2022
9
UK Supermarkets Market Report 2022
2023-01-03T03:01:41+00:00
OX1100569
2195
159053
[{"name":"Supermarkets and Grocery","url":"https:\/\/store.mintel.com\/industries\/retail\/supermarkets-grocery"}]
Report
en_GB
“While the grocery sector is to a degree insulated from much of the pain being felt elsewhere in retail as much of its demand is non-discretionary, the shifts in behaviour…

UK Supermarkets Market Report 2022

£ 2,195 (Excl.Tax)

Description

The UK Supermarkets Market Report identifies consumers’ priorities and shifts in shopping habits due to the rising cost of living, the frequency of grocery shopping, and future innovation among the leading grocery multiples. This report covers the UK grocery market size, market forecast, market segmentation and UK supermarkets industry trends.

 

Frequently Asked Market Research Questions in the UK Grocery Industry

What are the current trends in the UK grocery industry?

As society reopened in 2022, consumer behaviours have returned to pre-pandemic norms, with a rise in ‘big basket’ and ‘top-up shops’. Naturally, the ‘top-up shops’ declined during the pandemic due to consumers limiting their time spent in crowded stores and a shift to online shopping.

The large-format sector remains the dominant channel with UK grocery, but has also faced a ten-year-long decline in sales share due to the growth of discount stores and modernised convenience stores.

What is the market share of the UK grocery industry?

Supermarkets, or large-format stores, are estimated to claim around 46.5% of total sales within the UK grocery industry in 2022. Tesco is the leading UK grocery retailer, accounting for over a quarter of all sales within the UK grocery market.

What is the UK grocery market size?

Mintel predicts that the market size of the UK grocery retail market is expected to remain positive through to 2027, growing by 13.7% between 2022 and 2027 to reach £227.3 billion.

 

 

UK Supermarkets Industry – Current Landscape

As society reopened, a natural rebalancing of in-home demand was expected, but this has been compounded by mounting pressure on household finances.

Customers are already altering their behaviour to save money during the cost-of-living crisis, with some consumers shopping for groceries less frequently. Many of the cost-saving actions taken by consumers should benefit the UK supermarkets industry, where their core trade is less frequent ‘big-basket’ shops and promotions are strongest. While value sales will remain positive, volumes will fall as consumers cut back, trade down in ranges or switch to a food discounter retailer.

UK Grocery Market Research – Trends and Statistics

The most significant threat to the leading players in the UK supermarkets industry is consumers switching to shop at the discount retailers Aldi and Lidl. A record 26% of UK consumers say they now spend the most with discounters in a typical month.

To help slow down the discounter retailers growing grocery market share, the main grocery multiples can innovate with loyalty schemes and invest in private label products. Non-food items, particularly clothing, should also drive demand in the larger-format stores due to value positioning.

Consumer behaviours in the UK supermarkets industry

  • 34% of UK consumers stock up on grocery products when they are discounted.
  • 33% of shoppers have switched to cheaper brands in the last 12 months.
  • 18% of Brits shopping for groceries less frequently.
  • 63% of grocery shoppers say the price of food and drink products has become more important to them in the past year.

UK Supermarkets Industry – Future Trends

In the longer term, the UK supermarkets industry will see an increase in volume growth as real incomes recover. Large-format stores will remain under pressure due to the anticipated growth in online grocery retailing and the increased demand for discount channels.

However, grocery multiples are far better equipped to retain consumers compared to the last recession. 44% of Tesco shoppers and 40% of Sainsbury’s shoppers say that these retailers’ respective Aldi Price matches have stopped them from switching. Investment and a renewed focus on loyalty schemes will help further maintain customer loyalty.

Read on to discover more about the UK Supermarkets Market Report 2022, read our UK Food and Non-Food Discounters Market Report 2022, or take a look at our other Food Retailing Market Research.

Quickly Understand

  • Explores the UK grocery market size and the supermarket sector.
  • How consumers shop for groceries and how frequently.
  • Types of retail stores used and distribution of spending in the UK supermarkets industry by channel.
  • Retailers used for primary and secondary shopping, along with market sizes.
  • Loyalty/reward scheme membership and the impact it has on purchasing.
  • Priority and behaviour shifts when choosing where to shop as a result of the cost-of-living crisis.
  • Attitudes to fuel, promotions and food waste in the UK grocery market.

 

Leading Players in the Supermarkets Industry

Discounters are excluded from our definition of supermarket. While touched upon in this report, they are covered in more detail in Mintel’s UK Food and Non-food Discounters 2022 Market Report.

Brands: Tesco, Sainsbury’s, Asda, Morrisons, M&S, The Co-op, Lidl, Waitrose, Aldi, Iceland.

