Mintel research highlights online grocery challenges

Mintel research highlights online grocery challenges

Sales of online groceries in the UK hit £12.3 billion in 2018, up 9% from 2017, according to Mintel. But growth is slowing with many shoppers put off by the likes of delivery charges.

Online’s share of total grocery retail sales was up from 6.1% in 2016 to 7% last year. Sales are, meanwhile, expected to reach £13.6 billion in 2019. Over the next five years, this space is forecast to account for 10% of all grocery shopping, with sales growing by 60% to reach £19.8 million in 2023. On the downside, however, the number of customers shopping online for groceries dropped from 48% to 45% between 2015 and 2018.

“Online grocery is, alongside the food discounters, one of the fastest-growing segments within the wider grocery sector. However, growth is slowing and the number of users is plateauing as retailers struggle to encourage new customers to try their services,” says Nick Carroll, Associate Director of Retail Research at Mintel.

Many consumers remain reluctant to buy fresh products online, concerns around substitutions persist and delivery charges are still off-putting, particularly in a market where value is key. Online services are also still best suited to the traditional big basket weekly shop, at a time when consumers are increasingly shopping on a top-up or when-needed basis.

“That is why we are seeing more retailers launch trial services designed to tap into the potential market for same-day or small-basket online grocery delivery. The difficulty is such services, at present, are costly to both the customer and the retailer, limiting their appeal and potential geographic roll-out,” says Carroll.

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