What you need to know

All grocery retail sales grew by 3.4% in 2018, driven by continued inflationary pressures combined with solid underlying demand and one-off events such as the World Cup and a good summer. Growth is expected to slow in 2019, as inflation eases, but remain positive at 2.1%. The supermarket sector also grew for the second consecutive year in 2018 (+1.2%), a trend which will continue into 2019 (+0.8%) but this growth remains behind the wider sector, meaning some share of spending moved once more away from the large-format stores with the discounters and online the main benefactors.

Indeed of the leading 20 players within the grocery sector it was Aldi which gained the most share in 2018, +0.5 percentage points taking its share to 7%. Lidl also gained, taking its share to 5% whilst all of the big four lost some share, with Tesco’s overall share only boosted to 25% due to the acquisition of Booker.

Our consumer data further underlines the shifts in the market. Whilst the majority continue to spend the most in a typical month in supermarkets (63%), this number fell once more year-on-year with online seeing the biggest growth, particularly among those aged 25-44. As the leading players look to differentiate themselves, own-brand is becoming increasingly key with 57% seeing this as the main difference between the supermarket retailers. Food counters are also seen as a differentiating factor by 59%, although 34% find using such services as intimidating, whilst 49% think the range of non-foods is a key reason to visit.

Products covered in this Report

The main focus of this Report is the supermarkets of the market leaders – those stores in which people have historically done their main shop. Combining market, company and our consumer research data, we analyse why the shift away from supermarkets has occurred, what the state of play is in 2019 and where the sector is heading next.

The term ‘supermarket’ takes in a very broad selection of store sizes. Tesco for example has stores ranging from 10,000 sq ft small high street supermarkets to over 100,000 sq ft hypermarkets, with an average supermarket size of around 37,000 sq ft. Broadly speaking the unifier between these stores is the ability to serve, first and foremost, a shopper’s main shop, or primary grocery needs. As size increases the range of non-foods and other services such a store can accommodate also increase, with the trade-off being that the largest stores are usually located outside of urban areas and often need a dedicated trip to visit. It is these largest stores that have been most impacted by the trend to smaller, more frequent shopping habits.

Discounters are excluded from our definition of supermarkets as, whilst often similar in size to the supermarkets of the leading players, in reality they fall between the supermarket and convenience sectors. Whilst touched upon in this Report, they are covered in more detail in Mintel’s Food and Non-food Discounters – UK, September 2019 Report.

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