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Description

Description

“In 2019 growth slowed for the fourth consecutive year in the online grocery market, as the sector continues to struggle to reach new customers with much of the growth in the market coming from existing users. The start to 2020 has seen growth rapidly accelerate due to the COVID-19 outbreak, the legacy of which will be opening up the online grocery market to large numbers of customers who may not have shopped for groceries online before.”

– Nick Carroll, Associate Director of Retail Research

This report examines the following issues:

  • The impact (and legacy) of COVID-19 on the online grocery sector
  • D2C: Death by 1,000 cuts?

What's included

What's included

Table of contents

Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • Growth in the online grocery market slows to just 2.9%
              • Figure 1: All online grocery retail sales, (inc. VAT), 2014-24
            • Store-based players account for the majority of the market
              • Figure 2: Split of all online grocery retail sales, by type of retailer, 2014-24
            • Online accounts for just 7% of the wider grocery sector
              • Figure 3: Online share of all grocery retail sales (inc. VAT), 2014-24
            • Online grocery takes its greatest share in the winter months, but sales peak in December
              • Figure 4: Store-based online grocery retail sales, average weekly sales, Jan 2018-Jan 2020
            • Companies and brands
              • Tesco is the market leader
                • Figure 5: Leading online grocery retailers’ estimated market shares (excluding VAT), 2019
              • Tesco recognised as a grocer which provides a great online service
                • Figure 6: Key metrics for selected brands, October 2019
              • Leading players invest significantly in advertising in 2019
                • Figure 7: UK online supermarket/grocer/food retailers’ total recorded above-the-line, online display and direct mail advertising expenditure, 2015-19
              • The consumer
                • Half of consumers do some online grocery shopping
                  • Figure 8: Online grocery usage, December 2019
                • Younger parents the key online grocery users
                  • Figure 9: Online grocery usage, by parental status and age of children, December 2019
                • Significant growth in smartphone shopping
                  • Figure 10: Devices used to shop online for groceries, 2018 and 2019
                • Ambient products continue to overindex online
                  • Figure 11: Types of products purchased through online grocery services, December 2019
                • Online key to new brand discovery
                  • Figure 12: Attitudes towards shopping for groceries online, December 2019
                • What we think
                • Issues and Insights

                  • The impact (and legacy) of COVID-19 on the online grocery sector
                    • The facts
                      • The implications
                        • D2C: Death by 1,000 cuts?
                          • The facts
                            • The implications
                            • The Market – What You Need to Know

                              • Growth in the online grocery market slows to just 2.9%
                                • Store-based players account for the majority of the market
                                  • Online accounts for just 7% of the wider grocery sector
                                    • Online grocery takes its greatest share in the winter months, but sales peak in December
                                    • Market Drivers

                                      • Online growth comes into line with the wider market
                                        • Figure 13: Annual % change in all grocery retail sales and store-based online grocery retail sales, Jan 2018-Jan 2020
                                      • The outperformance of online-only players is not confined to the grocery sector
                                        • Figure 14: Share of all retail sales, by type of retail operation, 2015-19
                                      • Online grocery takes its greatest share in the winter months…
                                        • Figure 15: Share of all grocery retail sales accounted for by store-based online grocery retail sales, Jan 2018-Jan 2020
                                      • …but average weekly sales hit the peak in December
                                        • Figure 16: Store-based online grocery retail sales, average weekly sales, Jan 2018-Jan 2020
                                      • Food prices edge up in 2019
                                        • Figure 17: Inflation, year-on-year change in food and non-alcoholic beverage and alcoholic beverages and tobacco prices, Jan 2018-Jan 2020
                                      • Mobile devices moving to be the dominant device for online shopping
                                        • Figure 18: Other digital activity in the last three months, April 2017 and September 2019
                                      • Growth in older consumers and smaller households presents challenges and opportunities for retailers
                                        • Figure 19: Population size and age structure, 2014-24
                                    • Market Size and Forecast

                                      • Market growth slows to just 2.9% in 2019
                                        • Figure 20: All online grocery retail sales, (inc. VAT), 2014-24
                                        • Figure 21: Total online grocery retail sales (including VAT), 2014-24
                                      • Online continues to grow its share of all retail sales
                                        • Figure 22: Online share of all grocery retail sales (inc. VAT), 2014-24
                                      • Online-only players gaining influence in the market
                                        • Figure 23: Split of all online grocery retail sales, by type of retailer, 2014-24
                                      • Store-based sales decline in 2019
                                          • Figure 24: Online grocery sales by store-based grocery retailers (inc. VAT), 2014-24
                                          • Figure 25: Online grocery sales by store-based grocery retailers (including VAT), at current and constant prices, 2014-24
                                        • Online-only players slowing but outperforming store-based retailers
                                            • Figure 26: Online grocery sales by online-only retailers (including VAT), 2014-24
                                            • Figure 27: Online grocery sales by online-only retailers (including VAT), at current and constant prices, 2014-24
                                          • Forecast methodology
                                          • The Consumer – What You Need to Know

