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INDUSTRY INSIGHT US uncertainty A high degree of uncertainty relates to the economic outlook in the US, which is dependent on the impact of the recently agreed financial support from the new Biden administration and the vaccine rollout. We expect relatively flat growth over the next two years, but any growth we do see is likely to be driven by e-commerce and discount and value formats. The pandemic has slowed the gradual loss of share by supermarkets and hypermarkets as shoppers have consolidated their trips in larger stores. This trend is expected to continue. Suppliers have had unprecedented opportunity to capture new households during the pandemic, and focusing on retention and repeat purchase will help to consolidate the share gains from 2020. Robust growth in China Data suggests that most of China has been virus-free since April 2020, with growth for the grocery retail market expected to remain robust. The ongoing trend of consumers shifting towards online channels has accelerated and social platforms will continue to drive online traffic and sales. Consumers are increasingly demanding an ultra- convenience experience. Omnichannel services such as speedy home delivery, QR code scanning and self-checkout will be widely adopted. The rise in popularity of community stores and omnichannel retailing is changing the dynamic of the grocery market. Suppliers will need to broaden their customer base and reach potential shoppers in lower-tier cities, appealing to them with relevant products, because this is where the retailers are heading. Economic challenges in western Europe Western Europe in 2021 is facing expected economic challenges, so retailers will need to focus on price to remain competitive. Pre-Covid trends have been accelerated by the pandemic, which has hastened the switch to online across most markets, resulting in further investment in this channel. In the UK, following a dramatic shift of consumer spend from foodservice into grocery retail in 2020, sales growth will moderate as the national vaccination program allows the hospitality sector to reopen. Online is set to retain its elevated market share and big weekly shops will continue to remain popular. The winding down of financial support and rising unemployment will result in some households economising on grocery shopping while others may spend less, as the eating- out market begins to reopen and recover. Outlook for the year ahead Following the major boom in 2020, we foresee a moderate deceleration in 2021 followed by a return to pre-Covid growth in 2022, driven by several different factors: • Limited out-of-home opportunities While out of home is expected to bounce back in the second half of 2021, at-home consumption will remain elevated as many consumers will continue to work from home and social distancing will limit restaurants’ capacity. This trend will be reinforced by slow vaccine rollouts and thrifty spending behaviour by customers. • Continuation of disposable income support As many countries are putting together stimulus plans to recover from the economic effects of Covid-19, we expect disposable income to sustain grocery growth in most countries. • Slow return of tourism Tourism is likely to remain below pre-Covid levels for a few years. Countries that had high grocery spend derived from tourism will probably see their grocery market grow slower than countries less dependent on tourism. • Uncertainty continues Countries reacted differently to the pandemic. The prolonged nature of the pandemic in most regions adds a high degree of uncertainty to individual and global market performance in 2021 and beyond. We will continue to review and update our forecasts. Stay up to date with the latest global retail insights by signing up to the IGD Retail Analysis newsletter igd.com/newsletters. About IGD About Thibault Laurentjoye Thibault Laurentjoye is a senior data analyst at IGD. He leads the global forecasting process at Retail Analysis, IGD. He supervised the methodological changes in modelling implemented to quantify the effect of Covid-19 on grocery markets globally. IGD is a not-for-profit research and training organisation. It has a trading subsidiary that provides commercial insight services for the consumer goods industry. The profits from these commercial services fund its not-for-profit activities. Follow IGD’s communications team on Twitter for all the latest retail insights: @Comms_IGD APR, 2021 RETAIL WORLD 27