Author: Mintel Group Ltd.
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Online Grocery Retailing - UK - March 2014

INTRODUCTION
Definitions
Market size and market shares
Financial definitions
VAT
Other
Abbreviations
EXECUTIVE SUMMARY
The market
Figure 1: Online grocery sales (incl. VAT), 2008-18
Figure 2: Online grocery sales as % of all food retailers’ sector sales and grocery retailers’ sector sales, 2008-18
Figure 3: Online grocery sales as % of all food retailers’ sector sales versus the % of respondents saying they do all/all or most of their grocery shopping online, 2011-13
Companies, brands and innovations
Figure 4: Leading online grocers’ shares of online grocery sales, 2012 and 2013
Sales growth 2013
Figure 5: Leading retailers: Estimated growth in online grocery sales, 2013
The consumer
Who shops for groceries online
Figure 6: The consumer: Usage of online grocery shopping, December 2013
Where they shop online
Figure 7: The consumer: Retailers used for the majority of grocery shopping, in-store and online: selected major retailers, December 2013
Non-grocery shopping and impulse buys online
Figure 8: The consumer: Attitudes and behaviour: impulse buys, December 2013
Figure 9: The consumer: Attitudes and behaviour: non-grocery shopping, December 2013
Why they shop online
Figure 10: The consumer: Reasons for shopping for groceries online, December 2013
What would encourage them to shop online
Figure 11: The consumer: What would encourage consumers to shop/shop more online, December 2013
What we think
ISSUES AND INSIGHTS
Why is per-shopper value less online?
The facts
The implications
So how should supermarkets be pushing the online channel?
The facts
The implications
So how can stores and online be integrated?
The facts
The implications
How big will online get?
The facts
The implications
TREND APPLICATION
Trend: Prepare for the Worst
Trend: FSTR HYPR
Mintel futures: Old Gold
MARKET ENVIRONMENT
Key points
Broadband connections
Figure 12: Percentage of all UK households having a broadband internet connection, total and by selected household type, 2013
Shopping and selling by device
Figure 13: The consumer: Percentage shopping or selling online in past three months, by device, September 2013
Figure 14: The consumer: Percentage of tablet owners and smartphone owners shopping online via tablets/smartphones in the past three months, September 2013
Consumer confidence
Figure 15: UK: Consumer confidence levels, February 2013-January 2014
Figure 16: Retail prices index and average weekly earnings: Annual % change, June 2010-December 2013
Figure 17: UK: Consumer prices index: Annual % change, January 2013-January 2014
CONSUMER SPENDING ON KEY CATEGORIES
Key points
Food, drink and tobacco
Figure 18: UK: Breakdown of spending on food, beverages and tobacco, 2013
Figure 19: UK: Consumer spending on in-home food, beverages and tobacco (incl. VAT), 2009-14
Non-food FMCGs
Figure 20: UK: Consumer spending on personal care, household and over-the-counter pharmaceutical products (incl. VAT), 2009-14
Total potential market
Figure 21: UK: Estimated online grocery retail sales as proportion of spending on in-home food, beverages, tobacco and FMCGs, 2009-14
MARKET SIZE AND FORECAST
Key points
Growth slowed in 2013, may gain from Morrisons in 2014 and 2015
Figure 22: Online grocery sales (incl. VAT), 2008-18
The impact of Morrisons
Online still less than 5% of the food retail sector
Figure 23: Online grocery sales as % of all food retailers’ sector sales and grocery retailers’ sector sales, 2008-18
Gap between shopper numbers and online sales widens
Figure 24: Online grocery sales as % of all food retailers’ sector sales versus the % of respondents saying they do all/all or most of their grocery shopping online, 2011-13
Looking out to 2018
Figure 25: Online grocery sales (incl. VAT), at current and constant prices, 2008-18
Segments
Segment size and forecast: major online grocers
Figure 26: Online grocery sales, by major online grocers (incl. VAT), 2008-18
Just 4% of grocers’ sector sales are online
Figure 27: Online grocery sales by major online grocers as % of all grocers' sector sales, 2008-18
Figure 28: Online grocery sales by major online grocers (incl. VAT), at current and constant prices, 2008-18
Segment size and forecast: specialist online retailers
Figure 29: Online grocery sales by small or specialist online grocery retailers (incl. VAT), 2008-18
Figure 30: Online grocery sales by small or specialist online grocery retailers (incl. VAT), at current and constant prices, 2008-18
Mintel’s forecast methodology
STRENGTHS AND WEAKNESSES
Strengths
Weaknesses
THE CONSUMER – PROFILING ONLINE GROCERS’ SHOPPERS
Key points
By gender: Men over-represented online
Figure 31: The consumer: customer profiles of leading retailers, online and in-store, by gender, December 2013
By age group: Online shoppers more likely to be younger
Figure 32: The consumer: customer profiles of leading retailers, online and in-store, by age, December 2013
By socio-economic group: more affluent online
Figure 33: The consumer: customer profiles of leading retailers, online and in-store, by socio-economic group, December 2013
By region: Tesco is closest to the average
Figure 34: The consumer: customer profiles of leading retailers, online and in-store, by region, December 2013
THE CONSUMER – WHO IS SHOPPING FOR GROCERIES ONLINE?
