This report overviews the characteristics of UK retail outlets and how best to place U.S. products in the UK market.
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
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In the UK the retail grocery industry is concentrated with 83 percent market share in the hands of just
five supermarket chains. The remainder is scattered over hundreds of outlets. This report overviews the
characteristics of UK retail outlets and how best to place U.S. products in the UK market.
SECTION I. MARKET SUMMARY
Over the last 12 months, the UK food and drink industry has faced challenging trading conditions as
shoppers, manufacturers and retailers have been impacted by a range of factors. Increased pressure on
household budgets, unemployment, the banking crisis, and the availability of credit continues to impact
consumer spending. Despite these challenges, the UK food and grocery market remains robust. While
not recession proof, food and grocery is more resilient to the current downturn in the economic market
than other sectors.
The convenience stores are seeing a major upswing as the “big four” supermarkets gain more
importance in this area. The grocery convenience stores saw the highest current growth rate in 2011.
Consumers now prefer to shop more conveniently. With most convenience stores being located in town
centres, train stations and shopping areas consumers are visiting these stores more often to pick up a few
items at a time. This means that shoppers only purchase what they require and benefit from the cheapest
prices as the big four supermarkets dominate these stores and offer the same prices as they would in
their larger format stores.
The UK grocery market was worth £156.8 billion ($250.8 billion) * in 2011. This is an increase of 3.8
percent over 2010. Groceries account for 12.8 percent of total household spending in the UK, making it
the third largest area of expenditure, following housing and transport. Food and grocery expenditures
account for 53 pence in every £1.00 of retail spending (excluding restaurants). 21pence in every £1.00
spent on food and grocery is spent in convenience stores.
There are 88,441 grocery stores in the UK. These are split into four sectors:
Supermarket Chains: Supermarkets have a sales area of 3,000-25,000 square feet and sell a broad range
of grocery items. Superstores are defined as stores that have a sales area above 25,000 square feet,
selling a broad range of grocery and non-food items.
Convenience Stores: These stores have sales areas of less than 3,000 square feet, are open for long
hours, and sell products from at least eight different grocery categories.
Traditional Retail and Developing Convenience Stores: These stores have sales areas of less than 3,000
square feet, and include news stands, green-grocers, liquor stores and gas stations.
* This report uses an exchange rate of US$ 1.6 = 1 British Pound (£)
Alternative Channels: This category includes a wide range of outlets such as internet or catalogue home
shopping, farmers’ markets, and other produce markets and vending machines.
See attPlease see attachment for Grocery Retailing table.
Advantages and Challenges to U.S. Products in the UK Retail Sector
The UK is a sophisticated market that mirrors some trends in the U.S. retail sector. However, it can be
surprisingly different from the United States and in-depth research and analysis should be carried out
before attempting to export.
U.S. products face fierce competition in the British market. Not only is UK food production advanced,
but EU countries benefit from duty free access. However, there are opportunities for U.S. products in
this competitive and challenging retail environment. The United States is the largest non-EU country
supplier to the UK, but on average represents just 5-6 percent of food imports. Due to EU technical
barriers, market access can sometimes prove a challenge for U.S. products.
Market dominated by a few retailers with Supermarket chains demand significant volume and
strong market penetration. Sophisticated their concentration can make market access difficult
replenishment systems mean U.S. products initially. Trial listings must give results in a short
can be widely distributed. time or product will be de-listed.
There are a large number of specialty The UK has well-established brands for mainstream
importers, capable and interested in products. Brand-building and marketing costs are
importing from the United States. substantial.
The United States has a good brand image Strict (EU) import regulations and labeling/ingredient
in the UK. requirements.
The country is English-speaking and is EU competitors do not pay import duty on goods to
therefore an easier gateway into the rest of the UK. The United States generally pays 0-25
Europe for U.S. exporters. percent import duty, depending on the product.
The United States is a popular destination Popularity of specialty products from many EU
for UK tourists and familiarity with U.S. countries and U.S. competitors is high, e.g. French
products is widespread. cheeses, Spanish citrus, Italian pasta, South African
Strong purchasing power, sophisticated Consumer tastes differ in the UK. In general, there is
consumers. In general, the UK tends to not the same affinity for popcorn, peanut butter, and
mirror U.S. retail market trends. U.S. style chocolate.
