European food retail grows thanks to discounters and convenience stores

European food retail grows thanks to discounters and convenience stores

Major markets like Russia and Romania are the engine that drive the European FMCG branch’s growth. Discounters and convenience stores continue to expand their reach, according to the international research organization IGD.

Local retailers expand

Over the next five years, food sales will grow three times as fast in Central and Eastern Europe as compared to Western Europe. The European food retail industry will grow 3.8 % annually in that same time frame, but the annual growth for Central and Eastern Europe will be 6.5 % compared to 2.4 % for Western Europe.

 

"Many local retailers, including X5 Retail GroupLenta and the discounters, have planned major expansion plans for markets like Russia and Romania, where there have only been limited market consolidation efforts. This will speed up the region’s growth”, IGD’s Milos Ryba said.

 

Discount will become primary store

Even though large stores will continue to dominate, he also forecasts discounters to display the most dynamic turnover growth by 2022 thanks to new store openings and an update for its current store network. Discounters want to become the primary destination for more customers and that is why they will increase their presence in city centres, urban areas and prime shopping streets.

 

"Many discounters will expand their product range in order to remain relevant for the contemporary customer. Tapping into the food-to-go, prepared meals and premium product ranges, discounters will continue to attract new customers and strengthen their position in the market.”

 

New convenience formulas

"The convenience formula will also continue to perform well, with strong growth across Europe. Many multichannel retailers have turned their investments towards the convenience formulas, adapting their store formulas and product ranges to local needs. This is also to meet a customer’s diverging shopping needs.”

 

That is definitely true for the three largest retailers in this branch: conveneience stores have gained importance in Carrefour’s strategy until 2022. It has created formulas that cater towards specific needs, like food-to-go and organic food. Magnit’s convenience formula enlarges its presence in Western Russia’s major cities, quickly expanding its store network. Tesco’s strategy evolved from a larger store network to increased convenience and local product ranges.

 

European hypermarkets and supermarkets invest in new formulas, like in-store restaurants and additional services like pharmacies and store franchises. “Hypermarkets and supermarkets are still an important part of many retailers’ omnichannel strategy. For instance, they have added pick-up locations, allowing customers to combine a store visit with their online purchases.”