Table of Contents
Introduction
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- Definition
- Abbreviations
Executive Summary
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- The sector
- Sales more than double in the online grocery sector
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- Figure 1: Online grocery sales as proportion of the overall grocery sector, 2006-11
- Forecast
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- Figure 2: Forecast of value sales in the UK online grocery sector, by value, 2006-16
- Market factors
- Non-foods driving e-commerce uptake
- Consumers remain under pressure
- Demographic changes to pose a challenge to the online channel
- Companies, brands and innovation
- The big five dominate the online grocery sector
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- Figure 3: Leading retailers’ estimated shares of online grocery retailing, 2010/11
- Tesco leads the way
- Ocado: No longer a vanity project?
- Embracing new technologies and services
- The consumer
- Majority still do not shop for groceries online
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- Figure 4: Shopping online for groceries, July 2011
- Women and young families most inclined to shop for groceries online
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- Figure 5: Shopping online for groceries, by gender, age and presence of own children in the household, July 2011
- The online channel captures only a small part of overall grocery spend
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- Figure 6: Proportion of total monthly grocery spending spent online, July 2011
- Wanting to see fresh produce is a key barrier to shopping online
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- Figure 7: Attitudes to grocery shopping, July 2011
- What we think
Issues in the Market
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- What are the main obstacles to online shopping?
- How can online grocers appeal to the growing ageing population?
- How much growth potential does online grocery shopping have?
- What services could offer shoppers greater convenience online?
Future Opportunities
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- Trend: Totophobia
- Trend: Click and Connect
Internal Market Environment
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- Key points
- Broadband growth
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- Figure 8: Broadband penetration at home, 2006-10
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- Figure 9: Broadband penetration, by age and socio-economic group, 2010
- Embracing e-commerce
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- Figure 10: Frequency of purchasing online, 2010
- Figure 11: Change in frequency of purchasing online, 2006-10
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- Figure 12: Frequency of purchasing online, by age and socio-economic group, 2010
- Non-food categories drive e-commerce
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- Figure 13: Types of products purchased online regularly, 2010
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- Figure 14: Highest growth rates in products purchased online regularly, percentage point change, 2007-10
- Convenience and price drive shopping destination
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- Figure 15: Deciding factors when shopping for food, drink and household products, 2010
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- Figure 16: Most important factors when shopping for food, drink and household products, by age and socio-economic group, 2010
Broader Market Environment
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- Key points
- Consumer confidence remains low
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- Figure 17: GfK NOP Consumer confidence index, January 2007-July 2011
- Inflation taking its toll...
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- Figure 18: Percentage change in Retail Prices Index vs earnings, 2008-11
- …particularly on food
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- Figure 19: Year-on-year inflation in food and non-alcoholic beverages and all items, 2007-11
- Figure 20: Year-on-year % change in value retail sales of food vs all retail sales, current prices, July 2009-July 2011
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- Figure 21: Year-on-year % change in retail sales of food vs all retail, constant (2006) prices, July 2009-July 2011
- Ageing population, new potential for online grocery?
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- Figure 22: UK population projections, by age, % change, 2011-16
- Number of one-person households set to see rapid growth
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- Figure 23: UK households, by size, 2011
- Figure 24: Forecast % change in the number of UK households, by size, 2011-16
Competitive Context
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- Key points
- Food grows share in consumer spending
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- Figure 25: Consumer spending, by category, 2010
- Figure 26: Share of in-home food and non-alcoholic drinks in total consumer spending, 2005-10
- Eating out feels the effect of consumer cutbacks
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- Figure 27: Growth in consumption of food at home vs eating out and takeaways, 2007-11
- The big four dominate food retail
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- Figure 28: Leading food retailers’ share of all food retail, 2010/11
Strength and Weaknesses in the Market
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- Strengths
- Weaknesses
Who’s Innovating?
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- Key points
- New services and m-commerce
- Bringing the online offline
- Click and collect
- Idea generation
- Embracing the social side of online
Market size and Forecast
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- Key points
- Online grocery slowly gaining share of all grocery sales
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- Figure 29: Online grocery sales as a proportion of the overall grocery sector, 2007-11
- Market size for online grocery
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- Figure 30: Value sales in the UK online grocery sector, 2006-16
- Strong growth in online grocery
- Online grocery market forecast
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- Figure 31: Value sales in the UK online grocery sector, 2006-16
- Forecast methodology
Retail Competitor Analysis
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- Key points
- Tesco retains lead online
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- Figure 31: Leading retailers’ estimated share of online grocery retailing, 2010/11
- Figure 32: Leading retailers’ estimated share of online grocery retailing, 2008-10
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- Figure 33: Top 15 online food and drink sites, by number of visits, average May-July 2011
- Tesco remains the dominant force
- Sainsbury’s maintains robust growth
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- Figure 34: Year-on-year change in total visits to sainsburys.co.uk, monthly visitors, August 2009-July 2011
- Asda’s sales also on the up
- Ocado holds its own
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- Figure 35: Year-on-year % change in total visits to Ocado, monthly visitors, August 2009-July 2011
- Waitrose to grow
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- Figure 36: Year-on-year change in total visits to waitrose.com, monthly visitors, August 2009-July 2011
- Box schemes
- A long tail of small specialists
- New and future entrants
- Amazon makes first steps in the UK food arena
- Morrisons to be the next grocer to move online?