Strong interest in innovative products
including organic, health, specialty, and
ethnic food categories.
SECTION II. MARKET SEGMENTS
This report gives a broad outline of the UK supermarket chains. A more detailed report entitled “UK
Supermarket Chain Profiles” is available by emailing firstname.lastname@example.org .
Five supermarket chains dominate UK food retailing, accounting for almost 83 percent of the market.
Tesco is the market leader, with 30.7 percent market share, followed by Asda/Wal-Mart with 17.3
percent, Sainsbury’s has 16.5 percent, Morrison’s has 11.9 and the Cooperative rounds out the quintet
with 6.6 percent. Other UK supermarket chains include Waitrose, Iceland, Aldi, and Lidl.
Although the discounters Lidl and Aldi are still doing well; consumers tend to buy products in both
mainstream supermarkets and the discounters, preferring to do their main shop in their preferred
supermarket chain. Therefore the discounters market share in not growing.
The main features of discount supermarket shopping are every day low cost; limited product ranges and
a focus on price. Stores are smaller and relatively uniform in size and layout. Stores range from 800
square meters (8,600 square feet) to 1,500 square meters (16,000 square feet). They carry predominately
private label products; however, these are exclusive labels rather than store name.
The discounters account for 5.8 percent share in grocery spending.
Market Shares of the UK’s Supermarket Chains
Retailer Share %
The Cooperative 6.6
Source: TNS Data, market share summary, 12 weeks to July 8, 2012.
In general, each retail chain focuses on specific market segments. For example, Tesco targets the middle
market, providing both economy and up-scale products. Sainsbury’s is pitched slightly up-market of
Tesco, with Asda/Wal-Mart slightly down-market of Tesco. Morrison’s and The Cooperative compete
at much the same level as Asda/Wal-Mart. Waitrose, part of the John Lewis Partnership, is the most up-
market of the leading chains. Iceland, Aldi and Lidl are all price-focused outlets.
The UK has one of the most advanced private label markets in the world (valued at around $100
billion). The UK's major supermarket chains dominate the private label market and on average 40-50
percent of products in their stores are private label. Originally, private label goods were a copy of a
branded product, but today they are often innovative. They give UK retailers the opportunity to
diversify their product ranges and develop new revenue streams.
The extreme of UK private label grocery shopping can be seen by visiting a Marks and Spencer (M&S)
food hall. Eighty-five percent of what M&S sells is own-label goods. Most M&S customers buy the
majority of their food from other mainstream grocery retailers. They use M&S for special occasions,
for convenience food such as ready-meals and as a top-up to their regular shop by buying a few luxury
items. M&S consistently offer-innovative, high quality and rigorously checked food.
The U.S. chain Whole Foods has its flagship store in London’s High Street Kensington. Whole Foods
has the largest food retail space in central London at 80,000 square feet. Whole foods also own four
Fresh and Wild Stores in London and in January 2012 opened a new Whole Foods Store in Glasgow.
Partridges, part of the 9-store Shepherd Foods company, also deserves a mention for its continued
dedication to stocking U.S. products. Partridges is essentially a large delicatessen celebrating both
British and international foods.
Internet or Online Shopping
The internet and online grocery market in the UK is dominated by four of the UK’s major supermarket
chains – Tesco, Sainsbury’s, Asda and Waitrose, which is partnered with Ocado. Outside of these
suppliers, the market is mainly populated by a wide range of niche, specialized retailers, many of which
offer products that are not always available in major supermarkets. Apart from the leading online
suppliers, no other supermarket chains in the UK operate in the online grocery market. This is because
the costs and complexity of establishing an online service appear to be too much of a risk.
The value of the UK online grocery market has grown from £3.7 bn in 2009 to £5.9 bn in 2011. Online
grocery sales are predicted to reach £11.2 bn by 2016. Online grocery shopping accounts for only 4
percent of total groceries sold in the UK. Even though the UK online market is regarded as the most
advanced in the world, online shopping for food remains a niche market. Research has shown that
consumers are in fact reverting back to shopping in store rather than online. This is due to products
regularly being omitted from their delivery and substitute items were often considered unsuitable.
