Sunday, December 8, 2024

Competition intensifies in UK market

A saturation of loyalty schemes and price matching promotions by UK grocers is fuelling consumer switching behavior, says data and analytics company GlobalData.

UK grocers must move beyond competing solely on price and prioritize innovation in their product offerings to attract a growing base of transient shoppers, it advises.

GlobalData’s latest report, “United Kingdom (UK) Food and Grocery Retailing Market Size, Trends, Consumer Attitudes and Key Players to 2028,” reveals that the UK food market, representing 66% of the total UK food and grocery sales, will grow at a CAGR of 2.9% between 2023 and 2028, reaching £143.8 billion. It will be the fastest-growing category within the food & grocery sector during this period.

Eleanor Simpson-Gould, Senior Retail Analyst at GlobalData says competition regarding pricing, product variety, and quality has intensified to a point where UK consumers are willing to visit several grocers for weekly food shops to get the best deals.

“Though discounts and promotions are a strong driver of food and grocery purchases for UK consumers, quality and range perceptions must underpin product development strategies as price concerns ease,” she said. “These factors offer a more significant point of differentiation in this highly competitive market.”

GlobalData’s How Britain Shops Survey reveals that the proportion of UK consumers who stated that branded products are appealing to them in the food and grocery market is significantly lower (50.7%) than that compared to range and value (87.3%) for money (81.1%). The low priority of branded goods and high priority of range and value for money drivers is favourable for grocers and indicates a strong preference for private-label ranges.

Ms Simpson-Gould says UK grocers must invest in private-label ranges to secure a clear differentiation from competitors, improve impulse spending opportunities and bolster volume growth.

“A strong private-label offer must include world food options, fresh bakery products, broad ready-meal ranges, snacking and food-to-go items,” she said.

“Tesco’s Finest range innovation in 2024, consisting of new summer picnic items and meal deal options, is an excellent example of successful private-label differentiation.”

The full GlobalData report can be found here.

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