Evolution Insights specialise in understanding shopper behaviour within the UK F&G Market. Here is our first report of 2012.....This research looks specifically at shoppers' key loyalty drivers to retailers, then examines the impact of price, value and convenience, before testing shoppers' understanding of promotional mechanics, where is the tipping point for '2 for' deals and exploring what they do when confronted by one that leaves them confused!

1. The Role of Loyalty, Price and
Promotions – The Shopper’s
Perspective 1
SAMPLE EXTRACT
Evolution Insights Ltd
Prospect House
32 Sovereign Street
Leeds
LS1 4BJ
Tel: 0113 389 1038
http://www.evolution-insights.com
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2. About Evolution Insights
Evolution is a leading research consultancy specialising in shopper motivation and behaviour. We deliver off-the-shelf, tailored and bespoke
research for manufacturers, retailers and agencies.
Our research and analysis helps • Evolution offer a range of products & services for
clients develop targeted shopper clients in the field of shopper research:-
marketing initiatives designed to
• Off-the-shelf research
influence shoppers at the point of
purchase. – Evolution’s off the shelf research
publications deliver affordable insight
into shopper motivation and
behaviours in UK food, drink and
grocery
• Insight Plus
– Insight Plus offers your business the
opportunity to engage in any of our
We use a range of research regular shopper research projects in
advance of publication, tailoring the
methodologies to discover genuine scope to suit your needs
insights. Our research incorporates
a broad spectrum of robust • Bespoke Consulting
qualitative and quantitative
research techniques. – As publishers of research, we are able
to draw upon a wealth of existing
proprietary data for consulting projects
As a leading publisher of shopper – helping to better inform and shape
research, we are ideally placed to any further research requirements.
offer your business actionable
shopper insight.
Further information is available at our
website http://www.evolution-
insights.com
Visit and sign up for Reflections, our free
quarterly newsletter offering analysis and
commentary on topical issues
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3. Contents
Key findings and executive summary 6 Summary 38
The scope of the report 7 Loyalty in the food and groceries market 39
Key findings and executive summary 8 Introduction 40
9 Loyalty cards currently carried around by the shoppers 41
Key findings and executive summary (2)
Loyalty cards and discount vouchers currently carried around 42
Key findings and executive summary (3) 10
by the shoppers
Key findings and executive summary (4) 11 43
Defining loyalty
Key findings and executive summary (5) 12 Loyalty cards 44
Inflation and food retailer price war 13 Loyalty schemes 45
Introduction 14 Tesco Clubcard 46
Price wars 15 Nectar card 47
Food price inflation 16 Boots Advantage card 48
Food price inflation (2) 17 Superdrug Beautycard 49
Summary 18 Coffee shop loyalty cards 50
Changing shopping habits and different types of promotions 19 51
Other loyalty card schemes
Introduction 20
Summary 52
Changing shopping habits in recession 21
Loyalty and price related drivers for shopping 53
Changing shopping habits in recession (2) 22
Introduction 54
Savings through trading down 23
Price-related drivers of store choice - in store and online 55
Price comparison 24
Drivers for favouring shoppers’ most used supermarket – in 56
Recession 25
store
Money available to spend on food in the last 12 months 26 57
Drivers for favouring shoppers’ most used supermarket – online
Definition of value – what shoppers want 27 58
Summary
Value – relationship between price and value 28 59
Different types of promotions
Frequently promoted categories 29 60
Introduction
Number of promotions at different retailers 30 61
Appeal of different types of promotions – in store and online
Proportion of branded products of all promotions at different 31 62
The online grocery shopper: at a glance – drivers of online
retailers grocery shopping
Average % saving on branded products on promotion 32 63
Online vs. offline deals
Average % saving on own-label products on promotion 33 64
Offer appeal – in store and online
Websites offering vouchers and discount codes 34 65
The most attractive in store promotions by social group – in
Voucher code websites 35 store
Price comparison sites 36 The most attractive in store promotions by household type in 66
Why promote – benefits of promotional activity for 37 store
manufacturers and retailers Life stage and attractiveness of different promotions – in store 67
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4. Contents
The most attractive in store promotions by social group – online 68 Introduction 97
The most attractive in store promotions by household type 69 Proxy categories for survey questions 98
online Deal appeal 99
Life stage and attractiveness of different promotions – online 70 Deal appeal – a 4 pint bottle of milk 100
Summary 71 Deal appeal – a 4 pint bottle of milk (2) 101
Understanding promotions 72 Deal appeal – a box of washing powder (850g, 10 washes) 102
Introduction 73 Deal appeal – a box of washing powder (850g, 10 washes) (2) 103
Figuring out complicated offers 74 Deal appeal – instant coffee 104
