IGD: UK food and grocery forecast to grow by 15 per cent by 2022

Research has revealed

The UK food and grocery market is forecast to grow by 15 per cent between now and 2022, giving it a value of

£213bn, according to the latest forecasts released today by grocery research organisation IGD.

IGD is predicting growth across all the major grocery channels, with the discounters set to put in a particularly strong performance driven by ambitious store opening programmes, new store formats and range investment. By 2022, IGD is forecasting that one in every £7 will be spent at a discounter, up from one in every £9 now.

Other key findings from the new data include:

  • Online is set to remain the fastest-growing channel, although perhaps not at the same pace as in previous years, as retailers also look to drive growth through their larger store and convenience formats
  • Both discount and convenience have a more optimistic outlook than previous years and are forecast to grow the second and third fastest respectively of all the grocery channels
  • There’s a more positive outlook than before for both supermarkets and hypermarkets to 2022, driven by a combination of inflation and investment in the big store experience for shoppers
 2017 value (£bn)2022 value (£bn)

Change in value

 per cent

2017-22

Hypermarkets16.216.3+1.0
Supermarkets86.091.1+5.9
Convenience40.047.1+17.7
Discounters*20.130.1+49.8
Online10.416.0+53.8
Other retailers**11.812.2+3.6
Total184.5212.9+15.4

Channels may not exactly sum to market total because of numerical rounding in this table

*’Discounters’ includes all sales of Aldi and Lidl, and grocery-only sales of principal variety discounters, including Wilkinson

** ‘Other retailers’ includes specialist food and drink retailers, CTNs (confectionery, tobacco and news), food sales from mainly non-food retailers and street markets

Joanne Denney-Finch, IGD chief executive, said: “Our market growth figures to 2022 are higher than last year’s forecast, primarily driven by resurgent inflation following three years of sustained deflation across UK food and grocery. All channels are set to see growth, but we anticipate that encouraging shoppers to trade up or buy more will remain as competitive as it always has been – and potentially even more so, given the challenging economic outlook.

“There’s a revolution underway in food and grocery, in terms of what, how and where shoppers do their shopping. On average, shoppers say they use around 12 different stores every month – and in the future, we will have an even greater choice in what, where and how we buy our food. We’ll be more spontaneous but also better planned. We’ll be experimental, eager for new products and experiences. But we’ll also have perennial favourites, staples that we’ll buy on subscription. A quarter (24 per cent) of British shoppers say in the next two to three years, it’s likely they will use an online subscription service to get their staples delivered.

“So, the pace of change will be rapid – and this will present huge challenges and opportunities for the industry.”

Driving the discounters

On the discounters, Joanne Denney-Finch said: “Discounters will contribute most to the cash growth in the market over the next five years, as they continue to open new stores and keep improving the shopper experience with new additions such as food-to-go, self-checkouts and larger stores. Four in five (79 per cent) shoppers say they have visited a variety discounter for some of their grocery shopping in the last month, while two-thirds (62 per cent) say they used a food discounter. And almost three-quarters (70 per cent) of food discount shoppers say the quality of the products they buy from these stores has improved over the last couple of years.” 

Online ‘natives’

Joanne Denney-Finch said: “Online will remain the fastest-growing channel over the next five years, but we have lowered our forecast for this part of the market from 2016, as many retailers have also started to refocus their efforts on the in-store experience, which will create additional competition for online.

“However, the size of the prize in online still remains huge. We expect to see the ‘digital native’ those people who have grown up using technology in many aspects of their lives – help to sustain growth in the future, as they carry on shopping online for groceries and potentially convert others to do the same. In the last month, 40 per cent of all British shoppers say they have bought some of their food and groceries online, but looking ahead to the next two to three years, that figure rises to 60 per cent of shoppers who say it’s likely they will shop online.” 

Going large

Looking at supermarkets and hypermarkets, Joanne Denney-Finch said: “Larger format stores may no longer be the biggest engines of growth in UK grocery, but nevertheless they remain the place where most people shop for food and groceries. Nearly every shopper in Britain (98 per cent) claims to use a supermarket or a hypermarket for some of their grocery shopping every month, citing the convenience of having everything under one roof (84 per cent) and wider choice (81 per cent).

“Services that shoppers would like to see introduced at larger stores include non-food concessions, local independent food stores and an ‘everyday’ aisle near the front of the store, to enable a speedier shopping experience. We’re already seeing many larger stores move in this direction and expect this to continue over the next few years.”

At your convenience

Joanne Denney-Finch added: “With nine out of 10 shoppers claiming to have visited a convenience store in the last month, it’s not hard to see why we believe this will remain the third-fastest growing grocery channel. Small stores have an enduring appeal and there are some clear opportunities for them to engage the younger generation, with one in five (19 per cent) 18-25-year-olds mainly shopping in convenience stores, which is more than double the number of those aged 26 and over (7 per cent). There’s also a huge opportunity for food-to-go, with more than eight in 10 (83 per cent) c-store shoppers saying they could be encouraged to buy more food-to-go at their main convenience store.”

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