Discover the key takeaways from our latest grocery retail channel report.

The latest forecast report from IGD on the UK’s retail grocery channels is now available, detailing expected growth rates for the period between 2024 and 2029.

Real terms market growth to return in 2024

The grocery retail market is expected to grow by 5.8% in 2024, reaching £252 bn. From 2025 onwards, market growth will average 3.4% a year, to reach £296 bn in 2029.

A positive for the industry is that real terms market growth will return in 2024, at 2.4%. However, from 2025 onwards, real-term growth is expected to remain below 1.0% per year. 

Throughout the forecast period, inflation will be the main driver of growth.

Whilst earlier forecasts had predicted a period of deflation towards the end of 2024, IGD’s latest view is that the market won’t experience deflation at any point between 2024 to 2029.

Indeed, from 2025 onwards, inflation isn’t expected to fall below 2.2%.

Household income will grow ahead of inflation in 2024 and 2025, with real average wages returning to 2008 levels in 2026.

Improved household finances and increased demand for goods will lead to inflation spiking in 2026 at 3.0%.

From 2027 onwards, a combination of rising taxes and a slowdown in wage growth will pressure household incomes, impacting consumer demand for goods.

Increasing income and investment in infrastructure benefit convenience and online

Convenience, online and discount channels will grow ahead of the market over the next five years, whilst supermarket and hypermarket growth will fall behind the market rate.

Convenience will benefit from continuing development and expansion from larger retailers, who view the channel as strategically important for longer-term growth.

Looking ahead to 2026, a new duty on vaping products and increased tobacco duty as well as increasing reliance on like-for-like sales will impede growth.

Online sales have started to bounce back after several years of post-pandemic decline.

Increasing wages and an easing of pressure on household budgets, coinciding with retailers investing in technical and logistical infrastructure, will enable further growth of the channel.

Discount growth stalls as store openings slow

Discount will continue to benefit from cost-of-living shopping habits that have become ingrained in many shoppers and the expansion of store networks.

However, the recent slowdown in store openings is expected to persist in the coming years, resulting in slower growth than the channel has enjoyed in the past.

Large stores lose out to enhancements and expanded footprint of other channels

Large stores will benefit from retailers’ plans to expand the space dedicated to food and store refresh programmes reinvigorating the in-store experience.

The expansion of third-party partnerships will also act as an additional footfall driver.

The enhancements and expanded footprint of other channels, however, will draw shoppers away from large stores, acting as a brake on growth.

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