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Online Grocery Retailing - UK - March 2019

OVERVIEW
What you need to know
Products covered in this Report
EXECUTIVE SUMMARY
The market
Online growth slows in the second half of 2018….
Figure 1: Annual % change in the retail sales of food, by all food sales and online grocery sales, January 2017-January 2019
…meaning the market recorded its third successive year of slowing growth
Figure 2: Total online grocery market size (including VAT), 2013-23
Online grocery sales claim their greatest share of sales in November
Figure 3: Online grocery sales as a % of all food stores retail sales, January 2016-January 2019
UK facing an ageing population and declining household, throwing up challenges for the sector
Figure 4: Population projections, by age, 2013-23
Companies and brands
Tesco the dominant player
Figure 5: Leading online grocery retailers’ estimated market shares (excluding VAT), 2018
From same-day to in-home delivery, the online grocery sector continues to be a hotbed of innovation
Figure 6: Waitrose While You’re Away, October 2018
Of the grocers the Tesco brand is in good shape, but Amazon’s brand trumps all
Figure 7: Attitudes towards and usage of selected brands, September 2018
The consumer
Just under half do some online grocery shopping
Figure 8: Use of online grocery services, December 2018
Overall PC/laptops still the devices of choice for compiling orders
Figure 9: Devices used to shop online for groceries, December 2018
Nearly two thirds of users experienced an issue with an order in the past year…
Figure 10: Issues experienced with online grocery orders in the past year, December 2018
…with the most popular way to resolve an issue being to get on the phone
Figure 11: How customers resolved issues experienced with online grocery orders, December 2018
Tesco by far the most popular online grocery retailer
Figure 12: Retailers used to shop online for groceries in the past year, December 2018
A quarter would not be willing to pay for same-day delivery
Figure 13: Amount online grocery shoppers would be willing to pay for same-day delivery, December 2018
Much interest in a ‘unified’ app-based shopping experience
Figure 14: Attitudes towards shopping online for groceries, December 2018
Hesitancy towards buying fresh online still the biggest turn-off
Figure 15: Why they stopped shopping/have never shopped online for groceries, December 2018
What we think
ISSUES AND INSIGHTS
Same-day, tops-ups, sandwiches: What is the next driver of growth for the market?
The facts
The implications
Fire, break-up and new love: Ocado’s eventful start to 2019
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Online growth slows in the second half of 2018…
…meaning the market recorded its third successive year of slowing growth
Online grocery sales claim their greatest share of sales in November
UK facing an ageing population and declining household, throwing up challenges for the sector
MARKET DRIVERS
Rate of online grocery sales growth slower in 2018
Figure 16: Annual % change in the retail sales of food, by all food sales and online grocery sales, January 2017-January 2019
Online grocery store sales as a percentage of all food stores retail sales in 2018 same as 2017
Figure 17: Online grocery sales as a % of all food stores retail sales, January 2016-January 2019
Average weekly retail sales highest in December
Figure 18: Average weekly retail sales of all online grocery retailers, January 2016-January 2019
Food prices down year on year in 2018
Figure 19: Annual % change in the price of food and non-alcoholic beverages and alcoholic beverages and tobacco prices, January 2017-January 2019
End-of-year increase in some food prices
Figure 20: Annual % change in the price of core food categories, January 2018-January 2019
Broadband internet connection near universal
Figure 21: Devices used to access the internet in the last three months, 2016 and 2018
Core online grocery user demographic forecast to decline
Figure 22: Population projections, by age, 2013-23
Households downsizing could shrink size and value of online basket orders
Figure 23: UK households, by size, 2013-23
MARKET SIZE AND FORECAST
Growth slows for the third consecutive year
Figure 24: Total online grocery market size (including VAT), 2013-23
Figure 25: Total online grocery market size (including VAT), at current and constant prices, 2013-23
A small channel, but one that is gaining share
Figure 26: Online grocery sales as a % of all grocery retail sales, 2013-23
Store-based players dominate the market…
Figure 27: Share of total online grocery market, by type of online grocery operation, 2013-18
…but store-based sales are slowing
Figure 28: Online grocery sales by store-based grocery retailers (including VAT), 2013-23
Figure 29: Online grocery sales by store-based grocery retailers (including VAT), at current and constant prices, 2013-23
Ocado continues to be the driver for the pureplay market
Figure 30: Online grocery sales by online-only retailers (including VAT), 2013-23
