While Western European store-based retailing was badly hit by Coronavirus (COVID-19) in 2020, grocery retailers, which remained open throughout lockdowns, experienced a spike in sales due to the pandemic. Supermarkets, in particular, benefited from a consumer preference for one-stop shopping, minimising time spent outside the home and the number of locations visited. However, after the boost to sales in 2020, grocery retailing will generally see stagnating sales over the forecast period.
This report comes in PPT.
Grocery retailing was posting very modest growth rates in the years immediately prior to 2020, with price competition hitting players’ margins and increasing levels of maturity being seen in many of the channels. Sales in two of the biggest markets – France and the UK – were actually stagnating in 2018 and 2019, with growth proving hard to come by. Hypermarkets were struggling in France, widely associated with wanton indulgent consumerism and seen as part of an identikit, cookie-cutter retail infrastructure. Furthermore, bulk shopping is less important for the increasing numbers of single-person and two-person households.
Unlike the rest of store-based retailing, grocery retailers benefited from the pandemic during 2020. Performances improved in all but forecourt retailers, which was hit by the restrictions placed on mobility and travel as well as people working from home. Otherwise, with consumers needing to prepare more meals at home during lockdowns, due to foodservice establishments being closed and work-from-home mandates, grocery retailing sales went up, particularly in supermarkets, convenience stores and discounters.
Following the unexpected strong growth in 2020, there will be a dip in sales in grocery retailing in 2021. This will then be followed by very modest annual growth rates in real value terms over the rest of the forecast period. Price competition will remain a factor in suppressing value growth, with discounters continuing to expand and supermarkets/hypermarkets looking to hit back via, among other things, lowering their prices. E-commerce and click-and-collect services will continue to grow in popularity, while sales of organic products should also be a key growth area for grocery retailers in 2020-2025.
Retail is the sale of new and used goods to consumers from a business for personal or household consumption from retail outlets, kiosks, market stalls, vending, direct selling and e-commerce. Retail is the aggregation of Retail Offline and Retail E-Commerce. Excludes specialist retailers of motor vehicles, motorcycles, vehicle parts. Also excludes fuel sales, foodservice sales, rental transactions, and wholesale sales (e.g. Cash and Carry). Sales value excluding or including VAT/Sales Tax. Retail also excludes the informal retail sector. Informal retailing is retail trade which is not declared to the tax authorities. Informal retailing encompasses (a) sales generated by unregistered and unlicensed retailers, i.e. retailers operating illegally, and (b) any proportion of sales generated by a registered and licensed retailer that is not declared to the tax authorities. Unregistered and unlicensed retailers operate predominantly (although not exclusively) as street hawkers or operate open market stalls, as these channels are harder for the authorities to monitor than permanent outlets. Activities in the illegal market, which is usually understood to refer to trade in illegal, counterfeit or stolen merchandise, are included within our definition of informal retailing. Activities in the “grey market”, which is usually understood to refer to trade in legal merchandise that is sold through unauthorized channels – for example cigarettes bought legally in another country, legally imported, but sold at lower prices than in authorized channels – will be included as informal retailing if no tax is paid on sale by the retailer. However if the retailer pays tax – for example on cigarettes bought legally in another country but sold at a lower price than standard – the sale is included within formal retail.
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