Online grocery threat set to escalate

online grocery store

New research from IGD suggests that online grocery is set to be the fastest-growing segment of all UK grocery channels in the next five years.

The UK food and grocery market is worth £184.5bn, and online grocery currently accounts for £10.4bn of this. Although supermarkets and hypermarkets will still hold the biggest share of the market in five years’ time, online grocery retail is forecast to be the fastest-growing segment of all UK grocery channels, according to grocery research organisation IGD, with latest figures predicting growth of 53.8% between 2017 and 2022 to £16bn.

The move represents a threat or an opportunity for local retailers, depending upon how they approach the challenge as shoppers are increasingly turning online for their food and grocery purchases, with two out of five (42%) UK grocery shoppers now using online as part of their grocery shops every month, while three out of five (60%) plan to shop online for groceries and have them delivered to their home in the next two to three years.

Those who already shop online are also doing so more frequently. Some 28% of online shoppers claim to shop once a week or more online, compared with 20% in 2013. Online delivery saver passes are helping to lock in shopper loyalty and increase frequency of shops, with 29% of online shoppers claiming to be subscribed to this type of scheme.

Speaking at IGD’s Online & Digital Summit, IGD’s Shopper Insight Manager, Vanessa Henry, said: “More shoppers are engaging with online grocery shopping than ever before. What’s interesting is that, on the whole, online is not being used in isolation.

“What we call ‘omnichannel shoppers’ are having a big impact on the grocery market, with over half (54%) of shoppers claiming that they use five or more different channels every month, as well as buying from 12 different store brands on average. Retailers should therefore consider how they are driving loyalty so that they become the brand of choice, for example with online delivery saver passes or special promotions.”

IGD research suggests that the most popular combinations for online shoppers are using online and larger stores, and online and convenience stores. A significant 40% of shoppers said they have used either a blend of online and supermarkets or hypermarkets and convenience stores in the last month for their food and grocery shopping. But there is still huge potential to grow the online opportunity in the future.