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UK Online Grocery Retailing market report

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the Online Grocery Retailing market, and the behaviours, preferences and habits of the consumer.

Mintel has the answers you’re looking for

What are the key challenges facing the industry and how fast are its rates of growth? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Products covered in this Report

This Report includes both market and consumer data around the retailing of grocery products online.

Our market size for online grocery includes:

  • Major grocers’ online sales of food and drink and other grocery products
  • Online-only grocers’ sales (eg Ocado)
  • Specialist food and drink retailers’ online sales
  • Online-based food box and recipe box delivery schemes

It excludes:

  • General merchandise sales made online by major grocers
  • Foodservice delivery (eg restaurant or fast food takeaways ordered online)
  • Home delivery of groceries not ordered online

Expert analysis from a specialist in the field

Written by Nick Carroll, a leading analyst in the Retail sector, his extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

The smallest and quickest-growing aspect of the grocery market, online grocery is a sector that has seen a vast number of innovations in the past year as it strives to evolve to cater not just for big-basket supermarket-style shops but also for smaller top-up-based shops. Nick Carroll
Senior Retail Analyst

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Table of contents

  1. Overview

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

          • The market
            • Online grocery continues to be the fastest-growing segment of the grocery sector…
              • Figure 1: Total online grocery market size (including VAT), 2012-22
            • …but is equally the smallest
              • Figure 2: Online grocery sales as a % of all grocery retail sales, 2012-22
            • Online grocery sales peak in December, but take their greatest share in November
              • Figure 3: Average weekly retail sales of all online grocery retailers, January 2015-January 2018
            • Companies and brands
              • Tesco the dominant player
                • Figure 4: Leading online grocery retailers’ estimated market shares (excluding VAT), 2017
              • The Amazon brand is strong
                • Figure 5: Attitudes towards and usage of selected brands, September 2017
              • The consumer
                • Just under half do some online grocery shopping
                  • Figure 6: Online grocery usage, December 2017
                • Young families a key audience
                  • Figure 7: Online grocery usage, by parental status, December 2017
                • Convenience an obvious driver
                  • Figure 8: Why users shop online for groceries, December 2017
                • Bulky items most popular
                  • Figure 9: Types of products typically purchased when shopping online for groceries, December 2017
                • Tesco the most popular retailer
                  • Figure 10: Online grocery retailers used in the past 12 months, December 2017
                • Voice commerce could be limited by lack of visual representation
                  • Figure 11: Attitudes towards online grocery shopping, December 2017
                • What we think
                • Issues and Insights

                  • Taking time to talk: finding a place for voice in the online grocery market
                    • The facts
                      • The implications
                        • Food for tonight: can online grocery compete with foodservice takeaway?
                          • The facts
                            • The implications
                              • Online grocery shopping without the retailer: could a direct-to-consumer model work in the grocery sector?
                                • The facts
                                  • The implications
                                  • The Market – What You Need to Know

                                    • Online grocery market grows by 13.5% in 2017
                                      • A small but significant part of the make-up of the grocery sector
                                        • Store-based players dominate the market
                                          • Online grocery sales peak in December, but take their greatest share in November
                                            • Changing household dynamics could force the industry to switch strategies
                                            • Market Drivers

                                              • Online growth slows down over 2017
                                                • Figure 12: Annual % change in the retail sales of food, by all food sales and online grocery sales, January 2015-January 2018
                                              • Online takes its greatest share in November…
                                                • Figure 13: Online grocery stores as a % of all food stores retail sales, January 2015-January 2018
                                              • …but higher average weekly spending is seen in December
                                                • Figure 14: Average weekly retail sales of all online grocery retailers, January 2015-January 2018
                                              • Prices rise over 2017
                                                • Figure 15: Annual % change in the price of food and non-alcoholic beverages and alcoholic beverages and tobacco prices, January 2016-January 2018
                                              • Prices rise across all food categories
                                                • Figure 16: Annual % change in the price of core food categories, January 2017-January 2018
                                              • Smartphones and tablets used to access internet
                                                • Figure 17: Devices used to access the internet in the last three months, June 2014-September 2017
                                              • Growing 25-34 age group will boost sales…
                                                • Figure 18: Population projections, by age, 2012-22
                                              • …but smaller household sizes will prove to be a negative influence
                                                • Figure 19: UK households, by size, 2012-22
                                            • Market Size and Forecast

