2021
9
UK Supermarkets Market Report 2021
2022-01-15T03:10:07+00:00
OX1050547
2195
146870
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Report
en_GB
“Both 2020 and 2021 will have been record years for grocery retail in the UK. 2021 may not fully match the demand seen in 2020, but fundamental changes in working…

UK Supermarkets Market Report 2021

£ 2,195 (Excl.Tax)

Description

The UK Supermarket industry report identifies consumer attitudes towards grocery shopping behaviour, grocery market research, primary and secondary shops, and key drivers of supermarket use in the UK. This market report covers the market size, market forecast, market segmentation and industry trends for the Supermarkets industry in the UK.

Click here to view our German market research on Supermarkets 2022 (DE version).

 

UK Supermarket Industry Statistics 

The COVID-19 pandemic brought record demand for the grocery sector and supermarkets in the UK. COVID-19 brought record demand for the grocery sector as greater time spent at home grew in-home food and drink needs. More flexible working will mean that in-home volumes continued to be heightened and this should boost the channels, supermarket, discount and online, which thrive on big-basket demand.

  • 59% of grocery shoppers say that savings available via loyalty schemes have become more important to them since the pandemic began.
  • All grocery retail sales grew 6.8% in 2020 and only expected to fall 0.6% in 2021.
  • 50% of consumers eat cereals more often, challenging traditional sweet treats as a snack choice.

With inflation rising, and this set to continue in 2022, the fact that over half of grocery shoppers consider loyalty schemes more important than before the pandemic highlights how critical recent investments made in such schemes by the big-four supermarkets will be, fighting back a resurgent discounter sector.

Future Trends in the Supermarket Industry

In-store sales at supermarkets have been impacted by heightened online use during the pandemic. Serving similar needs, the expected legacy boost to online will mean this is a persisting issue for large-format stores. Reinvesting in the ‘multi-mission’ experience, including non-foods and services, will be important in creating a modern format that serves the needs of shoppers and provides a fully differentiated experience to online ordering.

The biggest opportunity for  the supermarkets industry in 2022 is to recapture some shoppers on the strength of their value offering. While inflation is rising in food and drink, it is currently rising quicker in out-of-home venues, and for grocery retail this brings a significant opportunity to drive meal replacement solutions for events usually celebrated out of home. Loyalty schemes will play a key role in keeping weekly shopping bills down, and grocers’ value offering in non-foods, particularly clothing, will also find a greater audience moving forward than the patchy demand provided since the pandemic began.

Read on to discover more details or take a look at all of our Grocery Retail market research.

Quickly understand

  • The impact of COVID-19 on grocery shopping behaviour and channel usage.
  • Market size for all grocery retail sales and supermarket sector sales.
  • How consumers shop for groceries and how frequently.
  • Retailers used for primary and secondary shops and total sector market shares.
  • Types of stores used currently and expected changes over the next 12 months.
  • Key drivers of supermarket use, and barriers to greater spending in the channel.
  • Attitudes to price, loyalty schemes, sustainability and convenience.

Covered in this report

Brands: Tesco, Sainsbury’s, ASDA, Morrisons, Aldi, The Co-op, Lidl, Waitrose, M&S (Marks & Spencers), Iceland, Getir, Amazon Fresh, Ocado.

Expert analysis from a specialist in the field

This report, written by Nick Carroll, a leading analyst in the Retail sector, delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Both 2020 and 2021 will have been record years for grocery retail in the UK. 2021 may not fully match the demand seen in 2020, but fundamental changes in working life for many and persistent hesitancy for some around visiting out-of-home venues means demand remains heightened. Online has been the success story within the sector, but this has served to limit footfall at larger format stores. However, with value rising on the agenda in 2022 there is significant opportunity for the large-format store to regain share, if value propositions can hold against an equally resurgent discount sector.