- Online is not on the agenda for the Co-op
- Can M&S compete in online groceries?
Retailer Profiles
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- Figure 37: Leading online food retailers’ comparison data, 2011
- Amazon
- Asda
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- Figure 38: Asda’s online grocery product mix, by number of lines, 2011
- Ocado
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- Figure 39: Ocado product mix, by number of lines, 2011
- Sainsbury’s
- Tesco
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- Figure 40: Tesco’s online grocery product mix, by number of lines, 2011
- Waitrose
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- Figure 41: Waitrose online grocery product mix, by number of lines, 2011
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Brand Communication and Promotion
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- Key points
- Adspend recovers in 2010
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- Figure 42: Topline adspend in the UK online grocery retailing sector, 2008-11*
- Direct mail remains the medium of choice
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- Figure 43: Share of adspend in the UK online grocery retailing sector, by media type, 2008-10
- Ocado is the biggest spender
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- Figure 44: Share of adspend in the UK online grocery retailing sector, by company, 2008-10
- Bringing in-store promotions online
Consumer – Shopping Online for Groceries
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- Key points
- Use of the online channel for shopping for groceries
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- Figure 45: Consumer use of online shopping for groceries, July 2011
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- Figure 46: Consumer use of online shopping for groceries, July 2011
- Only two in five consumers shop online
- Women and young families are most inclined to shop online for groceries
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- Figure 47: Consumer use of online shopping for groceries, by gender, age and presence of own children in the household, July 2011
- Youngest and oldest consumers the least likely to shop online
- Socio-economic profile of uptake is broadening
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- Figure 48: Consumer use of online shopping for groceries, by socio-economic status, annual gross household income and household size, July 2011
- 16-24-year-olds are the keenest to shop online
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- Figure 49: Agreement with the statement ‘I have never bought groceries online, but would like to’, by age, socio-economic group and household size, July 2011
Consumer – Online Food Shopping Spend
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- Key points
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- Figure 50: Proportion of total monthly grocery spend online, July 2011
Consumer – Attitudes towards Online Shopping
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- Key points
- Ease of in-store shopping remains a challenge to getting consumers online
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- Figure 51: Attitudes towards ease of grocery shopping, July 2011
- Trust remains an issue
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- Figure 52: Attitudes towards fresh produce and completeness of online orders, July 2011
- Delivery issues affect half of consumers
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- Figure 53: Attitudes towards delivery of online orders, July 2011
- Opportunities remain to cater for those who see grocery shopping as a chore
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- Figure 54: Attitudes towards planning grocery shopping, July 2011
Consumer – Interest in New Services
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- Key points
- Verdict on new services
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- Figure 55: Usage of and interest in new features, July 2011
- Meal plans and nutrition tracking sparked high minority interest
- Barcodes of interest, mobile shopping less so
Consumer – Target Groups
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- Key points
- Three target groups
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- Figure 56: Marketing targets based on attitudes towards online food shopping, July 2011
- Store-centrics
- Online embracers
- Online sceptics
Appendix – Internal Market Environment
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- Figure 57: Trends in broadband penetration, 2006-10
- Figure 58: Broadband penetration, by demographics, 2010
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- Figure 59: Trends in frequency of making a purchase online, 2006-10
- Figure 60: Deciding factors when shopping for food, drink and household products, 2006-10
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- Figure 61: Frequency of making a purchase online, by demographics, 2010
- Figure 62: Most important factors when shopping for food, drink and household products, by demographics, 2010
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- Figure 63: Most important factors when shopping for food, drink and household products, by demographics, 2010
- Figure 64: Most important factors when shopping for food, drink and household products, by demographics, 2010
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- Figure 65: Most important factors when shopping for food, drink and household products, by demographics, 2010
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Appendix - Market Size and Forecast
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- Figure 66: Total value forecast for online grocery, 2006-16
- Figure 67: Value sales for online grocery, 2006-16
- Figure 68: Forecast of UK Online grocery sector, best and worst case, 2011-16
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Appendix – Consumer – Online Food Shopping Patterns
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- Figure 69: Online shopping for groceries, July 2011
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- Figure 70: Most popular online shopping for groceries, by demographics, July 2011
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- Figure 71: Next most popular online shopping for groceries, by demographics, July 2011
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Appendix – Consumer – Online Food Shopping Spend
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- Figure 72: Share of monthly grocery spend spent online, July 2011
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- Figure 73: Share of monthly grocery spend spent online, by demographics, July 2011