However, that said there is considerable potential for growth. It is most popular with families and more
affluent consumers whose spare time is very valuable. There is very low uptake among people over the
age of 45. This is probably due to the acceptance and use of technology, along with a preference for
well established routines.
The highest number of users of internet shopping is in Scotland, followed by East Anglia and the
Midlands. These are all more rural areas.
Two thirds of British adults now have internet access from home. Internet connections have also
become faster and retailers have made their sites easier to use and have improved delivery services.
Convenience Stores or the “C-Sector”
This report gives a broad outline of UK retail outlets. A more detailed report entitled “Key UK Retail
Outlets” can be obtained by emailing email@example.com .
The UK’s convenience store market is highly fragmented, with a large number of retail operators. Store
operators may be divided into several types.
UK food co-operatives are moving away from their traditional supermarket-type operations and towards
convenience retailing. The largest co-op is The Cooperative Group (794 stores), followed by Midlands
(79 stores) and Mid Counties (67stores).
The largest players in the UK gas station market are Shell (843 stores), Esso (581 stores), BP (306
stores) and Murco (189 stores). The UK supermarket chains are also key players in this market too.
Tesco has 492 gas station stores, Asda/Wal-Mart has 195, Morrisons has 301 and Sainsbury’s has 265.
In total, there are 5,134 gas stations operating in the UK. Collaborative agreements between
supermarket chains and gasoline retailers have resulted in joint sites, for example, Tesco Express stores
operate at Esso gas stations and Sainsbury’s Local stores operate at Shell gas stations.
Convenience Outlets at Supermarkets
Tesco also dominates the convenience multiple sector with 1,834 Tesco Express and One Stop type
stores. Sainsbury’s and Asda, have followed Tesco into the convenience multiple market with their
Local stores. In fact, supermarket chains now own 50 percent of the UK’s convenience multiples. Other
key players are Martin McColl, the Simply Food format of Marks & Spencer, Whistlestop (SSP), and
Symbol (Convenience) Groups and Franchises
In order to protect against the advance of the supermarket chains in the convenience sector, the number
of convenience stores affiliated with a symbol group is growing rapidly. Symbol and buying groups
offer small retailers a range of benefits including strong marketing and branding, wider product ranges,
and more sophisticated supply chain systems. Major players in this sector are Premier/Booker (2,700
stores), Bestway (2,511 stores), Spar UK (2,427 stores), Musgrove (2,224 stores), Landmark (2,198
stores) and Costcutter (1,620 stores)
There are 19,237 unbranded independent grocery retailers in the UK. Independent store numbers are in
decline, down 5 percent on 2011. As store standards continue to improve in the convenience sector,
competition is intensifying. This is resulting in a number of independent retailers either leaving the
sector or affiliating with a symbol operation.
Traditional Retail and Developing Convenience Stores
This retail sector encompasses small chains of specialist Confectionery, Tobacco and Newsagents
(CTNs), specialist grocers, package liquor stores (off-licenses), and food specialists. There are also a
large number of independent specialists, with just one or a very small number of stores. Below are the
key players in each category, and their number of UK stores.
MULTIPLES (10+ STORES) INDEPENDENT
Specialist Specialist Specialist Off- Food Specialists Specialists
CTNs Grocers License (1 or more stores)
Martins, Wilkinson Bargain Booze Greggs Bakers CTNs (2,263)
McCool (653) (367) (487) (1,571)
Rippleglen, Poundland Majestic Wine Holland & Barrett Grocers (2,574)
Supercigs/ (392) Warehouses (176) Health Food
GT News (46) PoundStrecher Whittall’s Wine Thorntons Off-Licences
(387) EFB Retail (130) Chocolate (591) (2,256)
Aleef (26) Farmfoods Rhythm & Booze Whittard (73) Forecourts/ Gas
(320) (86) Marts (3,837)
Newsplus B&M Retail Wine Man (77) Food Specialists:
Group (20) (193) Greengrocers
Farm shops (3,300)
Source: The Grocer, May 2012
In addition to the above retail avenues, department store “food halls” and delicatessens present
opportunities for listings of U.S. products. London-based department stores such as Harvey Nichols and
Selfridges have expanded to other major UK cities - including Birmingham, Manchester and Leeds.
