Food retailers accounted for 49p in every pound spent in the shops in 2003, up from 45p in 2002, says IGD’s new report into the UK grocery retailing market.
IGD predicts that the market will be worth £118.1bn in 2004 (up 2.7%), rising to £133.5bn in 2009 (current prices prevailing), said business manager David Gordon.
He said: “Although the growth we are predicting in 2004 is slightly down on last year,this is against a background of food price inflation of just 0.5% compared to background inflation of 2.8%.”
Growth would continue at about 2.5%-2.7% a year until 2009, he predicted.
“The population is still growing so there are more mouths to feed, but a lot of the value will come from non-food and premium food products.”
However, the strongest growth would be in hypermarkets and convenience stores as the market became more polarised, he predicted.
Total sales area in food retail increased by 3.1% in the year to April 2004 to 83 million sq ft.
There are currently around 600 hypermarkets and there is probably capacity for another
200 in the next five years, many of which will have to come from store extensions. he added: “Asda has more than 250 stores larger than 25,000 sq ft but only a handful of Supercentres, while Tesco has more than 380 large stores and just 83 Tesco Extras. There is a lot of scope for growth there.”
The convenience sector was forecast to grow from £23bn to £29bn in the next four years, he added, although the number of non-affiliated independents would continue to decline.
“There are 53,500 convenience outlets now. We estimate that there will be just under 51,000 in 2009.”
The hard discounters had also made significant progress in the last few years, with Lidl, Aldi and Netto seeing growth in stores numbers of 200%, 35% and 15% respectively between 1998 and 2003.
Capital expenditure from the largest nine food retailers had declined 7% this year, mainly because Sainsbury had cut back spending, he said.