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Online Grocery Retailing - UK - March 2013

“Without a hike in delivery charges or perhaps substantially higher minimum order values, online retailing for multichannel grocers is never likely to yield margins comparable to store-based shopping. But we think retailers can focus marketing communications on higher socio-economic groups to help mitigate the inherent financial disadvantages of retailing online.”

- John Mercer - European Retail Analyst

Some questions answered in this report include:

  • How big is m-commerce in grocery?
  • What is the role of stores in an online future?
  • Should Morrisons buy Ocado?
  • What services do shoppers want?
  • Can online retailing be truly sustainable?

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Table of contents

  1. Introduction

      • Definition
        • Financial definitions
          • VAT
            • Sales per store, sales per sq m
              • Other
                • Abbreviations
                • Executive Summary

                    • Sector size and forecast
                      • Figure 1: Online grocery retail sales and forecast (incl. VAT), 2007-17
                    • Market factors
                      • Companies, brands and innovation
                        • Market shares
                          • Figure 2: Leading online grocers’ shares of online grocery sales, 2011 and 2012
                        • Proportion of total sales
                          • Figure 3: Leading multichannel grocers’ estimated percentage of total sales generated online, 2008-12
                        • Online category allocation
                            • Figure 4: Breakdown of online product offer, by category, leading grocers, January 2013
                          • The consumer
                            • Usage of online grocery
                              • Figure 5: The consumer: Usage of online grocery shopping, November 2012
                            • Where they shop
                              • Figure 6: The consumer: Retailers used for most grocery shopping, online and online/in-store total, November 2012
                            • Reasons for not shopping online
                              • Figure 7: The consumer: Reasons for not shopping for groceries online, November 2012
                            • Mobile, tablet and smart TV shopping
                              • Figure 8: The consumer: New-tech shopping activities done or would consider doing, November 2012
                              • Figure 9: The consumer: New-tech shopping activities done or would consider doing, smartphone and tablet apps, November 2012
                            • Online services used or considered
                              • Figure 10: The consumer: Online shopping services used or would consider using, online grocery shoppers, November 2012
                              • Figure 11: The consumer: Online shopping services would consider using, non-online grocery shoppers, November 2012
                            • What we think
                            • Issues in the Market

                                • How big is m-commerce in grocery?
                                  • What is the role of stores in an online future?
                                    • Should Morrisons buy Ocado?
                                      • What services do shoppers want?
                                        • Can online retailing be truly sustainable?
                                        • Trend Applications

                                            • Inspire trend: Life Hacking
                                              • Inspire trend: Collective Intelligence
                                                • Mintel Futures: Human
                                                • Broader Market Environment

                                                  • Key points
                                                    • Economic context
                                                      • Figure 12: UK: Consumer confidence levels, February 2012-January 2013
                                                      • Figure 13: Retail prices index and average weekly earnings: Annual % change, July 2009-December 2012
                                                      • Figure 14: UK: Consumer prices index: Annual % change, January 2012-January 2013
                                                    • Demographic trends
                                                      • Figure 15: England: One-person households as percentage of all households (projected from 2008 data), 2008-28
                                                      • Figure 16: Great Britain: Mid-year population projections, proportion of over-65s, 2012-21
                                                  • Consumer Spending on Key Categories

                                                    • Key points
                                                      • Food and drink
                                                          • Figure 17: UK: Breakdown of spending on food, beverages and tobacco, 2012
                                                          • Figure 18: UK: Consumer spending on in-home food, beverages and tobacco (inc VAT), 2008-12
                                                        • Non-food FMCGs
                                                          • Figure 19: UK: Consumer spending on personal care, household and over-the-counter pharmaceutical products (inc VAT), 2008-12
                                                        • Total potential market
                                                            • Figure 20: UK: Estimated online grocery retail sales as proportion of spending on in-home food, beverages, tobacco and FMCGs, 2008-12
                                                        • Sector Size and Forecast

                                                          • Key points
                                                            • The sector forecast
                                                              • M-commerce
                                                                • Figure 21: Online grocery retail sales and forecast (incl. VAT), 2007-17
                                                                • Figure 22: Online grocery retail sales and forecast (incl. VAT), at current and constant prices, 2007-17
                                                              • Proportion of all grocery sales
                                                                • Figure 23: Online grocery sales as percentage of all grocers’ sector sales, 2007-17
                                                              • The Mintel forecast
                                                              • Strengths and Weaknesses

                                                                • Strengths
                                                                  • Weaknesses
                                                                  • The Consumer: Who Shops Online

