Marks & Spencer is facing an uphill battle to hold its market share in the booming chilled convenience food sector according to the new Retail Intelligence research report Chilled Convenience Food in the UK. While food sales were less hard hit than clothing sales in the 1998-1999 period (during which the company’s profits were halved), its chilled food market share is falling as competition with the major grocery multiples intensifies. With reduced footfall likely to have a knock-on effect to food sales, M&S faces a tough battle in the sector it pioneered in the 1980s and led as recently as 1997.
Over the 1995-1999 period, M&S food sales grew just 15%, and actually fell slightly as a percentage of all the company’s UK retail sales (40.5% to 39.5%). At the same time, Chilled Convenience Food in the UK reports, Marks and Spencer slipped from market leader to third in the overall chilled food sector. Its lead in the chilled convenience food sector is shortening all the time, and here it will also soon be overtaken by Tesco and Sainsbury’s unless M&S take action to protect their leading share.
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Sales of Chilled Convenience Foods by Retailer, 1998 (% of value)
| % | |
| Marks & Spencer | 23.3 |
| Sainsbury’s | 21.0 |
| Tesco | 20.4 |
| ASDA | 8.5 |
| Safeway | 7.2 |
| Waitrose | 3.8 |
| Others | 15.9 |
| Total | 100.0 |
Source: Retail Intelligence
A Chill Wind
Chilled Convenience Food in the UK sets the M&S performance in the context of strong growth in the sector. Over the 1994-1998 period the total market has grown 50%, with the best-performing products lines – soup, pasta, sauce – all more than doubling in size. The total market was worth almost £2.9billion in 1998, and is projected to exceed £4billion by 2002. The most dynamic sector will be ready meals, where 70% growth is projected in the 1998-2000 period, driven by a stream of innovative product developments.
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By GlobalDataForecast Sales of Chilled Convenience Foods, 1999 & 2002 (£ mn)
| 1999 | 2002 | |
| Ready meals | 780 | 1,130 |
| Pizzas (a) | 178 | 205 |
| Pies, pasties | 462 | 515 |
| Quiches | 120 | 145 |
| Sandwiches (b) | 485 | 665 |
| Dressed salads (c) | 268 | 322 |
| Dips (d) | 85 | 109 |
| Soup | 76 | 110 |
| Pasta | 92 | 131 |
| Sauces | 63 | 93 |
| Cheese snacks | 82 | 142 |
| Dairy desserts | 284 | 331 |
| Non-dairy desserts | 229 | 295 |
| Total | 3,204 | 4,193 |
a Includes pre-packed sales only
b Refers to sales though multiples only
c Includes pre-packed and deli sales
d Includes savoury and Greek dips
Source: Retail Intelligence
The main impetus for this impressive growth has come from changing lifestyles. On one side of the equation, consumers have less time for formal dining, being less likely to live in traditional households, having declining cooking skills and taking shorter lunch breaks. On the other, the chilled convenience food sector appeals to consumers concerned with healthy eating, demanding a wider range of variety in food and expressing growing concerns about food safety – all areas where the chilled sector is perceived to score heavily over its ambient and frozen competitors.
The multiple grocery retailers – led by Tesco and Sainsbury’s – have been well placed to benefit from this trend. Their growth in these areas has been boosted by their moves to establish a town centre presence, such as the Sainsbury’s Central format. Tesco’s now has 36 Metro and a further 15 Express forecourt stores. This presence is vital for an assault on the convenience food sector – picking up both lunchtime business and the daily take-home trade.
However, the decline of M&S is a relative one. It is still a major player in the market, indeed the leader in the huge ready meals sector (44%), as well as in dressed and snack salads (29%), sandwiches (27%) and quiches (23%). The company also benefits from its strong and trusted brand, and is fighting back with new initiatives such as online shopping (November 1999) and accepting credit cards (Spring 2000). But will this be enough? Nicholas Wall, editor of Chilled Convenience Food in the UK, thinks not: “Without a major investment in additional sales outlets, M&S is unlikely to reverse the steady erosion of what was historically a dominant position.”
‘Chilled Convenience Food in the UK’ is a research report published by Retail Intelligence in January 2000, to order this report click here
