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The UK food & grocery market: Trends to watch out for

Full report: Structural Changes for UK Food & Grocery Sector

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4. Bigger brands joining forces

Tighter margins and tougher competition are leading to some of the bigger brands joining forces. This includes Tesco’s £3.7 billion acquisition of Booker announced in 2017, and the Co-op’s £143 million takeover of NISA a year later. 

5. The industry is getting creative with partnerships

Furthermore, the industry is getting creative with partnerships, looking both abroad – for example, Tesco and Carrefour’s 2018 partnership – and into new sectors, while Amazon has entered the supermarket arena with its acquisition of Whole Foods in the US.

6. Online food sales are expected to rise 

In general, the online food market has increased by 12% on average each year since 2010, and online food sales are expected to rise by 48% between 2017 and 2022.

Online food sales have more than doubled from 2010 to 2017

Online food sales have more than doubled from 2010 to 2017

7. Customers wanting to shop at places that care about the things they do

Shoppers expect retailers to do better, and be better. Convenience and good value is one way to attract customers, but a delightful experience – with extras like free coffee and sushi bars – can have a big impact. Customers also want to shop at places that care about the things they do, such as healthy living and sustainability.

 

What does this all mean?

To say that the industry is in for a bumpy ride might be an understatement, but it hints to what is in store for the sector. The cumulative effect of these future trends, dovetailed with advances in technology and greater societal moves fulfilling more political and ethical agendas, will arguably present the sector with a distinct set of more complex challenges throughout the 2020s. 

 

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Found this short article interesting?

This work was conducted by Retail Economics in partnership with Barclays Corporate Banking as part of a wider piece of research that focusses on a new era for UK food supply chains and the impact of Brexit. Here, we include an overview of the food and grocery sector since the turn of the century in Part 1 and look at current trends in Part 2. Part 3 focuses on the different Brexit outcomes and what this is likely to mean for the industry when it comes to costs and tariffs over the five-year post-Brexit period. Case studies are included, together with a look at Brexit tariffs, and lastly various industry trends to watch out for. 

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