 

Expert Analysis from a Specialist in the Retail Sector

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

While the grocery sector is to a degree insulated from much of the pain being felt elsewhere in retail as much of its demand is non-discretionary, the shifts in behaviour seen in 2022 and that will continue to be seen in the short term have been no less dramatic. A third of shoppers have cut back grocery budgets, leading to record volume declines and a significant uptick in discounter use. However, the market leaders are better prepared than in the past recession to fight back against Aldi and Lidl, with price-matching schemes and a renewed focus on loyalty schemes having a material impact on defending market share.”

Nick Carroll - Research Analyst

Nick Carroll
Category Director – Retail Insight

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • Products covered in this Report
  2. Executive Summary

    • The five-year outlook for grocery retail
      • Figure 1: Category outlook, 2022-27
    • The market
    • Market size and forecast
      • Figure 2: Market forecast for all grocery retail sales (including VAT), 2017-27
    • Supermarket demand to grow by 4.4% between 2022 and 2027
      • Figure 3: Market forecast for supermarket retail sales (including VAT), 2017-27
    • Supermarkets remain the dominant channel…
      • Figure 4: Estimated share of total grocery retail sales, by format/channel, 2012-22
    • Consumers’ financial wellbeing has fallen from the highs of 2021…
      • Figure 5: Household financial wellbeing index, 2016-2022
    • Leading retailers
    • Morrisons holds on to fourth spot in 2021, but Aldi to draw level in 2022
      • Figure 6: Leading grocery retailers: share of all grocery retail sales, 2021
    • More to discounters than simply low prices
      • Figure 7: Key metrics for selected brands, 2022
    • The consumer
    • Smaller basket and top-up demand comes back more strongly…
      • Figure 8: How grocery shoppers typically shop, 2015-22
    • …as frequency of shop grows
      • Figure 9: Frequency of grocery shopping, 2018-2022
    • Online usage dips while discounters get a cost-of-living boost
      • Figure 10: Store format where the most is spent in a typical month, 2016-2022
    • Aldi becomes the third most popular grocer
      • Figure 11: Grocery retailers used, 2019-22
    • Price moves up the agenda…
      • Figure 12: Shift in priority toward key grocery factors, 2022
    • Stocking up and tier shifting are most common reactions
      • Figure 13: Shifts in behaviour in response to the cost-of-living crisis, 2022
    • Almost three quarters of grocer shoppers are a member of Clubcard
      • Figure 14: Loyalty/reward membership held, 2022
    • Loyalty promotions have created switching behaviours
      • Figure 15: Attitudes towards loyalty schemes, 2022
    • Food waste moves up the agenda
      • Figure 16: Attitudes to shopping for groceries, 2022
  3. Issues and Insights

    • Cost-of-living crisis: open goal for discounters or will it be different this recession?
    • Discounters gain as customers look to cut back…
    • …however the leading multiples are now in a better place to defend and fight back
    • Managed decline or sleeping giant: can large-format stores address the decline?
    • Focus on what makes these stores unique
    • Shifts in shopping behaviour should favour larger stores
  4. Market Drivers

    • Inflation is the key concern for consumers and brands…
      • Figure 17: Inflation, overall index (CPI) and core categories, 2022
    • …and despite government support, energy prices are still a major concern
    • Rising interest rates mean that the pressure will move up to middle- and higher-income households
    • High inflation and rising interest rates will compound the impact of the slowing recovery
    • Consumer spending power will be curbed
    • Unemployment is at a near 50-year low
    • Consumers’ financial wellbeing has fallen from the highs of 2021…
      • Figure 18: Household financial wellbeing index, 2016-2022
    • …and most people are feeling the effects of price rises
  5. Consumer Spending on Food and Drink

    • Value growth accelerates, driven by inflation
      • Figure 19: Consumer spending (value, non-seasonally adjusted), total and year-on-year growth in core in-home and drink categories, 2021-22
      • Figure 20: Consumer spending (value, non-seasonally adjusted) on core in-home food and drink categories, 2017-22
    • Building inflation driving customers to cut back
      • Figure 21: Inflation: core in-home and out-of-home food and drink categories, 2021-22
    • Food: critical categories seeing record inflation
      • Figure 22: Annual % change in consumer spending, value and volume and inflation in food, 2017-22
      • Figure 23: Breakdown of consumer spending on food, 2021
    • Non-alcoholic drink market rebalancing but opportunities continue to exist
      • Figure 24: Annual % change in consumer spending, value and volume, and inflation in non-alcoholic drinks, 2017-22
    • Cuts in discretionary spend threaten alcohol sales
      • Figure 25: Annual % change in consumer spending, value and volume, and inflation in alcoholic drinks, 2017-22
      • Figure 26: Breakdown of value spending in the alcoholic drinks category, 2021
  6. Market Size and Performance