Key points
What we asked
Nearly half of consumers now buy groceries online
Figure 35: The consumer: Usage of online grocery shopping, December 2013
Participation jumps in 2013
Figure 36: The consumer: Proportion saying they do most or all of their grocery shopping online, 2011-13
Figure 37: The consumer: Usage of online grocery shopping, November 2012 and December 2013
Frequency of shopping by retailer used
Figure 38: The consumer: Usage of online grocery shopping, by retailers used for majority of grocery shopping, in-store and online, December 2013
By demographics: participation peaks among 25-34s and Londoners
Figure 39: The consumer: Usage of online grocery shopping, by average age and affluence, December 2013
Figure 40: The consumer: Usage of online grocery shopping, by age, December 2013
Figure 41: The consumer: Usage of online grocery shopping, by region, December 2013
Figure 42: The consumer: Usage of online grocery shopping, by presence of children in household, December 2013
THE CONSUMER – WHERE THEY SHOP ONLINE
Key points
What we asked
Tesco and Asda show strongest online shopper numbers
Figure 43: The consumer: Retailers used for majority of grocery shopping, in-store and online: selected major retailers, December 2013
Comparing 2012 and 2013
Figure 44: The consumer: Retailers used for majority of grocery shopping, online: selected major retailers, November 2012 and December 2013
Comparing online’s contribution to shopper numbers and contribution to sales
Figure 45: Online shopper numbers as % of total shopper numbers, and online grocery sales as % of total UK company sales, selected retailers, December 2013
Online shoppers are much younger
Figure 46: The consumer: Retailers used for majority of grocery shopping, in-store and online: selected major retailers, by average age and affluence, December 2013
Figure 47: The consumer: Retailers used for majority of grocery shopping, in-store and online: selected major retailers, by age, December 2013
Prospects for Morrisons
THE CONSUMER – NON-GROCERY SHOPPING AND IMPULSE BUYS ONLINE
Key points
What we asked
Consumers overlook non-grocery items when shopping online…
Figure 48: The consumer: Attitudes and behaviour: non-grocery shopping, December 2013
…and fewer consumers make impulse purchases when shopping online
Figure 49: The consumer: Attitudes and behaviour: impulse buys, December 2013
Helping to explain the shopper/value gap
Figure 50: Online grocery sales as % of all food retailers’ sector sales versus the % of respondents saying they do all/all or most of their grocery shopping online, 2011-13
Demographics: older shoppers more disciplined
Figure 51: The consumer: Attitudes and behaviour: non-grocery shopping and impulse buys, by age, December 2013
THE CONSUMER – WHY THEY SHOP ONLINE
Key points
What we asked
Saving effort, time, money are most important
Figure 52: The consumer: Reasons for shopping for groceries online, December 2013
Most frequent shoppers are most demanding
Figure 53: The consumer: Reasons for shopping for groceries online, by frequency of shopping for groceries online, December 2013
Demographics: older shoppers look to save time and effort
Figure 54: The consumer: Reasons for shopping for groceries online, by average age and affluence, December 2013
Figure 55: The consumer: Reasons for shopping for groceries online, most popular reasons, by age, December 2013
Figure 56: The consumer: Reasons for shopping for groceries online, most popular reasons, by gender, December 2013
By retailer used: Tesco shoppers appreciate convenience
Figure 57: The consumer: Reasons for shopping for groceries online, most popular reasons, by retailers used for majority of grocery shopping whether in-store and online, December 2013
Focus group confirms convenience and budgeting are important
THE CONSUMER – WHAT WOULD ENCOURAGE THEM TO SHOP ONLINE
Key points
What we asked
Charges and delivery barriers remain
Figure 58: The consumer: What would encourage consumers to shop/shop more online, December 2013
By retailer used: Strong demand for Morrisons online
Figure 59: The consumer: What would encourage consumers to shop/shop more online, selected options, by retailers used for majority of grocery shopping, in-store and online, December 2013
Demographics: Young want more information, older want value
Figure 60: The consumer: What would encourage consumers to shop/shop more online, by average age and affluence, December 2013
Figure 61: The consumer: What would encourage consumers to shop/shop more online, by age, December 2013
Figure 62: The consumer: What would encourage consumers to shop/shop more online, by presence of children in household, December 2013
WHO’S INNOVATING?
