Table of Contents
Executive Summary
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- Impact of COVID-19 on online grocery retailing
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- Figure 1: Short, medium and long- term impact of COVID-19 on online grocery retail, 24 March 2021
- The market
- Market size and forecast: online grocery sales grow by 75.2% in 2020…
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- Figure 2: All online grocery retail sales, 2015-25 (prepared on 15 March 2021)
- …driven by record weekly sales and basket sizes
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- Figure 3: Store-based online grocery retail sales, average weekly sales, January 2019-January 2021
- Store-based players react more quickly to heightened demand in the market
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- Figure 4: Split of all online grocery sales, by type of retailer, 2015-25
- Circumstances lay the groundwork for diversification in the makeup of the channel
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- Figure 5: Estimated composition of the online grocery sector by type of service, 2018-20
- The pandemic will leave the market forever inflated
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- Figure 6: All online grocery sales as a proportion of all grocery retail sales, pre- and post-COVID-19, 2015-25
- Leading retailers
- Major store-based players more easily capitalise on heightened demand
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- Figure 7: Leading online grocery retailers’ estimated market shares (excluding VAT), 2020
- Pandemic also gives smaller players a chance to shine
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- Figure 8: Alternative online food and drink retailers/services used since the COVID-19 pandemic began, December 2020
- However, disruption to services as a result of the pandemic has impacted some perceptions
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- Figure 9: Key metrics for selected brands, November 2020
- The consumer
- A record 59% of consumers shop online for groceries
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- Figure 10: Use of online grocery services, December 2020
- Demand driven by both new and existing users
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- Figure 11: Changes in online grocery use since the COVID-19 pandemic began, December 2020
- All demographics see an uptick, but it is most stark in groups with traditionally lower engagement in the channel
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- Figure 12: Any use of online grocery services, by age, 2019-20
- Much of this uptick has been circumstantial…
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- Figure 13: Drivers of online grocery use since COVID-19, December 2020
- …however, a majority will remain in the channel
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- Figure 14: Online grocery usage intentions post-pandemic, December 2020
- Home delivery remains key, but new modes of fulfilment show strong engagement
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- Figure 15: How groceries are typically received, December 2020
- Conditions of the pandemic serve to limit further growth in smartphone shopping
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- Figure 16: Devices used to shop online for groceries, December 2018-20
- A third of online grocery shoppers have shopped most often with Tesco since the pandemic began
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- Figure 17: Online grocery retailers used and used most often since the pandemic began, December 2020
- Overall satisfaction levels are high, but work is needed on recommendations, substitutions and click-and-collect
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- Figure 18: Satisfaction with the shopping experience of the retailer used most often since the COVID-19 outbreak began, December 2020
- Key underlying trends remain in the market
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- Figure 19: Attitudes towards online grocery services, December 2020
Issues and Insights
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- The impact of COVID-19 on traditional online grocery services
- The diversification of the online grocery market
The Market – Key Takeaways
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- Concern combined with lower levels of movement drive record sales
- All online grocery sales grow by 75.2% in 2020
- The groundwork for diversification has been laid in 2020
Market Drivers
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- Confidence nosedives as pandemic hits
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- Figure 20: The Financial Confidence Index, January 2016-March 2021
- The pandemic has caused a schism in finances
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- Figure 21: Changes in current financial situation, March 2020
- Online grocery sales accelerate during COVID-19 pandemic
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- Figure 22: Annual % change in all grocery retail sales and store-based online grocery retail sales, January 2019-January 2021
- Online share of retail sales reach record proportions during COVID-19 lockdowns
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- Figure 23: Share of all grocery retail sales accounted for by store-based online grocery retail sales, January 2019-January 2021
- Bigger orders drive online grocery average weekly sales
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- Figure 24: Store-based online grocery retail sales, average weekly sales, January 2019-January 2021
- COVID-19 crisis drives down food prices
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- Figure 25: Inflation, year-on-year change in food and non-alcoholic beverage and alcoholic beverages and tobacco prices, January 2019-January 2021
- Online shopping solutions to better suit the influx of older online shoppers’
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- Figure 26: Population size and age structure, 2015-25
Market Size and Forecast
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- COVID-19 drives rapid growth within the online grocery market
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- Figure 27: Short, medium and long-term impact of COVID-19 on online grocery retail, 24 March 2021