Lowest price per unit – washing powder 75 Deal appeal – yoghurt 105
Lowest price per weight – yoghurt 76 Deal appeal – beer 106
Lowest price per item – soft drink 77 Deal appeal – beer (2) 107
Percentage discounts 78 Summary 108
Summary 79 Multi-buy deals and online grocery shopping 109
Single item vs. multi-buys – finding the tipping point 80 Introduction 110
Introduction 81 Willingness to buy in bulk in store and online 111
Tipping point for different categories 82 Willingness to buy in bulk in store and online (2) 112
Finding the tipping point for bulk-deals – when is it worth it to 83 Willingness to buy in bulk in store and online 113
get two instead of one? Bulk-buying online 114
There is a loaf of bread available for two for £2 or one for the 84 Summary 115
price below. Different retailers’ current promotional strategies 116
There’s a box of your favourite washing powder (850g, 10 85 Introduction 117
washes) available for two for £5.50 or one for the price below. Promotions leaving shoppers confused 118
A pack of your normal toilet rolls (18 rolls) is available for two for 86 The cost of promotions 119
£12 or one for the price below. Retailer price strategies in 2011 120
Tipping point for different product categories 87 Asda’s strategy on promotions and pricing 121
Summary 88 Shoppers mostly shopping in Asda 122
Price expectations in convenience stores 89 Tesco’s strategy on promotions and pricing 123
Introduction 90 Shoppers mostly shopping at Tesco 124
Convenience store prices 91 Sainsbury’s strategy on promotions and pricing 125
Convenience store prices – perceptions by age group 92 Shoppers mostly shopping in Sainsbury’s 126
Convenience store prices – perceptions by social group 93 Morrisons strategy on promotions and pricing 127
Convenience store prices – perceptions by life stage 94 Shoppers mostly shopping in Morrisons 128
Summary 95 Waitrose’s strategy on promotions and pricing 129
Deal appeal – determinants of choice 96
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5. Contents
Shopper perceptions on prices and promotions at different 130
retailers
Cheapest retailer in relation to primary store of choice 131
Best deals in relation to primary store of choice 132
Price matching 133
Everyday low pricing vs. promotions 134
Discount retailers 135
Effectiveness of pricing strategies and campaigns – Christmas 136
performance in 2011
Methodology 137
Methodology 138
Methodology: quantitative survey 139
Glossary 140
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6. The scope of the report
The economic downturn and food price inflation are challenging household budgets and
shoppers need to find ways to cope with the squeeze. This report investigates how shoppers
feel about food prices, what kind of promotion types they prefer. We also tested the tipping
point for ‘2 For’ offers using a number of proxy categories to demonstrate differences. A
complete section of the report is dedicated to testing whether shoppers understand
promotions and how they deal with confusing or difficult offers. We also look into the effects
on store loyalty when food retailers are at constant war on prices, and what are the price-
related drivers of store choice.
The report also provides a good overview of the current promotional strategies adopted by
the big four retailers and existing loyalty schemes offered by the fast moving consumer
goods retailers.
The understanding of this vital area of shopper understanding places us in a good position to
undertake bespoke research at an individual category level.
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7. Food price inflation
The extent of inflation on food prices varies between different retailers and is dependant on promotional activity.
The economic downturn has resulted in inflation and
higher taxation which is also affecting food prices.
The cost of food has increased by approximately 5.0%
in the last 12 months. The British Retail Consortium
8.0
has however estimated that about 40% of groceries
6.9
7.0 6.3 6.3
Percentage change on year earlier
6.1 6.4 are bought on promotion. When promotional pricing
5.5 5.8 is factored in, the cost of food has increased by only
6.0
6.2 6.2 5.0 4.8
5.1 4.5 4.6 3% in the last 12 months. According to The Grocer
5.0 4.3 4.4 4.4 5.2 price Index the cost of food was up by 5% compared
4.1 3.7 4.0 4.2 5.0
4.0 3.4 3.7 3.3 3.2 3.3 4.5 to a year ago and by 4% when promotions were
3.0 3.1 3.2 4.5 4.5
4.1 4.0 considered. There is some variation between
3.0
2.0 3.1 3.1 different retailers. Whereas Asda shoppers are only
2.8 1.8
2.0 paying 2% more than a year ago, prices in Tesco have
1.9
1.0 gone up by 8%. Promotional activity and discounting
isn’t showing any signs of slowing down though and
0.0
promotions appeal to all age and social groups.
Aug-10
Aug-11
Apr-10
Oct-10
Apr-11
Oct-11
Mar-10
Mar-11
Jan-11
Jun-10
Jul-10
Jun-11
Feb-11
Jul-11
May-10
Sep-10
Dec-10
May-11
Nov-10
Sep-11
Nov-11
Retailers are in constant competition to be the
cheapest. Asda has, however, changed its strategy
and is gradually shifting away from promotions to
CPI (overall index) Food and non-alcoholic beverages everyday low prices. How long the other retailers can
keep going remains to be seen but it is possible that
the impact of promotions is smaller in the future.
