A record 59% of UK consumers shopped online for groceries in 2020, helping to drive record sales in the channel. The COVID-19 pandemic encouraged (in some cases, forced) new customers to enter the market, with 7% of current online grocery shoppers using online services for the first time. However, most of the uptick in demand came from existing users, with 53% of pre-pandemic online grocery shoppers doing more of their grocery shopping through the channel as a result of COVID-19.

The obvious impact of this uptick in consumer engagement in the online channel has been a rapid acceleration in sales, with all online grocery sales growing by 75.2% in 2020 to reach £22.3 billion and account for a record 11.4% of all grocery sales. The January 2021 lockdown and slow roadmap out of the peak of the pandemic will give further opportunities for the online channel to capitalise, and this prolonged period of heightened demand will leave a legacy impact, with the market expected to be £4.9 billion bigger in 2025 than our pre-pandemic expectations.

The major threat for the channel is that this uptick in usage was purely circumstantial; however, the indications are that most currently utilising online grocery services will remain in the channel, with just 5% saying they will stop shopping online for groceries once the peak of the pandemic has passed. The threat to the market leaders is that the legacy boost to the online channel will bring greater interest and new retailers and forms of service into the market, diversifying what it means to trade food and drink online and take a share of spending away from traditional ‘big-basket’ services.

While a threat to leading players, it is this diversification of missions shopped online which brings the greatest opportunity moving forward. The greater role for businesses like Deliveroo means trading food and drink online is now accessible to all grocery retailers, including convenience, while the pandemic gave a much larger platform to alternative retailers, such as Hello Fresh, and those brands who trade D2C. That will be the legacy of the pandemic – not only opening the channel up to new shoppers but to new services and new thinking about what it means to serve in-home food and drink demand online.

• The impact COVID-19 has had on the size and the shape of the online grocery market

• The number of consumers shopping online, and the key shifts in demographics using the channel as a result of COVID-19

• Consumer intentions post-pandemic in their online grocery use

• How groceries are delivered and how this may adapt in light of increased demand

• Key leading retailer metrics, including market shares in 2020

• Satisfaction with the retailer used most often as a result of COVID-19

The first COVID-19 cases were confirmed in the UK at the end of January 2020, with a small number of cases in February. Rapidly rising case numbers led to the first national lockdown, starting on 23 March. It was not until 15 June that non-essential stores were allowed to re-open, followed by pubs, restaurants, hotels and hairdressers on 4 July, and many beauty businesses on 13 July.

By September, it had become clear that the UK was at the start of a second wave, and social distancing measures were intensified. Continued increases in infection numbers led to Wales implementing a two-week national lockdown from 19 October, England announcing a month-long lockdown from 5 November, and Scotland introducing a new five-level system of coronavirus restrictions.

Despite these restrictions, however, case numbers continued to increase. All four UK nations tightened restrictions further in January 2021, effectively leading to a full UK-wide lockdown.

On 22 February, Boris Johnson announced the roadmap to an easing of restrictions in England, starting with the re-opening of schools on 8 March, followed by easing of restrictions on outdoor gatherings on 29 March, and with a hoped end to all restrictions by 21 June. The Welsh and Scottish governments also gave more details on their plans to ease restrictions, with both nations taking a slightly more cautious approach to the one planned for England.

The UK’s vaccination programme started on 8 December 2020, and with the Pfizer-BioNTech, Moderna and Oxford-AstraZeneca vaccines licenced for use in the UK, the government aims to offer a first dose of the vaccine to 32 million people by mid-April.

Mintel’s economic assumptions are based on the Office for Budget Responsibility’s central scenario included in its March 2021 Fiscal Sustainability Report. After the fall of 9.9% over the course of 2020, the scenario suggests that UK GDP will grow by 4% in 2021 and 7.3% in 2022.

GDP is not expected to return to pre-COVID levels until the second quarter of 2022, although this is six months earlier than the OBR forecast in November 2020, mainly because of the faster than expected rollout of vaccines.

Unemployment is expected to peak at 6.5% in the fourth quarter of 2021. As with GDP, this is more positive than the OBR’s November forecast, but the OBR does raise the prospect of long-term scarring on employment, especially in the more exposed retail and hospitality sectors.

This Report includes both market and consumer data around the retailing of grocery products online.

Our market size for online grocery includes:

• Major grocers’ online sales of food and drink and other grocery products

• Online-only grocers’ sales (eg Ocado)

• Specialist food and drink retailers’ online sales

• Online-based food box and recipe box delivery schemes

It excludes:

• Foodservice delivery (eg restaurant or fast-food takeaways ordered online). However, grocery delivery via predominantly foodservice platforms (eg Deliveroo) is included.

• Home delivery of groceries not ordered online