- Sales in the online channel near double in 2020…
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- Figure 28: All online grocery retail sales, 2015-25 (prepared on 15 March 2021)
- …which will naturally lead to a necessary rebalancing in the short term…
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- Figure 29: Total online grocery retail sales (including VAT), 2015-25 (prepared on 15 March 2021)
- …however the pandemic will lead to a greater role for online in the grocery sector moving forward
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- Figure 30: All online grocery sales as proportion of all grocery retail sales, pre- and post-COVID-19, 2021
- Market drivers and assumptions
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- Figure 31: Key drivers affecting Mintel’s market forecast, 2015-25 (prepared on 5 March 2021)
- Learnings from the last recession
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- Figure 32: Composition of online grocery shoppers, by household income, 2012-20
- Forecast methodology
Market Segmentation
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- Store-based players take share in the enlarged online grocery market
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- Figure 33: Split of all online grocery sales, by type of retailer, 2015-25
- Conditions favour store-based players
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- Figure 34: Online grocery sales by store-based grocery retailers (inc: VAT), 2015-25
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- Figure 35: Online grocery sales by store-based grocery retailers (inc: VAT), 2015-25
- Online-only players hamstrung by model in 2020
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- Figure 36: Online grocery sales by online-only retailers (including VAT), 2015-25
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- Figure 37: Online grocery sales by online-only retailers (including VAT), at current and constant prices, 2015-25
- Diversification of mission and service will bring change market composition
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- Figure 38: Estimated composition of the online grocery sector by type of service, 2018-20
The Consumer – Key Takeaways
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- Concern combined with convenience drive record engagement in online grocery
- The vast majority of current users will remain in the channel
- New necessary modes of fulfilment will bring new missions into the market
Impact of COVID-19 on Consumer Behaviour
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- COVID-19 impacts all aspects of behaviour in a very different 2020
- Vaccine rollout having a material impact on concern levels
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- Figure 39: COVID-19 Tracker: concern regarding exposure to COVID-19 and the impact of the pandemic on lifestyles, February 2020-March 2021
- High levels of concern push customers online and away from stores
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- Figure 40: COVID-19 Tracker: impact of the pandemic on in-store and online behaviour, April 2020-March 2021
- Stockpiling behaviours ease, but do indicate a level of ‘preparedness’ moving forward
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- Figure 41: COVID-19 Tracker: impact on availability and stockpiling behaviours, April 2020-March 2021
- Concerns around the environment have not gone away
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- Figure 42: COVID-19 Tracker: shifts in priority due to COVID-19, 4-12 February 2021
- Hygiene concerns with orders have been heightened by the pandemic
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- Figure 43: Attitudes towards the impact of COVID-19 on delivery and collection, August 2020
- Lower levels of concern could see a quicker snap-back following the second national lockdown
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- Figure 44: COVID-19 Tracker: activities looked forward to once lockdown end, May 2020 and February 2021
Online Grocery Use and the Impact of COVID-19
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- Number using online grocery services grows
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- Figure 45: Use of online grocery services, December 2020
- Growth driven by newer entrants…
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- Figure 46: Changes in online grocery use since the COVID-19 pandemic began, December 2020
- …and existing users relying on online more
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- Figure 47: Types of online grocery users as a proportion of all online grocery users, December 2018-20
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- Figure 48: Use of online grocery services, December 2018-20
- For a small minority the pandemic has caused them to move away from online grocery
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- Figure 49: Reasons for reducing use of online grocery shopping since the COVID-19 outbreak began, December 2020
Demographics of Online Grocery Shoppers
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- A year of significant shifts in the online grocery market
- Dramatic shift in older shoppers using online grocery services
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- Figure 50: Any use of online grocery services, by age, 2019-20
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- Figure 51: Usage of online grocery services, by age, 2019-20
- Families still crucial, but uptick in smaller households can alter the market
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- Figure 52: Usage of online grocery services, by parental status, 2019-20
- Significant growth in the number of lower-income households using online grocery services
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- Figure 53: Any use of online grocery services, by household income, 2019-20
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- Figure 54: Usage of online grocery services, by household income, 2019-20
- Gap between urban and rural usage narrows
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- Figure 55: Any use of online grocery services, by type of area/region lived in, 2019-20
Drivers of Online Grocery Use During the Pandemic
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- Unique conditions of the pandemic drive online grocery use…
