Sluggish online grocery sector set for seismic year
The percentage of UK grocery shopping that is done online is growing extremely slowly, according to Nielsen research.
Online grocery sales in Britain rose by 4.6% in 2017 to £6.6 billion, a third faster than in-store sales (+3.4%). Yet online’s share only increased from 6.3% to 6.4% across the year. “Despite the hype and attention given to online and its ability to change the way people shop, the reality seems rather different,” says Aylin Ceylan, Nielsen’s analytics business partner. “Although online spend increased by around £300 million last year, a 0.1% rise in market share is a rather pedestrian rate. Many will be surprised it's not faster but online shopping in grocery, unlike many other sectors, is much more a complementary option to stores not an ‘instead of’ option.”
Neither popularity nor basket size is an issue because “two-thirds of people who buy groceries do so online and the average online basket is around four times bigger than an in-store one.” The issue is firmly a “frequency one.” On average, people buy groceries online less than once a month (11 ‘trips’ a year) compared to nearly 21 a month in-store (247 per year).
The big shop and weekly trips account for twice the share of online trips (82%) than they do for in-store trips (44%). “In other words, the regular smaller ‘top-up’ shops account for just 18% of online trips compared to 57% for in-store.”
Delivery costs are often cited as a roadblock, however, Ceylan notes that, “whilst free delivery would have the biggest impact on people shopping online, only one in four shoppers say delivery costs are actually a barrier to buying groceries online.”
She believes that online’s ability to grow its share rests on the range of business models popping up to help shoppers, particularly when it comes to convenience, “2018 may be a seismic year for online grocery with the rise of voice assistants from Google and Apple, the Dash button from Amazon, the extension of Click & Collect to more supermarkets all making it easier for shoppers, as well as online meal-kit and ‘box’ subscriptions such as Hello Fresh and Graze offering new purchasing opportunities."
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