Figure 31: Online grocery sales by online-only retailers (including VAT), at current and constant prices, 2013-23
Forecast methodology
THE CONSUMER – WHAT YOU NEED TO KNOW
Just under half do some online grocery shopping
Those aged 25-34 are key users
Overall laptop/desktops still the devices of choice for compiling orders
Nearly two thirds of users experienced an issue with an order in the past year
Tesco by far the most popular online grocery retailer
A quarter would not be willing to pay for same-day delivery
Much interest in a ‘unified’ app-based shopping experience
Hesitancy towards buying fresh online still the biggest turn-off
ONLINE GROCERY USE AND DELIVERY PASS OWNERSHIP 
Just under half are online grocery shoppers…
Figure 32: Use of online grocery services, December 2018
…although less than one in 10 do all of their grocery shopping online
Figure 33: Online grocery usage, 2015-18
A quarter (24%) have a delivery pass
Figure 34: Ownership of online grocery passes, December 2018
DEMOGRAPHICS OF ONLINE GROCERY SHOPPERS
Those aged 25-34 most likely to shop online
Figure 35: Online grocery use, by age, December 2018
Usage peaks among younger consumers of both sexes
Figure 36: Use and interest in online grocery of non-users, by age and gender, December 2018
Those with children in the household more likely to shop online for groceries
Figure 37: Online grocery usage, by parental status, December 2018
Convenience comes at a price
Figure 38: Online grocery usage, by socio-economic group, December 2018
Online grocery usage peaks in urban areas
Figure 39: Online grocery usage, by type of location lived in and area lived in, December 2018
DEVICES USED TO SHOP ONLINE FOR GROCERIES
Most use a laptop/desktop to complete online grocery orders
Figure 40: Devices used to shop online for groceries, December 2018
Younger online grocery shoppers more likely to shop via mobile
Figure 41: Devices used to shop online for groceries, by age, December 2018
Device users more likely to use the mobile site
Figure 42: How smartphone/tablet users shop for groceries online, by age, December 2018
ISSUES EXPERIENCED WITH ONLINE GROCERY ORDERS 
Nearly two thirds (63%) have experienced an issue with an online grocery order
Figure 43: Issues experienced with online grocery orders in the past year, December 2018
Just under a quarter (22%) have experienced more than three problems
Figure 44: Repertoire of issues experienced in the past 12 months when ordering groceries online, December 2018
Frequent users experience more issues
Figure 45: Issues experienced with online grocery orders in the past year, by level of online grocery usage, December 2018
Most call to resolve issues
Figure 46: How customers resolved issues experienced with online grocery orders, December 2018
Younger consumers more likely to complain via modern means
Figure 47: How customers resolved issues experienced with online grocery orders, by age, December 2018
RETAILERS SHOPPED WITH 
Tesco the most popular retailer to shop with online
Figure 48: Retailers used to shop online for groceries in the past year, December 2018
Asda appealing to the younger and less affluent
Figure 49: Online grocery retailers used in the past 12 months, by age and socio-economic group, December 2018
Most shopped with at least two retailers online in the past year
Figure 50: Repertoire of online grocery retailers shopped with in the past 12 months, December 2018
Tesco also the most popular grocery retailer overall
Figure 51: Retailers used to shop in-store for groceries in the past 12 months, December 2018
Figure 52: Retailers used to shop in-store for groceries in the past 12 months, by where online grocery shoppers shop for groceries online, December 2018
SAME-DAY DELIVERY
The market edges towards same-day delivery
Figure 53: Select metrics of same-day delivery services within the UK, February 2019
Most would only be willing to pay £1-£4.99 for same-day delivery
Figure 54: Amount online grocery shoppers would be willing to pay for same-day delivery, December 2018
Younger customers far more willing to pay for same-day delivery
Figure 55: Amount online grocery shoppers would be willing to pay for same-day delivery, by age, December 2018
Figure 56: Amount online grocery shoppers would be willing to pay for same-day delivery, by parental status, December 2018
Most plan, but most also think getting fresh as quickly as possible is important
Figure 57: Attitudes towards planning and delivery of fresh products, December 2018
ATTITUDES TOWARDS MOBILE APPS AND VOICE
Demand is there for a one-stop app
Figure 58: Attitudes towards online grocery shopping, December 2018
Younger consumers far more in favour of app integration
Figure 59: Agreement with attitudes towards online grocery shopping, by age, December 2018
More interest around using voice for assistance than for ordering
Figure 60: Attitudes towards voice and online grocery, December 2018
WHY THEY DON’T SHOP ONLINE FOR GROCERIES