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- Figure 56: Drivers of online grocery use since COVID-19, December 2020
- …however more time at home could drive longer-term growth
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- Figure 57: Drivers of online grocery use since COVID-19, by changes in use of online grocery services, December 2020
Intentions Post-pandemic
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- Overall only 5% of online grocery shoppers plan to step away from online services
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- Figure 58: Online grocery usage intentions post-pandemic, December 2020
- Older shoppers more likely to walk away
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- Figure 59: Online grocery usage intentions post-pandemic, demographic breakdown of those who plan to stop shopping online for groceries, December 2020
- A quarter of first time users will transition to doing all/most of their shopping online…
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- Figure 60: Online grocery usage intentions post-pandemic, by changes in online grocery use since the pandemic began, December 2020
- …while nearly two thirds of high value online shoppers will continue their behaviour
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- Figure 61: Online grocery usage intentions post-pandemic, by changes in online grocery use since the pandemic began, December 2020
Devices Used to Shop for Groceries Online
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- Less movement limits growth in smartphone penetration
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- Figure 62: Devices used to shop online for groceries, December 2018-20
- Younger shoppers still skew toward mobile, but 2020 has seen some move away
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- Figure 63: Devices used to shop online for groceries, December 2018-20
How Groceries Are Delivered
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- Home delivery the most popular fulfilment method
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- Figure 64: How groceries are typically received, December 2020
- Use of third-party courier aligns with wider trends in that market
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- Figure 65: How groceries are typically received, by age, December 2020
- Those most reliant on online grocery have a broader repertoire of services
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- Figure 66: How groceries are typically received, by level of online grocery shopping done, December 2020
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- Figure 67: Repertoire of ways online grocery orders are typically received, December 2020
Leading Grocery Retailers Used
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- Tesco the most popular retailer to shop with online
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- Figure 68: Online grocery retailers used and used most often since the pandemic began, December 2020
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- Figure 69: Online grocery retailers used, by online grocery shopped with most often since the COVID-19 pandemic began, December 2020
- COVID-19 forces switching behaviour, opening up retailers to new audiences
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- Figure 70: Forced changes in retailer usage due to lack of delivery slots, December 2020
- Iceland one of the few to gain proportion of shoppers in the enlarged market
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- Figure 71: Online grocery retailers shopped with, December 2018-20
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- Figure 72: Online grocery retailers used, by those who shopped online for groceries for the first time due to COVID-19
- Tesco taps into value and Asda into the older demographic
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- Figure 73: Demographic profile of online grocery retailers used, by age and household income, December 2020
Alternative Retailers Used
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- One in ten consumers have used HelloFresh since the pandemic began
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- Figure 74: Alternative online food and drink retailers/services used since the COVID-19 pandemic began, December 2020
- Alternative platforms speak to a young and affluent audience
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- Figure 75: Demographic profile of alternative retailers used, by average age and average household income, December 2020
Satisfaction with Buying Groceries Online
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- Overall satisfaction levels are high…
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- Figure 76: Satisfaction with the shopping experience of the retailer used most often since the COVID-19 outbreak began, December 2020
- …however delivery slots and substitutions need to be addressed
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- Figure 77: Key drivers of overall satisfaction with online grocery retailers, December 2020
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- Figure 78: Impact of the lack of delivery slots on retailer perceptions, December 2020
- Sainsbury’s performs strongly, while Asda leads on collection
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- Figure 79: Satisfaction with the shopping experience of the retailer used most often since the COVID-19 outbreak began, by leading retailers, December 2020
- Methodology
Attitudes towards Sustainability and Convenience
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- Significant interest in convenient solutions to sustainability concerns
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- Figure 80: Interest in sustainability initiatives, December 2020
- Saved lists key for frequency of shop, scheduling a logical extension of this
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- Figure 81: Convenience related behaviours of online grocery shoppers, December 2020
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- Figure 82: Convenience related behaviours of online grocery shoppers, December 2020
Leading Retailers – Key Takeaways
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- Rapid growth in demand drives record revenues for leading players
- Lack of delivery slots hit brand perceptions
