Like every business, the marketplace affects the way we do business.
The UK grocery market remains in a tough economic climate. Whilst we continue to progress, we recognise the challenges of the marketplace as consumers face financial pressure through government cuts and the recent VAT increase.
Understanding our markets
We keep a regular eye on consumer trends, have programmes where we talk to our customers and also make good use of market data. This allows us to improve our business and deliver the needs of consumers.
Consumer confidence has remained low throughout 2010, but at a relatively stable level. The coming year will however be pivotal as the impact of the austerity measures are realised. Research suggests that the impact of the recession and government cuts will hit the North the hardest. We are in a good position to perform well in a recession with a range that offers value for money whilst maintaining choice and quality.
Own label growth
There has been some evidence of people trading up to more expensive products in 2010, with supermarkets' premium own label sales up 2.8%.
Whilst premium sales have risen, there has been a corresponding fall in the sales of value ranges. Consumers do however remain prudent with their spending with greater pressures on their finances.
Home cooking and lifestyle trends
Eating healthily remains important to consumers. Through the recession there has been an increase in people entertaining at home rather than going out. Likewise, we have seen a trend towards more people cooking at home rather than eating out. This remains a trend and we continue to develop offers and ranges to help our customers get the most from home cooking, offering fresh quality food at a great value.
The market place is continually evolving, and a key trend has been the growth of different retailing 'channels'. Between 2010 and 2014, market sales through local convenience stores are anticipated to grow by 25% and online sales are estimated to grow by 67%. As we develop these areas, they provide a further opportunity for us to grow and meet the needs of our customers.
Morrisons share of UK grocery market
The grocery market last year grew by 3.4% and was worth £93.2bn. Inflation remained relatively stable and stood at 3.1% over the 12 weeks to 23 January 2011.
Morrisons regional market share 2010/11
Morrisons market share % (52 weeks to January)
Market share growth in 2010/11 (%)