Author: Mintel Group Ltd.
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Online Grocery Retailing - UK - March 2014
Introduction
 
Some 20% of adults now do all or most of their grocery shopping online – confirming the UK’s leadership in online grocery retailing in Europe.

Yet, there is a problem: less than 5% of the total food retailers’ sector sales are online. So online shoppers are under-indexing in value sales. 

Our consumer research this year explored why this may be, by asking online shoppers impulse purchases when shopping online; we also asked about browsing and buying non-grocery products (ie general merchandise) when buying groceries on the internet. The findings confirm there are real disadvantages to retailers in shifting grocery shoppers from stores to the internet. 

Our other consumer questions this year asked: 

●	How much of their grocery shopping do they do online?
●	Which retailers do they do most of their grocery shopping from, online and in-store?
●	What are the reasons internet shoppers buy groceries online? 
●	What changes or innovations would encourage those not doing all (or any) grocery shopping online to turn to the internet?

Definitions
The online grocery sector size is defined as the online sales of grocery products (largely food and drink but also grocers’ food/drink/FMCG sales online).

It includes: Major grocers’ online sales of food and drink and other grocery products; online-only grocers’ sales (ie Ocado); specialist food and drink retailers’ online sales; online-based food box delivery schemes.

It excludes: Online general merchandise sales by major grocers (eg electricals or furniture ordered from direct.tesco.com or clothing ordered from asda.com); foodservice delivery (ie restaurant/takeaways ordered online); home delivery of groceries not ordered online.

This year, we also include a segment size and forecast for major grocers only – stripping out smaller, more niche retailers such as food specialists. 

Market size and market shares
We have recalculated some aspects of the market size and market shares since last year’s report, primarily because of new data released by Sainsbury’s and Asda. 

Financial definitions
Sales: turnover as reported by the company, excluding VAT.

Operating profits: profits after depreciation, but before interest and tax and excluding non-trading income such as the sale of fixed assets and any exceptional items, including provisions.

Pre-tax profits: operating profit less net interest payable and exceptional charges, but before tax, dividends and other appropriations.

Operating margin: operating profits as a percentage of sales.

VAT
In general, all company sales data are quoted excluding VAT.

Consumer spending data are quoted including VAT unless specifically stated otherwise.

VAT-inclusive sales are used for the market size and forecast.

VAT-exclusive sales are used to calculate market shares.

The UK reduced the standard rate of VAT from 17.5% to 15% on 1 December 2008, before increasing it to 17.5% on 1 January 2010 and 20% on 4 January 2011.

Other 
Value figures throughout this report are at retail selling prices (rsp) unless otherwise stated. Market sizes at constant 2013 prices have been calculated using Mintel’s food deflator.

Crown copyright material is reproduced with the permission of the Controller of HMSO and the Queen’s Printer for Scotland.

Abbreviations
B2B | Business-to-Business
CAGR | Compound Annual Growth Rate
CFC | Customer Fulfilment Centre
CPI | Consumer Prices Index
EBITDA | Earnings Before Interest, Tax, Depreciation and Amortisation
FMCG | Fast-Moving Consumer Goods
GDP | Gross Domestic Product
GM | General Merchandise
GMI | Global Market Insite Inc.
IPO | Initial Public Offering
M&S | Marks & Spencer
na | Not Available or Not Applicable
Nielsen Media Research | For further information please contact nmr.communication@nielsenmedia.co.uk
NPD | New Product Development
ONS | Office for National Statistics
OTC | Over-The-Counter (drugs)
RPI | Retail Price Index
RSP | Retail Selling Prices
SKU | Stock Keeping Units
USP | Unique Selling Point
VAT | Value Added Tax

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