Nick Carroll - Research AnalystNick Carroll
Director of Grocery and E-commerce Research

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • COVID-19: market context
    • Economic and other assumptions
    • Products covered in this Report
  2. Executive Summary

    • Impact of COVID-19 on supermarket sector
      • Figure 1: Short-, medium- and long-term impact of COVID-19 on supermarket retail, 2020-25
    • The market
    • Market size and forecast: all grocery retail sales
      • Figure 2: Market forecast for all grocery retail sales (including VAT), 2016-26
    • Market size and forecast: supermarket sector size
      • Figure 3: Market forecast for supermarket sales (including VAT), 2016-26
    • A third remain hesitant to come into store
      • Figure 4: COVID-19 Tracker: Impact on online shopping behaviour and time spent in-store, 2020-21
    • Footfall sees a recovery
      • Figure 5: Google COVID-19 Community Mobility Reports: UK (National), average monthly change from baseline, 2020-21
    • Supermarkets to have regained some ground in 2021
      • Figure 6: Estimated channels of distribution for grocery retail sales, by channel, 2011-21
    • Confidence shakes on rising inflation and new variant fears
      • Figure 7: Future Financial Confidence Index, 2015-21
    • Inflation in grocery currently under-indexing…
      • Figure 8: CPIH and core components of inflation, 2021
    • …however greater spending in other areas will put pressure on non-discretionary areas
      • Figure 9: Financial Confidence Tracker, confirmed spending in the last three months, 2019-21
    • Leading retailers
    • Online strength helps to boost big four in a competitive market…
      • Figure 10: Leading grocery retailers: share of all grocery retail sales, 2020
    • …however newer entrants point to a diversification of mission online
      • Figure 11: Getir, IMAX Waterloo advertisement, 2021
    • Checkout-free hits convenience sector, but could be truly disruptive in the large-format sector
      • Figure 12: Amazon Fresh, Wembley, 2021
    • Sustainability drives a refill revolution
      • Figure 13: Asda’s draught beer refill station, 2021
    • M&S leads on store-based experience stakes
      • Figure 14: Key metrics for selected brands, 2021
    • The consumer
    • Big-basket remains heightened
      • Figure 15: How grocery shoppers typically shop, 2015-21
    • Although for some frequency of shop is reverting to pre-pandemic
      • Figure 16: Frequency of grocery shop, 2018-21
    • Tesco’s dominance in core channels means over half shop with the retailer
      • Figure 17: Grocery retailers used, 2021
    • Shopper losses in the supermarket channel stabilise…
      • Figure 18: Store format where the most is spent in a typical month, 2016-21
    • …and intention across the next year is positive
      • Figure 19: Expected channel use over the next 12 months, 2021
    • Convenience and price key large-format drivers
      • Figure 20: Why the most is spent in supermarkets in a typical month, 2021
    • Additional convenience around checkout and multi-mission could drive greater reliance on the format
      • Figure 21: What would encourage more supermarket shopping, 2021
    • Greater range can lead to greater waste
      • Figure 22: Attitudes to grocery shopping, 2021
  3. Issues and Insights

    • The multi-mission shop post-COVID-19
    • Value – price is key but it is just one aspect of the equation
  4. Market Drivers

    • GDP should reach pre-pandemic levels by the end of Q1 2022…
    • …but the post-COVID bounceback will be short term
    • Consumers’ financial wellbeing has slipped from its recent high point…
      • Figure 23: Household Financial Wellbeing Index, 2016-21
    • …and concerns over inflation are coming to the fore
      • Figure 24: Consumer concerns over cost-of-living changes, 2021
      • Figure 25: Future Financial Confidence Index, 2015-21
    • Improved confidence in 2021 and restrictions ending means retail is more opposed for share of wallet
      • Figure 26: Financial Confidence Tracker, confirmed spending in the last three months, 2019-21
    • Inflationary pressures are mounting
      • Figure 27: CPIH and core components of inflation, 2021
      • Figure 28: Real income growth: average weekly earnings versus CPIH, 2018-21
    • Food inflation being driven up by import levels
      • Figure 29: Origins of food consumed in the UK, 2019
      • Figure 30: UK trade, value of import and export by food groups, 2019
    • Footfall recovers more strongly in 2021
      • Figure 31: Google COVID-19 Community Mobility Reports: UK (National), average monthly change from baseline, 2020-21
    • Summary of key economic data, 2020-26
      • Figure 32: Key economic data, 2020-26
  5. Consumer Spending on Food and Drink