Other notable department stores stocking U.S. products are Fortnum and Mason and Harrods. Key
London delicatessens for U.S. products include Partridges in Kensington – www.partridges.co.uk , and
Panzers in St. John’s Wood – www.panzers.co.uk
Other Retailers/Alternative Channels
The UK has other outlets for U.S. products such as mail/internet order, farmers’ markets and other
produce markets, as well as machine vending.
Examples of these retail sales avenues are:
Shelf-stable grocery products www.skyco.uk.com , www.lakelandlimited.co.uk ,
www.melburyandappleton.co.uk and www.americansweets.co.uk
Organic fruit and vegetable box scheme www.abelandcole.co.uk;
Farmers’ markets www.localfoods.org.uk
UK’s largest fresh produce market www.newcoventgardenmarket.com; and
Automatic Vending Association www.ava-vending.co.uk.
SECTION III. ROAD MAP FOR MARKET ENTRY
Importers are key to doing business in the UK. Food importing is a specialized business, and an
importer plays a pivotal role in navigating the hurdles of UK/EU food law. It is not impossible to supply
UK retailers direct. However, there are few instances where that is a viable option. A UK importer or
UK sales agent or broker is usually critical.
Importers normally carry a whole inventory of products. Many importers of non-frozen and chilled
foods have in-house distribution networks and warehousing facilities, while smaller importers contract
out. Many fresh produce importers have controlled atmosphere warehousing facilities and almost all
importers of frozen and chilled foods contract out to specialized storage, handling and distribution
The terms and length of association between the U.S. Company and the foreign importer are normally
established by contract.
Some of the largest importers will only consider a product if it has large volume potential in the UK
supermarket chains and is backed by substantial marketing and financial support. Others specialize
entirely in independent grocer or food service distribution. Costs vary widely, too. Some importers may
ask for a start-up fee, some are commission-only agents, and others may seek a fixed fee that switches
to commission when sales reach a target level. A full brokerage rate may range anywhere between 17
and 25 percent.
Marketing costs from FOB level to retail may include some or all of the following: sea/air freight costs;
insurance costs; import duty/value added tax/excise duty (is applicable); customs entry and clearance;
handling charge to importer (can be a small charge deducted from wholesale price); packaging and
labeling; overheads, wastage and shrinkage allowance; and mark-up by supermarket retailer (35-70
Large U.S. companies with substantial financial backing may be able to work with an importer to
supply the UK supermarket chains immediately upon market entry. For small/medium sized U.S.
companies, it is normal to work with an importer to gain product listings in department store food halls,
delicatessens and independent retailers first. Once a sales volume and track record has been established,
it is then possible for the importer to attempt listings in smaller retail chains, with a view to ultimately
supplying the four key supermarket chains.
In choosing a UK importer, it is essential to take in to account the retail outlets that they currently
supply. A U.S. exporter needs to understand a UK importer’s distribution capacity, and ensure that the
UK importer can supply the retail outlets that best fit the appropriate UK consumer base.
Market entry to the UK/EU requires substantial homework on the part of the U.S. exporting company to
ensure that all import regulations and labeling laws are met.
These are covered in the Food and Agricultural Importer Regulations (FAIRS) Report, available by
emailing: firstname.lastname@example.org .
SECTION IV. COMPETITION
In the last decade, the UK consumer’s appetite has grown for “healthy”, convenient, and ethnic foods.
There is an increasing demand for quick meal solutions, such as chilled ready meals or ingredients, and
single snack portions. As a result, the UK domestic food manufacturing industry is sophisticated and
advanced. UK new product development teams create innovative copies of international dishes and
ready meals. If a U.S. product has been particularly successful in the UK, it is likely that a
manufacturing site will be placed in the UK or EU.
The EU is the main competitor for U.S. consumer-orientated food. EU food exporters have relatively
low transportation costs and fast delivery times. Their products do not face import duties, nor do they
face major ingredient or labeling changes. Products are sourced mainly from the Netherlands, France,
Ireland, Denmark, Germany, Italy and Spain. Fruits and vegetables primarily come from the EU.
