Analysts say online, discounters and convenience, forecast will be key drivers in UK grocery market worth £184bn by 2016

Analysts say online, discounters and convenience, forecast will be key drivers in UK grocery market worth £184bn by 2016

The UK food and grocery market is set to be worth £184 billion by 2016, compared to £156.8bn in 2011, according to the latest research published today by IGD Retail Analysis.

The research found that online will be the fastest growing channel with an annual average growth rate of 13.7%. It is set to almost double in value in the next five years to reach £11.2bn, up from £5.9bn in 2011.

Discounters will also grow at an average annual rate of 10.1% and are forecast to be worth £11.4bn by 2016, up from £7bn in 2011. And the convenience sector will grow by 4.7% and is set to be worth £42.2bn by 2016, up from £33.6bn in 2011.

Capitalise on 2012 opportunities

Joanne Denney-Finch, IGD chief executive, stated: “Despite the extraordinary economic climate and the ongoing uncertainty caused by the eurozone crisis, there are a number of exceptional events in 2012 that could provide opportunities for growth: the Queen’s Jubilee celebrations, the Euro2012 football championship and the London Olympics. During this year’s Royal wedding, for example, our ShopperTrack research found there was a spike in shoppers’ interest in food with a local or British theme.

“We still buy most of our groceries at supermarkets and hypermarkets but we are also using different types of stores more often, such as online and convenience. And leading retailers are building their presence in these areas.

Appealing to the cost-conscious

“Another growth area is discounters and with people increasingly experiencing a squeeze in incomes, this format will benefit despite counting for a small share of the overall grocery market. Our ShopperTrack data shows a doubling in shoppers using food discounters for their main source of grocery shopping: 6% of them say they now use this outlet as their main grocery channel, compared to 3% last September.

“Technology will be a key feature in driving growth in the various food and grocery sectors. This includes, for example, proximity marketing where customers who sign-up to the service receive a text when they are near their local store about specific offers or virtual reality services which allows people with an online camera to get a 3D view of a product without needing to be in a store.”

IGD ShopperTrack is a monthly analysis of British grocery shopper sentiment based on a survey of 1,000 shoppers to gain insight on their attitudes, motivators and barriers to food and grocery shopping, and what they expect to be doing in the future.