The UK food and grocery market is set to be worth £184bn (€214bn) by 2016, compared with £156.8bn (€182.5bn) in 2011, according to the latest research published by IGD Retail Analysis.
A number of key factors will drive the expansion, IGD noted, including the growth of discounters, the convenience segment and online sales.
Discount retailers are expected to hit £10bn fro the first time, growing at an average annual rate of 10.1 per cent and forecast to be worth £11.4bn (€13.3bn) by 2016 – up from £7bn (€8.1bn) in 2011.
The UK's convenience sector will grow by 4.7 per cent by 2016 and is set to be worth £42.2bn (€49bn) by 2016, compared with £33.6bn (€39bn) in 2011.
Online will be the fastest growing channel with an annual average growth rate of 13.7 per cent, IGD said, and is set to almost double in value in the next five years to reach £11.2bn (€13bn), up from £5.9bn (€6.9bn) in 2011.
'Despite the extraordinary economic climate and the ongoing uncertainty caused by the eurozone crisis, there are a number of exceptional events in 2012 that could provide opportunities for growth: the Queen's Jubilee celebrations, the Euro2012 football championship and the London Olympics,' said Joanne Denney-Finch, chief executive, IGD. 'During this year's Royal wedding, for example, our ShopperTrack research found there was a spike in shoppers’ interest in food with a local or British theme.
'We still buy most of our groceries at supermarkets and hypermarkets but we are also using different types of stores more often, such as online and convenience,' she continued. 'And leading retailers are building their presence in these areas.
Denney-Finch noted that another growth area going forward would be discounters, and as people increasingly experienced a squeeze in income, this format is expected to benefit despite counting for a small share of the overall grocery market.
'Technology will be a key feature in driving growth in the various food and grocery sectors,' she added. 'This includes, for example, proximity marketing where customers who sign-up to the service receive a text when they are near their local store about specific offers or virtual reality services which allows people with an online camera to get a 3D view of a product without needing to be in a store.'
