MARKS & SPENCER CHILLED SALES LOSING HEAT

JENNIFER QUAIL

LONDON -- Marks & Spencer here is slipping from its position as market leader in the United Kingdom's chilled-food sector, and could fall to third place, according to a report published by Retail Intelligence.

The report, Chilled Convenience Food in the UK, said M&S's standing within the chilled food category, which it helped to pioneer in the 1980s, and led as recently as 1997, is falling as competition builds with other major grocery chains in the UK. The report concludes M&S could soon be overtaken by competitors Tesco and Sainsbury's unless action is taken by the company to reverse its decline.

Despite the retailer's performance regarding chilled foods, M&S remains a major player and leader in many classes of trade, including overall ready meals, dressed and snack salads, and sandwiches and quiches, according to the report. Still, the company lost stomach share while the market for the chilled convenience foods category grew by 50% during the period 1994 to 1998.

Leading that growth were soups, pasta and sauces, which more than doubled in size. The study anticipates ready meals will be the most dynamic sector within the chilled convenience foods category in the upcoming years, with projected growth through 2002 estimated at 70%.

As in the United States, it appears lifestyle changes are the main drivers in affecting category increases. Consumers today have less time for formal dining, are less likely to live in traditional households, have declining cooking skills, and take shorter lunch breaks. Despite the reduced amounts of time spent engaging in meals and their preparation, 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. Chilled foods score higher than their frozen competition in such areas, the researchers found.