The United States is the largest non-EU supplier to the UK, with around 6 percent of all UK food and
drink imports. New Zealand, Brazil, South Africa and Canada are some of the other top non-EU
SECTION V. BEST PRODUCT PROSPECTS
U.S. products which do well in the UK are snack foods, fresh and dried fruit, nuts, canned salmon,
cereal products, cooking sauces, salad dressings, confectionery, dips and salsas, frozen foods, wine and
beer, and food ingredients.
The UK Government is increasingly promoting healthy eating and healthy lifestyles. There are
opportunities for U.S. products that can be marketed as natural, wholesome, and healthy. Within this
category, organic products are also good prospects provided they comply with EU/UK organic
Convenience (semi-prepared) foods are estimated to account for around 50 percent of household food
expenditures. This trend continues to be a major driving force in the UK food and beverage industry.
Best High Value Product Prospects for the UK Market
Product Total UK Average U.S. Key Constraints Market
Category UK Imports Annual Import to Market Attractiveness for
Imports From U.S. Tariff Development USA
2011 U.S. Import Rate
($ 2011 Growth
million) ($ (last 5 yrs)
Highly U.S. #1 canned
Fish and 2,605 63.7 -28% 0-22% fragmented salmon supplier,
Seafood market, developing interest
HS: 03 domestic in other products
shortfall. and species
Chocolate 1,672.1 21.2 +27% 8-27% Domestic & EU British eat more
confectionery competition, chocolate than any
HS: 1806 low acceptance other nationality.
Vegetables & 137.4 0.3 -55% 0-16% Competition Food has long
Fruit prepared from Turkey, shelf life
in Vinegar Netherlands and
Preserved fruit 554.8 21.8 +13% 7-27% Competition U.S. nut butters
& nuts from EU, perceived as high
HS: 2008 Thailand & quality, exotic
South Africa preserved fruits of
Fruit & 1,092 20.7 +139% 16- Competition High focus on
Vegetable 23% from EU and healthy living in
Juice Brazil UK. Juices now
HS: 2009 more popular than
Sauces, 861.6 21.6 +10.5% 0-10% Australia U.S. #4 supplier,
Condiments, starting to enter UK wants
Seasonings the market authentic tex-mex,
HS: 2103 BBQ sauces,
marinades & salad
Domestic & EU New U.S. concepts
Soft drinks 1,015.0 +6.6% -18.5% 0-10% competition, in beverages
HS: 2202 strong brands, always attractive,
market reaching e.g. functional
Domestic & EU U.S. micro-brew
Beer HS: 2203 752.0 4.5 +107% 0% competition, beers, generally
major brewers unique beers with a
located in EU story. They are
attractive to a niche
4,781.8 223.6 +3% 18- Competition UK #1 export
Wine HS: 25% from EU, market for U.S.
2204 Australia, Latin wine, California
America & S. wine has 16%
Africa. market share, other
Figure shows a parts of U.S.
minus due to should benefit in
wine being future
shipped to Italy
and then the
SECTION VI. POST CONTACT AND FURTHER INFORMATION
If you have any questions or comments regarding this report, require a listing of UK importers or need
any other assistance exporting to the United Kingdom, please contact the USDA office in London.
United States Department of Agriculture
Embassy of the United States of America
24 Grosvenor Square
London, WIK 6AH
Tel: +44 20 7894 0040
Website: www.fas.usda.gov or http://london.usembassy.gov/fas/index.html
Further information on the UK retail grocery sector is available from the British Retail Consortium or
the Institute of Grocery Distribution.
British Retail Consortium (BRC)
21 Dartmouth Street
London, SW1H 9BP
Tel: +44 20 7854 8900
The British Retail Consortium is the lead trade association representing the whole range of retailers
from large multiples and department stores through to independents.
Institute of Grocery Distribution (IGD)
Grange Lane, Letchmore Heath
Watford, Hertfordshire WD2 8DQ
Tel: +44 1923 857141
The IGD is the UK Trade association for information about the food and grocery chain.
One service offered is the Retail Analysis - www.igd.com/analysis. This covers more than 130 retailers
in 50+ countries. Retail Analysis provides an understanding of retailer strategies, as well as the latest
news in this sector.
NOTE: This report uses the following exchange rate:
US$ 1.6 = 1 British Pound