IGD market forecast

grocery store

The Institute of Grocery Distribution reveals to Neighbourhood Retailer key insights into the future of the grocery industry in 2018 and beyond.

Educational and training charity, IGD are at the heart of the retail industry working closely with retailers, manufacturers, primary producers, and service providers to understand and address key issues as well as provide intelligence on shoppers, retailing and supply chains, and on wider issues such as health, nutrition, sustainability and economics.

James Walton, chief economist at IGD told Neighbourhood Retailer: “2017 was a mixed bag: sales rose, but this was driven mainly by inflation. Meanwhile, volume performance was weaker; however this is not surprising as historically, grocery retail has tended to see growth in either value or volume, rarely both at the same time.”

Research shows that convenience grocery stores performed better than the market as whole, which James attributes partly to changing shopper needs, but also due to improvement in the offer. IGD also saw good growth for online and especially for discounting.

“Retailers and suppliers worked hard to give shoppers a compelling offer and good value for money through 2017,” said James. “We saw the benefit of this in Christmas performances – most major grocery retailers have reported growth in total sales and like-for-like sales. Most importantly, our ShopperVista research also shows high levels of satisfaction amongst grocery shoppers, meaning most grocery retailers are entering 2018 in a strong position.”

Challenges for 2018

James continued:  “2018 will be all about conquering the right range, right value, stores and supply chain. We expect to see retailers and suppliers fine-tuning ranges to ensure that shoppers have plenty of healthy options, alongside meeting growing demand for vegetarian and vegan products.

“Sales of non-food are increasingly moving online, which means retailers will need to think about future store investment, giving shoppers compelling reasons to visit.

“Retailers and suppliers will need to work together to create supply chains that are fit for the future, to support the kind of multichannel shopping increasingly favoured by shoppers.”

The Future of Food-to-go

In 2017 food-to-go remained one of the fastest growing sectors with retailers reporting consumer trends that showed a prevalence for healthy options, provenance, and good value for money. Gavin Rothwell Head of Food-to-go, IGD predicts that the UK food-to-go market will be worth £23.5bn by 2022, up from £17.4bn in 2017, as shoppers’ preference for eating on the move shows no signs of slowing down.

Gavin said: “Food-to-go specialists are really setting the pace on product innovation and range development, as well as expanding quite rapidly outside London, which is why we’re forecasting them to become the biggest part of the food-to-go market by the end of 2022.

“In addition to the well-known high street names, there are several new players emerging in this segment as well. Health and wellness is a particularly big focus for these specialists, with three-quarters (76 per cent) of shoppers satisfied with the choice of healthy options available in-store, higher than any other segment of the food-to-go market.”

Channel forecast

The UK food and grocery market is forecast to grow by 15% between now and 2022, giving it a value of £213 billion, according to the latest forecasts released today by grocery research organisation IGD.

IGD is predicting growth across all the major grocery channels, with the discounters set to put in a particularly strong performance driven by ambitious store opening programmes, new store formats and range investment. By 2022, IGD is forecasting that one in every £7 will be spent at a discounter, up from one in every £9 now.

2017 value
(£bn)
2022 value
(£bn)
Change in value
%
2017-22
Hypermarkets 16.2 16.3 +1.0
Supermarkets 86.0 91.1 +5.9
Convenience 40.0 47.1 +17.7
Discounters 20.1 30.1 +49.8
Online 10.4 16.0 +53.8
Other retailers 11.8 12.2 +3.6
Total 184.5 212.9 +15.4

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