    • Growth slows as movement comes back into the market
      • Figure 33: Consumer spending (value, non-seasonally adjusted), total and year-on-year growth in core in-home food and drink categories, 2020-21
      • Figure 34: Consumer spending (value, non-seasonally adjusted) on core in-home food and drink categories, 2016-21
    • Inflation starting to bite
      • Figure 35: Inflation: core in-home and out-of-home food and drink categories, 2021
    • Despite dip in 2021, value sales of food remain inflated by the pandemic
      • Figure 36: Annual % change in consumer spending, value and volume, and inflation in food, 2015-21
      • Figure 37: Breakdown of consumer spending on food, 2020
    • Greater in-home coffee and tea consumption drives non-alcoholic drink sales
      • Figure 38: Annual % change in consumer spending, value and volume, and inflation in non-alcoholic drinks, 2015-21
    • Hospitality closures see in-home alcoholic drink spending soar
      • Figure 39: Annual % change in consumer spending, value and volume, and inflation in alcoholic drinks, 2015-21
      • Figure 40: Breakdown of value spending in the alcoholic drinks category, 2020
  6. Market Size and Performance

    • Impact of COVID-19 on supermarket sector
      • Figure 41: Short-, medium- and long-term impact of COVID-19 on supermarket retail, 2021
    • Grocery retail sector sees record highs in 2020
      • Figure 42: ONS grocery retail sales, by value and volume, non-seasonally adjusted year-on-year growth, 2020-21
    • Supermarket sales grow under the market in 2020 as online soars and non-foods are hit
      • Figure 43: All grocery retail and supermarket sector size, (including VAT), 2016-21
  7. Market Forecast

    • Grocery sector set for a period of inflation-led growth
      • Figure 44: Market forecast for all grocery retail sales (including VAT), 2016-26
    • Larger-format players expected to benefit from pressure on finances
      • Figure 45: Market forecast for supermarket sales (including VAT), 2016-26
    • Market drivers and assumptions
      • Figure 46: Key drivers affecting Mintel’s market forecast, 2017-26
    • Forecast methodology
  8. Channels of Distribution

    • Online remains at record levels…
      • Figure 47: Estimated channels of distribution for grocery retail sales, 2021
    • …but supermarkets reclaim some ground in 2021
      • Figure 48: Estimated channels of distribution for grocery retail sales, by channel, 2011-21
  9. How They Shop

    • Big-basket shops remain heightened
      • Figure 49: How grocery shoppers typically shop, 2015-21
    • Seasonality and unexpected events affect shopping habits
      • Figure 50: How grocery shoppers typically shop, by quarter, 2016-21
    • Frequency of shop creeps back up
      • Figure 51: Frequency of grocery shop, 2018-21
  10. Retailers Shopped With

    • Over half of UK grocery shoppers use Tesco
      • Figure 52: Grocery retailers used, 2021
    • Tesco continues to leak shoppers
    • Morrisons loses secondary shoppers
      • Figure 53: Trend of grocery retailers usage, 2019-21
    • Aldi more likely to be a primary shop than Lidl
      • Figure 54: Grocery retailers used for primary and secondary shops, 2021
    • Over a third shop at just one extra store a month
      • Figure 55: Repertoire of secondary retailers used, 2021
    • Tesco shoppers visiting Sainsbury’s and Aldi
      • Figure 56: Where leading retailers’ primary shoppers also visit, 2021
  11. Retailer Demographic Comparison

    • Morrisons’ audience skewed towards older shoppers
      • Figure 57: Leading grocery retailers used for primary and secondary shops, by age, 2021
    • Lidl has broad appeal across all age ranges
      • Figure 58: The discounters: primary and secondary usage, by age, 2021
    • Tesco’s vast store estate sees it reach rural consumers
      • Figure 59: Leading grocery retailers used for primary and secondary shops, by location, 2021
    • Lidl ahead of Aldi in competitive London market
      • Figure 60: Leading retailers’ primary shoppers, by region, 2021
      • Figure 61: Leading retailers’ secondary shoppers, by region, 2021
    • Asda secondary shoppers more affluent than primary shoppers
      • Figure 62: Leading grocery retailers’ primary and secondary shoppers, by household income bracket, 2021
    • Two discounters have broadly similar profiles
      • Figure 63: The discounters: primary and secondary grocery shoppers, by household income bracket, 2021
  12. Types of Store Used

