Discount retailers to get stronger, says IGD

By Rod Addy

- Last updated on GMT

Related tags Igd chief executive Supermarket Wal-mart Hypermarket Igd

Discounters such as Aldi look set to capture 11% of the grocery market by 2019, says IGD
Discounters such as Aldi look set to capture 11% of the grocery market by 2019, says IGD
Discounters such as Aldi and Lidl are set to double their sales in the next five years, accounting for £1 in every £9 spent by 2019, according to grocery think tank IGD.

Discounters would account for 11% of grocery sales, up from 6% currently in a market set to be worth £203bn, 16% larger than its current £175bn value, said IGD.

“While price was initially what attracted people to discounters, shoppers tell us they feel there’s been an increase in quality,” ​said IGD chief executive Joanne Denney-Finch. “As discounters’ stores are also typically smaller than supermarkets, shoppers also say it’s quicker and easier to get round them.

“Discounters have been opening additional stores giving more people access to them and increasing their range of products to help people buy more of their groceries there. Half (51%) of shoppers told us they used food discounters in the last month to buy some of their food and groceries, up from 37% in 2011.

Other winning grocery channels would be online and convenience retail, which together with the discounters, would climb to more than 40% of the market within five years, IGD claimed.

Online retailing

Online retailing would be the fastest growing part of the market, more than doubling in value to £17bn – 8% of the market over the same period. A surge in usage of home delivery and click and collect services would boost the growth, IGD forecast.

“Online grocery sales are being boosted by a flurry of activity​,” said Denney-Finch. “Morrisons, for example, launched its new internet service earlier this year, while other players have enhanced their websites.

“There has also been a big push to offer non-store based click and collect pick-up points from locations such as tube station car parks. The online sales momentum is set to continue, with people using several digital devices to place orders and taking advantage of home delivery subscription schemes.”

The convenience sector, already the second largest grocery channel, would keep growing, with convenience stores accounting for nearly a quarter (24%) of food and grocery sales by 2019, IGD predicted.

Traditional formats

However, it said it would not all be doom and gloom for more traditional superstores and hypermarkets. Although less money would be spent in these formats by 2019 than currently, most food and groceries would still be bought in these types of shops, it said.

They would still represent more than a third (35%) of the total grocery market by then and would increasingly be used as pick-up points for click and collect orders, and for online home delivery orders.

“While most food and groceries will still be bought at larger supermarkets and hypermarkets in five years, they are becoming less popular, but we’ve already seen the re-invention of some hypermarkets offering additional services such as restaurants and gyms,”​ Denney-Finch said.

“There’s also been more investment in making the shopping experience more inspiring and user-friendly. This, for example, includes using digital technology to send personalised offers to people’s smartphones when they’re in-store and telling them where in the shop the items are located.” 

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