© IGD Shopper News
The UK retail grocery sector was valued at US$232.3 billion in September 2019, up 1.7% on 2018, according to the Institute of Grocery Distribution (IGD), which estimates that the market will expand by 12.5% by 2024 to be worth $261 billion. Online grocery shopping will be the fastest growing channel, with a projected rise of 41% over the next five years. By 2024, discounters are predicted to be worth $41.6 billion, while convenience stores will remain the third-fastest growing sector with sales up from $49.6 billion in 2019 to $57.8 billion by 2024.
The UK’s top-five retail groups together hold 74% of the market share. Convenience stores, discounters and online grocery retailing are seeing strong expansion, with major chains opening smaller stores in city centres at the expense of the previously popular large-format outlets in out-of-town locations. Discounters Aldi and Lidl continue to gain market share. In the 12 weeks ending May 17th 2020, the discounters’ combined market share reached 13.6%. And they show no signs of resting on their laurels, as both chains have announced plans to open hundreds of more stores over the next two years.
While online shopping had already been increasing year on year, the Coronavirus has driven this trend even further and the channel now accounts for 11.5% of all grocery sales. Indeed, online grocery shopping attracted more new shoppers in 2020 than in the previous five years combined. Online delivery company Ocado has seen sales rise by 32.5% in the past four months, with its market share now at 1.6%, compared to 1.3% last year.
The success of the discounters had led to a drop in food prices in recent years, but, in recent months, prices have shot up by almost 20%, especially in the fresh produce categories. It is unclear at this point whether these high prices are here to stay.
On average, UK households spend $3,868 on groceries and $1,897 on restaurants and takeaways every year. Groceries account for 11% of total household spending, making it the third largest area of expenditure, following housing and transport.