                                            • Half of consumers do some online grocery shopping
                                              • Younger parents the key online grocery users
                                                • Significant growth in smartphone shopping
                                                  • Ambient products continue to overindex online
                                                    • Online key to new brand discovery
                                                    • Online Grocery Usage

                                                      • Half of consumers do some online grocery shopping
                                                        • Figure 28: Online grocery usage, December 2019
                                                      • Growth in the number doing most of their shopping online
                                                        • Figure 29: Online grocery usage, December 2017-19
                                                        • Figure 30: Changes in online grocery use, December 2019
                                                    • Demographics of Online Grocery Shoppers

                                                      • Key demographics summary
                                                        • 25-34s most likely to shop online for groceries
                                                          • Figure 31: Online grocery usage, by age, December 2019
                                                        • Usage peaks among those with young children
                                                          • Figure 32: Online grocery usage, by parental status and age of children, December 2019
                                                        • Those in full-time work more likely to shop for groceries online
                                                          • Figure 33: Online grocery usage, by working status, December 2019
                                                        • Online use still peaks among higher earners
                                                          • Figure 34: Online grocery usage, by household income, December 2019
                                                        • Cities a hotbed of online grocery use
                                                          • Figure 35: Online grocery usage, by location, December 2019
                                                      • Retailers Shopped With

                                                        • Tesco the dominant player online
                                                          • Figure 36: Retailers used to shop for groceries online, December 2019
                                                          • Figure 37: Repertoire of retailers used to shop online for groceries, by retailers shopped with, December 2019
                                                        • Partnership with Amazon proving fruitful in attracting younger shoppers for Morrisons
                                                          • Figure 38: Retailers used to shop for groceries online, by age and socio-economic group, December 2019
                                                        • Tesco winning the battle for parents, but there is significant use of food-box services among this group
                                                          • Figure 39: Retailers used to shop for groceries online, by parental status and age of children, December 2019
                                                      • Delivery Pass Ownership

                                                        • Over a quarter have a delivery pass
                                                            • Figure 40: Delivery pass ownership, December 2019
                                                          • Ocado converting more of its shoppers to delivery pass owners
                                                            • Figure 41: Delivery pass ownership, July 2019
                                                        • Devices Used to Shop Online for Groceries

                                                          • Significant growth in the number shopping via smartphone
                                                            • Figure 42: Devices used to shop online for groceries, 2018 and 2019
                                                          • Younger online grocery shoppers more likely to shop via mobile than PC/laptop
                                                            • Figure 43: Devices used to shop online for groceries, by age, December 2019
                                                          • Over half shop on mobile via apps
                                                            • Figure 44: Method used to shop via mobile device, December 2019
                                                        • What They Buy Online

                                                          • Ambient products continue to overindex online
                                                            • Figure 45: Types of products purchased through online grocery services, December 2019
                                                          • Most online grocery shoppers are full-basket shoppers
                                                            • Figure 46: Repertoire of types of products purchased through online grocery services, December 2019
                                                        • Factors Impacting Online Grocery Usage

                                                          • Convenience still the major driver for online grocery
                                                              • Figure 47: Reasons why more grocery shopping has been done online, December 2019
                                                            • Discounters still drawing customers away from online
                                                              • Figure 48: Reasons why less grocery shopping has been done online, December 2019
                                                          • Attitudes towards Shopping Online for Groceries

                                                            • Discovery of new brands a key part of the online grocery experience
                                                              • Figure 49: Behaviours of online grocery shoppers, December 2019
                                                            • There are concerns around the environmental impact of shopping online
                                                              • Figure 50: Behaviours of online grocery shoppers, December 2019
                                                            • Foodservice courier firms could provide the solution to tap into top-ups
                                                                • Figure 51: Behaviours of online grocery shoppers, December 2019
                                                            • Leading Retailers – What You Need to Know

                                                              • Tesco is the market leader
                                                                • Ocado grows strongly despite warehouse fire
                                                                  • Tesco recognised as a grocer which provides a great online service
                                                                    • Leading players invest significantly in advertising in 2019
                                                                    • Leading Retailers and Market Share

                                                                      • Tesco the market leader
                                                                        • Figure 52: Leading online grocery retailers’ estimated market shares (excluding VAT), 2019
                                                                        • Figure 53: Leading online grocery retailers’ estimated market shares (excluding VAT), 2017-19
                                                                      • Leading players: revenues
                                                                          • Figure 54: Leading retailers’ net online grocery revenues, 2017-19
                                                                        • Leading players: revenue breakdown
                                                                          • Figure 55: Leading online grocery retailers’ estimated total online revenues, by grocery and non-grocery, 2017-19
                                                                        • Smaller players: revenues
                                                                          • Figure 56: Smaller online grocery players’ turnover, 2017-19
                                                                          • Figure 57: Smaller online grocery players’ turnover, 2017-19
                                                                      • Brand Research