Key points
Foodie.fm partners with The Southern Co-operative
Professional shoppers to do your grocery shopping
Spanish start-up helping online grocery shoppers save time and money
Smart fridge that generates its own grocery shopping list
Amazon Add-on
Walmart bolsters its online grocery credentials
One-hour grocery delivery service
‘MyStore’
Live availability stock tool
‘E-couching’
BRAND COMMUNICATION AND PROMOTION
Key points
Leading grocery retailers’ adspend
Figure 63: Main media advertising spend, by the UK’s leading grocery retailers (incl. online supermarkets), 2010-13
Online shopping/delivery/home delivery brand spend
Figure 64: Selected UK grocery retailers’ (incl. online supermarkets) advertising spend on online shopping/delivery/home delivery brand, 2010-13
Media used
Figure 65: Main media advertising spend by the UK’s leading grocery retailers (incl. online supermarkets), by media type, 2012 and 2013
Figure 66: Selected UK grocery retailers’ (incl. online supermarkets) advertising spend on online shopping/delivery/home delivery brand, by media type, 2012 and 2013
What we’ve seen in 2014
Morrisons debuts campaign for online grocery launch
Sainsbury’s thrifty budget shopper campaign
LEADING RETAILERS AND MARKET SHARES
Key points
Market shares
Figure 67: Leading online grocery retailers’ market shares, 2011-13
Online revenues
Figure 68: Leading online grocery retailers’ net internet revenues, 2011-13
Figure 69: Leading online grocery retailers’ estimated total online revenues, by grocery and non-grocery, 2012 and 2013
Proportion of sales online
Figure 70: Leading online grocery retailers’ online sales as % of their total UK sales, 2012 and 2013
Smaller online retailers
Figure 71: Smaller online grocery retailers’ estimated market shares, 2010-12
Coverage and fulfilment
Figure 72: Coverage: selected leading online grocers, February/March 2014
Figure 73: Fulfilment: dot.com-only fulfilment centres, February 2014
Most popular sites by visitor numbers
Figure 74: Leading food retail websites, ranked by total unique visitors, January 2014
AMAZON
What we think
Company background
Company performance
Figure 75: Amazon Europe: Group sales performance, excl. sales tax, 2009-13
Retail offering
Figure 76: Number of products listed in Grocery on amazon.co.uk, by sub-category, February 2014
ASDA GROUP LTD
What we think
Company background
Company performance
Figure 78: Asda Group Ltd: Group financial performance, 2009-13
Figure 79: Asda Group Ltd: Estimated online grocery revenues, 2011-13
Figure 80: Asda Group Ltd: Outlet data, 2009-12
Retail offering
J SAINSBURY
What we think
Company background
Company performance
Figure 81: J Sainsbury: Group financial performance, 2009/10-2013/14
Figure 82: J Sainsbury: Estimated online grocery revenues, 2011/12-2013/14
Figure 83: J Sainsbury: Outlet data, 2009/10-2012/13
Retail offering
OCADO LTD
What we think
Figure 84: Ocado.com and waitrose.com: Composition of visitors, by socio-economic group, January 2014
Company background
Company performance
Figure 85: Ocado Ltd: Group financial performance, 2008/09-2012/13
Figure 86: Ocado Ltd: Key customer metrics, 2008/09-2012/13
Retail offering
THE CO-OPERATIVE FOOD
What we think
Company background
Company performance
Figure 87: The Co-operative Food: Group financial performance, 2008/09-2013/14
Figure 88: The Co-operative Food: Outlet data, 2008/09-2013/14
Retail offering
TESCO
What we think
Company background (UK)
Company performance
Figure 89: Tesco UK:  Sales growth, 2013/14
Figure 90: Tesco Plc: Group financial performance, 2008/09-2013/14
Figure 91: Tesco UK: Estimated online grocery revenues, 2011-13
Figure 92: Tesco UK: Outlet data, 2009/10-2013/14
Retail offering
WAITROSE LTD
What we think
Succeeding through investment
Online capacity help drive sales
Company background
Company performance
Figure 94: Waitrose Ltd: Group financial performance, 2009/10-2013/14
Figure 95: Waitrose Ltd: Estimated online grocery revenues, 2011/12-2013/14
Figure 96: Waitrose Ltd: Outlet data, 2009/10-2013/14
Retail offering
WM MORRISON GROUP
What we think
Company background
Company performance
Figure 97: Wm Morrison Group: Group financial performance, 2009/10-2013/14
Figure 98: Morrisons:  Outlet data, 2009/10 -2013/4
Retail offering
APPENDIX – THE CONSUMER – WHO SHOPS FOR GROCERIES ONLINE
Figure 99: Usage of online grocery shopping, December 2013