    • Market rebalancing: in-home decline accelerated by the cost-of-living crisis
      • Figure 27: All grocery retail sales, non-seasonally adjusted value and volume growth, 2021-22
    • Grocery sector returns to stronger growth, but inflation masking volume decline
      • Figure 28: All grocery retail sales (inc. VAT) market size, 2017-22
    • Supermarket growth tempered by inflation and format shift
      • Figure 29: All supermarket size retail (inc. VAT), market size, 2017-22
  7. Market Forecast

    • The five year outlook for grocery retail
      • Figure 30: Category outlook, 2022-27
    • Grocery sector to grow by 13.7% between 2022 and 2027
      • Figure 31: Market forecast for all grocery retail sales (including VAT), 2017-27
    • Supermarket demand to grow by 4.4% between 2022 and 2027
      • Figure 32: Market forecast for supermarket retail sales (including VAT), 2017-27
    • Learnings from the last income squeeze
      • Figure 33: All grocery retail sales, non-seasonally adjusted value and volume growth, 2011-14
    • Forecast methodology
  8. Channels of Distribution

    • Supermarkets remain the dominant channel…
      • Figure 34: Estimated channels of distribution for grocery retail sales, 2022
    • …but share continues to move away as discounters gain
      • Figure 35: Estimated share of total grocery retail sales, by format/channel, 2012-22
  9. How Consumers Shop for Groceries

    • Nine in ten consumers have some responsibility for grocery shopping
      • Figure 36: Responsibility for grocery shopper, by age and gender, 2022
    • Smaller basket and top-up demand comes back more strongly…
      • Figure 37: How grocery shoppers typically shop, 2015-22
      • Figure 38: Grocery tracker: how grocery shoppers typically shop, 2017-2022
    • …as frequency of shop grows
      • Figure 39: Frequency of grocery shopping, 2018-2022
  10. Types of Stores Used

    • Online use dips while discounters get a cost-of-living boost
      • Figure 40: Store format where the most is spent in a typical month, 2016-2022
    • Discounters hit highest ever share of spending in 2022
      • Figure 41: Grocery tracker: format/channel where the most is spent in a typical month, 2019-2021
    • Danger of discount switching as more see finances pressurised
      • Figure 42: Store format where the most is spent in a typical month by current financial situation, 2022
  11. Retailers Shopped With

    • Aldi becomes the third most popular grocer
      • Figure 43: Grocery retailers used, 2019-22
    • Lidl now claims more primary shops than Morrisons
      • Figure 44: Primary and secondary grocery retailers used, 2022
    • Just 6% of grocery shoppers using a single brand in a typical month
      • Figure 45: Where leading retailers’ primary shoppers also shop, 2022
  12. Retailer Demographic Comparison

    • Tesco and Aldi gain among under 44s…
      • Figure 46: Leading grocery retailers used for primary and secondary shops, by age, 2022
    • …helped by capturing more family shops
      • Figure 47: Leading grocery retailers used for primary and secondary shops, by parental status, 2022
    • Tesco gains across the UK, while Aldi’s push into the south brings more shoppers
      • Figure 48: Leading grocery retailers used for primary and secondary shops, by type of area lived in, 2022
    • Discounter shopping still skews towards lower income households
      • Figure 49: Leading grocery retailers used for primary and secondary shops, by household income, 2022
      • Figure 50: Leading grocery retailers used for primary and secondary shops, by current financial situation, 2022
  13. Priority Shifts in the Past Year

    • Price moves up the agenda…
      • Figure 51: Shift in priority toward key grocery factors, 2022
    • …but underlying trends remain important
      • Figure 52: Factors selected as ‘more important’, by current financial situation, 2022
  14. Behaviour Shifts due to the Cost of Living Crisis

    • Stocking up and tier shifting are most common reactions
      • Figure 53: Shifts in behaviour in response to the cost-of-living crisis, 2022
    • Bigger packs a way to tap into more ‘preparedness’ among shoppers
      • Figure 54: Sainsbury’s ‘big pack’ area, 2022
    • The cost-of-living crisis presents a significant opportunity for own-label
      • Figure 55: Key private label launches by leading players, 2022
  15. Loyalty Schemes

    • Almost three quarters of grocer shoppers are a member of Clubcard
      • Figure 56: Loyalty/reward membership held, 2022
      • Figure 57: Loyalty/reward membership held, by retailer shopped with, 2022
    • Loyalty promotions have created switching behaviours
      • Figure 58: Attitudes towards loyalty schemes, 2022
      • Figure 59: Attitudes towards loyalty schemes, by retailer primary shopper and loyalty/reward card customer base, 2022
  16. Attitudes towards Food Waste, Promotions and Fuel