    • Shift away from supermarkets stabilises
      • Figure 64: Store format where the most is spent in a typical month, 2016-21
      • Figure 65: Grocery Tracker: Format where the most is spent in a typical month, 2019-21
    • Supermarket use does skew older, but captures a majority of spend from all generations
      • Figure 66: Store format where the most is spent in a typical month, by age, 2021
    • Big-basket families critical to supermarkets, but online has captured significant demand in this area
      • Figure 67: Store format where the most is spent in a typical month, by parental status and age of children, 2021
    • Battle in the middle-incomes to come as inflation bites
      • Figure 68: Store format where the most is spent in a typical month, by household income band, 2021
  13. Future Channel Use

    • A note on the timing of this research
    • Boost for online set to continue, but discounters and supermarkets to come more into the mix
      • Figure 69: Expected channel use over the next 12 months, 2021
    • Supermarkets and discounters set for a boost, and changing habits continue to hit c-stores
      • Figure 70: Expected channel use: percentage point difference between ‘more’ and ‘less’ usage in the coming 12 months, 2021
      • Figure 71: Users of channels by expected channel use in the next 12 months, 2021
  14. Key Drivers of Supermarket Use

    • Convenience, price and range critical to drive supermarket patronage
      • Figure 72: Why the most is spent in supermarkets in a typical month, 2021
    • Loyalty schemes critical to Tesco and Sainsbury’s supermarket shoppers
      • Figure 73: Why the most is spent in supermarkets in a typical month, by supermarket retailer where the most is spent in a typical month, 2021
    • Loyalty 2.0 a key battleground in 2022
      • Figure 74: Attitudes towards loyalty scheme savings, 2021
  15. What Would Encourage More Supermarket Use

    • Price the barrier to more supermarket patronage for many
      • Figure 75: What would encourage more supermarket shopping, 2021
    • Convenience a key driver for younger generations
      • Figure 76: What would encourage more supermarket shopping, by age, 2021
  16. Attitudes towards Price, Convenience and Sustainability

    • Convenience a barrier for smaller basket shoppers
      • Figure 77: Attitudes to convenience in supermarkets, 2021
      • Figure 78: Attitudes towards self-scan and automated checkout, by age, 2021
    • Greater in-home needs places pressure on budgets
      • Figure 79: Attitudes to value in supermarkets, 2021
      • Figure 80: Attitudes to value in supermarkets, by self-assessment of current financial situation, 2021
    • Calls for greater transparency on seasonality and carbon footprint
      • Figure 81: Attitudes towards sustainability and grocery shopping, 2021
      • Figure 82: Attitudes towards sustainability and grocery shopping, 2021
  17. Leading Retailers – Key Metrics

    • Sales – a record year for many
    • Online drives growth as two of the big four change hands
      • Figure 83: Leading grocery retailers sales, 2016/17-2020/21
    • Store growth keeps Aldi and Lidl gaining in a difficult market
      • Figure 84: Leading grocery retailers, store numbers, 2016/17-2020/21
      • Figure 85: Leading grocery retailers: annual sales per outlet, 2016/17-2020/21
    • Sales areas and densities
      • Figure 86: Leading grocer retailers: total sales area, 2016/17-2020/21
      • Figure 87: Leading grocery retailers: annual sales per sq m, 2016/17-2020/21
    • Operating profits and margins
      • Figure 88: Leading grocery retailers: operating profits, 2016/17-2020/21
      • Figure 89: Leading grocery retailers: operating margins, 2016/17-2020/21
  18. Market Share

    • Tesco and Booker chains account for a quarter of the grocery sector
      • Figure 90: Leading grocery retailers: share of all grocery retail sales, 2020
      • Figure 91: Leading grocery retailers: share of all grocery retail sales, 2016-21
    • A note on our market shares
  19. Online

    • Sales dip a little in 2021 but pandemic-driven online behaviour proves sticky
      • Figure 92: Online sales by store-based grocery retailers, as a percentage of all grocery retail sales, 2020-21
      • Figure 93: Online grocery: total market size (inc. VAT) and annual % growth, 2015-21
    • Despite an improved picture, concern is still a driver of increased online use
      • Figure 94: COVID-19 Tracker: Impact on online shopping behaviour and time spent in-store, 2020-21
    • New models and new mission in the online channel
      • Figure 95: Getir, IMAX Waterloo advertisement, 2021
      • Figure 96: Estimated composition of the online grocery sector, by type of service, 2018-20
    • Click-and-collect represents an opportunity for large-format stores
      • Figure 97: Attitudes towards click-and-collect and packaging, 2020
  20. Launch Activity and Innovation

