The grocery market has experienced its slowest period of growth in at least 16 years with an increase of just 3.1% for 2006. According to IGD data seen exclusively by The Grocer, the market grew to £123.5bn for the year to April. Growth was down from a high in 2002 of 6.6%.
However, IGD senior business analyst Patrick Mitchell-Fox, who was lead author on the UK Grocery Retailing 2006 report, said the numbers were not all doom and gloom as the figures did not reflect the inflation that had come back into the market in the past six months.
Price increases in grocery were likely to buoy the figure next year, he added. However, the report forecast that while the grocery market would grow to £141.5bn by 2011, at middle estimates, this represented an average rate of growth of just 2.8%.
Nonetheless, grocery was growing significantly faster than the overall retail market, which was forecast to grow by 1.3% on average to £265.8bn by 2011.
With these estimates, grocery would become the dominant force in retail by 2010, making up more than 50% of the total market, said Mitchell-Fox.
The report revealed that UK grocery turnover for the major multiples increased 5.4% in the past year to £85.6bn, with sales up 33.5% on five years ago.
In contrast, operating margins slipped from an average figure of 3.06% to 2.95%. Only M&S and Waitrose made significant leaps, while Asda fell from 4.7% to 4.4% and Morrisons fell from 3.2% to 0.9%.
Overall store numbers for the multiples were up 33.3% over five years to 6,028. In convenience retailing the multiples' value rose from £2.7bn to £3.1bn.
Non-food sales within the grocery market are forecast to grow by 6% on average, reaching sales of £12.7bn by 2011, while home shopping will double its share of the grocery market to 2.2%.
The gulf between Tesco and the other retailers showed no sign of lessening, said Mitchell-Fox, adding that it had definitely been Sainsbury's year. "They are the big success story with significant growth on growth. But they're not out of the woods yet."