Online and discounters shine as UK food sales rocket

The UK food and grocery industry will grow by £24.1 billion, or 12.5%, by 2024, bringing the market to a total value of £217.7 billion, according to IGD.

Online will be the fastest growing channel, but only just ahead of discount. Simon Wainwright, Director of Insight at IGD, says: “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.”

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 fully fledged supermarkets, 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 will also support growth, but this will only be as a marginal player with nine stores at present.

Meanwhile, large stores remain a core part of the multi-channel approach shoppers continue to take, with the average shopper still visiting larger stores 10 times a month, which is three times as many as food discount stores.

“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,” says Wainwright.

“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.”