The total UK grocery market was estimated at £115 billion in 2003, of which some 73%, or £83.7 billion was through the major supermarkets (source: TNS). However, the "supermarket grocery" figure includes non-foods, currently estimated at 15%. 9.5% of sales are also accounted for by products still delivered direct to store (see below). The sale of food products delivered via RDC networks, therefore, is estimated at £61.6 billion.
| Summary volumes by regime | |
| Chilled (inc fish) | 24.8% |
| Raw meat | 10.4% |
| Produce | 14.5% |
| Frozen | 7.8% |
| BWS | 8.6% |
| Other ambient | 33.5% |
Until the 1960's, most food products were delivered directly to stores by the manufacturers. However, as the self-service "superstore" concept was imported from the USA and started to take off here, congestion at back doors and the problems associated with stores all ordering their own products forced retailers to look for other solutions. Over the following 20 years, all the major chains set up their own networks of "centralised" depots - typically 10 - 20 per retailer. Suppliers would deliver products in bulk to these Regional Distribution Centres (RDC's), where specific orders for each store would be assembled ("picked") and delivered to the shop in just one or two lorries. The whole system was financed by securing discounts from the suppliers in return for not having to running huge fleets of store delivery vehicles. Although all the retailers organise their own RDC networks and store delivery ("secondary") operations, they are often run under contract by specialist third parties (3PL = Third Party Logistics Provider). Many of today's major 3PL's grew out of the need for setting up Primary distribution networks or running RDC contracts in the 1970's and 1980's.
Once this "centralisation" of food distribution had been completed in the early 1990's, the retailers then sought to integrate supplier collections ("Primary" distribution) with the secondary store deliveries. This is done either by using their own or contractors' store delivery vehicles to make supplier collections or, more commonly, by appointing a small number of contractors to handle all supplier collections and using their buying power to negotiate rates on the suppliers' behalf. The very latest development is, having put all this in place, to then ask suppliers to take distribution costs out of their product costings altogether. Products are sold on a "factory gate" process, with the retailers organising all of the distribution and paying for it out of the discounts secured from suppliers.
The UK food distribution market is unlike most others in the world. The "superstore" (25,000 - 40,000 square feet) is the dominant format, as opposed to, for example, the hypermarket in France or the USA or the smaller more traditional store in Southern Europe. Few other countries have the same level of retail "concentration" as the UK, where just four firms control 70% of the market. Few other countries have the same degree of centralisation or the same reliance on 3PL contractors.
NFT's growth follows these trends. Set up specifically to operate RDC's for Sainsbury, NFT has grown through setting up a Primary network for its then-parent company, Northern Foods, and other manufacturers, and has gone on to take further advantage of the growth of retailer centralisation and concentration. Most of NFT's revenue comes from contracts with major retailers, although it is still uniquely placed to be able to offer time-critical transport and warehousing services to those manufacturers whose retail customers have yet to set up networks of their own.
