UK grocery market to grow by 16% over next five years
The grocery research and training body is also predicting that discounters, online and convenience will account for over 40% of the market in five years.
IGD forecasts that discounters will double in value over the same period, accounting for one pound in every nine spent on UK groceries by 2019, up from 6% currently.
Online will be the fastest growing part of the market, more than doubling in value to £17 billion to be worth 8% of the market over the same period, boosted by a surge in usage of home delivery and click and collect services.
The convenience sector, already the second largest grocery channel, continues to grow and will account for nearly a quarter of food and grocery sales by 2019.
Although less money will be spent at superstores and hypermarkets by 2019 than currently, IGD predicts that the majority of food and groceries will still be bought in these types of shops. They will still represent over a third of the total grocery market by then and will increasingly be used as pick-up points for click and collect orders and to service online home delivery orders.
Joanne Denney-Finch, chief executive, IGD, said: “People are now more willing to shop around at different types of grocery formats, such as convenience stores, discounters or buying online. They have more options available to them than ever before. Our ShopperVista research shows that on average shoppers are using four retail formats a month to buy their food and groceries.
“Shoppers now expect grocery retailing to organise itself around their lives rather than building their routines around store opening hours. They expect to buy whatever they want, anytime, anyplace in the most convenient way to them.”
IGD found that half of the shoppers it surveyed said they had used food discounters in the last month to buy some of their food and groceries. This was up from 37% in 2011. In addition, shoppers were found to use convenience stores more than any other type grocery format, on average 11 times a month.
Denney-Finch said: “This is about format, not only about price. While price was initially what attracted people to discounters, shoppers tell us they feel there’s been an increase in quality. As discounters’ stores are also typically smaller than supermarkets, shoppers also say it’s quicker and easier to get round them. Discounters have been opening additional stores giving more people access to them and increasing their range of products to help people buy more of their groceries there.”
She added: “Convenience stores have upped their game by going beyond providing the staples, such as bread, milk or eggs, and now offer a better quality and range of fresh fruit, vegetables and meat. This includes providing in-store butchers and bakeries. Convenience operators are also more effectively tailoring their products and services to meet the needs of local people.”
IGD predicts that the online sales momentum is also set to continue, with people using several digital devices to place orders and taking advantage of home delivery subscription schemes and non-store based click and collect pick-up points from locations such as Tube station car parks.
Denney-Finch said: “While most food and groceries will still be bought at larger supermarkets and hypermarkets in five years, they are becoming less popular. Retailing is a response to culture, and is constantly evolving so we’ve already seen the re-invention of some hypermarkets offering additional services, such as restaurants and gyms.
“There’s also been more investment in making the shopping experience more inspiring and user-friendly. This, for example, includes using digital technology to send personalised offers to people’s smartphones when they’re in-store and telling them where in the shop the items are located.”
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