New research from IGD, Grocery Retailing 2001, estimates that the UK grocery retail market will be worth £117bn by 2005. This is a 17.2% increase on the December 2000 estimate of £99.8 bn. By recent standards this is relatively modest growth, with the previous five years (1996 to 2000) experiencing a 19.4% increase.

However, if inflation is assumed to remain constant at 2.5% per annum, then the 'real' increase in the market is just 3.6% over the five years. This is much lower than the latest five year period where 'real' growth of 8.6% was recorded.

A number of key factors are influencing the future growth of the market, both positively and negatively. These factors are not mutually exclusive.

Factors potentially increasing market value:

  • Growth in non-food/other 'non-traditional grocery' categories e.g. clothing, electrical and sports goods
  • UK joining the Euro (pre-joining phase)
  • Consumers willing to pay for increased convenience
  • Supply side shocks (e.g. foot and mouth disease) and increases in inflation

Factors potentially depressing the market value:

  • Price focus/competition
  • Increased international and global sourcing
  • Economic recession
  • Increased foodservice offer

The following chart illustrates the upper and lower limits of variations in possible market sizes between 2000 and 2005. The variation increases the further the forecasts are from the starting point (2000) since there is less certainty further into the future.

UK Grocery Market, 1990 - 2005


(£ billion)

Source: IGD Research

(NB lower, mid and upper point forecasts, both in nominal and real prices are available in the report)

For further information please contact Jane Beard, tel: 01923 851910, mobile 07770 640448 or Catherine Ellwood, tel: 01923 851916.

EDITORS' NOTES

Grocery Retailing 2001 is available from IGD at £500 for members and £650 for Non-members. Electronic copies are also available. To order contact Michelle Jarman on 01923 851925 or email michelle.jarman@igd.com. Alternatively, you can order on line at www.igd.com

IGD is the leading research and education organisation for the food and grocery industry. Its membership is drawn from the total grocery supply chain, including retail, manufacturing, wholesale, distribution, catering, packaging companies and primary producers. IGD also has close links with consumer organisations.