Table of Contents
Overview
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- What you need to know
- Products covered in this report
Executive Summary
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- The market
- Online continues to grow ahead of the wider grocery market
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- Figure 1: Total online grocery market size (including VAT), 2011-21
- Store-based retailers dominate the market
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- Figure 2: Share of total online grocery market, by type of online grocery operation, 2011-21
- Online grocery sales peak in the final quarter
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- Figure 3: Average weekly retail sales of all online food retailers, January 2014-January 2017
- Companies and brands
- Tesco accounts for a third of the market, but its share is falling
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- Figure 4: Leading online grocery retailer’ estimated market shares (excluding VAT), 2016
- Speed of delivery the focus of innovation in 2016
- Consumers have greater trust in the Amazon brand than rival grocers
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- Figure 5: Attitudes towards and usage of selected brands, October and December 2016
- The Consumer
- Just under half of consumers shop online for groceries
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- Figure 6: Online grocery usage, December 2016
- Younger consumers the target audience
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- Figure 7: Usage and attitudes to online grocery services, by age, December 2016
- Tesco the dominant player online
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- Figure 8: Where they shop online by Where they do a majority of their shopping and where else they shop, December 2016
- Delivery prices and minimum spends the biggest barrier to greater use
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- Figure 9: What would encourage online grocery use, December 2016
- Just under a quarter have a delivery pass
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- Figure 10: Ownership and interest in delivery passes, December 2016
- Same-day delivery: the next evolution for online grocery?
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- Figure 11: Attitudes to online grocery services, December 2016
- What we think
Issues and Insights
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- Getting Amazon in perspective
- The facts
- The implications
- Same-day delivery: a necessary evil?
- The facts
- The implications
- What about click-and-collect?
- The facts
- The implications
The Market – What You Need to Know
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- Online continues to grow ahead of the wider grocery market
- Store-based retailers dominate the market
- Online grocery sales peak in the final quarter
- Inflation on the rise
- Online access via smartphones on the rise
- The connected home presents an opportunity for online grocery services
Market Size and Forecast
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- Online continues to outperform the wider grocery market
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- Figure 12: Total online grocery market size (including VAT), 2011-21
- Figure 13: Total online grocery market size (including VAT), at current and constant prices, 2011-21
- Despite strong growth, online accounts for just 6% of total sector sales
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- Figure 14: Online grocery sales as a % of all grocery retail sales, 2011-21
- Store based players fight back in 2016
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- Figure 15: Share of total online grocery market, by type of online grocery operation, 2011-21
- The usual suspects dominate the store-based segment
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- Figure 16: Online grocery sales by store-based grocery retailers (Including VAT), 2011-21
- Figure 17: Online grocery sales by store-based grocery retailers (Including VAT), at current and constant prices, 2011-21
- Innovation is likely to drive the online-only segment
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- Figure 18: Online grocery sales by online-only retailers (including VAT), 2011-21
- Figure 19: Online grocery sales by online-only retailers (including VAT), at current and constant prices, 2011-21
- Forecast methodology
Market Drivers
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- Online continues to grow ahead of all grocery retail
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- Figure 20: Annual % change in the retail sales of food, by all food sales and online food sales, Jan 2014-Jan 2017
- Online takes its largest share in November…
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- Figure 21: Online food stores sales as a % of all food stores retail sales, Jan 2014-Jan 2017
- …but December shows the highest average sales
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- Figure 22: Average weekly retail sales of all online food retailers, Jan 2014-Jan 2017
- Sterling’s weakness is pushing prices up
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- Figure 23: Annual % change in the price of food and non-alcoholic beverages and alcoholic beverages and tobacco prices, Jan 2015-Jan 2017
- Core food categories trending upwards
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- Figure 24: Annual % change in the price of core food categories, Jan 2016-Jan 2017
- Device ownership: more own a smartphone than a laptop
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- Figure 25: Devices used to access the internet in the last three months, June 2013-September 2016
- Smart home: a big opportunity for online grocers?
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- Figure 26: Interest in making home more connected, March 2016
The Consumer – What You Need to Know
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- Just under half of consumers shop online for groceries
- Younger consumers are the target audience
- Tesco is the dominant player online
- Delivery prices and minimum spends the biggest barrier to greater use
- Just under a quarter have a delivery pass
- Same-day delivery: the next evolution for online grocery?
