2022
9
UK Online Grocery Retailing Market Report 2022
2022-03-31T04:05:12+01:00
OX1100885
2195
150085
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Report
en_GB
“The online grocery market defied expectations in 2021 by putting on further growth following the monumental uptick in demand caused by the pandemic in 2020. Rebalancing between stores and online…

UK Online Grocery Retailing Market Report 2022

£ 2,195 (Excl.Tax)

Description

The UK Online Grocery Retailing report identifies consumer attitudes towards online shopping, grocery delivery, and perceptions around speed and planning of orders in the UK. This market report covers the market size, market forecast, market segmentation and industry trends for the Online Grocery Retailing market in the UK.

Current Online Grocery Market Landscape

While there was an expectation of a natural decline in 2021, following the rapid growth seen following the onset of the pandemic, the online grocery market saw an impressive 17.1% growth in 2021. Consumer engagement with the channel remained high, with many holding onto habits developed during the national lockdowns.

  • 58% of consumers reported doing online grocery shopping in 2021.
  • Indeed, 35% of those who don’t shop online for groceries say this is because they can find better prices/promotions in-store and 31% say it is because delivery charges are too high.
  • 71% of online grocery shoppers saying that they think grocery deliveries should be made more sustainable.

Moving into 2022, the household squeeze does present challenges for the online grocery channel as it is perceived as a more expensive way of buying groceries. This may mean than some active in the channel currently will move away as inflation bites, but as a market currently leans towards higher-income households many will remain thanks to the convenience that online services offer them.

Future Market Trends in Online Grocery Retailing

A long-term threat for the sector is how the perception of the environmental impact of ordering groceries online develops. While convenience currently outweighs the environmental concerns for most, it is important that retailers communicate environmental credentials to customers and build sustainable models for the future.

A key reason the online grocery market defied expectations and put on growth in 2021 was that the diversification of services. The arrival of rapid delivery grocers was a key story in 2021, with retailers offering this service giving the channel a credible way of tapping into smallbasket demand. This will be a significant area of growth over the next decade.

Read on to discover more details or take a look at all of our UK Retail market research

Quickly Understand

  • The impact COVID-19 has had on the online grocery market and the impact the household squeeze will have moving forward.
  • The number of consumers shopping online, including demographics, and how this has changed pre- and post-pandemic.
  • How groceries are delivered and perceptions around speed and planning of orders.
  • Leading and alternative retailers used and their market shares.
  • Types of products purchased online.
  • Barriers to encourage more online shopping and barriers to beginning shopping online for groceries.

Covered in this Report

Brands: Ocado, Getir, Deliveroo, Tesco, Sainsbury’s, Asda, Waitrose, Morrisons, Iceland, Amazon, Gorillas, Zapp, Aldi, Co-Op, Hello Fresh, Gousto, Mindful Chef, Abel & Cole, Riverford, Farm Drop, Gopuff, Zapp, Weezy, Naked Wines, Majestic Wine, Laithwaite’s.

Expert Analysis from a Specialist in the Field

This report, written by Nick Carroll, a leading analyst in the Food sector, delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

The online grocery market defied expectations in 2021 by putting on further growth following the monumental uptick in demand caused by the pandemic in 2020. Rebalancing between stores and online will come in 2022, but it is clear the legacy boost to the online channel will be larger than first expected. In particular, growth is coming from new ways to shop online and a diversification of the missions and basket sizes coming through the channel.

