While the convenience retail market is likely to continue to grow over the coming years, retailers operating in this space should keep a close eye on competitors in the increasingly crowded food-to-go market, a new report from MCA Insight & HIM has found.
The Food To Go Market Report 2020, which analysed the growth of the UK food-to-go market, found that the sector will outperform the total UK eating out market this year, growing at a rate of 2.7% to be valued at £21.7 billion.
Convenience Market
The convenience retail sector is forecast to grow by £475 million over the next three years, to be valued at £6.7 billion by 2023.
However, this represents a fall in the share of the total market, to 28.3%, as the convenience sector fails to keep up with its rivals in the food-to-go (FTG) space, the report suggests.
“Convenience retail continues to be the biggest shareholder of the UK food to go market, highlighting strong demand from consumers and considerable growth opportunities for retailers – particularly with the £475m growth forecast over the next three years," commented Blonnie Walsh, head of insight at MCA Insight & HIM.
"However, frequency is declining and with participation arguably reaching its peak, retailers are under pressure to find ways of increasing spend to mitigate a drop in FTG footfall.”
Losing Share
While convenience retail remains the number one channel for lunch and snack occasions in the UK, its share is slipping, as coffee shops, cafés and other food-to-go options gain traction.
In addition, foodservice players are also outperforming grocery operators – foodservice players in the Top 10 FTG brands grew sales by 5.6% in 2019; whilst grocery retail operators in the Top 10 grew FTG sales by just 0.7%, according to the report.
“Value for money continues to grow in importance and is an area that is considered synonymous with convenience retail in the context of food to go," said Walsh. "In particular, meal deals are the number one mechanic for promotions.
"However, foodservice specialists are using innovation and technology to improve their offer beyond the traditional meal deal that has remained a staple within a c-store offering.”
According to MCA Insight & HIM, offering a broad range of products within a food-to-go offering is a cornerstone of success, with healthy living and other considerations gaining in prominence.
“Offering a wider variety of products within an FTG range is critical to success," said Walsh.
"Health has changed the landscape of FTG, with growth in vegetarian and vegan options, as well as other dietary requirements. In fact, 15% of FTG visitors have dietary requirements, so failure to offer a wider, more diverse range will see frequency continue to fall.”
© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine
