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Online Grocery Retailing - UK - March 2016

“The online grocery market continues to grow in double digits but remains a niche market in terms of the wider grocery market. However, the shift away from superstores to more convenient shopping channels is certainly benefiting the market.”
– Nick Carroll, Retail Analyst

This report answers the following key questions:

  • Can Amazon succeed in the online grocery market? 
  • Delivery passes: A way to tap into top-up shopping? 
  • Recipe boxes: Making online grocery more convenient?

After years of rumours Amazon is finally about to launch a full online grocery offer in the UK. Little detail, at the time of writing, is currently known about this offering other than Morrisons will be supplying the retailer with a range of ambient and fresh food products. It is to be seen if the new service will be given a new name, such as Amazon Fresh which is used in the US, or if it will be an extension of the Amazon Pantry offering. What we do know is that it has taken fellow pureplay Ocado over 10 years to build a profitable online-only model and, whilst Amazon has great pedigree in successfully moving into new markets, this does not automatically mean that it will be a success.

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Table of contents

  1. Overview

    • What you need to know
      • Areas covered in this report
      • Executive Summary

          • The market
            • The market continues to experience double-digit growth
              • Figure 1: Online grocery sales (including VAT), 2010-20
            • There is a move back to stores at Christmas…
              • Figure 2: Online food stores sales as a % of all food stores retail sales, January 2013-January 2016
            • …but December remains the highest value month for online players
              • Figure 3: Average weekly retail sales of all online food retailers, January 2013-December 2015
            • Companies, brands and innovations
              • Tesco claims more share than its nearest three rivals combined
                • Figure 4: Leading online grocery retailers’ estimated market shares (excluding VAT), 2015
              • The consumer
                • Almost half have shopped online for groceries in the last year
                  • Figure 5: Usage of online grocery shopping, December 2015
                • A fifth own a delivery pass
                  • Figure 6: Ownership and interest in delivery passes, December 2015
                • Tesco captures two fifths of online grocery shoppers
                  • Figure 7: Where consumers shop for the majority of their groceries, by in-store and online buying, December 2015
                • Just under a third now do more of their shopping online compared to a year ago
                  • Figure 8: Changes in online grocery shopping habits, December 2015
                • Why they are shopping more…
                  • Figure 9: Reasons for shopping online more for groceries, December 2015
                • …and why they are shopping less
                  • Figure 10: Reasons for shopping less for groceries online, December 2015
                • A third would be happy to do a full online shop at Amazon
                  • Figure 11: Attitudes towards shopping online for groceries from Amazon, December 2015
                • A third still struggle to find a delivery slot that suits
                  • Figure 12: Attitudes towards issues surrounding delivery of online grocery orders, December 2015
                • What we think
                • Issues and Insights

                  • Can Amazon succeed in the online grocery market?
                    • The facts
                      • The implications
                        • Delivery passes: A way to tap into top-up shopping?
                          • The facts
                            • The implications
                              • Recipe boxes: Making online grocery more convenient?
                                • The facts
                                  • The implications
                                  • The Market – What You Need to Know

                                    • Online market continues to show double-digit growth
                                      • Store-based players take the biggest share but growth is slowing
                                        • Online-only sales driven by Ocado and new innovative formats
                                          • Online sales strongest during the autumn and winter months
                                            • Mobile device ownership and usage growing
                                            • Market Size and Forecast

                                              • The market continues to grow strongly
                                                • Figure 13: Online grocery sales (including VAT), 2010-20
                                                • Figure 14: Online grocery sales (including VAT), at current and constant prices, 2010-20
                                                • Figure 15: Online grocery sales as a % of all grocery retailers’ sector sales, 2010-20
                                              • Segments
                                                • Figure 16: Share of total online grocery market, 2010-20
                                              • Store-based online grocery segment: Growth slowing
                                                • Figure 17: Online grocery sales by store-based grocery retailers (Including VAT), 2010-20
                                                • Figure 18: Online grocery sales by store-based grocery retailers (Including VAT), at current and constant prices, 2010-20
                                              • Pureplay grocery segment
                                                • Figure 19: Online grocery sales by online-only retailers (including VAT), 2010-20
                                                • Figure 20: Online grocery sales by online-only retailers (including VAT), at current and constant prices, 2010-20
                                              • Forecast methodology
                                              • Market Drivers