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8. Price comparison
The majority of shoppers (60.9%) are more price conscious compared to 12 months ago.
I’m spending more time looking at prices in store compared to 12 months ago • Majority of shoppers claim to pay more
60.9% agree attention to prices than 12 months ago. It
35 seems though that what shoppers say and
31.9 what they do is different. In reality shopping
in convenience stores is on the rise even
30 though shoppers admit convenience stores
are more expensive than supermarkets.
26.5
• Lots of little shops instead of a big weekly
25
% primary grocery shoppers
shop expose shoppers more to impulse
buying which can increase the food bill.
20 • There is also a growing trend towards meal
for tonight deals at different retailers.
14.9 Shoppers aren’t planning their shops which is
15 14.1 an expensive way of shopping.
10
7.0
5 3.0 2.5
0
Strongly Agree Agree Undecided Disagree Disagree Strongly
agree somewhat somewhat disagree
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9. Voucher code websites
Groupon is known by nearly 75% of shoppers whereas the most of the other voucher code websites are unfamiliar to most grocery
shoppers. Moneysavingexpert.com is the most used, with 9.5% using it often and 17.5% using it occasionally.
Are you aware of the following types of voucher code websites, and if so, have you used them?
Groupon.co.uk 25.6 44.3 8.2 17.5 4.4
Moneysavingexpert.com 39.5 28.3 5.2 17.5 9.5
Myvouchercodes.co.uk 42.4 30.6 7.1 16.4 3.5
Kgbdeals.co.uk 60.4 26.1 4.8 6.8 1.9
Wowcher.co.uk 71.5 21.3 2.7 4.1 0.4
Livingsocial.com 73.1 16.2 3.8 5.8 1.1
Hotukdeals.com 75 13.2 2.9 5.8 3.1
Mysavings.com 80.7 14.2 2.22.40.6
Wow-coupons.co.uk 81.5 13.3 2.9 20.4
Vouchercloud.com 83.3 10.1 2.6 3.6 0.5
0 10 20 30 40 50 60 70 80 90 100
% primary grocery shoppers
Not aware Aware but haven't tried it
Aware, have tried but don't use anymore Aware and use occasionally
Aware and use often
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10. Loyalty cards currently carried around by the shoppers
So what’s in your purse/wallet?
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11. Online vs. offline deals
There is no real belief that prices are better online than in store. This is interesting because outside the category of food
and groceries online prices are absolutely considered cheaper.
Online offers are better than offers in stores
20.7% 27.7%
agree disagree
51.6%
I would shop online more undecided Why aren’t online offers
better? For other shopping
often if the offers were
better than in stores. you can get good bargains
online!
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12. Convenience store prices – perceptions by age group
Majority of shoppers in all age groups expected convenience store to be higher than their normal supermarket prices.
If your shopping came to a total of £50 in your normal supermarket, how much • Younger respondents (18 to 24) were more
would you expect to pay for the same items in a convenience store?
100 likely to expect convenience prices be lower
than in a supermarket.
90
80 • The oldest group expected lower prices than
28.6% of 18 to 24 year olds expected
the total price to be less than £50. the younger groups, apart from the youngest
70
age group.
60
% 50
• The mean averages for different age groups are
40
• 18 to 24: £54.60 (9.2% more expensive)
30
• 25 to 34: £58.67 (17.3% more
expensive)
20
• 35 to 44: £60.28 (20.6% more
10 expensive)
• 45 to 54: £59.65 (19.3% more
0 expensive)
25 30 35 40 45 50 55 60 65 70 75 • 55 to 64: £59.65 (19.3% more
expensive)
£ • 65+: £57.84 (15.7% more expensive)
18 to 24 25 to 34 35 to 44 45 to 54 55 to 64 65 and over
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13. Methodology: quantitative survey
Topics of questions in quantitative survey
Demographic profiling • Detailed shopper insights were gained from a
survey of 1,007 UK adults who say they regularly
shop for food and grocery. The samples were fully
representative of the UK population.
Main supermarket information
• The survey contained 28 questions relating to
health and nutrition – in addition to standard
Loyalty demographic profiling questions.
• The survey was undertaken by a third party MRS
Price-related drivers for shopping – in store and online partner and is therefore bound by the MRS code
of conduct.
Promotion appeal • The survey was carried out online during the week
commencing 17th October 2011.
Understanding pricing and promotions
Multi-buy appeal in different categories and finding the tipping point
Awareness and use of price comparison and voucher code websites
Perceptions on discount retailers
Changes in food available to spend on food
Source: Evolution Insights
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14. Contact us
Evolution Insights Ltd
Prospect House
32 Sovereign Street
Leeds
LS1 4BJ
Telephone: 0113 336 6035
e-mail: craig.bradley@evolution-insights.com
Web: http://www.evolution-insights.com
Company No. 07006001
Country of Incorporation: United Kingdom
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