Figure 100: Most popular usage of online grocery shopping, by demographics, December 2013
Figure 101: Next most popular usage of online grocery shopping, by demographics, December 2013
APPENDIX – THE CONSUMER – WHERE THEY SHOP ONLINE
Figure 102: Retailers used for majority of grocery shopping, in-store and online, December 2013
Figure 103: Usage of online grocery shopping, by retailers used for majority of grocery shopping, in-store and online, December 2013
Figure 104: Usage of online grocery shopping, by retailers used for majority of in-store grocery shopping, December 2013
Figure 105: Usage of online grocery shopping, by Retailers used for majority of online grocery shopping, December 2013
Figure 106: Most popular retailers used for majority of grocery shopping, in-store and online, by demographics, December 2013
Figure 107: Next most popular retailers used for majority of grocery shopping, in-store and online, by demographics, December 2013
Figure 108: Most popular retailers used for majority of in-store grocery shopping, by demographics, December 2013
Figure 109: Next most popular retailers used for majority of in-store grocery shopping, by demographics, December 2013
Figure 110: Most popular retailers used for majority of online grocery shopping, by demographics, December 2013
Figure 111: Next most popular retailers used for majority of online grocery shopping, by demographics, December 2013
APPENDIX – THE CONSUMER – NON-GROCERY SHOPPING AND IMPULSE BUYS ONLINE
Figure 112: Attitudes and behaviour, December 2013
Figure 113: Attitudes and behaviour, by usage of online grocery shopping, December 2013
Figure 114: Attitudes and behaviour, by retailers used for majority of grocery shopping, in-store and online, December 2013
Figure 115: Attitudes and behaviour, by retailers used for majority of in-store grocery shopping, December 2013
Figure 116: Attitudes and behaviour, by retailers used for majority of online grocery shopping, December 2013
Figure 117: Most popular attitudes and behaviour, by demographics, December 2013
Figure 118: Next most popular attitudes and behaviour, by demographics, December 2013
APPENDIX – THE CONSUMER – WHY THEY SHOP ONLINE
Figure 119: Reasons for shopping for groceries online, December 2013
Figure 120: Reasons for shopping for groceries online, by Usage of online grocery shopping, December 2013
Figure 121: Reasons for shopping for groceries online, by retailers used for majority of grocery shopping, in-store and online, December 2013
Figure 122: Reasons for shopping for groceries online, by retailers used for majority of in-store grocery shopping, December 2013
Figure 123: Reasons for shopping for groceries online, by retailers used for majority of online grocery shopping, December 2013
Figure 124: Reasons for shopping for groceries online, by most popular what would encourage consumers to shop/shop more online, December 2013
Figure 125: Reasons for shopping for groceries online, by next most popular what would encourage consumers to shop/shop more online, December 2013
Figure 126: Most popular reasons for shopping for groceries online, by demographics, December 2013
Figure 127: Next most popular reasons for shopping for groceries online, by demographics, December 2013
APPENDIX – THE CONSUMER – WHAT WOULD ENCOURAGE THEM TO SHOP ONLINE
Figure 128: What would encourage consumers to shop/shop more online, December 2013
Figure 129: What would encourage consumers to shop/shop more online, by most popular usage of online grocery shopping, December 2013
Figure 130: What would encourage consumers to shop/shop more online, by next most popular usage of online grocery shopping, December 2013
Figure 131: What would encourage consumers to shop/shop more online, by retailers used for majority of grocery shopping, in-store and online, December 2013
Figure 132: What would encourage consumers to shop/shop more online, by retailers used for majority of in-store grocery shopping, December 2013
Figure 133: What would encourage consumers to shop/shop more online, by retailers used for majority of online grocery shopping, December 2013
Figure 134: Most popular what would encourage consumers to shop/shop more online, by demographics, December 2013
Figure 135: Next most popular what would encourage consumers to shop/shop more online, by demographics, December 2013

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