- Rush of old and new delivery partners to fill gaps in logistical capabilities
Leading Retailers and Market Share
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- Major store-based players more easily capitalise on heightened demand
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- Figure 83: Leading online grocery retailers’ estimated market shares (excluding VAT), 2020
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- Figure 84: Leading online grocery retailers, estimated market shares, 2018-20
- Leading players: revenues
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- Figure 85: Leading retailers’ net online grocery revenues, 2018-20
- Leading players: revenue breakdown
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- Figure 86: Leading online grocery retailers’ estimated total online revenues, by grocery and non-grocery, 2018-20
- Smaller players: market share and revenue
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- Figure 87: Smaller online food and drink retailers, estimated and market shares, 2018-20
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- Figure 88: Smaller online food and drink retailers, turnover, 2018-20
Brand Research
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- What you need to know
- Brand map
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- Figure 89: Attitudes towards and usage of selected brands, November 2020
- Key brand metrics
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- Figure 90: Key metrics for selected brands, November 2020
- Brand attitudes: Amazon innovative and provides a great online service
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- Figure 91: Attitudes, by brand, November 2020
- Brand personality: extensive store presence enhances Asda and Tesco’s accessibility, upmarket grocer Waitrose exclusive
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- Figure 92: Brand personality – Macro image, November 2020
- Morrisons welcoming, Iceland basic
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- Figure 93: Brand personality – Micro image, November 2020
- Brand analysis
- Amazon near universal brand awareness and highest brand usage
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- Figure 94: User profile of Amazon, November 2020
- Tesco trusted, reliable, accessible and offers good value
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- Figure 95: User profile of Tesco, November 2020
- Sainsbury’s pricier than its nearest rivals, but more ethically minded
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- Figure 96: User profile of Sainsbury’s, November 2020
- Morrisons lacks innovation and cutting edge appeal and has the lowest lifetime usage of the Big Four grocers
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- Figure 97: User profile of Morrisons, November 2020
- Asda basic, but good value for money and accessible
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- Figure 98: User profile of Asda, November 2020
- Iceland inexpensive, but somewhat untrustworthy
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- Figure 99: User profile of Iceland, November 2020
- Waitrose & Partners expensive and exclusive, but does not provide a great online service
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- Figure 100: User profile of Waitrose & Partners, November 2020
- Ocado lowest brand usage and least recommended by those who have used it
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- Figure 101: User profile of Ocado, November 2020
Launch Activity and Innovation
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- Leading courier foodservice delivery firms pivot toward grocery due to COVID-19
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- Figure 102: Co-op Deliveroo in-store activation, December 2020
- Existing couriers joined by a host of new entrants
- Centralised distribution in the local area, the future?
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- Figure 103: Getir, IMAX Waterloo advertisement, March 2021
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- Figure 104: Gorillas order fulfilment in-centre, March 2021
- Figure 105: Weezy advertisement, London March 2021
- Autonomous robot and drone home grocery deliveries
- Eco-friendlier online grocery deliveries
- Zero-waste online grocer
- Making greener choices easier for online grocery shoppers
- 100% vegan online supermarket
Advertising and Marketing Activity
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- Near-53% year-on-year fall in total sector advertising spend in 2020
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- Figure 106: UK online supermarket/grocer/food retailers’ total recorded above-the-line, online display and direct mail advertising expenditure, 2016-20
- Online-only Ocado is the sector’s biggest advertising spender
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- Figure 107: Leading UK online supermarket/grocer/food retailers’ total recorded above-the-line, online display and direct mail advertising expenditure, 2016-20
- A third of advertising expenditure channelled through door drops
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- Figure 108: UK online supermarket/grocer/food retailers’ total recorded above-the-line, online display and direct mail advertising expenditure, by media type, 2019-20
- Leading advertisers favour different media types
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- Figure 109: Leading UK online supermarket/grocer/food retailers’ total recorded above-the-line, online display and direct mail advertising expenditure, by media type, 2020
- Nielsen Ad Intel coverage
Appendix – Data Sources, Abbreviations and Supporting Information
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- Data sources
- Financial definitions
- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
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- Forecast methodology
Appendix – Key Driver Analysis
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- Interpretation of results
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- Figure 110: Overall satisfaction with online grocery retailers – Key driver output, December 2020
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- Figure 111: Satisfaction with online grocery retailers – Key driver output, December 2020
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