Sales in the convenience channel have been tipped to grow by £5.9bn over the next five years.
IGD has predicted that a year of big events combined with rising inflation will boost value sales in the channel between 2022 and 2027, leading to a £5.9bn growth (+13%).
It believes that “following a 2021 impacted by tough comparatives, 2022 will see a return to more buoyant growth for the convenience channel as shopping behaviour normalises and events provide a boost” and that convenience will continue to outperform the market.
Patrick Mitchell-Fox, senior business analyst at IGD, said the channel will see the benefits of seasonal events this year. “2022 will be boosted by a number of big event opportunities – including the Platinum Jubilee in early June and the football World Cup in November. A hoped-for good summer would create additional opportunities, helping cement the recovery of city centres and travel, both domestic and in-bound tourism. However, it is clear that inflation will be an important factor in driving value sales during the year.”
Overall, IGD predicts that the UK grocery market will grow by 11.3% – from £216.8bn to £241.3bn – between 2022 and 2027. However it warned that with the war in Ukraine impacting the UK supply chain and food prices expected to increase by 8.9% in 2022, shoppers will respond to this and the spike in general inflation by making real terms cuts in food expenditure.
IGD also predicted that supermarkets will see a growth of +£5.7bn (+6.2%) over the five-year period and that while the channel will outperform hypermarkets, it warned that supermarkets need to be mindful that “a focus on efficiencies does not compromise shoppers’ experience and that they continue to offer breadth of range to differentiate from discounters”.
Caroline Myers, director of retail analysis at IGD, said: “Our new forecast sees growth for all retail channels. Though discount will naturally benefit from shoppers’ desire to save money, growth will be held in check by increasing competitiveness from other channels.
“The outlook has changed most for larger stores, where we expect more competitive pricing and the development of more inspirational store formats to achieve growth, while convenience is well placed to build on the growth achieved during the pandemic. After largely holding on to sale gains from Covid, service investments and the rollout of rapid delivery will boost the online channel further.”
Myers added that shopping habits will be changed by rising costs. “Many shoppers on tight budgets will adopt a more for less mentality – managing their spend closely by trading down to cheaper ranges and pack sizes, switching brands for private label and seeking out the best promotions,” she said. “Shopping will also be more planned, with many switching to more overtly value-focused retailers. Retailers’ sales will however be supported by shoppers eating out less often, building demand for at-home entertaining and premium meal solutions.”
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