Aldi and Lidl will take £1 in every £7 as shoppers dodge Brexit price hikes

People will spend more on groceries because of 'resurgent inflation', said Joanne Denney-Finch, IGD chief executive

‘There’s a revolution underway in food and grocery, in terms of what, how and where shoppers do their shopping,’ IDG said (Reuters)

One pound in every seven spent on groceries in the UK will be in a discount store like Aldi or Lidl within five years, according to new research.

Shoppers are set to be hit by food price rises caused by a weak pound, meaning more and more will do their weekly shop at one of the bargain chains, according to grocery specialists IGD.

Overall, the UK food and grocery market is forecast to grow by 15 per cent by 2022, giving it a value of £213bn. IGD says the amount consumers spend at the discounters will grow almost 50 per cent as the chains embark on “ambitious” store opening programmes.

More traditional supermarkets will register just 5.9 per cent sales growth in this period, the research predicts.

Online sales are predicted to grow fastest of all, jumping 53.8 per cent in five years, although this is slightly slower than in previous years. Chains are now focusing their efforts less on online growth and more on getting shoppers into pricier convenience outlets such as Sainsbuy’s Local and Tesco Metro. Despite the push for greater value, convenience stores will also see solid growth of 17.7 per cent over the next five years, IGD said.

There’s a more positive outlook than before for hypermarkets as well, driven by a combination of inflation and investment in the big store experience for shoppers.

UK supermarket growth, 2017 - 2022 (source: IGD)

	2017 value (£bn)	2022 value (£bn)	Change in value (%)
Hypermarkets	16.2	16.3	+1.0%
Supermarkets	86.0	91.1	+5.9%
Convenience	40.0	47.1	+17.7%
Discounters	20.1	30.1	+49.8%
Online	10.4	16.0	+53.8%
Other retailers	11.8	12.2	+3.6%
Total	184.5	212.9	+15.4%

Joanne Denney-Finch, IGD chief executive, said people will spend more than previously estimated on groceries because of “resurgent inflation” which follows three years of price cuts. However, supermarkets will still face a challenge trying to get shoppers to part with more cash, “given the challenging economic outlook”.

“There’s a revolution underway in food and grocery, in terms of what, how and where shoppers do their shopping,” she said.

People now use far more different stores every month and choice is going to increase further, Ms Denney-Finch said, adding that a quarter of shoppers plan to use an online subscription service to get their staples delivered. She added: “So the pace of change will be rapid – and this will present huge challenges and opportunities for the industry.”