The UK convenience sector is set to grow by 13.2 per cent – or by £5.4 billion to £46.4 billion – between 2019 and 2022, a new report from IGD has predicted.
The overall food and grocery market is expected to grow by 9.9 per cent during the same period, driven primarily by online and discount sectors. The sales value is forecast to reach £ £211 billion in 2022.
The online and discount sectors could witness growth of 59.2 per cent and 25.4 per cent respectively.
The forecast clearly shows the impact of COVID-19 pandemic in the transformation of the industry, with online sales expected to post an increase of 52.5 per cent in 2020, compared to the previous year. IGD said the channel could mostly retain the loyalty of new shoppers gained during the pandemic.
Notes: Channels may not exactly sum to market total because of numerical rounding in this table.
‘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.
Convenience channel is expected to see an annual growth of 7.31 per cent this year, whereas the discounters, which IGD predicts to become the fastest-growing channel in 2021 and 2022, will enjoy 9.3 per cent.
The growth of the discount and online channels between 2021 and 2022 could be at the expense of supermarkets as the channel is forecast to see a decline of 1 percent in sales in the period.
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.
“While we expect growth to pause in 2021, it will later resume, with continuing expansion from Amazon and the launch of online operations by M&S through Ocado supplementing activity by the Big Four.”
Convenience channel, which benefitted significantly during lockdown, will increase its market share from 21.4 per cent in 2019 to 22 per cent in 2022, but the growth in the channel is expected to moderate over the next two years.
Wainwright said: “Having benefited significantly from meeting local needs during lockdown, growth for convenience stores will slow in 2021 and 2022. There is a key opportunity for stores that develop their role as destinations for local community needs going forward, but the slow recovery of trading in city centres and transient locations is likely to affect overall channel performance.”
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