IGD on key trends to watch in the UK grocery channel in 2024
John Tobin, Data and Intelligence Specialist, Bord Bia
Bord Bia recently partnered with the Institute of Grocery Distribution (IGD) to present the key trends to watch in the UK grocery channel in 2024. Read this insightful article to quickly discover the trends that will shape the shape grocery channel and influence shopper and consumer behaviour in the UK market.
Key trends highlighted were:
- New avenues for growth
-
- a) Retail media:
Source: IGD research
Retail media, is a new development in the UK that retailers are putting an increased emphasis on with for example the use of digital screens in store. From a retailer’s perspective this represents a new revenue stream and links in quite nicely with the evolution of retailers’ loyalty strategies and mechanics.
To add some context to the growth in this trend, between March and November 2023, Tesco had recorded a six fold increase in digital screens to 1,800 screens in their stores across the UK, with other grocery chains increasing their efforts at a similar accelerated pace too. One of the key benefits of this medium is its dynamism and the ability to change the display throughout the day as the focus shifts from for example breakfast meats in the morning to lunch and dinner meats later in the day. It was highlighted to attendees that this medium is still very much in its infancy and its full potential has yet to be realised.
IGD’s expectation is that digital media will quickly become an important part of in-store activation.
- b) Occasions:
With regards to the theme of occasions it was demonstrated to attendees how suppliers and retailers are seeking growth through the delivery of new occasions and products.
As consumers now navigate the cost of living challenges (replacing the cost of living crisis as inflation slows down), other costs associated with mortgages remain elevated, hence there’s an opportunity to capture expenditure from out of home occasions. This was exemplified by how consumers in the UK have different experiences of recovery as the economy emerges from the inflationary environment over the last two years and not all consumers undergoing equal experiences of recovery.
IGD has calculated that on average consumers are now around £5,000 worse off than they were two years ago highlighting the enormity of the strain on household budgets that currently exists. However, from a shopper’s perspective, if consumers have cut back via moving to a private label or to a smaller pack size which meets their needs, why would shoppers revert to spending more, which presents a challenge for the industry as a whole.
- Evolution of multichannel shopping:
Whilst not a new phenomenon remains a key element in this market where British consumers visit 13 stores and shop in nearly five different channels each month. The convenience channel was highlighted as seeing increased activity.
However, there are example of retailers investing in the stores and are competing with one another to capture a greater share of those big basket shopping trips by matching competitor prices.
The implication here is that if retailers match competitor prices, reduces the need to shop elsewhere from a shopper’s perspective and may encourage some to shop in a certain store/retailer more frequently. As the requirement for consumers to visit more stores to get the best outcome on price is reduced.
- Longer term trends:
Looking to the more longer term trends, a number of trends were highlighted including the industry delivering on net zero commitments by 2025 which will see efforts ramped up to achieve this. Along with labour market challenges increasing the need invest in automation and creating efficiencies.
On the topics of health and sustainability IGD’s findings suggested that shoppers need some support with this. Shoppers will look to the industry and government to lead activities in areas such as tackling climate change. Where retailers or brands can be seen to do more, the rewards can be worthwhile.
For instance IGD shared examples of where branded products share messaging around the sustainability credentials of products can result in a uplift in sales of products where such information is introduced at the point of purchase.
Overall, IGD’s expectation is that shoppers will approach the year ahead with a degree of caution and a reluctance to loosen purse strings. However, with 27% of lower income households suggesting their household debt is likely to impact on expenditure on food, the focus on value and keeping costs down will remain. Getting shoppers to adjust their behaviour and increase their spend more will be a challenge. Despite the cost-of-living challenges shoppers do care about addressing bigger issues such as sustainability, but they will look to the industry to take the lead and support them.
Thought starters:
- How can you get shoppers to adjust their behaviour and increase their spend in 2024?
- How can you support shoppers to address sustainability?
Irish suppliers can keep abreast of key trends and developments in the UK and other retail channels by leveraging Bord Bia’s world class library collections to ensure they are keeping their fingers on the pulse.
Book a call with one of Bord Bia’s research Librarians or arrange a visit to the Bord Bia library by please email thethinkinghouse@bordbia.ie.