Verdict – 27 years of retail research Think Retail, Think Verdict

1. Verdict – 27 years of retail research Think Retail, Think Verdict

2. Food & Grocery Retail in 2012 Retailer reaction Verdict overview Economic Outlook Shopping behaviour Inflation & volumes

3. Verdict overview

4. UK market leader in retail research & analysis In-house team of analysts covering all major retail sectors globally Strong relationship with leading retailers & unique in-house data Culture of high quality analysis and independent opinion backed up by robust data Verdict Overview Who we are Our credentials

5. Consumers Sectors Channels Locations Forecasts News, comment Retail Futures: Annual five year sector forecasts Quarterly two year forecasts by sector + online Daily retail news via e-mail Regular opinion & comment on new stories and breaking news Updates & comment on retailer results E-Retail Remote Shopping Home Delivery & Fulfilment Click & Collect Food & grocery Neighbourhood retailing Convenience retailing Regional briefs How Britain Shops Where Britain Shops Customer Satisfaction Customer Insight Verdict Overview What we do Products and services Verdict core output

6. Company accounts Consumer trends Briefings Retailers Interviews Demographics Results meetings Consumer research Economy Press, media Housing market Trade associations Treasury/BOE Govt statistics Item Club, consensus Historical data Press, media Space Retailers Channels New entrants Regulation Costs Verdict Overview How we do it Sector and retailer research - methodology Market sizing & shares Forecasts

7. Verdict Overview How we do it Trade interviews Provide strategic insight… • Recovery from the recession • Changes to store development plans • Transactional websites • High/low growth areas • New product areas • Changes in price positioning

8. Visual Merchandising Stock Density Fixtures Mix of Product – Sub brands Store format/Ambiance Price positioning Customers Verdict Overview How we do it Store audits Important to have a feel for the retailers you are profiling…

9. Economic outlook

10. Economic outlook Economy Yearly GDP view GDP growth patterns, year-on-year change (%) 2009 2010 2011 2012 2013 2014 2015 -4.4 +2.1 +0.7 +0.6 +1.6 +2.3 +2.5 Normality Recovery Recession Recession

11. Economy Unemployment (national) Economic outlook Unemployment rate by year, % LFS measure

12. Economic outlook Economy Inflation prospects Inflation forecasts for RPI and CPI % RPI measure CPI measure

13. Economic outlook Economy Inflation Retail inflation rates for 2012 2.9% 1.9% 2.0%

14. Economic outlook Economy Consumer confidence index Nationwide consumer confidence index Nationwide consumer confidence index Spending index

15. Economic outlook Economy Household income Real household disposable income (year on year change, %) 2009 2010 2011 2012 2013 2014 2015 +1.6% -0.2% -1.2% -0.7% +0.3% +1.1% +1.5%

16. Inflation & volumes

17. Inflation & Volumes UK Food & Grocery Market Market growth

18. Inflation & Volumes UK Food & Grocery Market Impact of inflation on volumes

19. Inflation & Volumes UK Food & Grocery Market What does low volumes mean for retailers?

20. Inflation & Volumes UK Food & Grocery Market Growth of expenditure online vs total

21. Inflation & Volumes UK Food & Grocery Market Growth of sales in convenience vs total

22. Shopping behaviour

23. Shopping behaviour UK Food & Grocery Market What it all means for shopper behaviour Trade up Save time Save money

24. Retailer reaction

25. Retailer reaction Shopper trends What it means for retailers Offer Better Enable Quicker Be Cheaper

26. Retailer reaction Better: Affordable indulgence Quicker: Top-up shopping Cheaper: Pricing & promotions

27. Shopper trends Retailer reaction Better – affordable indulgence Quality & Freshness Alternative to dining out Respite from austere climate Polarisation of demand Own label alternatives Price sensitivity Disposable incomes tight

28. Shopper trends Retailer reaction Better – affordable indulgence Quality perception – Cooking from scratch drives demand

29. Shopper trends Retailer reaction Better – affordable indulgence Trading up in own brand – product innovation

30. Shopper trends Retailer reaction Better – affordable indulgence Providing respite from restricted budgets, alternative to dining out

31. Better: Affordable indulgence Quicker: Top-up shopping Cheaper: Pricing & promotions

32. Shopper trends Retailer reaction

33. Quicker – more convenient shopping Shopper trends Retailer reaction

34. Shopper trends Retailer reaction Changing market dynamics for convenience retailers Top-up shopping Further consolidation Online shopping Space churn Grocers expansion New entrants bring innovation Declining sales densities New strategies for gaining loyalty

35. Shopper trends Retailer reaction Quicker – Growth in c-stores

36. Shopper trends Retailer reaction Quicker – Innovation in convenience food

37. Grocers Fresh & food to go focus Click & collect Price focus Engaging with local community Symbols Local retailer loyalty Leveraging buying power Retaining over recruiting Indies Specialisation Insulation from inflation Increased spend in convenience sector Leverage local loyalty

38. Better: Affordable indulgence Quicker: Top-up shopping Cheaper: Pricing & promotions

39. Shopper trends Shopper reaction Cheaper- pricing & promotions

40. UK Food & Grocery Market Inflation impacts price sensitivity

41. Culture of promotional activity Multibuys Meal Deals Extension of multibuys to meal solutions at round price Price focus Shopper focus Discounting Meal planners & Fuel promotions Price comparison

42. Cheaper – price focus Shopper trends Retailer reaction

43. Cheaper – Price comparison & matching Shopper trends Retailer reaction

44. Cheaper – pricing and promotions Shopper trends Retailer reaction - Couponing at round price Price comparison

45. Retailer positioning Where they are – and where they are going

46. Thanks for listening