Nick Carroll - Research AnalystNick Carroll
Associate Director of Grocery and eCommerce Research

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • Market context
    • Products covered in this Report
  2. Executive Summary

    • The five-year outlook for online grocery retailing
      • Figure 1: Online grocery category outlook, 2022-27
    • The market
    • Market size and forecast
      • Figure 2: Market forecast for all online grocery retail sales, (prepared on 17 February 2022), 2016-26
    • Slowdown did occur in 2022, but not to the levels first expected
      • Figure 3: Store-based online grocery retail sales, non-seasonally adjusted year-on-year growth by month, 2020-22
    • Online will continue to play a heightened role in the grocery sector
      • Figure 4: Online grocery as a % of all grocery sales, pre- and post-COVID-19, 2019-26
    • Pandemic creates a more diverse market
      • Figure 5: Estimated composition of the online grocery sector, by type of service, 2018-21
    • Inflation concerns may see some leave the online grocery market
      • Figure 6: Consumer concerns about household finances, 2021-22
    • Leading retailers
    • Tesco the dominant player in the online space
      • Figure 7: Leading online grocery retailers’ estimated market shares (excluding VAT), 2021
    • Within a year of trading over a third of consumers are aware of Getir and Gorillas
      • Figure 8: Key metrics for selected brands, 2021-22
    • The consumer
    • Over half of consumers are still shopping online for groceries
      • Figure 9: Online grocery use, 2021
    • 43% of online grocery shoppers began shopping online less than two years ago
      • Figure 10: Length of time using online grocery services, 2021
    • Some move away from older and less affluent consumers
      • Figure 11: Online grocery usage, by age, 2019-21
    • Home delivery remains dominant
      • Figure 12: How groceries are typically delivered, 2020 and 2021
    • Ambient, bulky and difficult-to-transport goods still over-index…
      • Figure 13: Grocery products typically purchased online, 2021
    • Expiry dates and substitutions key barrier to additional online grocery use
      • Figure 14: Factors that would encourage more online grocery use, 2021
    • Fresh remains the main barrier to online grocery use for non-users
      • Figure 15: Reasons why online grocery services are not/no longer used, 2021
    • Tesco the most popular online grocery retailer
      • Figure 16: Online grocery retailer shopped with and shopped with most often, 2021
    • One in 10 have tried an ultra-fast grocery retailer
      • Figure 17: Alternative grocery/drinks retailers used, 2021
    • Planning doesn’t necessarily negate rapid delivery desire
      • Figure 18: Attitudes to planning and delivery of online grocery orders, 2021
    • DRS could provide the opportunity for better links between online and stores
      • Figure 19: Attitudes towards shopping online for groceries sustainably, 2021
  3. Issues and Insights

    • What the household squeeze means for the online grocery channel
    • Diversification: the opportunity for new brands and the threat to traditional players
  4. Market Drivers

    • Concerns ease but continued hesitancy to enter stores will benefit the online channel
      • Figure 20: COVID-19 Tracker, concern levels and online/in-store shopping behaviour, 2020-22
    • In-home demand eases, but remains significantly ahead of 2019
      • Figure 21: All grocery retail sales, non-seasonally adjusted, annual monthly growth, by value and volume, 2020-22
    • The conflict in Ukraine will hurt the UK economy
    • Inflationary pressures are mounting
      • Figure 22: CPI, overall index and core categories, 2021-22
    • The post-COVID-19 bounceback will be followed by a period of slower growth
    • Consumers’ financial wellbeing has slipped from its recent high point…
      • Figure 23: Household financial wellbeing index, 2018-22
    • …and concerns over inflation are coming to the fore
      • Figure 24: Consumer concerns about household finances, 2021-22
    • Ageing population presents both challenges and opportunities for the online market
      • Figure 25: Trends in the age structure of the UK population, 2016-26
  5. Market Size and Performance

    • Heightened online demand persists through 2021
      • Figure 26: All online grocery retail sales (including VAT), 2016-21
      • Figure 27: All online grocery retail sales (including VAT), at current and constant prices, 2016-21
    • Lower growth in 2021, but the channel annualises 2020 numbers better than expected
      • Figure 28: Store-based online grocery retail sales, non-seasonally adjusted year-on-year growth by month, 2020-22
    • Despite slowing growth, online took a record level of sales in 2021
      • Figure 29: All online sales and store-based online grocery sales as a percentage of total sales, 2020-22
    • Average weekly sales 114% higher in 2021 than in 2019
      • Figure 30: Store-based online grocery, average weekly sales, non-seasonally adjusted (including VAT), 2020-22
  6. Market Forecast