                                                • Online growing ahead of the total market
                                                  • Figure 21: Annual % change in the retail sales of food, by all food sales and online food sales, January 2013-December 2015
                                                • Online takes peak share during the colder months
                                                  • Figure 22: Online food stores sales as a % of all food stores retail sales, January 2013-January 2016
                                                • Online grocery average weekly sales
                                                  • Figure 23: Average weekly retail sales of all online food retailers, January 2013-December 2015
                                                • Food prices impacting value growth
                                                  • Figure 24: Annual % change in the price of food and non-alcoholic beverages and alcoholic beverages and tobacco prices, January 2012-January 2016
                                                • Near total internet coverage for households with children
                                                  • Figure 25: UK household internet access, by the presence of dependent children, 2013-15
                                                • Devices used to access the internet
                                                  • Figure 26: Devices used to access the internet in the last three months, September 2015
                                              • The Consumer – What You Need to Know

                                                • Almost half have shopped online for groceries in the last year
                                                  • A fifth own a delivery pass
                                                    • Tesco captures two fifths of online grocery shoppers
                                                      • Just under a third now do more of their shopping online compared to a year ago
                                                        • A third would be happy to do a full online shop at Amazon
                                                          • A third still struggle to find a delivery slot that suits
                                                          • Who Buys Online

                                                            • Online grocery usage edges up
                                                              • Figure 27: Usage of online grocery shopping, December 2015
                                                            • Trend in online grocery shopping
                                                              • Figure 28: Trend in the usage of online grocery shopping, November 2012-December 2015
                                                            • Younger consumers far more likely to shop online
                                                              • Figure 29: Usage of online grocery shopping, by age, December 2015
                                                            • Online grocery shopping appealing to parents
                                                              • Figure 30: Usage of online grocery shopping, by presence of own children in household, December 2015
                                                          • Ownership of Delivery Passes

                                                              • Figure 31: Ownership and interest in delivery passes, December 2015
                                                            • Ownership tied to usage
                                                              • Figure 32: Ownership and interest in delivery passes, by online grocery shopping usage, December 2015
                                                            • Tesco shoppers most likely to have a pass
                                                              • Figure 33: Ownership and interest in delivery passes, by retailers used for the majority of online grocery shopping, December 2015
                                                          • Where They Shop

                                                              • Figure 34: Where consumers shop for the majority of their groceries, by in-store and online buying, December 2015
                                                            • Online shopper demographics
                                                              • Figure 35: Where consumers shop for the majority of their groceries, by socio-economic group and age, December 2015
                                                            • Tesco captures the high users
                                                              • Figure 36: Retailer used for online grocery shopping, by online grocery shopping habits, December 2015
                                                            • Where else do they shop online?
                                                              • Figure 37: Other retailers used for online grocery shopping, December 2015
                                                            • Some crossover between the major players
                                                              • Figure 38: Where they shop for the majority of groceries online, by where else they shop online for groceries, December 2105
                                                          • Changes in Online Grocery Usage

                                                            • Around a third shopping more
                                                              • Figure 39: Changes in online grocery shopping habits, December 2015
                                                            • Who is shopping more?
                                                              • Figure 40: Changes in online grocery shopping habits, by age, December 2015
                                                            • Why they are shopping more…
                                                              • Figure 41: Reasons for shopping online more for groceries, December 2015
                                                            • Why they are shopping online less for groceries…
                                                              • Figure 42: Reasons for shopping less for groceries online, December 2015
                                                            • Lack of control turning some away
                                                              • Figure 43: Change in online grocery habits, by users who are shopping less or have stopped shopping online for groceries, December 2015
                                                          • Satisfaction with Online Grocery Shopping