Online Grocery Usage
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- Just under half of consumers shop online for groceries
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- Figure 27: Online grocery usage, December 2016
- Total usage is plateauing but the number only shopping online is growing
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- Figure 28: Trend in online grocery usage, November 2014-December 2016
- Online shoppers continue to shift more of their shopping online
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- Figure 29: Changes in online grocery usage, December 2016
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- Figure 30: Changes in online grocery usage, by how they shop for groceries online, December 2016
Demographics of Online Grocery Use
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- Younger consumers more likely to shop online for groceries
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- Figure 31: Usage and attitudes to online grocery services, by age, December 2016
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- Figure 32: Usage of online grocery services, by age, December 2016
- Online far more popular with young families
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- Figure 33: Usage of online grocery services, by parental status, December 2016
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- Figure 34: Usage of online grocery services, by age of children in household, December 2016
- Online most popular in urban areas, particularly London
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- Figure 35: Usage of online grocery services, by type of area lived in, December 2016
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- Figure 36: Usage of online grocery services, by region lived in, December 2016
- Usage comes at a cost
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- Figure 37: Usage of online grocery services, by socio-economic goods, December 2016
Where They Buy
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- Tesco by far the most popular online grocery retailer
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- Figure 38: Where they shop for groceries online, December 2016
- Where they do a majority of their online shopping
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- Figure 39: Where they shop online by Where they do a majority of their shopping and where else they shop, December 2016
- Trend data: smaller players gaining
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- Figure 40: Where they shop for groceries online, December 2015 and December 2016
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- Figure 41: Trend data: Primary and secondary retailers used to purchase groceries online, December 2015 and 2016
- Online consumer bases skew younger
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- Figure 42: Where consumers shop for the majority of their groceries, by socio-economic group and age, December 2016
- What about the discounters?
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- Figure 43: Attitudes to a potential online grocery service from the discounters, December 2016
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- Figure 44: Attitudes to a potential online grocery service from the discounters, by retailer currently used to do the majority of shopping, December 2016
Ownership of and Attitudes to Delivery Passes
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- Around a quarter of online grocery shoppers have a pass
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- Figure 45: Ownership and interest in delivery passes, December 2016
- Growing number of online shoppers have a delivery pass
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- Figure 46: Changes in delivery pass ownership and attitudes, December 15 and December 16
- Those who shop online-only for groceries most likely to have a pass
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- Figure 47: Ownership of delivery passes, by how much of grocery shopping is done online, December 2016
- Most see delivery passes as good value, but many also acquired them at a discount
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- Figure 48: Attitudes to delivery passes, December 2016
What Would Encourage More Online Grocery Use
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- Cost still off putting
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- Figure 49: What would encourage online grocery use, December 2016
- Current shoppers: cost the main barrier to increased use
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- Figure 50: What would encourage greater online grocery use, December 2016
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- Figure 51: What would encourage online grocery use, by select age groups, December 2016
- Lapsed shoppers: freshness and substitutions key
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- Figure 52: What would encourage lapsed shoppers to come back to online, December 2016
- Non-users: those interested see delivery as the main barrier
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- Figure 53: What would encourage non-users to begin shopping online for groceries, December 2016
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- Figure 54: What would encourage non-users to begin shopping online for groceries, by interest levels in shopping online for groceries December 2016
Attitudes to Same-day Delivery, Non-foods, Mobile apps and Hygiene Standards
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- Same-day delivery: The next step for online grocery?
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- Figure 55: Attitudes to same-day delivery of online grocery orders, December 2016
- Mobile applications: work needed?