    • Discount price-matching is having significant impact
      • Figure 60: Attitudes towards discounter price-matching schemes, 2022
    • Pressure on fuel costs is also driving switching behaviour
      • Figure 61: Attitudes towards fuel promotions, 2022
    • Food waste rises significantly on the agenda
      • Figure 62: Attitudes towards grocery shopping, by age, 2022
    • HFSS legislation comes into play, causing a navigation headache
      • Figure 63: Booths household and Sainsbury’s discover end of aisles, 2022
  17. Leading Retailers – Key Metrics

    • Slowdown in sales growth reflects difficult comparatives
      • Figure 64: Leading grocery retailers’ sales, 2017/18-2021/22
    • Supermarket giants strengthen their convenience store estates
    • Tesco, Morrisons and Aldi pilot grab-and-go, checkout-free stores
    • Iceland and Waitrose building a presence in locations where grocery shopping may not be conveniently accessible
    • Morrisons and discounters roll-out eco concept store formats
    • Co-op’s store rebranding and robot home deliveries
    • New Spar food-to-go concept and Morrisons’ Market Kitchen store expansion
      • Figure 65: Leading grocery retailers, store numbers, 2017/18-2021/22
    • Shoppers returning to stores, but footfall still below pre-pandemic level
      • Figure 66: Leading grocery retailers, sales per outlet, 2017/18-2021/22
    • Sales areas and densities
      • Figure 67: Leading grocer retailers: total sales area, 2017/18-2021/22
      • Figure 68: Leading grocery retailers: annual sales per sq m, 2017/18-2021/22
    • Operating profits and margins
      • Figure 69: Leading grocery retailers: operating profits, 2017/18-2021/22
      • Figure 70: Leading grocery retailers: operating margins, 2017/18-2021/22
  18. Market Share

    • Morrisons holds on to fourth spot in 2021, but Aldi to draw level in 2022
      • Figure 71: Leading grocery retailers: share of all grocery retail sales, 2021
      • Figure 72: Leading grocery retailers estimated market shares, 2017-22
    • A note on our market share
  19. Launch Activity and Innovation

    • Technology in supermarket aisles
      • Figure 73: Lidl’s refill station, kingswinford, 2022
      • Figure 74: Amazon One, US, 2022
      • Figure 75: Veeve smart shopping cart, US, 2022
      • Figure 76: TX SCARA stacking bottles, Japan, 2022
    • Supermarkets campaign to save the planet
    • Fighting food waste
      • Figure 77: Sainsfreeze, a walk-in freezer concept store, Shoreditch, 2022
    • Supermarket schemes to help cash-strapped customers
      • Figure 78: Asda’s ‘Winter Warmer’ scheme, 2022
    • New partnerships and launches
      • Figure 79: Deliveroo Hop store, Oxford Street, London, 2022
    • Supporting a cause by shopping
  20. Advertising and Marketing Activity

    • Advertising expenditure reached its highest since 2018
      • Figure 80: recorded above-the-line, online display and direct mail total advertising expenditure by UK supermarkets and online supermarkets and grocers, 2018-2022
    • Some big spenders cut their budgets
      • Figure 81: Recorded above-the-line, online display and direct mail total advertising expenditure, by leading UK supermarkets and online supermarkets and grocers, 2018-2021
    • TV advertising accounted for the biggest share
      • Figure 82: Recorded above-the-line, online display and direct mail total advertising expenditure, by UK supermarkets and online supermarkets and grocers, by media, 2021
    • What we’ve seen so far in 2022
    • Campaigns to fight the cost-of-living crisis
    • Promoting quality food, healthier choice and supporting farmers
    • Tesco’s first Ramadan campaign
    • New launches: Morrisons Media Group and Sainsbury’s self-service advertising platform
    • Christmas 2022 ads: Tesco’s nod to the cost-of-living crisis and Aldi’s homage to Home Alone and more
    • Nielsen Ad Intel coverage
  21. Brand Research

    • Brand map
      • Figure 83: Attitudes towards and usage of selected brands, 2022
    • Key brand metrics
      • Figure 84: Key metrics for selected brands, 2022
    • Brand attitudes: Tesco is as strong as ever and its online service is seen as excellent
      • Figure 85: Attitudes, by brand, 2022
    • Brand personality: Aldi and Lidl are considered fun owing to their social media presence
      • Figure 86: Brand personality – macro image, 2022
    • Retailers seen as basic gain advantage during the financial crisis
      • Figure 87: Brand personality – micro image, 2022
    • Brand analysis
    • Fun supermarkets are seen as different from the rest, gaining trust and users
    • Going basic is seen as a safer option
    • Most supermarkets are seen as ethical
    • Tesco performs as strongly as ever, and even stronger in its online service
  22. Appendix – Data Sources, Abbreviations and Supporting Information

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

    • Market forecast and prediction intervals
      • Figure 88: All grocery retail sales forecast (including VAT), current price prediction intervals, 2022-27
      • Figure 89: Supermarket retail sales forecast (including VAT), current price prediction intervals, 2022-27
    • Market drivers and assumptions

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