    • The five-year outlook for online grocery retailing
      • Figure 31: Online grocery category outlook, 2022-27
    • Expected decline in 2022 as the market finds its new equilibrium
      • Figure 32: Market forecast for all online grocery retail sales, (prepared on 17 February 2022), 2016-26
      • Figure 33: Market forecast for all online grocery retail sales, (prepared on 17 February 2022), at current and constant prices, 2016-26
    • Online grocery to account for 14.1% of grocery sales by 2026
      • Figure 34: Online grocery as a % of all grocery sales, pre- and post-COVID-19, 2019-26
    • Market drivers and assumptions
      • Figure 35: Key drivers affecting Mintel’s market forecast, 2020-26
    • Forecast methodology
  7. Market Segmentation

    • Store-based dominant but online-only expected to gain share
      • Figure 36: Split of online grocery sales, by broad type of retailer, 2016-26
    • Decline expected in 2022 as store-based players annualise pandemic demand
      • Figure 37: Online grocery sales by store-based grocery retailers (inc VAT), 2016-26
    • Online-only retailers outpace store-based retailers once more in 2021
      • Figure 38: Online grocery sales by store-based grocery retailers (inc VAT), 2016-26
    • Rapid delivery players a niche but quickly established aspect of the market
      • Figure 39: Estimated composition of the online grocery sector, by type of service, 2018-21
  8. Online Grocery Use and the Impact of COVID-19

    • Over half of consumers are still shopping online for groceries
      • Figure 40: Online grocery use, 2021
    • 43% of online grocery shoppers began shopping online less than two years ago
      • Figure 41: Length of time using online grocery services, 2021
    • Number doing most of their shopping online continues to grow
      • Figure 42: Types of online grocery users as a proportion of all online grocery uses, 2018-21
    • Some have moved away but hesitancy from non-users remains low
      • Figure 43: Use of online grocery shopping, 2018-21
  9. Demographics of Online Grocery Shoppers

    • Some move away from older shoppers…
      • Figure 44: Online grocery usage, by age, 2019-21
    • …but core generations are engaged as ever
      • Figure 45: Level of online grocery usage, by age, 2019-21
    • Parents remain the most engaged within the market
      • Figure 46: Level of online grocery usage, by parental status, 2019-21
    • Price perception turns some lower-income households away
      • Figure 47: Online grocery usage, by household income, 2019-21
      • Figure 48: Level of online grocery usage, by household income, 2019-21
    • Online use continues to grow in London
      • Figure 49: Online grocery usage, by household income, 2019-21
  10. How Groceries Are Delivered

    • Home delivery remains dominant
      • Figure 50: How groceries are typically delivered, 2020-21
    • A third of 16-34s have had products delivered by courier
      • Figure 51: How groceries are typically delivered, by age, 2021
    • More varied delivery method use likely to come into the market in 2022
      • Figure 52: Repertoire of delivery methods typically used, by current working status, 2021
  11. Products Purchased Online

    • Ambient, bulky and difficult-to-transport goods still over-index…
      • Figure 53: Grocery products typically purchased online, 2021
    • …but the pandemic has caused some uptick in other categories
      • Figure 54: Grocery products typically purchased online, 2021
      • Figure 55: Grocery products typically purchased online, 2021
    • Older shoppers have a broader repertoire per shop
      • Figure 56: Repertoire of product categories typically included in online grocery orders, by age, 2021
  12. Leading Grocery Retailers Used

