UK grocery channel forecasts 2025-2030

The report offers a comprehensive view of the UK grocery market, outlining how all channels will grow over the next five years.

Grocery market is facing significant headwinds

Our latest forecast is more conservative  than recent years. This reflects the significant headwinds the UK economy and the grocery market face in the next five years. The central challenge faced by suppliers and retailers will be how to drive growth at a time when household budgets remain under sustained pressure.

As such, our recommendation for businesses is to prepare for weak economic growth, certainly over the next two years, but in all likelihood through to the end of the forecast period.

Shoppers can expect to see increases in disposable household income fall in 2026 and 2027, and although a recovery is expected in the latter half of the forecast period, a combination of persistent inflation and rising taxes will keep budgets under pressure.

IGD predicts the grocery market will grow by +4.3% in 2025, reaching £255 bn. From here, we expect the market to grow at a compound annual growth rate of +3.0%, with the market size climbing to £297 bn by the end of 2030.

Inflation will remain the primary driver of market growth

This will result in the grocery market performing in much the same way it did in the years leading up to the COVID-19 pandemic.

Following four years of consistent decline, we expect to see a return to real-term growth in 2025. Growth, adjusted for inflation, will be +0.9% for the year. However, this good news is tempered by the fact that real-term growth isn’t expected to remain at this level. Instead, it is likely to slow between 2026 and 2028, not passing 0.2%, before improving to 0.5% for the final years of the forecast period.

The market will continue to rely on inflation as its main source of growth. Inflation is expected to peak this year at +3.4% before falling back to +2.7% in 2027, where it will settle for the remaining years of the forecast.

Although the overall picture is gloomy, there is room for optimism, and there will be pockets of stronger growth.

Higher-earning households, more able to withstand the squeeze on budgets, are already heavily favouring quality over saving money when they shop. This trend is expected to continue.

Premium private label’s boom in sales will see it receive greater focus from retailers, whilst categories such as pet care and health and wellness, and the dine-in meal occasion are all expected to outperform the market.

Online and discount to lead market growth

Our latest forecasts predict the online channel will see the fastest growth rate. It will be closely followed by discount, with both channels outperforming the market.

Online can expect to see its leading retailers growing ahead of the wider grocery market, benefitting from improved infrastructure in warehouse capacity and automation and improvements to deliveries fulfilled from stores.

This will produce faster, more accurate order picking, which will lead to improved shopper satisfaction and the continued use of the channel. Changing shopper demographics will also provide a constant stream of online engaged shoppers as Gen Z and Millennials become increasingly active grocery shoppers.

Quick commerce will also form a key part of online growth, as retailers and delivery aggregators continue to invest in broadening their geographic reach and its availability throughout the day.

Discount’s growth remains heavily dependent on Aldi and Lidl’s performance and, in particular, the rate of new stores each discounter will open. Although the number of new stores opened in recent years has slowed, we expect that this will pick up, evidenced by both discounters targeting 40 new stores  in 2025.

The other key driver for discount will be the continued slow performance of the UK economy. The resulting pressure on household budgets will provide an ongoing push factor, driving shoppers to the discount channel.

Slower growth expected for convenience and  large stores

Supermarkets are expected to outperform hypermarkets, with the performance of the channels’ leading retailers set to continue. The upgrading of the store environment and increased space dedicated to food will keep sales strong. This will be complemented by partnerships with third parties and the provision of additional services, such as electronic vehicle charging and the collection of household furniture, driving footfall to stores.

We expect retailers in the early stages of their  turnarounds to impact the sales outlook, holding back overall growth for the supermarket channel. This will result in the channel growing inline with the wider grocery market.

The ongoing issues the convenience channel faces, with declining sales of tobacco and vape products, will result in the channel growing behind the market.

Within the channel, mults and co-ops are predicted to enjoy stronger growth than independents and symbols, benefitting from investment in new stores and reformatted store layouts.

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