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Europe: More UK consumers buy grocery online

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Sales of online grocery retailing in the UK is forecast to reach £11.1 billion (US$14.44 billion) in 2017, up from an estimated £9.9 billion in 2016, according to Mintel.

With the market forecast to grow by 12% this year, the value of virtual shopping baskets is growing at a faster rate than physical ones.

In 2016, sales in the online grocery market rose by an estimated 15%, while total food retail sales grew by 1.5%.

The growth in the market comes as more shoppers are choosing to forgo their trip to the supermarket.

Some 29% of online shoppers say that in the past 12 months they have done more of their grocery shopping on the web.

As many as 14% of consumers in Britain currently do all of their grocery shopping online, up from 7% in 2014.

Meanwhile, the proportion claiming to do most of their grocery shopping online has risen to 13%, up from 10% in 2014.

Overall, 48% of consumers do at least some of their grocery shopping online, up from 43% who said the same in 2014.

“Online grocery is the quickest growing grocery channel,” says senior retail analyst Nick Carroll.

“Once seen as simply a service to replicate the needs of a supermarket shop online, a number of new services came to market in 2016 that have the potential to elevate online grocery beyond this barrier and adequately serve the more fluid and frequent shopping behaviours seen in the wider market.”

“Growth is being driven by encouraging users who have done most or some of their shopping online to do more.”

“This suggests that it’s just as crucial for online grocery retailers to engage as much with their current consumer base as it is for them to attract new shoppers to drive sales.”

Younger, savvy consumers

While the online grocery market has experienced rapid growth in recent years, it remains a small part of the wider market, accounting for an estimated 6% of all grocery retail sales in 2016.

However, it is poised for strong growth over the next few years, forecast to reach £16.7 billion in 2021, accounting for a 9% share of the total grocery market.

Younger consumers are key to this growth while indicating the longevity of the market, Mintel research finds.

Some 62% of consumers surveyed aged 25-34 are current grocery shoppers, as well as 57% aged 35-44 and 56% aged 16-24.

About 23% of consumers aged 25-34 currently do all of their grocery shopping online, as do 20% aged 35-44 and 16% aged 16-24.

In comparison, just one in three 32% consumers aged 55 and over are current online grocery shoppers, while approaching half 47% of this group say they have never bought groceries online and have no interest in doing so.

“The fact that younger consumers are far more likely to shop online highlights that rising smartphone ownership and internet connectivity has created an expectation from consumers that they can get what they want, whenever they want it,” says Carroll.

“A younger online grocery shopping consumer base means it is crucial that grocery retailers have a well thought-out desktop and mobile site to best interact with the core online grocery consumer base.”

Online shopping demand

While younger consumers are currently the most engaged group in this market, same day delivery is a pivotal service that they, in particular, are demanding.

About 53% of all respondents who shop online for groceries say that it is important to have the ability to have online grocery orders delivered on the same day, rising to 71% of consumers aged 16-24 and 65% of those aged 25-34.

Finally, it seems that the majority of respondents are keen to see some new players in the market.

Mintel research finds that 60% of those who shop online for groceries say they would be happy to purchase a full weekly shop online from discounters.

“A number of same-day grocery delivery services have launched in the past year from both established players and new entrants to the market. While providing a same-day delivery service is highly challenging, it is something that consumers are demanding,” says Carroll.

“When it comes to the discounters, they have been a disruptive force in the UK grocery market, but this has been limited to physical retail to date.”

“Our research shows there will certainly be a market for the discounters if they decide to take the plunge into online retailing.”