    • Tesco the most popular online grocery retailer…
      • Figure 57: Online grocery retailer shopped with and shopped with most often, 2021
      • Figure 58: Online grocery retailers used, by online grocery retailers shopped with most often, 2021
    • …but has lost some shoppers in the past year
      • Figure 59: Online grocery retailers used, 2018-21
    • Newer customers skewing towards newer entrants to the market
      • Figure 60: Retailers shopped with most often, by when they began shopping online for groceries, 2021
    • Amazon and Aldi carving out a niche in the market
      • Figure 61: Demographic profile of online grocery retailers used, by age and household income, 2021
  13. Alternative Retailers Used

    • One in 10 have tried an ultra-fast grocery retailer
      • Figure 62: Alternative grocery/drinks retailers used, 2021
    • Food/recipe boxes can be a bridge to bring customers fully into online grocery services
      • Figure 63: Alternative grocery/drinks retailers used, by use or interest in online grocery services, 2021
    • First-time shoppers during the pandemic have a broader repertoire of businesses used
      • Figure 64: Alternative grocery/drinks retailers used, by online grocery shoppers and when they started shopping online for groceries, 2021
    • Ultra-fast are finding their niche in the younger audience
      • Figure 65: Demographic profile of online grocery retailers used and alternative food and drink retailers used, by age and household income, 2021
  14. What Would Encourage More Online Grocery Use

    • Expiry dates and substitutions are a key barrier to additional online grocery use…
      • Figure 66: Factors that would encourage more online grocery use, 2021
    • …but quicker delivery and better navigation key for younger shoppers
      • Figure 67: Factors that would encourage more online grocery use, by age, 2021
  15. Barriers to Online Grocery Use

    • Fresh remains the main barrier to online grocery use
      • Figure 68: Reasons why online grocery services are not/no longer used, 2021
    • Delivery costs driving some away
      • Figure 69: Reasons why online grocery services are not/no longer used, by previous experience/level of interest in online grocery services, 2021
  16. Attitudes towards Sustainability and Delivery

    • Planning doesn’t necessarily negate rapid delivery desire
      • Figure 70: Attitudes to planning and delivery of online grocery orders, 2021
    • Core users most likely to have a delivery pass
      • Figure 71: Attitudes to planning and delivery of online grocery orders, by age, 2021
    • Deposit Return Scheme could provide the opportunity for better links between online and stores
      • Figure 72: Attitudes towards shopping online for groceries sustainably, 2021
    • The demand for change will come from the most valuable shoppers first
      • Figure 73: Attitudes towards shopping online for groceries sustainably, by level of online grocery use, 2021
  17. Leading Retailers and Market Share

    • Leading players’ share falls back a little in 2021
      • Figure 74: Leading online grocery retailers’ estimated market shares (exc. VAT), 2021
      • Figure 75: Leading online grocery retailers, estimated market shares, 2019-21
    • Leading players: a note on revenues
    • Leading players: revenues
    • Big three look to annualise significant growth in 2021…
    • …while those coming from a smaller base continue to see growth
      • Figure 76: Leading retailers’ net online grocery revenues, 2019-21
    • Leading players: revenue breakdown
      • Figure 77: Leading online grocery retailers’ estimated total online revenues, by grocery and non-grocery, 2019-21
    • Smaller players: market share and revenue
      • Figure 78: Smaller online food and drink retailers, estimated market shares, 2019-21
      • Figure 79: Smaller online food and drink retailers, turnover, 2019-21
  18. Brand Research

