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Impact of Covid-19 on convenience grocery shopping

Full report: The UK Grocery Market: Five Key Trends to 2025

Impact of Covid-19 on convenience grocery shopping

2 minute read

Lockdown measures in 2021 saw the widespread closure of hospitality outlets leading to UK households consuming an additional seven billion meals at home. Retail Economics estimates an extra £3.8bn was spent on groceries during the pandemic (March 2020 – March 2021), an increase in monthly spend per household of £318 compared with pre-pandemic norms. However, these figures fail to tell the whole story. In this, the first in a series of five articles examining Retail Economics’ report on the UK’s grocery sector, we focus on convenience sales.

 

Convenience grocery shopping retail economics

 

Convenience: from office blocks to chimney pots

The Covid-19 crisis has created unique challenges for convenience retailing. Increased home-working reduced city centre footfall, resulting in fewer ‘on the go’ shopping trips. Convenience stores in residential areas however saw their sales spike, as shoppers stayed local. Retail Economics’ research shows that overall convenience sales reached £33.6bn in 2020, up 4.5% year-on-year, with local shopping and hospitality closures offsetting the im-pact of remote working. However, with restrictions easing, the outlook for convenience sales from 2021 onwards is more uncertain with much resting on the outlook for working from home.

Fig 14: Convenience sales under pressure from shift to hybrid working

Covid-19 impact on convenience grocery sales retail economics

Source: Retail Economics

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Shift to hybrid working

In 2019, 27% of the workforce operated from home during the year on average (ONS). In 2020, this figure jumped to 37%. With home working set to remain, we expect companies to reposition their convenience store portfolios, pivoting towards local high streets and un-derserved residential areas, rather than city centres.

 

 

Retailers may ultimately find them-selves vulnerable to unprofitable smaller-format stores that previously relied on high levels of commuter footfall. For example, Booths is closing its Media City store in Manchester due to “significant losses”. The upmarket grocer admitted the store had been impacted by the shift to home working, which led to a significant reduction in footfall and sales. On-the-go businesses are grappling with similar challenges which has seen store strategies shift away from urban areas. For instance, Pret-a-Manger are trialling shop-in-shops in partnership with Tesco as it looks to reach a wider customer base away from city centres.

More than ever, a strategic focus on ‘local’ is paramount for food retailers striving for suc-cess. Increasing numbers of consumers purchasing online presents attractive opportunities for innovative grocery retailers and their partners to capture market share over the next five years.

Despite supermarkets remaining open throughout the crisis, the grocery sector has experi-enced one of the largest shifts towards online within the retail industry. The proportion of online sales more than doubled compared with the previous year, accounting for 12.6% of total grocery sales in 2020. In the second of five articles, we take a look at how, and why, the online shopping experience has further entrenched itself in recent months.

 

Things to do now

Explore the first article in this series.

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Found this short article interesting?

This article is the first in a series of five derived from Retail Economics’ report The UK Grocery Market: Five Key Trends to 2025. Epochal changes are taking place in the retail sector, in the second article we discuss how online shopping is here to stay. For retailers, brands and retail related professionals seeking insight into the impact of the crisis on the food and grocery sector, the full report provides data-driven insights and guidance for action.

View Full Report Here

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