                                                                          • What you need to know
                                                                            • Brand map
                                                                              • Figure 58: Attitudes towards and usage of selected brands, October 2019
                                                                            • Key brand metrics
                                                                              • Figure 59: Key metrics for selected brands, October 2019
                                                                            • Brand attitudes: Waitrose seen as a brand that is worth paying more for
                                                                              • Figure 60: Attitudes, by brand, October 2019
                                                                            • Brand personality: The big four have accessibility on their side
                                                                              • Figure 61: Brand personality – macro image, October 2019
                                                                            • Tesco size boosts it sense of reliability
                                                                              • Figure 62: Brand personality – micro image, October 2019
                                                                            • Brand analysis
                                                                              • Amazon’s brand excels on most metrics
                                                                                • Figure 63: User profile of Amazon, October 2019
                                                                              • Tesco: A highly ubiquitous but trust brand
                                                                                • Figure 64: User profile of Tesco, October 2019
                                                                              • Sainsbury’s: still carries a higher price perception compared to nearest rivals
                                                                                • Figure 65: User profile of Sainsbury’s, October 2019
                                                                              • Asda: strong price credentials, but this leads to some negative connotations
                                                                                • Figure 66: User profile of Asda, October 2019
                                                                              • Morrisons: online credentials still in doubt from non-users
                                                                                • Figure 67: User profile of Morrisons, October 2019
                                                                              • Waitrose: a premium brand image
                                                                                • Figure 68: User profile of Waitrose, October 2019
                                                                              • Ocado: lower usage, but high service levels
                                                                                • Figure 69: User profile of Ocado, October 2019
                                                                              • Iceland: reliable but also most likely to be seen as basic
                                                                                • Figure 70: User profile of Iceland, October 2019
                                                                            • Launch Activity and Innovation

                                                                              • Faster and more convenient grocery shopping services
                                                                                • Targeting office lunchtime delivery market
                                                                                  • Click-and-collect robotic grocery parcel system that saves time queuing in stores
                                                                                    • Figure 71: Cleveron 501 Grocery pick-up
                                                                                  • ‘Grab and go’ digital grocery shop
                                                                                    • Grocery voice ordering service
                                                                                      • 'Referrals' discount for online grocery purchases
                                                                                        • Last-mile delivery solutions
                                                                                          • AI-driven online grocery solution
                                                                                          • Advertising and Marketing Activity

                                                                                            • Total sector advertising spend up 61.9% year-on-year in 2019
                                                                                              • Figure 72: UK online supermarket/grocer/food retailers’ total recorded above-the-line, online display and direct mail advertising expenditure, 2015-19
                                                                                            • Ocado remains the sector’s highest advertising spender
                                                                                              • Figure 73: Leading UK online supermarket/grocer/food retailers’ total recorded above-the-line, online display and direct mail advertising expenditure, 2015-19
                                                                                            • Door drops account for the biggest percentage share of advertising spend
                                                                                              • Figure 74: UK online supermarket/grocer/food retailers’ total recorded above-the-line, online display and direct mail advertising expenditure, by media type, 2015-19
                                                                                            • Leading advertisers prefer door drops over other media types
                                                                                              • Figure 75: Leading UK online supermarket/grocer/food retailers’ total recorded above-the-line, online display and direct mail advertising expenditure, by media type, 2019
                                                                                            • Nielsen Ad Intel coverage
                                                                                            • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                              • Data sources
                                                                                                • Financial definitions
                                                                                                  • Abbreviations
                                                                                                    • Consumer research methodology
                                                                                                    • Appendix – Market Size and Forecast

                                                                                                      • Forecast methodology

                                                                                                      About the report

                                                                                                      This report will give you a complete 360-degree view of your market. Not only is it rooted in robust proprietary and high-quality third-party data, but our industry experts put that data into context and you’ll quickly understand:

                                                                                                      • The Consumer

                                                                                                        What They Want. Why They Want It.

                                                                                                      • The Competitors

                                                                                                        Who’s Winning. How To Stay Ahead.

                                                                                                      • The Market

                                                                                                        Size, Segments, Shares And Forecasts: How It All Adds Up.

                                                                                                      • The Innovations

                                                                                                        New Ideas. New Products. New Potential.

                                                                                                      • The Opportunities

                                                                                                        Where The White Space Is. How To Make It Yours.

                                                                                                      • The Trends

                                                                                                        What’s Shaping Demand – Today And Tomorrow.

                                                                                                      Please Note: This is a sample report. All of the figures, graphs, and tables have been redacted.

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