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Grocery sector growth expected for UK as shopper habits evolve says IGD

The UK grocery sector is set to see strong growth over the next five years, according to predictions from the IGD.

The industry group says that the sector will grow by 12.5 per cent, or £24.1bn, by 2024 to be worth a total of £217.7bn.

Online and discount sales are expected to account for two thirds of the cash growth, and are will boost their combined market share from 18.6 per cent to 23.4 per cent over the period, says the IGD. Discounters alone are expected to account for £4 in every £10 of growth over the next five years, with online sales growth only slightly ahead.

The market share of large supermarket and hypermarket stores is expected to fall to just over half (50.1 per cent) of the market by 2024.

“Food and variety discounters continue to grow their market share rapidly, fuelled by ambitious store-opening programmes. With many food discount shoppers now perceiving Aldi and Lidl as supermarkets rather than discounters, and more targeted investments in categories such as fresh produce, meat, bakery and beauty, the channel will continue to experience notable growth,” says IGD director of insight Simon Wainwright.

“Developments include the expansion of Aldi, which is on track to open 1,200 stores by 2025, and Lidl upping store openings to 50-60 per year. The entry of Jack’s in the channel will also support growth, but this will only be as a marginal player with nine stores at present. According to shoppers, the benefits to shopping more with food discounters in future are good value, time saving and concise range. Over a fifth (21%) of shoppers say they currently use food discounters for the majority of their shopping (2019), and 26% say this will be the case in 2021-2022,” adds Wainwright.

Meanwhile, young shoppers will be behind further growth in the convenience store sector, which is expected to grow by 16.6 per cent.


“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,” says Wainwright.

“Convenience formats and ranges are increasingly being tailored to local demographics to engage shoppers more effectively. Creating an easy shopping experience is an increasing focus for convenience retailers, with Co-op and Sainsbury’s trialling payment by app technology.”

Supermarket chains are expected to invest in their larger store formats to improve the shopper experience, introducing concessions and improving navigation. Product innovation, brand partnerships, local sourcing, and new services are expected as the established groups fight back against discounters.

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