                                                                    • Key points
                                                                      • What we asked
                                                                        • Usage of online shopping
                                                                          • Figure 24: The consumer: Usage of online grocery shopping, November 2012
                                                                          • Figure 25: The consumer: Proportion doing all or most of their grocery shopping online or having never shopped for groceries online, 2011-13
                                                                          • Figure 26: The consumer: Usage of online grocery shopping, average age/socio-economic group, November 2012
                                                                          • Figure 27: The consumer: Usage/non-usage of online grocery shopping, by presence of children in household, November 2012
                                                                          • Figure 28: The consumer: Participation in online grocery shopping, by retailers used for main grocery shop, selected retailers, November 2012
                                                                      • The Consumer: Where They Shop

                                                                        • Key points
                                                                          • What we asked
                                                                            • Where they shop
                                                                                • Figure 29: The consumer: Retailers used for most grocery shopping, online and online/in-store total, November 2012
                                                                              • By age and affluence
                                                                                  • Figure 30: The consumer: Main retailers used for online grocery shopping, average age and socio-economic group, November 2012
                                                                                • By main grocery retailer used
                                                                                    • Figure 31: The consumer: Usage of online grocery shopping, by retailer used for most grocery shopping whether online or in-store, November 2012
                                                                                  • By main grocery retailer used online
                                                                                      • Figure 32: The consumer: Usage of online grocery shopping, by retailer used for most grocery shopping online, November 2012
                                                                                  • The Consumer: Reasons For Not Shopping Online

                                                                                    • Key points
                                                                                      • What we asked
                                                                                        • Why they don’t shop for groceries online
                                                                                            • Figure 33: The consumer: Reasons for not shopping for groceries online, November 2012
                                                                                          • By age and affluence
                                                                                              • Figure 34: The consumer: Reasons for not shopping for groceries online, average age and affluence, November 2012
                                                                                            • By interest in online shopping
                                                                                                • Figure 35: The consumer: Reasons for not shopping for groceries online, by usage/interest in usage of online shopping, November 2012
                                                                                              • By grocery retailer used
                                                                                                  • Figure 36: The consumer: Reasons for not shopping for groceries online, by retailer used for most grocery shopping in-store, November 2012
                                                                                              • The Consumer: Mobile, Tablet and Smart TV Shopping

                                                                                                • Key points
                                                                                                  • What we asked
                                                                                                    • Activities online shoppers use or would consider
                                                                                                        • Figure 37: The consumer: New-tech shopping activities done or would consider doing, November 2012
                                                                                                        • Figure 38: The consumer: New-tech shopping activities done or would consider doing, smartphone and tablet apps, November 2012
                                                                                                      • Demographics: ‘Have done’
                                                                                                          • Figure 39: The consumer: New-tech shopping activities done, average age/socio-economic group, November 2012
                                                                                                        • Demographics: ‘Would consider’
                                                                                                            • Figure 40: The consumer: New-tech shopping activities would consider doing, average age/socio-economic group, November 2012
                                                                                                          • M-commerce and t-commerce activities, by frequency of online shop
                                                                                                              • Figure 41: The consumer: M-commerce and t-commerce activities done, by frequency of online grocery shopping, November 2012
                                                                                                          • The Consumer: Online Services Used or Considered

                                                                                                            • Key points
                                                                                                              • What we asked
                                                                                                                • The appeal of services to online and offline shoppers
                                                                                                                    • Figure 42: The consumer: Online shopping services used or would consider using, online grocery shoppers, November 2012
                                                                                                                    • Figure 43: The consumer: Online shopping services would consider using, non-online grocery shoppers, November 2012
                                                                                                                  • Usage of services by frequency of shop
                                                                                                                      • Figure 44: The consumer: Online shopping services used, by usage of online shopping, November 2012
                                                                                                                    • Demographics: online shoppers
                                                                                                                        • Figure 45: The consumer: Online shopping services used, average age and socio-economic group, November 2012
                                                                                                                        • Figure 46: The consumer: Online shopping services would consider using, average age and socio-economic group, November 2012
                                                                                                                    • The Consumer: Profiling Online Shoppers

                                                                                                                      • Key points
                                                                                                                        • Charting consumer breakdowns
                                                                                                                          • Demographic composition
                                                                                                                            • Figure 47: The consumer: Breakdown, by gender, November 2012
                                                                                                                            • Figure 48: The consumer: Breakdown, by age, November 2012
                                                                                                                            • Figure 49: The consumer: Breakdown, by socio-economic group, November 2012
                                                                                                                            • Figure 50: The consumer: Breakdown, by urban/rural, November 2012
                                                                                                                        • Who’s Innovating?

