The UK food and grocery market is set to grow by 10% – or by £19.1bn to £211bn – between 2019 and 2022, according to the latest market and channel forecast research from IGD.
The forecast illustrates that the pandemic has accelerated the shift to online, a channel IGD expects to mostly retain the loyalty of new shoppers gained during the pandemic.
Discount looks to become the fastest-growing channel in 2021 and 2022, as shoppers looking to economise due to rising unemployment.
Online market share will increase from 6.2% in 2019 to 8.9% in 2022. Online will be the fastest-growing channel in 2020, following dramatic increases in shopper numbers and bigger order sizes, and is predicted to take £1 from every £11 spent on grocery.
Discount market share will increase from 12.8% in 2019 to 14.6% in 2022, set to be the fastest growing market over the next two years, and will be dominated by the expansion of Aldi and Lidl, alongside the likes of B&M and Home Bargains scaling up their grocery sections.
Convenience market share is expected to increase from 21.4% in 2019 to 22% in 2022, following a boost from meeting local shoppers’ needs during lockdown
Hypermarket market share will decrease from 8.4% in 2019 to 7.6% in 2022. Supermarket market share will decrease from 46.1% in 2019 to 42.3% in 2022. After a boost to sales in 2020 from the pandemic, supermarket growth will turn negative by 2022.
Simon Wainwright, Director of Global Insight at IGD, said: “We forecast e-commerce will gain market share faster than previously predicted, following the dramatic influx of new shoppers and bigger order sizes in 2020 as a result of COVID-19.
““Though eclipsed by the surge in online sales in 2020, discount will be the fastest growing channel in 2021 and 2022 as unemployment climbs and shoppers across the income spectrum look to economise.
“We expect hypermarkets to revert to sales declines as more shoppers migrate to other channels. After a boost to sales in 2020 from COVID-19, supermarket growth will turn negative by 2022. The channel will lose ground, particularly to discount and online, though it will defend its share better than hypermarkets.
“Retaining the loyalty of shoppers who switched to them at the start of the pandemic will be the priority for operators of large stores. Making stores easier to shop while also differentiating through their range and emphasising value will be vital as stores pivot towards more functional retailing.”