                                                              • Figure 44: Satisfaction with factors relating to the purchase of groceries online, December 2015
                                                              • Figure 45: Key drivers of overall satisfaction with online grocery retailer, December 2015
                                                              • Figure 46: Overall satisfaction with online grocery retailer – Key driver output, December 2015
                                                            • Overall satisfaction with retailers
                                                              • Figure 47: Overall satisfaction when shopping online for groceries, by retailer used for the majority of online grocery shopping, December 2015
                                                            • Range, pricing and quality
                                                              • Figure 48: Satisfaction with select factors when shopping online for groceries, by retailer used for the majority of online grocery shopping, December 2015
                                                            • Delivery and service
                                                              • Figure 49: Satisfaction with select factors when shopping online for groceries, by retailer used for the majority of online grocery shopping, December 2015
                                                            • Website factors
                                                              • Figure 50: Satisfaction with select factors when shopping online for groceries, by retailer used for the majority of online grocery shopping, December 2015
                                                            • Methodology
                                                            • Attitudes towards Online Grocery Shopping

                                                              • A third would be happy to do a full shop at Amazon
                                                                • Figure 51: Attitudes towards shopping online for groceries from Amazon, December 2015
                                                              • Younger consumers most interested in a full online grocery offer
                                                                • Figure 52: Agreement with statements surrounding shopping online for groceries at Amazon, by age, December 2015
                                                              • Asda has potential to lose the most from Amazon
                                                                • Figure 53: Agreement with the statement ‘I would be happy to purchase a full weekly shop online from Amazon’, by retailer where the majority of groceries are bought online, December 2015
                                                              • Attitudes towards product recommendations
                                                                • Figure 54: Attitudes towards product recommendations by online grocery retailers, December 2015
                                                              • Younger consumers more likely to be influenced by recommendations
                                                                • Figure 55: Agreement with statements surrounding product recommendations by online grocery retailers, by age and gender, December 2015
                                                              • Delivery
                                                                • Figure 56: Attitudes towards issues surrounding delivery of online grocery orders, December 2015
                                                              • Those in urban locations struggling to find a time that suits
                                                                • Figure 57: Agreement with statements surrounding delivery of online grocery, by location lived in, December 2015
                                                            • Key Players – What You Need to Know

                                                              • Tesco the dominant player
                                                                • Wine specialists performing well online
                                                                  • Delivery fulfilment
                                                                    • Ocado excels in giving a good experience but struggles with brand awareness
                                                                      • Innovations: New ways to shop and new players to shop from
                                                                      • Leading Players and Market Shares

                                                                        • Tesco the dominant player
                                                                          • Figure 58: Leading online grocery retailers’ estimated market shares (excluding VAT), 2015
                                                                          • Figure 59: Leading online grocer retailers’ estimated market shares (excluding VAT), 2013-15
                                                                        • Online revenues
                                                                            • Figure 60: Leading online grocery retailers’ net internet revenues, 2013-15
                                                                          • Breakdown of online revenues
                                                                            • Figure 61: Leading online grocery retailers’ estimated total online revenues, by grocery and non-grocery, 2013-15
                                                                            • Figure 62: Leading online grocery retailers’ online sales as % of their total UK sales, 2013-15
                                                                          • Smaller players and non-specialists: Market shares
                                                                            • Figure 63: Smaller online grocery retailers’ estimated market shares, 2013-15
                                                                            • Figure 64: Smaller online grocery retailers’ net revenues, 2013-15
                                                                        • Competitive Strategies – Key Metrics

                                                                          • Coverage and fulfilment
                                                                              • Figure 65: Selected leading online grocers’ coverage and fulfilment centres, 2016
                                                                            • Home delivery metrics
                                                                              • Figure 66: Selected leading online grocers’ delivery metrics, 2016
                                                                            • Delivery passes
                                                                              • Figure 67: Selected leading online grocers’ delivery pass details, 2016
                                                                            • Click-and-collect metrics
                                                                              • Figure 68: Major grocery retailers offering grocery click-and-collect services, 2016
                                                                            • Online range
                                                                              • Figure 69: Selected leading online grocery retailers, categories as a % of total SKUs, March 2016
                                                                              • Figure 70: Total SKU counts of the select leading online grocery players, by category, March 2016
                                                                          • Advertising and Marketing Activity

