The UK food and grocery market is forecast to grow by 10% between now and 2021, giving it a value of £197bn, according to the latest forecasts from the food and grocery research body IGD.

Convenience will remain the third fastest-growing sector, according to IGD, with sales increasing 11.7% from £35.5bn this year to £41.9bn in 2021, but it will see a slowdown in expansion.

Online will remain the fastest-growing format, increasing 68% from £10.5bn to £17.6bn over the same period, followed by the discounters.

It also predicts that hypermarkets and supermarkets are set to see a stabilisation in sales by 2021, as large stores evolve to reflect the changing needs of shoppers, and they will still hold more than half of the market.

Joanne Denney-Finch, IGD chief executive, said: “It has been a challenging time for food and grocery retailers, with an extremely competitive market dampened by unprecedented food and drink deflation. Yet we believe there will be a modest recovery across food and grocery over the next five years, as inflation picks up and shoppers start to benefit from the investments that retailers are making in their stores and ranges.

“For shoppers, it’s an exciting time, with access to a huge choice of quality food and groceries, purchased in whatever way they find most convenient. For those retailers who operate in more than one format, shopping trips can often overlap, underpinning each other to drive customer loyalty. For example, an online grocery shopper who has opted to use the click and collect service at a larger supermarket might also pop into the store while there, to make use of the many services or concessions on offer inside. It’s all about giving shoppers more reasons to visit a store.”

She said convenience operators are also finding it tougher to find new store sites, adding “Convenience stores have historically been seen as the ‘go-to’ channel for a top-up shop and 63% of all shoppers still visit these stores for that reason.

“However, they are now facing increased competition from other channels, such as discounters and supermarkets. We still expect convenience to grow, but that is slowing down as the sector comes to maturity and other channels compete more effectively for the top-up pound.”

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