Retail and foodservice ‘will grow in 2021’


IGD’s latest Eating In vs Dining Out report reveals that both retail and foodservice will grow in 2021, taking the entire industry almost back to its pre-Covid levels.

The entire UK food and drink market will expand by 12% in 2021 with both retail and foodservice set to grow this year, according to the latest Eating In vs Dining Out report produced by insight and analysis providers IGD, in collaboration with foodservice consultant Peter Backman.

The forecasted increase is driven by strong retail growth from January to March and foodservice sales which will begin to strengthen from July onwards as pent-up demand for socialising boosts the sector. Foodservice will grow by 54% (£18.6bn) vs 2020, says the report.

Some of this growth will impact retail, but elevated levels of home working, at-home social gatherings and financially stretched shoppers who are unable to divert spend to eating out, will see the retail sector continue to grow.

Nicola Knight, Senior Retail Analyst at IGD, said: “The latest industry growth forecasts, combined with the Office for Budget Responsibility predictions for a slightly quicker than expected economic recovery, are reassuring for both retailers and operators. The reopening of the eating out sector and lifting of social restrictions will increase social dining both in and out of home and will give the market as a whole a significant boost. The value of retail is up £1.8bn on 2020 and £14.5bn on 2019.

According to the report, the key to unlocking opportunity for both retailers and operators is understanding the K-shaped recovery and its influences on shopper behaviour.

The recovery will see higher income households who have accrued substantial savings – estimated by the Office of National Statistics to be a significant pot of over £100bn – sit in stark contrast to lower income households who face a financial challenge due to the ending of government support and rising unemployment, which will be particlarly prevalent in younger people.

Knight continues: “Discount is likely to be the fastest growing channel in retail as financially-challenged shoppers look for value. Yet, on the flipside, more affluent shoppers, particularly amongst older age groups, will be looking to trade-up on both every day and occasion products, to utilise their disposable income. Retailers will need to pay close attention to pricing strategy and product innovation to keep shoppers engaged and loyal.”

  • Food and drink industry forecast to grow 12% in 2021, taking it to 97% of its 2019 pre-Covid level
  • Foodservice to be boosted by 54% (£18.6bn), reaching 71% of 2019 levels
  • Retail value to increase by £1.8bn
  • Total forecasted value of food and drink market is £195.4bn in 2021

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