Convenience to be boosted by neighbourhood focus, predicts IGD

By Liz Wells in Industry News 1st July 2021

The convenience channel is set to grow 12.5% in the next five years to be worth £229.1bn by 2026, new research reveals.

Research by the IGD predicts that over the next few years, a continued focus on neighbourhood locations, underpinned by the higher levels of working from home and suburban living, will boost the convenience channel.

The IGD also predicts that the reopening of city centres and transport locations will also add to short term growth.

Patrick Mitchell-Fox, senior business analyst at IGD, said: “The historic significance of ‘impulse’ has declined and now top-up shopping is more dominant for the convenience sector: basket sizes have become much larger with a wider range of goods.

“The convenience sector is now focusing on how it retains its current 21% share of the grocery market, by focusing on neighbourhood stores and extending ranges to meet local demand. We expect it to maintain its position over the next five years and predict it will grow to 21.8% by 2026.”

However, the IDG believes that discount will be the fastest-growing channel between 2021 and 2026. It believes that a combination of new stores, the need for many shoppers to economise, and the increase of food and grocery within variety discounters will fuel the channel’s growth. However, the growth will slow through the forecast period, IGD says.

Maxime Delacour, senior retail analyst and specialist in the discounter channel, added: “Discounters are a natural destination for households looking to economise and the key players have extensive expansion plans. But, growth will be held in check by strong competition on value from the multiples and new entrants to the market.”

In addition, the IGD thinks that large supermarkets will reposition as retail destinations. Nick Gladding, senior retail analyst at IGD, said: “Shoppers will need to justify the time and travel to large stores as other, more convenient options become increasingly available to them. Operators will need to offer distinct benefits to attract customers. We’ll see more investment in this channel to position large stores as retail destinations.”