GROCERY TRENDS SHAPING THE SECTOR

Insight Report Highlights:
The UK Grocery Supermarket
Insight Report 2025

Abstract

The UK grocery supermarket industry is entering a period of accelerated change, shaped by shifting consumer demands, rapid advances in digital technology, and ongoing economic pressures. Between 2025 and 2028, supermarkets will need to balance sustainability, innovation, and affordability while remaining competitive in an increasingly fragmented market.

This Insight Report examines the seven key forces driving transformation in the UK grocery market, offering a detailed perspective on how supermarkets can adapt to ensure growth and resilience.

1. Sustainability and Ethical Consumption

• Eco-Friendly Products: Consumers are increasingly choosing brands and retailers that demonstrate genuine commitment to sustainability. This includes reducing single-use plastics, offering recyclable or compostable packaging, and sourcing local and seasonal produce.

• Carbon Reduction Strategies: Many UK supermarkets have pledged ambitious net-zero carbon goals, accelerating the shift to renewable energy, tackling food waste, and introducing deposit-return schemes. Ethical certifications and fair-trade sourcing are also becoming mainstream expectations.
  
  

Technological Integration

• AI and Automation: Artificial intelligence is revolutionising inventory planning, pricing optimisation, and customer engagement. Automated checkouts, cashier-less stores, and robotics in logistics are becoming standard.

• Digital Transformation: The expansion of online grocery platforms, personalised shopping apps, and AI-driven loyalty schemes is reshaping how consumers engage with supermarkets. Click-and-collect services, rapid home delivery, and subscription models are driving convenience-led growth.

Changing Consumer Behaviour

• Health and Wellness: Growing demand for organic, plant-based, allergen-free, and functional foods reflects a shift toward wellness-driven shopping baskets. Retailers are expanding ranges in these categories to capture a more health-conscious customer base.

• Value-Driven Shopping: High inflation and rising living costs are steering shoppers toward discount retailers, own-label products, and multi-buy promotions. Consumers are increasingly balancing affordability with quality, boosting the success of private labels and discount chains.
  
  

Expansion of Private Labels

• Rising Market Share: Private-label products are forecast to gain further share as retailers invest in product innovation, premiumisation, and sustainability credentials. Supermarkets are positioning their in-house brands as direct competitors to established FMCG names.

• Consumer Loyalty: Shoppers are showing greater willingness to switch to store brands if quality and sustainability match their expectations—strengthening supermarket control over margins and customer loyalty.
  
  

Building Supply Chain Resilience

• Localisation of Supply Chains: Post-Brexit challenges, climate risks, and pandemic-related disruptions have forced retailers to strengthen local sourcing and reduce dependence on overseas imports.

• Automation and Logistics Innovation: Automated warehousing, AI-led demand forecasting, and robotics are improving operational resilience, reducing costs, and ensuring consistent stock availability.
  
  

New Store Formats and Customer Experiences

• Convenience and Hybrid Stores: Urbanisation and changing lifestyles are driving demand for smaller, agile store formats. Retailers are testing hybrid models that blend physical shopping with digital integration, including smart trolleys and app-based checkout.

• Experiential Retail: To differentiate from discount competition, supermarkets are creating in-store experiences—ranging from cooking demonstrations and food halls to community events—that encourage longer visits and stronger brand engagement.
  
  

Regulation and Policy Landscape

• Evolving Compliance: The UK government’s environmental agenda, including stricter plastic reduction targets and sustainability reporting requirements, will continue to shape supermarket operations.

• Health Regulations: Nutritional labelling reforms, restrictions on HFSS (high fat, sugar, and salt) product placements, and initiatives to promote healthier eating are expected to influence store layouts and product strategies.
  
  

Conclusion

The UK grocery supermarket industry is set for dynamic growth and disruption between 2025 and 2028. Retailers that invest in sustainability, embrace digital innovation, and respond to consumer values around health and affordability will be best placed to capture market share. The winners will be those who can combine resilient supply chains, premium private labels, and engaging customer experiences—while maintaining competitive pricing in a cost-conscious economy.