    • What you need to know
    • Brand map
      • Figure 80: Attitudes towards and usage of selected brands, 2021-22
    • Key brand metrics
      • Figure 81: Key metrics for selected brands, 2021-22
    • Brand attitudes: Rapid players viewed as innovative, but service credentials still strong with ‘traditional’ players
      • Figure 82: Attitudes, by brand, 2021-22
    • Brand personality: Rapid players play on fun to reach younger audience
      • Figure 83: Brand personality – macro image, 2021-22
    • Major grocers still lead on reliability
      • Figure 84: Brand personality – micro image, 2021-22
    • Brand analysis
    • Tesco: Brand in strong health
    • Asda: Value credentials shine but service and experience behind rivals
    • Sainsbury’s: Strong trust levels but premium perception turns some away
    • Morrisons: Trusted and respected but online perception lags behind rivals
    • Amazon: A powerhouse with some question marks
    • Iceland: Strong value credentials but concerns around experience
    • Ocado: Awareness now matching rivals but trust issues remain
    • Waitrose: A premium player that many think is worth the money
    • Getir: Positive experience will be crucial to word of mouth
    • Gorillas: Has quickly built trust in users
    • Zapp: A strong start but needs to create a more distinct personality
  19. Launch Activity and Innovation

    • Rapid expansion and consolidation in Qcommerce sector
      • Figure 85: Gopuff, e-delivery bike, 2021
    • Leading players strike back…
    • …not just in the UK
    • Gopuff goes physical
      • Figure 86: Urbx Market concept site, 2021
    • Carrefour looks to subscription market
    • Breaking down the fresh barrier
      • Figure 87: Albertsons and Firework livestream, 2021
    • Collective and fractional buying
    • Walmart expands ‘direct-to-fridge’
      • Figure 88: Walmart InHome delivery expansion, 2022
    • Asda trials personal lockers to break down barriers
      • Figure 89: Asda home delivery box trial, 2021
    • The sky’s the limit
      • Figure 90: Coles and Wing drone delivery, 2022
  20. Advertising and Marketing Activity

    • Online grocery advertising expenditure hits a high in 2021
      • Figure 91: UK Online supermarket/grocery/food retailers and delivery partners’ total recorded above-the-line, online display and direct mail advertising expenditure, 2017-21
    • Delivery partners and new entrants drive spend to new highs
      • Figure 92: Leading Online supermarket/grocery/food retailers and delivery partners’ total recorded above-the-line, online display and direct mail advertising expenditure, 2017-21
      • Figure 93: Deliveroo in-home grocery advertisement, 2021
    • Outdoor spending grows as society reopens
      • Figure 94: UK Online supermarket/grocery/food retailers and delivery partners’ total recorded above-the-line, online display and direct mail advertising expenditure, by media type, 2017-21
    • Major outdoor campaigns and direct marketing help new entrants grow awareness
      • Figure 95: UK Online supermarket/grocery/food retailers and delivery partners’ total recorded above-the-line, online display and direct mail advertising expenditure, by media type, 2017-21
      • Figure 96: Zapp at London’s BFI IMAX, 2021
      • Figure 97: Gopuff door drop, 2021
      • Figure 98: Gorillas Shoreditch, London, 2021
    • Nielsen Ad Intel coverage
  21. Appendix – Data Sources, Abbreviations and Supporting Information

    • Data sources
    • Financial definitions
    • Abbreviations
    • Consumer research methodology
  22. Appendix: Forecast Methodology

    • Market forecast and prediction intervals: total online grocery retail sales (including VAT)
      • Figure 99: All online grocery retail sales (inc VAT) market size and forecast, at current and constant prices, 2016-26
      • Figure 100: All online grocery retail sales (inc VAT), current price prediction intervals, 2021-26
    • Market forecast and prediction intervals: Store-based online grocery retail sales (including VAT)
      • Figure 101: Online grocery sales by store-based grocery retailers (inc VAT) market size and forecast, at current and constant prices, 2016-26
      • Figure 102: Online grocery sales by store-based grocery retailers (inc VAT), current price prediction intervals, 2021-26
    • Market forecast and prediction intervals: Online-only grocery retail sales (including VAT)
      • Figure 103: Online grocery sales by online-only retailers (inc VAT) market size and forecast, current and constant prices, 2016-26
      • Figure 104: Online grocery sales by online-only retailers (inc VAT), current price prediction intervals, 2021-26
    • Market drivers and assumptions
    • Forecast methodology

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