                                                                                                                          • Key points
                                                                                                                            • Morrisons ventures into the online market
                                                                                                                              • Flexible delivery and pick-up options for busy on-the-go consumers
                                                                                                                                • More ‘Dark Stores’ see the light
                                                                                                                                  • Independent operators tap into trend for specialist produce
                                                                                                                                    • Department stores target market for high end groceries and foodie gifts
                                                                                                                                    • Leading Retailers and Market Shares

                                                                                                                                      • Key points
                                                                                                                                        • Market shares in brief
                                                                                                                                          • Figure 51: Leading online grocers’ shares of online grocery sales, 2011 and 2012
                                                                                                                                        • Leading retailers
                                                                                                                                            • Figure 52: Leading online grocers’ estimated revenues (excl. VAT), 2008-12
                                                                                                                                            • Figure 53: Leading multichannel grocers’ estimated percentage of total sales generated online, 2008-12
                                                                                                                                          • Market shares in detail
                                                                                                                                            • Figure 54: Leading online grocers’ shares of online grocery sales, 2008-12
                                                                                                                                          • Average orders
                                                                                                                                            • Figure 55: Average online order value, Ocado and J. Sainsbury, 2011/12
                                                                                                                                          • Mobile capability
                                                                                                                                            • Other food and drink retailers
                                                                                                                                              • Figure 56: Major home shopping food specialists, total turnover (excl. VAT, incl. non-online sales), 2008-11
                                                                                                                                            • End-to-end fulfilment
                                                                                                                                              • Distribution developments
                                                                                                                                                  • Figure 57: Leading online grocers’ store/fulfilment centre numbers, March 2013
                                                                                                                                                • Collection innovations
                                                                                                                                                • Company Profiles

                                                                                                                                                    • Retailers’ propositions
                                                                                                                                                      • Figure 58: Leading online food retailers’ comparison data, 2013
                                                                                                                                                    • Profiling retailers’ shoppers
                                                                                                                                                      • Figure 59: Leading grocers: Index of participation in online shopping, by gender relative to overall index of participation in online shopping, November 2012
                                                                                                                                                      • Figure 60: Leading grocers: Index of participation in online shopping, by age relative to overall index of participation in online shopping, November 2012
                                                                                                                                                      • Figure 61: Leading grocers: Index of participation in online shopping, by socio-economic group relative to overall index of participation in online shopping, November 2012
                                                                                                                                                    • Amazon.com Inc
                                                                                                                                                      • Asda
                                                                                                                                                          • Figure 62: Asda’s online grocery product mix, based on count of available product lines on website, January 2013
                                                                                                                                                        • Ocado
                                                                                                                                                            • Figure 63: Ocado’s online grocery product mix, based on count of available product lines on website, January 2013
                                                                                                                                                          • J. Sainsbury
                                                                                                                                                            • Tesco
                                                                                                                                                                • Figure 64: Tesco’s online grocery product mix, based on count of available product lines on website, January 2013
                                                                                                                                                              • Waitrose
                                                                                                                                                                  • Figure 65: Waitrose’s online grocery product mix, based on count of available product lines on the website, January 2013
                                                                                                                                                              • Brand Communication and Promotion

                                                                                                                                                                • Key points
                                                                                                                                                                  • Adspend back on the rise in 2012
                                                                                                                                                                    • Figure 66: Total main media adspend in the UK online grocery retailing sector, 2009-12
                                                                                                                                                                  • Tesco dominates advertising landscape
                                                                                                                                                                    • Figure 67: Leading advertisers in the UK online grocery retailing sector, 2009-12
                                                                                                                                                                    • Figure 68: Share of main media adspend in the UK online grocery retailing sector, by company, 2012
                                                                                                                                                                  • Internet increasingly popular as advertising channel
                                                                                                                                                                    • Figure 69: Adspend in the UK online grocery retailing sector, by media type, 2011 and 2012
                                                                                                                                                                • Appendix – The Consumer: Who Shops Online

                                                                                                                                                                    • Figure 70: Usage of online shopping, November 2012
                                                                                                                                                                    • Figure 71: Most popular usage of online shopping, by demographics, November 2012
                                                                                                                                                                    • Figure 72: Next most popular usage of online shopping, by demographics, November 2012
                                                                                                                                                                • Appendix – The Consumer: Where They Shop