                                              • Online grocery continues to grow in double digits
                                                • Figure 20: Total online grocery market size (including VAT), 2012-22
                                                • Figure 21: Total online grocery market size (including VAT), at current and constant prices, 2012-22
                                              • A growing but small sector
                                                  • Figure 22: Online grocery sales as a % of all grocery retail sales, 2012-22
                                                • Store-based players still dominate the market
                                                  • Figure 23: Share of total online grocery market, by type of online grocery operation, 2012-22
                                                • Three players dominate the store-based online grocery market
                                                  • Figure 24: Online grocery sales by store-based grocery retailers (Including VAT), 2012-22
                                                  • Figure 25: Online grocery sales by store-based grocery retailers (including VAT), at current and constant prices, 2012-22
                                                • Ocado the driver for the online-only segment, but smaller players are growing quickly
                                                  • Figure 26: Online grocery sales by online-only retailers (including VAT), 2012-22
                                                  • Figure 27: Online grocery sales by online-only retailers (including VAT), at current and constant prices, 2012-22
                                                • Forecast methodology
                                                • The Consumer – What You Need to Know

                                                  • Just under half do some online grocery shopping
                                                    • Young families a key audience
                                                      • Convenience an obvious driver
                                                        • Bulky items most popular
                                                          • Tesco the most popular retailer
                                                            • Satisfaction levels generally high but work could be done on recommendations
                                                              • Voice commerce could be limited by lack of visual representation
                                                              • Online Grocery Use and Delivery Pass Ownership

                                                                • Just under half do some online grocery shopping
                                                                  • Figure 28: Online grocery usage, December 2017
                                                                • Trends in online grocery use
                                                                  • Figure 29: Online grocery usage, 2014-17
                                                                • Nearly a quarter have a delivery pass
                                                                  • Figure 30: Delivery pass ownership levels, December 2017
                                                              • Demographics of Online Grocery Use

                                                                  • 25-34s most likely to shop online for groceries
                                                                    • Figure 31: Online grocery usage, by age, December 2017
                                                                  • Gender plays a role in use amongst younger shoppers
                                                                    • Figure 32: Use and interest in online grocery of non-users, by age and gender, December 2017
                                                                  • Online peaks amongst those with young families
                                                                    • Figure 33: Online grocery usage, by parental status, December 2017
                                                                  • Price premium means usage peaks amongst more affluent consumers
                                                                    • Figure 34: Online grocery usage, by socio-economic group, December 2017
                                                                  • Online grocery usage peaks in the capital
                                                                    • Figure 35: Online grocery usage, by type of location lived in and area lived in, December 2017
                                                                • How They Shop Online for Groceries

                                                                  • Desktop/laptops the most used device for online grocery shopping
                                                                      • Figure 36: Devices used to purchase groceries online, December 2017
                                                                    • Younger consumers more likely to shop via smartphone
                                                                      • Figure 37: Devices used to purchase groceries online, by age, December 2017
                                                                    • 25-34s most likely to use multiple devices
                                                                      • Figure 38: Repertoire of devices used to purchase groceries online, by age, December 2017
                                                                  • Why They Shop Online for Groceries

                                                                    • Convenience a clear driver for online grocery
                                                                      • Figure 39: Why users shop online for groceries, December 2017
                                                                    • Stocking up on bulky items more common with older online grocery shoppers
                                                                      • Figure 40: Leading reasons why users shop online for groceries, by age, December 2017
                                                                    • Higher socio-economic groups more convenience-focused
                                                                      • Figure 41: Reasons why users shop online for groceries, by socio-economic group, December 2017
                                                                    • Store experience an issue for those who do the majority of their shopping online
                                                                      • Figure 42: Reasons why users shop online for groceries, by how much grocery shopping is done online, December 2017
                                                                  • Types of Groceries Purchased Online

                                                                    • Bulky goods most popular
                                                                      • Figure 43: Types of products typically purchased when shopping online for groceries, December 2017
                                                                    • 25-44s more likely to buy fresh
                                                                      • Figure 44: Types of products typically purchased when shopping online for groceries, by age, December 2017
                                                                    • 16-24s more likely to buy from a single category
                                                                      • Figure 45: Repertoire of products typically purchased when shopping online for groceries, December 2017
                                                                  • Online Grocery Retailers Used

