The global grocery retail market is on track to generate an additional US$440bn in sales between 2020 and 2022, yielding a 3.1% CAGR (compound annual growth rate), according to our latest forecasts. IGD looked at the detail behind this growth.
An exceptional 2020 driven by the pandemic
The increase in sales for the period follows an exceptional growth for grocery in 2020, which saw the top 20 markets grow by US$280bn, representing growth of 8.8% year-on-year. Accelerated growth in most of the global retail market in 2020 was driven by a shift in consumer spend from out-of-home to at-home as a result of pandemic lockdown restrictions.
Key findings 2020-2022
India will be the fastest growing country over the period 2020-22 with a CAGR of 7.2%
The US will remain the leading market driven by e-commerce and discount value retail formats
In the medium-term, Central and Eastern Europe is expected to grow faster than Western Europe with high pressure on price
Growth in China will remain robust and the accelerated shift towards convenience and online will continue
Uncertainty in North America There’s a high degree of uncertainty relating to the economic outlook in the US, which is dependent on the level of financial support from the new administration and the vaccine roll-out. We expect relatively flat growth over the next two years but any growth we do see is likely to be driven by e-commerce and discount and value retail formats. The pandemic has slowed the gradual loss of share by supermarkets and hypermarkets as shoppers have consolidated their trips in larger stores and we expect this trend to continue. Suppliers have had an unprecedented opportunity to capture new households during the pandemic. Focusing on retention and repeat purchase will help to consolidate the share gains from 2020.
Robust growth in China With most of China having been virus-free since April 2020; growth for the grocery retail market will remain robust. The ongoing trend of consumers shifting towards online channels has accelerated and social platforms will continue to drive online traffic and sales. Consumers are increasingly demanding an ultra-convenience experience and omnichannel services such as speedy home delivery, QR code scanning and self-checkout will be widely adopted. The rise in popularity of community stores and omnichannel retailing is changing the dynamic of the grocery market. Suppliers will need to broaden their customer base and reach potential shoppers in lower tier cities and appeal to them with relevant products, because that is where the retailers are heading.
Economic challenges in Western Europe Economic challenges are expected across most of Western Europe in 2021, so retailers will need to focus on price to remain competitive. Pre-COVID trends have been accelerated by the pandemic, which has hastened the switch to online across most markets, resulting in further investment in this channel. In the UK, following a dramatic shift of consumer spend from foodservice into grocery retail in 2020, sales growth will moderate as the national vaccination programme allows the hospitality sector to reopen. Online is set to retain its elevated market share and big weekly shops will remain popular. Winding down of financial support and rising unemployment will result in some households economising on grocery shopping while others may spend less as eating out begins to recover.