                                                                              • Ocado leads the pack
                                                                                • Figure 71: Product category recorded above-the-line, online display and direct mail total advertising expenditure by leading UK online supermarket/grocer/food retailers, 2011-15
                                                                              • 75.5% of spend channelled through the press and TV
                                                                                • Figure 72: Leading UK online supermarket/grocer/food retailers’ product category recorded above-the-line, online display and direct mail total advertising expenditure, by media type, 2015
                                                                              • Nielsen Media Research coverage
                                                                              • Innovation and Launch Activity

                                                                                • Grocery shopping app integrated into a refrigerator
                                                                                  • Figure 73: Samsung Family Hub refrigerator
                                                                                • Wrist-mounted digital grocery shopping
                                                                                  • Amazon’s online fresh food delivery service
                                                                                    • Google launches fresh grocery delivery service
                                                                                      • Intuitive online grocery shopping experience for Portuguese shoppers
                                                                                        • New food packaging solution for temperature-controlled goods
                                                                                          • Online grocery retailer championing home-grown local food producers
                                                                                            • Online grocery service with emphasis on speed of delivery
                                                                                              • Pick up essentials in-store and have the rest home-delivered
                                                                                                • FoodKick serves up meal solutions for time-starved consumers
                                                                                                • Brand Research

                                                                                                    • What you need to know
                                                                                                      • Brand map
                                                                                                        • Figure 74: Attitudes towards and usage of selected retail brands, August and December 2015 and January 2016
                                                                                                      • Key brand metrics
                                                                                                        • Figure 75: Key metrics for selected retail brands, August and December 2015 and January 2016
                                                                                                      • Brand attitudes: Ocado stands out for its innovations whilst Waitrose is worth paying more for
                                                                                                        • Figure 76: Attitudes, by retail brand, August and December 2015 and January 2016
                                                                                                      • Brand personality: Amazon fun, Tesco not so much
                                                                                                        • Figure 77: Brand personality – Macro image, August and December 2015 and January 2016
                                                                                                      • Tesco’s profit scandal still impacting the brand’s image
                                                                                                        • Figure 78: Brand personality – Micro image, August and December 2015 and January 2016
                                                                                                      • Brand analysis
                                                                                                        • Amazon: A broad appeal
                                                                                                          • Figure 79: User profile of Amazon, December 2015
                                                                                                        • Ocado: Capturing the high earners
                                                                                                          • Figure 80: User profile of Ocado, January 2016
                                                                                                        • Asda: Scores high on fun, but most likely to be described as basic
                                                                                                          • Figure 81: User profile of Asda, August 2015
                                                                                                        • Sainsbury’s: Expensive but reliable
                                                                                                          • Figure 82: User profile of Sainsbury’s, August 2015
                                                                                                        • Tesco: Brand image still suffering from recent affairs
                                                                                                          • Figure 83: User profile of Tesco, August 2015
                                                                                                        • Morrisons: Less likely to be recommended than its main rivals
                                                                                                          • Figure 84: User profile of Morrisons, August 2015
                                                                                                        • Waitrose: Excelling on experience
                                                                                                          • Figure 85: User profile of Waitrose, August 2015
                                                                                                      • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                        • Data sources
                                                                                                          • Market size and forecast
                                                                                                            • Mintel’s market size
                                                                                                              • Forecast methodology
                                                                                                                • Consumer research methodology
                                                                                                                  • Key driver analysis methodology
                                                                                                                    • Interpretation of results
                                                                                                                      • Figure 86: Overall satisfaction with online grocery retailer – key driver output, December 2015
                                                                                                                      • Figure 87: Satisfaction with online grocery retailer, December 2015
                                                                                                                    • Financial definitions
                                                                                                                      • VAT
                                                                                                                        • Abbreviations

                                                                                                                        Companies Covered

                                                                                                                        To learn more about the companies covered in this report please contact us.

                                                                                                                        Online Grocery Retailing - UK - March 2016

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