                                                                    • Tesco the dominant player online
                                                                      • Figure 46: Online grocery retailers used in the past 12 months, December 2017
                                                                    • Recipe boxes are targeting younger, more affluent consumers
                                                                      • Figure 47: Online grocery retailers used in the past 12 months, by age and socio-economic group, December 2017
                                                                    • Over half used two or more online grocery retailers in the past year
                                                                        • Figure 48: Repertoire of online grocery retailers used in the past 12 months, December 2017
                                                                        • Figure 49: Online grocery retailers used in the past 12 months, December 2017
                                                                      • Strong crossover between store and online
                                                                        • Figure 50: Retailers shopped with in-store in the last 12 months, December 2017
                                                                        • Figure 51: Online grocery retailers used in the past 12 months, December 2017
                                                                    • Satisfaction with the Buying Process Online

                                                                      • General high levels of satisfaction from online grocery shoppers
                                                                        • Figure 52: Satisfaction with factors relating to online grocery process online, December 2017
                                                                      • Key Driver Analysis: Recommendations an area to monitor
                                                                          • Figure 53: Key drivers of overall satisfaction with online grocery retailers, December 2017
                                                                          • Figure 54: Overall satisfaction with online grocery retailers – key driver output, December 2017
                                                                        • Shopping aisles or mission-based categorisation?
                                                                            • Figure 55: Attitudes towards online grocery websites, December 2017
                                                                          • Key Driver Analysis – Methodology
                                                                          • Attitudes towards Voice and Same-day Delivery

                                                                            • Voice commerce has potential but first wave of devices don’t lend themselves to grocery ordering
                                                                                • Figure 56: Attitudes towards online grocery shopping, December 2017
                                                                              • Voice commerce has the potential to tap into new areas
                                                                                • Figure 57: Agreement with the statement “The ability to order groceries through voice command whilst on the move appeals to me”, by working status, December 2017
                                                                              • The cost of quick delivery services is off-putting for some
                                                                                • Figure 58: Attitudes towards same-day delivery services, December 2017
                                                                              • Younger consumers more put off by quick delivery charges
                                                                                • Figure 59: Agreement with attitudes towards same-day delivery services, by age, December 2017
                                                                            • Leading Retailers – What You Need to Know

                                                                              • Tesco the dominant player…
                                                                                • …but others are growing quickly
                                                                                  • Voice, recipe boxes and foodservice all areas of innovation in 2017
                                                                                    • Amazon scores best on brand metrics
                                                                                    • Leading Retailers and Market Shares

                                                                                      • Market shares: Tesco accounts for a third of the market
                                                                                        • Figure 60: Leading online grocery retailers’ estimated market shares (excluding VAT), 2017
                                                                                        • Figure 61: Leading online grocery retailers’ estimated market shares (excluding VAT), 2015-17
                                                                                      • Leading players: revenues
                                                                                          • Figure 62: Leading online grocery retailers’ net internet revenues, 2015-17
                                                                                        • Leading players: revenue breakdown
                                                                                          • Figure 63: Leading online grocery retailers’ estimated total online revenues, by grocery and non-grocery, 2015-17
                                                                                        • Smaller players
                                                                                          • Figure 64: Smaller online players, estimated market shares, 2015-17
                                                                                          • Figure 65: Smaller online grocery players’ turnover, 2015-17
                                                                                      • Competitive Strategies – Key Metrics

                                                                                        • Coverage and fulfilment
                                                                                          • Figure 66: Selected leading online grocers’ coverage and fulfilment centres, 2017
                                                                                        • Home delivery metrics
                                                                                          • Figure 67: Selected leading online grocers’ delivery metrics, March 2018
                                                                                        • Delivery passes
                                                                                          • Figure 68: Selected leading online grocers’ delivery pass details, March 2018
                                                                                        • Click-and-collect
                                                                                          • Figure 69: Selected leading online grocers’ click-and-collect details, March 2017
                                                                                      • Advertising and Marketing Activity

                                                                                        • Total sector advertising spend down 26.9% year on year in 2017
                                                                                          • Figure 70: UK online supermarket/grocer/food total recorded above-the-line, online display and direct mail advertising expenditure, 2013-17
                                                                                        • Leading online supermarket/grocer/food retailers advertising spenders
                                                                                          • Figure 71: Leading UK online supermarket/grocer/food retailers’ total recorded above-the-line, online display and direct mail advertising expenditure, 2013-17
                                                                                        • Door drops attract the biggest percentage of total sector advertising spend
                                                                                          • Figure 72: UK online supermarket/grocer/food total recorded above-the-line, online display and direct mail advertising expenditure, by media type, 2017
                                                                                        • Nielsen Ad Intel coverage
                                                                                        • Innovations and Launch Activity

