The paper "Size and Background of the British Grocery Market " is a brilliant example of an assignment on marketing. The importance of the British grocery market sector could be understood best in terms of its size and limits of expansion. The grocery market was worth £ 146.3bn for the calendar year 2008, an increase of 4.8% in 2007. Food and grocery expenditure accounts for 52p in every £ 1 of retail spending and 21p in every £ 1 spent in food & grocery is spent in convenience stores. Figure 1: IGD Grocery Retailing 2005 There are 92,796 grocery stores in the UK.
These could be divided into four group lines. These are as follows: Convenience stores: A convenience store is a store that has a sales area of below 3,000 sq ft. The store usually remains accessible for buyers for longer hours and is responsible for the sale of products ranging to at least eight different grocery categories. The best-known examples of the convenience stores are the stores like SPAR, Co-operative Group, and Londis among others Traditional retail: The traditional retail store has a sales area of fewer than 3,000 sq ft.
Sellers like newsagents, grocers, off-licenses, & some forecourts fall under this category of division. Hypermarket, supermarkets & superstores: Supermarkets have a sales area of 3,000-25,000 sq ft. Superstores have a sales area above 25,000 sq ft. Hypermarkets are over 60,000 sq ft. All three categories are responsible for the sale of a wide spectrum of mainly grocery items. These chains also sell non-food grocery items. The big known names like Asda, Sainsbury, and Tesco fall in this divisional category. Online channel: These make use of B2B and B2C techniques to sell their produce online, through the use of the internet. Figure 2: Structure of the market Source: Institute of Grocery Distribution Research, 2008 Sales of food and drink account for 65% of the total.
Non-food grocery and non-grocery sales are becoming increasingly important. Non-food groceries are traditional grocery items like toothpaste, soap, health and beauty products. Non-groceries include electrical goods, fuel, and housewares. About ¾ of sales are made in supermarkets and superstores. The majority of the remainder is accounted for by convenience retailing, with traditional small retailers5 now accounting for only 7% of sales.
Sales through UK grocery outlets of £ 120 bn represent almost half of all retail sales, (valued at £ 246 bn at the end of 2004 (ONS)), and 13.1 % of total household expenditure. Gross Value Added (GVA)6 of the food and drink retailing sector was measured as £ 20.1 bn in 2004 or 2 % of total UK Gross Value Added. This was slightly less than the food and drink manufacturing sector (£ 21.3 bn) and the non-residential catering sector (£ 21.8 bn) but significantly larger than the food and drink wholesaling sector (£ 7.5 bn).