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- Figure 56: Attitudes to mobile applications and voice control, December 2016
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- Figure 57: Attitudes to mobile applications and voice control, by usage of online grocery services, December 2016
- A majority think a non-food range is important when choosing where to shop
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- Figure 58: Attitudes to online grocery services and non-foods, December 2017
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- Figure 59: Agreement to Attitudes to online grocery services and non-foods, by age, December 2016
- Concerns exist around the hygiene of online grocery services
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- Figure 60: Attitudes to hygiene standards of online grocery services, December 2016
Leading Retailers – What You Need to Know
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- Tesco accounts for a third of the market, but its share is falling
- Leading players ramp up fulfilment capabilities
- Ocado the biggest spender on advertising
- Speed of delivery the focus of innovation in 2016
- Consumers have greater trust in the Amazon brand than rival grocers
Leading Retailers and Market Shares
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- Tesco the market leader but facing increased pressure
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- Figure 61: Leading online grocery retailer’ estimated market shares (excluding VAT), 2016
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- Figure 62: Leading online grocer retailers’ estimated market shares (excluding VAT), 2014-16
- Online revenues
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- Figure 63: Leading online grocery retailers’ net internet revenues, 2014-16
- Leading players: breakdown of revenues
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- Figure 64: Leading online grocery retailers’ estimated total online revenues, by grocery and non-grocery, 2014-16
- Figure 65: Leading online grocery retailers’ online sales as % of their total UK sales, 2014-16
- Smaller players: market shares
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- Figure 66: Smaller online grocery players estimated market shares, 2014-16
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- Figure 67: Smaller online grocery players turnover, 2014-16
Competitive Strategies – Key Metrics
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- Coverage and fulfilment
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- Figure 68: Selected leading online grocers’ coverage and fulfilment centres, 2017
- Home delivery metrics
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- Figure 69: Selected leading online grocers’ delivery metrics, March 2017
- Delivery passes
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- Figure 70: Selected leading online grocers’ delivery pass details, March 2017
- Click and collect
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- Figure 71: Selected leading online grocers’ click-and-collect details, March 2017
- Amazon
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- Figure 72: Amazon: Key online grocery services metrics, March 2017
Advertising and Marketing Activity
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- Total sector advertising spend down 25.4% year-on-year in 2016
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- Figure 73: UK online supermarket/grocer/food total recorded above-the-line, online display and direct mail advertising expenditure, 2012-16
- Waitrose the only leading supermarket brand to increase spend year-on-year
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- Figure 74: leading UK online supermarket/grocer/food retailers total recorded above-the-line, online display and direct mail advertising expenditure, 2012-16
- Outdoor attracts the biggest percentage of total sector advertising spend
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- Figure 75: UK online supermarket/grocer/food total recorded above-the-line, online display and direct mail advertising expenditure, by media type, 2016
- Nielsen Ad Intel coverage
Innovations and Launch Activity
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- Continued emphasis on speed of delivery
- Tesco launches one-hour delivery in London
- Sainsbury’s weighs in with Chop Chop
- Amazon raises the bar with AmazonFresh and Morrisons at Amazon
- In Europe Carrefour and Albert Heijn trial one-hour services
- Walmart looks at how it can take a different approach to delivery
- Cornershop app promises 90-minute service in Mexico and Chile
- Operators look to increase convenience and accessibility
- Dash buttons allow consumers to order immediately
- Amazon begins to develop an own label offering
- Bus stop ordering
- HomeRefill aims to help consumers forget about grocery shopping
- Online grocery shopping for the visually impaired
- Operators seek to improve user experience and product quality
- Ocado invests in interface development
- Amazon addresses quality concerns in Italy
- Discounters wrestle with online conundrum
- Lidl launches Lidl Express click-and-collect store in Germany
- Kaufland first discounter to launch online delivery service
Brand Research
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- What you need to know
- Brand map
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- Figure 76: Attitudes towards and usage of selected brands, October and December 2016
- Key brand metrics
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- Figure 77: Key metrics for selected brands, October and December 2016
- Brand attitudes: Amazon has a strong platform to develop online grocery business
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- Figure 78: Attitudes, by brand, October and December 2016
- Brand personality: ethical concerns only black mark against Amazon
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- Figure 79: Brand personality – Macro image, October and December 2016
- Big four lacking the ‘X-factor’
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- Figure 80: Brand personality – Micro image, October and December 2016
- Brand analysis
- Amazon has strong platform to develop its grocery business
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- Figure 81: User profile of Amazon, December 2016
- Ocado struggles to differentiate itself
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- Figure 82: User profile of Ocado, December 2016
- Tesco shows notable improvement
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- Figure 83: User profile of Tesco, October 2016
- Sainsbury’s also lifts its game
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- Figure 84: User profile of Sainsbury’s, October 2016
- Asda loses ground in key areas
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- Figure 85: User profile of Asda, October 2016
- Morrisons regains lost ground
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- Figure 86: User profile of Morrisons, October 2016
- Waitrose in danger of losing its way
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- Figure 87: User profile of Waitrose, October 2016
Appendix – Data Sources, Abbreviations and Supporting Information
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- Data sources
- Financial definitions
- VAT
- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
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- Market size methodology
- Forecast Methodology
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