Grocery & Food Service Sectors
UK Grocery & Food Service Sector Member Trends Briefing 2023
They will need to further increase their efficiency through automation, for example, or an evolved online business and find new pools of margin, through analytics or a shift to more differentiated, premium-type products. These trends are a top concern for many of the CEOs we interviewed. So this executive member briefing will examine the consumer and sector trends that will be dominant in both sectors over the next few years.
Consumer shifts around online, value, and lifestyle agendas are creating an attractive opportunity for grocery retailers to capture market shares over the next two to three years. However, both the growth of online and the trend toward value are likely to put further pressure on grocers’ margins, especially given that the overall market may shrink once restaurants return. Grocery retailers thus will need to strive for further efficiency and find new margin pools to grow profitably.
The timing and magnitude of the likely future contraction of these sectors are highly uncertain and dependent on several factors linked to the further evolution of the COVID-19 crisis. In line with this, nearly 50% of the member CEOs we talked with expect the market situation will worsen in 2022 and remain highly uncertain. Just 26% anticipate that the situation will improve. The words CEOs most commonly associate with their expectations for 2022/23 are “challenging,” “uncertain,” “price-focused,” “competitive,” and “online”.
The Key Trends to be highlighted in this briefing and that will shape the grocery sector over the next few years:
1 Restaurants return 49% of CEO's think that the market situation will worsen in 2022/23 compared with previous years of 2019 /2020
2 Online becomes core 39% growth contribution of online in the UK in 2020 (compared to 18% avg. in Europe)
3 Brick & mortar supermarkets losing market share 6% annual growth 2015 – 2019 for discount, online minimarkets, and specialty stores, while supermarkets grew by just 1.6% p.a.
4 Once again value is king – not that it ever went away but as inflation continues to climb and the cost of power spikes 37% of consumers plan to look for ways to save money while grocery shopping and 22% look to cut back on eating out.
5 Higher quality in entry-level price tiers with 26% of consumers wanting to save more money on food in 2022/23 and they ask for more sustainable and healthy products at the same time.
6 Health and organic 30% of consumers intend to spend more on healthy eating in 2022/23
7 Sustainability 19% of consumers intend to spend more on environmentally friendly products in 2022/23
8 Convenience food 24% of CEO's name convenience food as a top priority, it has been a sector that has lagged in technology innovation 2019-2021
9 Technology as a differentiator 13% annual growth of investments in warehouse automation; speed in IT becomes a measurable differentiator.
10 Advanced analytics and the path towards personalisation 3-6% additional sales potential through advanced analytics.
These headlines form the primary agenda for this sector trends briefing which will be followed by a panel group to discuss these points:
CEO's rank the accelerated growth of online channels as their second most important priority. They also see a need to improve online profitability.
Value if King - Downtrading
CEOs see downtrading, or increased price sensitivity, as the most influential trend for the grocery market, with 56% of CEOs listing it among their top three priorities.
Lifestyle agendas drive food demand
Higher-income segments tend to be less price conscious and more willing to spend on healthy eating and nutrition. In contrast, lower-income segments focus more on saving money and are less concerned about healthy food choices.
Implications for grocers
All three of these key consumer shifts represent excellent opportunities for grocery retailers to win new customers. These shifts are happening at substantially greater magnitude and speed than ever before and could lead to significant changes in market share over the coming years. Smaller players could win by excelling in one or two of these areas and nurturing their niche.
This member trends briefing will identify in detail were these opportunities exist and how they can be captured - not surprisingly there are parallel trends developing in the food service sector which will also be looked at in detail.
Jan 26 2023
09:20 - 15:00 hrs
This is a virtual event.
Open to members and partners - bookings will close on 20th Dec 2022
To learn more about who will be joining us by adding their weight to this trends briefing including the agenda, speakers forum, headliners, the content and 'take aways' you can expect on May 26th 2022, hit one of the buttons opposite.
If you would like to put yourself forward as a speakers or panel group participant on any of our future events, take a look at our calender and make contact.