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- Figure 74: Share of monthly grocery spend spent online, by online shopping for groceries, July 2011
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Appendix – Consumer – Attitudes towards Grocery Shopping
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- Figure 75: Attitudes towards grocery shopping, July 2011
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- Figure 76: Agreement with the statements ‘Grocery shopping in-store is a chore’ and ‘It's easy to pop into the grocery store’, by demographics, July 2011
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- Figure 77: Agreement with the statements ‘I only buy food for a few days at a time, or less’ and ‘I tend to do a big weekly shop, and top up in between’, by demographics, July 2011
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- Figure 78: Agreement with the statements ‘Doing the grocery shopping takes up too much of my evenings/weekends’ and ‘I usually go to the grocery store by car’, by demographics, July 2011
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- Figure 79: Agreement with the statements ‘I make a meal plan for the week and only buy what I need’ and ‘I often choose what food to buy based on what looks good in-store’, by demographics, July 2011
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- Figure 80: Agreement with statement ‘I'm willing to pay more for a more pleasant shopping experience’, by demographics, July 2011
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- Figure 81: Attitudes towards grocery shopping, by most popular online shopping for groceries, July 2011
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- Figure 82: Attitudes towards grocery shopping, by next most popular online shopping for groceries, July 2011
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Appendix- Consumer – Attitudes towards Shopping Online for Groceries
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- Figure 83: Attitudes towards shopping online for groceries, July 2011
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- Figure 84: Agreement with the statements ‘It’s not worth paying the delivery charge’ and ‘I don't buy enough in one go for an online order’, by demographics, July 2011
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- Figure 85: Agreement with the statements ‘Waiting at home for delivery is inconvenient’ and ‘I prefer not to buy fresh food online because I won’t know the use-by dates’, by demographics, July 2011
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- Figure 86: Agreement with the statements ‘I like to see and touch fresh produce before buying’ and ‘I don't see the point of shopping online for groceries’, by demographics, July 2011
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- Figure 87: Agreement with the statements ‘The websites are slow to use’ and ‘I won't get the same deals as in-store’, by demographics, July 2011
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- Figure 88: Agreement with the statements ‘I'm concerned about not getting everything I ordered’ and ‘I'm concerned about not getting exactly what I ordered’, by demographics, July 2011
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- Figure 89: Agreement with statement ‘If I have to top up on my shopping at the supermarket, I might as well buy everything there’, by demographics, July 2011
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- Figure 90: Attitudes towards shopping online for groceries, by most popular online shopping for groceries, July 2011
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- Figure 91: Attitudes towards shopping online for groceries, by next most popular online shopping for groceries, July 2011
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Appendix – Consumer – Usage of and Interest in New Features
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- Figure 92: Usage of and interest in new features, July 2011
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- Figure 93: Usage of and interest in shopping online, collecting in-store, by demographics, July 2011
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- Figure 94: Usage of and interest in adding items to online shopping list by scanning barcode, by demographics, July 2011
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- Figure 95: Usage of and interest in adding items to online shopping list by mobile, by demographics, July 2011
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- Figure 96: Usage of and interest in recipes on the online store site, by demographics, July 2011
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- Figure 97: Usage of and interest in weekly menu planners on the online store site, by demographics, July 2011
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- Figure 98: Usage of and interest in nutritional tracking based on my online shopping, by demographics, July 2011
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- Figure 99: Usage of and interest in ordering by mobile, by demographics, July 2011
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- Figure 100: Usage of and interest in adding items to shopping list based on site reminder that I'm running out of something, by demographics, July 2011
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- Figure 101: Usage of and interest in adding items to shopping list based on site suggestion of items that suit together, by demographics, July 2011
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- Figure 102: Usage of and interest in new features, by most popular online shopping for groceries, July 2011
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- Figure 103: Usage of and interest in new features, by next most popular online shopping for groceries, July 2011
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Appendix – Consumer – Target Groups
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- Figure 104: Online shopping for groceries, by target groups, July 2011
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- Figure 105: Share of monthly grocery spend spent online, by target groups, July 2011
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- Figure 106: Attitudes towards grocery shopping, by target groups, July 2011
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- Figure 107: Attitudes towards shopping online for groceries, by target groups, July 2011
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- Figure 108: Usage of and interest in new features, by target groups, July 2011
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- Figure 109: Target groups, by demographics, July 2011
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