                                                                                                                                                                    • Figure 73: Retailers used for grocery shopping, November 2012
                                                                                                                                                                    • Figure 74: Usage of online shopping, by retailers used for grocery shopping, in-store and online, November 2012
                                                                                                                                                                    • Figure 75: Usage of online shopping, by retailers used for grocery shopping, in-store, November 2012
                                                                                                                                                                    • Figure 76: Usage of online shopping, by retailers used for grocery shopping, online, November 2012
                                                                                                                                                                    • Figure 77: Any retailers used for grocery shopping, by demographics, November 2012
                                                                                                                                                                    • Figure 78: In-store retailers used for grocery shopping, by demographics, November 2012
                                                                                                                                                                    • Figure 79: Retailers used for grocery shopping, by demographics, November 2012
                                                                                                                                                                • Appendix – The Consumer: Reasons For Not Shopping Online

                                                                                                                                                                    • Figure 80: Reasons for not shopping for groceries online, November 2012
                                                                                                                                                                    • Figure 81: Usage of online shopping, by most popular reasons for not shopping for groceries online, November 2012
                                                                                                                                                                    • Figure 82: Usage of online shopping, by next most popular reasons for not shopping for groceries online, November 2012
                                                                                                                                                                    • Figure 83: Retailers used for grocery shopping, by most popular reasons for not shopping for groceries online, November 2012
                                                                                                                                                                    • Figure 84: Retailers used for grocery shopping, by next most popular reasons for not shopping for groceries online, November 2012
                                                                                                                                                                    • Figure 85: Retailers used for grocery shopping, by most popular reasons for not shopping for groceries online, November 2012
                                                                                                                                                                    • Figure 86: Retailers used for grocery shopping, by next most popular reasons for not shopping for groceries online, November 2012
                                                                                                                                                                    • Figure 87: Most popular reasons for not shopping for groceries online, by demographics, November 2012
                                                                                                                                                                    • Figure 88: Next most popular reasons for not shopping for groceries online, by demographics, November 2012
                                                                                                                                                                • Appendix – The Consumer: Mobile, Tablet and Smart TV Shopping

                                                                                                                                                                    • Figure 89: Online shopping methods used or would consider using, November 2012
                                                                                                                                                                    • Figure 90: Usage of online shopping, by online shopping methods to download a grocery shopping app on a smartphone and download a grocery shopping app on a tablet computer, November 2012
                                                                                                                                                                    • Figure 91: Usage of online shopping, by online shopping methods used to add items to my online basket using a web browser on a smartphone and used to add items to my online basket using a web browser on a tablet, November 2012
                                                                                                                                                                    • Figure 92: Usage of online shopping, by online shopping methods to complete an online grocery purchase using a web browser on a smartphone and online shopping methods to complete an online grocery purchase using a web browser on a tablet, November 2012
                                                                                                                                                                    • Figure 93: Usage of online shopping, by online shopping to add items to my online basket by scanning items on a ‘shopping wall’ (picturing goods available to purchase with barcodes) using a smartphone and online shopping to shop for groceries online through an internet-enabled television, November 2012
                                                                                                                                                                    • Figure 94: Online shopping methods used to download a grocery shopping app on a smartphone and online shopping methods used to download a grocery shopping app on a tablet computer, by demographics, November 2012
                                                                                                                                                                    • Figure 95: Online shopping methods used to add items to my online basket using a web browser on a smartphone and using a web browser on a tablet computer, by demographics, November 2012
                                                                                                                                                                    • Figure 96: Online shopping methods used to complete an online grocery purchase using a web browser on a smartphone and a web browser on a tablet computer, by demographics, November 2012
                                                                                                                                                                    • Figure 97: Online shopping methods used to add items to my online basket by scanning items on a ‘shopping wall’ using a smartphone and an internet-enabled television, by demographics, November 2012
                                                                                                                                                                • Appendix – The Consumer: Online Services Used or Considered

