The UK food and grocery industry is forecast to grow by GBP24.1bn, or 12.5%, by 2024, bringing the market to a total value of GBP217.7bn, according to the latest forecast from research organization IGD.
Some of the main takeaways from the report include:
- Online and discount will contribute almost two-thirds of cash growth and will boost their combined market share from 18.6% to 23.4% over the next five years
- Discounters alone will contribute GBP4 in every GBP10 of growth over the next five years – GBP9.7bn out of GBP24.1bn
- Large stores – supermarkets and hypermarkets – will account for half of the market (50.1%) in 2024
- On average, people are conducting 24 shopping trips per month and spending 18.3 hours a month planning, traveling, shopping for and unpacking their food and grocery shopping.
“Growth in the online channel will come from a number of directions. Firstly, newer players are entering the space such as Amazon and meal box operators such as Hello Fresh, Gousto and Mindful Chef. Faster and more convenient options to shop for groceries online are being introduced, such as Sainsbury’s, Ocado and Amazon all offering orders within an hour and widening the availability of delivery. More sophisticated analytics are also helping to strengthen customer loyalty,” commented Simon Wainwright, director of Insight at IGD.
Online is poised to be the fastest growing channel with +43.8% (+GBP5.1bn), but only just ahead of discount. According to the report the average shopper conducts one online food shop session a month. When doing so, a shoppers will spend 22 minutes planning and 31 minutes shopping.
The the biggest cash contribution to market growth will come from discounters (food and variety discounters) with +GBP9.8bn (or +40.2%). Comparatively, when conducting a main food shop session at a food discounter, shoppers spend 15 minutes planning, 25 minutes traveling and 34 minutes shopping.
According to IGD, young shoppers will be the key to unlocking growth for the convenience channel. The research firm notes that, on average, shoppers spend 8 minutes shopping at a convenience store. The average shopper conducts 7 shopping trips at convenience stores in a month.
“Despite only marginal growth in market share, the convenience channel will deliver the second biggest gain in sales as retailers update their stores to meet the demand for smaller and more frequent shopping trips. Younger shoppers are more predisposed to shopping at convenience stores than older shoppers. Having grown up in the era of ‘new convenience’, offering wider ranges, longer opening hours and supermarket quality, younger generations will be key to driving ongoing growth, but they do have high expectations,” explains Wainwright.
While large – supermarket and hypermarket – store openings are slowing down, there’s significant investment in upgrading existing stores, making them relevant for changing shopper needs. On average, when conducting a main food shop at large stores, shoppers spend 12 minutes planning, 28 minutes traveling and 38 minutes shopping. The average shopper conducts 10 shopping trips at large stores in a month.
“Large stores remain a core part of the multichannel approach shoppers continue to take, with the average shopper still visiting larger stores 10 times a month, which is three times as many as food discount stores. Over the next five years we’ll see these retailers investing more in how they can improve the shopper experience at existing stores over introducing new sites, with key trends including easier in-store navigation for shoppers conducting smaller shops and introducing more foodservice and concessions. Developments are also taking place in product innovation, brand partnerships, local sourcing and offering new services, which is largely being driven by competition from the likes of Aldi and Lidl,” concludes Wainwright.