Fresh still the main concern from those who don’t shop online for groceries
Figure 61: Why they stopped shopping/have never shopped online for groceries, December 2018
Younger consumers less put off by ordering fresh online
Figure 62: Why they stopped shopping/have never shopped online for groceries, by age, December 2018
Fresh is a key concern for those who have never shopped online for groceries
Figure 63: Reasons for not shopping online for groceries, by previous experience of or interest in using online groceries services, December 2018
LEADING RETAILERS – WHAT YOU NEED TO KNOW
Tesco the dominant player
From same-day to in-home delivery, the online grocery sector continues to be a hotbed of innovation
Ocado the biggest spender in 2018
Of the grocers the Tesco brand is in good shape, but Amazon’s brand trumps all
LEADING RETAILERS AND MARKET SHARE
Market shares: Tesco still dominant, but has lost share
Figure 64: Leading online grocery retailers’ estimated market shares (excluding VAT), 2018
Figure 65: Leading online grocery retailers’ estimated market shares (excluding VAT), 2016-18
Leading players: revenues
Figure 66: Leading retailers’ net online grocery revenues, 2016-18
Leading players: revenue breakdown
Figure 67: Leading online grocery retailers’ estimated total online revenues, by grocery and non-grocery, 2016-18
Smaller players
Figure 68: Smaller players, estimated market shares, 2016-18
Figure 69: Smaller online grocery players’ turnover, 2016-18
COMPETITIVE STRATEGIES – KEY METRICS 
Coverage and fulfilment
Figure 70: Selected leading online grocers’ coverage and fulfilment centres, 2018
Home delivery metrics
Figure 71: Selected leading online grocers’ delivery metrics, March 2019
Delivery passes
Figure 72: Selected leading online grocers’ delivery pass details, March 2019
Click-and-collect
Figure 73: Selected leading online grocers’ click-and-collect details, March 2019
ADVERTISING AND MARKETING ACTIVITY
Total sector advertising spend up 11.7% year on year in 2018
Figure 74: UK online supermarket/grocer/food retailers’ total recorded above-the-line, online display and direct mail advertising expenditure, 2014-18
Ocado is the sector’s highest advertising spender
Figure 75: Leading UK online supermarket/grocer/food retailers’ total recorded above-the-line, online display and direct mail advertising expenditure, 2014-18
Majority of advertising spend channelled through door drops
Figure 76: UK online supermarket/grocer/food retailers’ total recorded above-the-line, online display and direct mail advertising expenditure, by media type, 2014-18
Only half of the leading advertisers favour door drops
Figure 77: UK online supermarket/grocer/food retailers’ total recorded above-the-line, online display and direct mail advertising expenditure, by media type, 2018
Nielsen Ad Intel coverage
LAUNCH ACTIVITY AND INNOVATION
I want it now: grocers across Europe embrace same-day delivery
Figure 78: Supermercato24, March 2019
Figure 79: Buymie Ireland and Lidl, March 2019
Alexa, clean up in aisle four: retailers increasingly embrace voice commerce
Mini-supermarkets on wheels
Figure 80: Stop & Shop driverless vehicle, January 2019
Unattended in-home grocery delivery services
Figure 81: Waitrose While You’re Away, October 2018
Expanded pick-up points
Amazon France launches La boutique des Producteurs
Developing foodservice offering
Bol.com takes another leap into grocery deliveries
BRAND RESEARCH
What you need to know
Brand map
Figure 82: Attitudes towards and usage of selected brands, September 2018
Key brand metrics
Figure 83: Key metrics for selected brands, September 2018
Brand attitudes: Amazon provides the best online service
Figure 84: Attitudes, by brand, September 2018
Brand personality: Store-based retailers generally perceived as the most accessible
Figure 85: Brand personality – macro image, September 2018
Tesco seen as reliable
Figure 86: Brand personality – micro image, September 2018
Brand analysis
Amazon innovative, trusted and highly recommended by those who use it
Figure 87: User profile of Amazon, September 2018
Tesco reliable and accessible
Figure 88: User profile of Tesco, September 2018
Sainsbury’s trustworthy and ethical, but lacks cutting edge
Figure 89: User profile of Sainsbury’s, September 2018
Asda offers good value
Figure 90: User profile of Asda, September 2018
Morrisons lacks innovativeness and authoritativeness
Figure 91: User profile of Morrisons, September 2018
Iceland basic, but offers good value for money
Figure 92: User profile of Iceland, September 2018
Waitrose expensive and exclusive
Figure 93: User profile of Waitrose, September 2018
Ocado lowest brand awareness, lowest lifetime usage and lowest brand recommendation
Figure 94: User profile of Ocado, September 2018
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Data sources
Financial definitions
VAT
Abbreviations
Consumer research methodology
APPENDIX – MARKET SIZE AND FORECAST
Forecast methodology

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