    • Amazon enters the real world
      • Figure 98: Amazon Fresh, Ealing, 2021
    • Tesco and Gorillas join forces in first of its kind partnership
      • Figure 99: Gorillas delivery, 2021
    • Quiet places for those that need them
    • Vegetables on a train in REWE trial
      • Figure 100: REWE’s train-based supermarket, 2021
    • Tesco takes aim at plastic problems
    • Pret enters retail world with Tesco partnership
    • Rapid delivery sector sees flurry of acquisitions
      • Figure 101: Getir billboard, 2021
    • Asda launches new refill store
      • Figure 102: Asda’s draught beer refill station, 2021
    • Asda trials a vegan butcher’s counter
      • Figure 103: Asda’s vegan-based butcher’s counter, 2021
  21. Advertising and Marketing Activity

    • Sector advertising spend down 7.6% in 2020
      • Figure 104: Recorded above-the-line, online display and direct mail total advertising expenditure by UK supermarket and online supermarket and grocers, 2017-21*
    • Tesco the biggest advertising spender
      • Figure 105: Recorded above-the-line, online display and direct mail total advertising expenditure, by leading UK supermarket and online supermarkets and grocers, 2017-20
    • Advertising spend spikes around annual seasonal events
      • Figure 106: Recorded above-the-line, online display and direct mail total advertising expenditure, by UK supermarket and online supermarket and grocers, by month, 2019-20
    • 43% of total advertising spend channelled through TV
      • Figure 107: Recorded above-the-line, online display and direct mail total advertising expenditure by UK supermarket and online supermarket and grocers, by media type, 2020
    • What we’ve seen so far in 2021
    • Tesco’s biggest ever integrated campaign for mobile phones
    • Aldi and Lidl kick off their Christmas advertising campaigns early
    • Asda, Sainsbury’s and Morrisons unveil new taglines and brand positioning campaigns
    • Co-op Food pushes green credentials with recycling campaign
    • Ocado’s biggest national multichannel advertising campaign to date
    • Deliveroo boosts awareness of tie-ups with supermarket partners
    • Nielsen Ad Intel coverage
  22. Brand Research

    • Brand map
      • Figure 108: Attitudes towards and usage of selected brands, 2021
    • Key brand metrics
      • Figure 109: Key metrics for selected brands, 2021
    • Brand attitudes: Iceland and the discounters score well for value
      • Figure 110: Attitudes, by brand, 2021
    • Brand personality: Waitrose, Ocado and M&S all considered exclusive
      • Figure 111: Brand personality – macro image, 2021
    • Amazon at the cutting edge of retail
      • Figure 112: Brand personality – micro image, 2021
    • Brand analysis
    • Tesco, the UK’s largest supermarket, scores highly for trust
    • Sainsbury’s considered marginally more ethical than big-four rivals
    • Asda is considered basic but good value
    • Morrisons has the lowest awareness and usage of the big four
    • Aldi scores well for accessibility and fun
    • Co-op scores well for ethics
    • Lidl is considered basic but good value
    • M&S is highly trusted and recommended
    • Iceland is considered basic but fun
    • Waitrose is considered exclusive but expensive
    • Amazon is head and shoulders above competitors when it comes to innovation
    • Ocado struggles to put across its value proposition
    • A note on the timing of the research
  23. Appendix – Data Sources, Abbreviations and Supporting Information

    • Data sources
    • Financial definitions
    • Abbreviations
    • Consumer research methodology
  24. Appendix: Forecast Methodology

    • Market forecast and prediction intervals: all grocery retail sales
      • Figure 113: All grocery retail sales (including VAT), at current and constant prices, 2016-26
      • Figure 114: All grocery retail sales forecast (including VAT), current price prediction intervals, 2021-26
    • Market forecast and prediction intervals: supermarket retail sales
      • Figure 115: Supermarket retail sales (inc. VAT), at current and constant prices, 2016-26
      • Figure 116: Supermarket retail sales forecast (inc. VAT), current price prediction intervals, 2021-26
    • Market drivers and assumptions
      • Figure 117: Key drivers affecting Mintel’s market forecast, 2020-26
    • Forecast methodology

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This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.

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