                                                                                          • Voice-enabled shopping
                                                                                            • Ocado is the first to join Alexa’s party…
                                                                                              • Figure 73: Ocado/Amazon Alexa marketing image
                                                                                            • … swiftly followed by Gousto and Morrisons
                                                                                              • Figure 74: Morrisons/Amazon Alexa marketing image, December 2017
                                                                                            • Tesco launches on Google Home
                                                                                              • New delivery methods
                                                                                                • Ocado trials self-driving grocery truck
                                                                                                  • Figure 75: Oxbotica autonomous van, June 2017
                                                                                                • Grocery delivery service for tourists
                                                                                                  • Carrefour lets customers deliver groceries
                                                                                                    • Sainsbury’s trials 30-minute click-and-collect
                                                                                                      • Bringmeister launches in-home delivery…
                                                                                                        • … as does Amazon
                                                                                                          • Recipe boxes and foodservice
                                                                                                            • Sainsbury’s trials pizza delivery service
                                                                                                              • HelloFresh
                                                                                                                • … launches in Sainsbury’s stores…
                                                                                                                  • …opens pop-up store in London…
                                                                                                                    • …launches Christmas dinner recipes
                                                                                                                      • Figure 76: HelloFresh Christmas dinner recipe box, November 2017
                                                                                                                    • Waitrose launches recipe box subscription
                                                                                                                      • Same-day gathers pace
                                                                                                                        • Sainsbury’s expands one-hour delivery
                                                                                                                          • Convibo becomes Home Run
                                                                                                                            • Amazon expands its food offering in Europe
                                                                                                                              • Aldi to begin offering online groceries in the US
                                                                                                                                • Co-op trials online deliveries with Deliveroo
                                                                                                                                  • Marks & Spencer launches online groceries with one-hour delivery trial…
                                                                                                                                    • …and joins Dropit to allow for home delivery of goods from stores
                                                                                                                                      • Robinsons trials home delivery service
                                                                                                                                      • Brand Research

                                                                                                                                          • What you need to know
                                                                                                                                            • Brand map
                                                                                                                                              • Figure 77: Attitudes towards and usage of selected brands, September 2017
                                                                                                                                            • Key brand metrics
                                                                                                                                              • Figure 78: Key metrics for selected brands, September 2017
                                                                                                                                            • Brand attitudes: Online-only retailers perceived as more innovative
                                                                                                                                              • Figure 79: Attitudes, by brand, September 2017
                                                                                                                                            • Brand personality: The big four supermarkets perceived as the most accessible
                                                                                                                                              • Figure 80: Brand personality – macro image, September 2017
                                                                                                                                            • Amazon considered trendsetting and cutting edge
                                                                                                                                              • Figure 81: Brand personality – micro image, September 2017
                                                                                                                                            • Brand analysis
                                                                                                                                              • Amazon innovative and cutting edge
                                                                                                                                                • Figure 82: User profile of Amazon, September 2017
                                                                                                                                              • Tesco trustworthy and accessible
                                                                                                                                                • Figure 83: User profile of Tesco, September 2017
                                                                                                                                              • Sainsbury’s reliable, good customer service but perceived as fairly expensive
                                                                                                                                                • Figure 84: User profile of Sainsbury’s, September 2017
                                                                                                                                              • Morrisons lacks differentiation and uniqueness but value for money
                                                                                                                                                • Figure 85: User profile of Morrisons, September 2017
                                                                                                                                              • Asda trusty, reliable but lacks vigour
                                                                                                                                                • Figure 86: User profile of Asda, September 2017
                                                                                                                                              • Waitrose exclusiveness and worth paying more for
                                                                                                                                                • Figure 87: User profile of Waitrose, September 2017
                                                                                                                                              • Iceland good value, but largely unappealing and disappointing
                                                                                                                                                • Figure 88: User profile of Iceland, September 2017
                                                                                                                                              • Ocado innovative and stylish, but suffers low brand awareness
                                                                                                                                                • Figure 89: User profile of Ocado, September 2017
                                                                                                                                            • Appendix – Data Sources, Abbreviations and Supporting Information

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

                                                                                                                                                        • Forecast methodology