                                                                                                                                                                    • Figure 98: Online shopping services used or would consider using, online grocery shoppers, November 2012
                                                                                                                                                                    • Figure 99: Usage of online shopping, by online shopping services used to collect online grocery orders from a drive-thru collection point and online shopping services used to collect online grocery orders from an in-store collection point, November 2012
                                                                                                                                                                    • Figure 100: Usage of online shopping, by online shopping services used to purchase a delivery pass, which, for a one-off fee, covers the cost of online grocery deliveries for a fixed period of time and online shopping services used to try a different online grocer for a single shop because of an introductory offer, November 2012
                                                                                                                                                                    • Figure 101: Usage of online shopping, by online shopping services used to return substituted products where the product I have ordered is not available and online shopping services used to return products where I think the shelf life is too short, November 2012
                                                                                                                                                                    • Figure 102: Usage of online shopping, by online shopping services used to pay a higher delivery charge for same-day delivery, November 2012
                                                                                                                                                                    • Figure 103: Retailers used for grocery shopping, by online shopping services used to collect online grocery orders from a drive-thru collection point and online shopping services used to collect online grocery orders from an in-store collection point, November 2012
                                                                                                                                                                    • Figure 104: Retailers used for grocery shopping, by online shopping services used to purchase a delivery pass, which, for a one-off fee, covers the cost of online grocery deliveries for a fixed period of time and online shopping services used to try a different online grocer for a single shop because of an introductory offer, November 2012
                                                                                                                                                                    • Figure 105: Retailers used for grocery shopping, by online shopping services used to return substituted products where the product I have ordered is not available and online shopping services used to return products where I think the shelf life is too short, November 2012
                                                                                                                                                                    • Figure 106: Retailers used for grocery shopping, by online shopping services used to pay a higher delivery charge for same-day delivery, November 2012
                                                                                                                                                                    • Figure 107: Retailers used for grocery shopping, by online shopping services used to collect online grocery orders from a drive-thru collection point and online shopping services used to collect online grocery orders from an in-store collection point, November 2012
                                                                                                                                                                    • Figure 108: Retailers used for grocery shopping, by online shopping services used to purchase a delivery pass, which, for a one-off fee, covers the cost of online grocery deliveries for a fixed period of time and online shopping services used to try a different online grocer for a single shop because of an introductory offer, November 2012
                                                                                                                                                                    • Figure 109: Retailers used for grocery shopping, by online shopping services used to return substituted products where the product I have ordered is not available and online shopping services used to return products where I think the shelf life is too short, November 2012
                                                                                                                                                                    • Figure 110: Retailers used for grocery shopping, by online shopping services used to pay a higher delivery charge for same-day delivery, November 2012
                                                                                                                                                                    • Figure 111: Retailers used for grocery shopping, by online shopping services used to collect online grocery orders from a drive-thru collection point and online shopping services used to collect online grocery orders from an in-store collection point, November 2012
                                                                                                                                                                    • Figure 112: Retailers used for grocery shopping, by online shopping services used to purchase a delivery pass, which, for a one-off fee, covers the cost of online grocery deliveries for a fixed period of time and online shopping services used to try a different online grocer for a single shop because of an introductory offer, November 2012
                                                                                                                                                                    • Figure 113: Retailers used for grocery shopping, by online shopping services used to return substituted products where the product I have ordered is not available and online shopping services used to return products where I think the shelf life is too short, November 2012
                                                                                                                                                                    • Figure 114: Retailers used for grocery shopping, by online shopping services used to pay a higher delivery charge for same-day delivery, November 2012
                                                                                                                                                                    • Figure 115: Online shopping services used to collect online grocery orders from a drive-thru collection point and online shopping services used to collect online grocery orders from an in-store collection point, by demographics, November 2012
                                                                                                                                                                    • Figure 116: Online shopping services used to purchase a delivery pass, which, for a one-off fee, covers the cost of online grocery deliveries for a fixed period of time and online shopping services used to try a different online grocer for a single shop because of an introductory offer, by demographics, November 2012
                                                                                                                                                                    • Figure 117: Online shopping services used to return substituted products where the product I have ordered is not available and online shopping services used to return products where I think the shelf life is too short, by demographics, November 2012
                                                                                                                                                                    • Figure 118: Online shopping services used to pay a higher delivery charge for same-day delivery, by demographics, November 2012
                                                                                                                                                                • Appendix – The Consumer: Online Services Used or Considered by Non-Online Shoppers

                                                                                                                                                                    • Figure 119: Online shopping services would consider using, non-online grocery shoppers, November 2012

                                                                                                                                                                Companies Covered

                                                                                                                                                                • Amazon.co.uk
                                                                                                                                                                • Asda Group Ltd
                                                                                                                                                                • Facebook, Inc.
                                                                                                                                                                • Heston Blumenthal
                                                                                                                                                                • J. Sainsbury
                                                                                                                                                                • John Lewis Partnership
                                                                                                                                                                • Marks & Spencer
                                                                                                                                                                • Ocado
                                                                                                                                                                • Riverford Organic Vegetables Limited
                                                                                                                                                                • Tesco (UK)
                                                                                                                                                                • Waitrose
                                                                                                                                                                • Wal-Mart Stores, Inc
                                                                                                                                                                • Wm Morrison Supermarkets
                                                                                                                                                                • YouTube, Inc.

                                                                                                                                                                Online Grocery Retailing - UK - March 2013

                                                                                                                                                                US $2,478.79 (Excl.Tax)