According to the Institute of Grocery Distribution’s (IGD) 2031 UK forecast, the market is entering a prolonged period of structurally weak demand despite continued headline growth, as underlying consumption fails to recover from repeated shocks.
The forecast predicts that the market will grow by more than £45 billion by 2031, reaching £303.7 billion in value – but that this will primarily be driven by inflation and population growth rather than a significant increase in demand.
Discount and online are expected to capture outsized gains, benefiting from sustained shifts in shopper behaviour and taking a disproportionate share of future growth.
Online is set to be the fastest-growing channel, with a compound annual growth rate (CAGR) of 5.6%, while discount will grow at 3.6%.
These gains reflect changing consumer habits, including a continued move towards smaller baskets, more frequent trips and value-led decision-making, which in turn reinforces demand for convenience and low prices while placing pressure on more traditional formats.
IGD predicts that supermarkets will remain the largest channel and contribute the most to overall growth, adding £17.9 billion over the forecast period, but will lose share to faster-growing competitors.
Marking a significant shift, IGD adds that discount is forecast to close the gap with convenience – the UK’s second-largest grocery channel – driven by faster growth of 3.6% CAGR versus 2.5%.
This will see discount’s value reach £52.9 billion, compared with convenience’s £54.7 billion, underlining the strength of value-led formats in a cash-strapped consumer environment.
High fat, salt and sugar (HFSS) regulations and changing health behaviours are expected to further shape consumption patterns, but all channels are set to continue growing in value terms.
Convenience, however, is predicted to experience a downturn as sales of tobacco and vapes decline.
Concluding its forecast, IGD says the UK grocery market is transitioning from an inflation-led recovery into a more stable, lower-growth phase.
Alex Rowberry, senior insight analyst at IGD, said: “There will not be a meaningful recovery in underlying demand over the next five years.
“Ongoing economic pressure, lasting changes in shopper behaviour, and emerging factors, such as GLP-1s, are all acting to limit how much people buy. We expect that GLP-1 adoption alone will offset £11.2 billion of market growth.”
He added: “What’s changing is that retailers can no longer rely on a growing market to drive performance. With demand remaining structurally weak, growth increasingly depends on being positioned in the channels and missions where spend is shifting.”
