UK鈥檚 food retail sector is one of the most profitable and sophisticated businesses in the country鈥檚 food and beverage industry. The market, which is currently dominated by the four largest supermarket chains 鈥� with growing competition from several discount chains as well as emerging online food retailers 鈥� is expected to continue growing in the future.
UK Food Retail Sector Analysis
According to the latest statistics from Institute of Grocery Distribution, UK鈥檚 food retail market was estimated around 拢179.1 billion (US$232.8 billion) in 2016, representing a 0.6% increase over the previous year. The market value is projected to grow nearly 10% to 拢196.9 billion by 2021. In UK, food shopping accounts for nearly 9% of total household spending in average, making it the third largest area of expenditure, after housing and transport. The sales of food retail in UK also represents over half of the country鈥檚 total retail sales.
Right now, the four leading supermarket chains, including Tesco, 厂补颈苍蝉产耻谤测鈥檚, ASDA, and 惭辞谤谤颈蝉辞苍鈥檚 are dominating the UK鈥檚 food retail market with over 70% of the market share. Tesco is the largest food retailer so far, with 28.2% market share, followed by 厂补颈苍蝉产耻谤测鈥檚 with 16%, ASDA with 15.6% and 惭辞谤谤颈蝉辞苍鈥檚 with 10.4%.
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However, the sales of food discounters, namely Lidl and Aldi continue to be the standout segment in UK鈥檚 food retail market, posting a value growth of an impressive 11% in 2016, while the total value of discounters will be worth 拢24.9 billion by 2021. The significant growth of discount food retailer over the recent years is believed to be driven by rising consumer price-sensitivity and ongoing expansion in the leading players’ store networks, alongside a growing consumer focus on cheap but quality products.
Grocery Ecommerce Trends
Meanwhile, online food retail, as another newly emerged segment in UK鈥檚 food retail market, also posed impressive growth over the recent years. In 2016, the total value of the UK鈥檚 online food retail market reached a tremendous 拢9.3 billion. It is expected that the online food retail will become the fastest growing channel with an increase of 68% by 2021.
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In its future prospect, discounters and convenience stores are expected to be the two main segments that drive the UK鈥檚 food retail market, due to the market trends that price-sensitive consumers continue to turn to discounters for their main shop and convenience stores for top-up shops. According to the report from Euromonitor, with the two major UK food discounters – Aldi and Lidl 鈥� continue to expend their store networks, discounters set to be the only channel in food retail market to see outlet volume growth of 4% CAGR this year. While many food retailers are expected to be impacted by a weak pound sterling over the near future, as a result of the Brexit process, many believe that these leading discounters are likely to remain strong, thanks to their growing focus on locally sourced products and a simple supply chain.
