Latest forecasts by IGD show the value of the UK food and grocery industry will grow by 12.5% to £217.7bn by 2024, with the online and discount channels remaining the key drivers.
Online and discount are expected to 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 £4 in every £10 of growth over the period, whilst online is forecast to be the fastest growing channel, up 43.8% to £16.7bn (see table below).
Simon Wainwright, Director of Insight at IGD, said: “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.
“From a shopper perspective, the key benefits of shopping more online in future are good value, time saving and ease of shop.”
Discounters (food and variety discounters) will be the second-fastest growing channel, up 40.2% to £34.3bn. IGD’s research reveals that the average shopper is already conducting three shopping trips at food discounters a month.
Wainwright commented: “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.
“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.”
Convenience looks set to remain a key channel with its value growing 16.6.% to £48.2bn.
Wainwright said: “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.
“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.”
Meanwhile, the growth of supermarkets (+3.1%) and hypermarkets (-0.8%) will be limited by major retailers continuing to curtail their store opening programmes. However, IGD highlights that large stores remain a core part of the multichannel approach shoppers continue to take, with the average shopper still visiting these stores 10 times a month, which is three times as many as food discount outlets.
Wainwright said: “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.
“To remain relevant to shoppers, large store retailers should focus on providing better value, more ways to save time and an easier shopping experience.”
| Channel | 2019 value (£bn) |
2024 value (£bn) |
Change in value 2019-2024 (%) | 2024 market share (%) | CAGR % 2019-2024 |
| Hypermarkets | 16.3 | 16.2 | -0.8 | 7.4 | -0.2 |
| Supermarkets | 90.0 | 92.8 | +3.1 | 42.6 | +0.6 |
| Convenience | 41.4 | 48.2 | +16.6 | 22.2 | +3.1 |
| Discount | 24.5 | 34.3 | +40.2 | 15.8 | +7.0 |
| Online | 11.6 | 16.7 | +43.8 | 7.7 | +7.5 |
| Other retailers | 9.8 | 9.4 | -3.9 | 4.3 | -0.8 |
| Total | 193.6 | 217.7 | +12.5 | +2.4 |
Source: IGD research. Note numbers may not appear to sum due to rounding.
‘Discount’ includes all sales of Aldi, Lidl and grocery only sales of the principal variety discounters.
‘Other retailers’ includes specialist food and drink retailers, CTNs, and the food sales of mainly non-food retailers and street markets.
For additional insight into the future of food and grocery, download IGD’s global trend predictions and research into future shopper behaviours and attitudes.
