The UK convenience channel is tipped to grow 13.2% in value terms by 2022, a new IGD report has found.
In its latest UK food and grocery market forecast, IGD revealed that the convenience sector would be worth £5.4bn more in 2022 than in 2019 and increase its market share from 21.4% (2019) to 22% in 2022.
IGD said this growth is driven by the channel benefitting from meeting local shoppers’ needs during lockdown although it warned that growth would moderate in the next two years.
On the convenience channel, director of global insight at IGD Simon 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.”
This level of predicted growth is slightly ahead of the overall UK food and grocery market, which is tipped to grow by 10% - or by £19.1bn to £211bn - between 2019 and 2022.
“The pandemic has accelerated the shift to online, a channel IGD expects to mostly retain the loyalty of new shoppers gained during the pandemic,” said Wainwright. “Discount will, however, become the fastest-growing channel in 2021 and 2022, as shoppers looking to economise due to rising unemployment.”
Also of note was that IGD predicted that large stores and hypermarkets would see their share decrease between now and 2022. It estimates that hypermarket market share will decrease from 8.4% in 2019 to 7.6% in 2022 while supermarket market share will decrease from 46.1% in 2019 to 42.3% in 2022, suggesting that after a boost to sales in 2020 from the pandemic, supermarket growth will turn negative by 2022.
On the channel, Wainwright said: “Strong growth at the start of the pandemic – driven by shoppers stocking up and preferring spacious stores – has receded. We expect hypermarkets to revert to sales declines as more shoppers migrate to other channels. After a boost to sales in 2020 from COVID-19, supermarket growth will turn negative by 2022. The channel will lose ground, particularly to discount and online, though it will defend its share better than hypermarkets.
“Retaining the loyalty of shoppers who switched to them at the start of the pandemic will be the priority for operators of large stores. Making stores easier to shop while also differentiating through their range and emphasising value will be vital as stores pivot towards more functional retailing.”
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