market has been an unequivocal success story, with strong growth expected for 2009 despite overall poor market performance. While online retailing was initially confined to categories such as books and recorded music, with generic products that do not require a tactile experience prior to purchase, improvements in technology have allowed it to extend into more categories with more complex purchasing patterns. Limited discounter presence: European-style hard discount stores have not achieved major scale in the UK. Much of the UK discount environment consists of "pound shops" (dollar-store equivalents) that stock an ever-changing range of very cheap products targeted at very low income consumers.
Key Category Trends
Premiumization in food & groceries: Food & groceries is by far the most important category group. Growth here has been driven in recent years primarily by premiumization: food volumes sold in the UK are not showing a substantial rise, but the price per unit of food has been rising as food manufacturers and retailers seek to persuade consumers to upgrade to higher-quality, more expensive products. Commodity price inflation in 2007-2008 also boosted value sales in the food market, since demand is relatively inelastic.
Competitive apparel, accessories and luxury goods market: There has been an explosive growth in discount and mid-price clothes retailing: specialist retailers such as Primark and supermarkets such as Asda have created ranges of fair-quality, relatively fashionable clothing at very low price-points while retailers like Zara have launched fashionable clothes at medium price points.
Table of Contents
Executive Summary
Introduction
Market Environment
Channel Analysis: UK Retail Market
Channel Analysis: Discount Retailers
Channel Analysis: General Retailers
Channel Analysis: Specialist Retailers
Channel Analysis: Online Retailers
Category Analysis: UK Retail Market
Category Analysis: Apparel, Accessories & Luxury Goods
Category Analysis: Books, News & Stationery
Category Analysis: Electricals & Electronics
Category Analysis: Food & Groceries
Category Analysis: Furniture & Floor Coverings
Category Analysis: Home & Garden Products
Category Analysis: Music, Video & Entertainment Software
Category Analysis: Sports & Leisure Equipment
Company Profile: Tesco plc
Company Profile: Asda Stores Limited
Company Profile: J Sainsbury plc
Company Profile: Alliance Boots Holdings Limited
Company Profile: Wm Morrison Supermarkets PLC
Company Profile: Marks & Spencer Group plc
Company Profile: DSG International plc
Kingfisher plc
Deal Analysis
