The Covid-19 pandemic led to an acceleration in on-line grocery purchasing, however market progress has since levelled off. Based on the ONS, web gross sales as a proportion of complete retail gross sales within the UK (not simply grocery) stood at 18.7% in July 2019. Whereas this surged to a peak of 37.8% in January 2021 – notably throughout the second UK lockdown – it has since fallen to 25.3% in July 2022.
As shopper concern shifts from contact-free purchasing to looking for out worth, and shopper behaviour shifts again in direction of the pre-pandemic ‘regular’, how is the net grocery market faring within the second half of 2022?
Right here’s a collection of stats as an example what’s occurring, and the way on-line and omnichannel grocery retailers are responding.
1. Newest stats spotlight areas of sustained demand
Proportion of UK over-65s shopping for groceries on-line has doubled in 3 years
Adoption of on-line grocery purchasing has definitely elevated for the reason that onset of the pandemic, although not fairly as dramatically as earlier reviews of ‘10 years’ value of progress’ may recommend.
Kantar figures state that 12.6% of UK grocery gross sales have been carried out on-line in March 2022 in contrast with 8.0% three years in the past – a big rise and one that implies adoption will probably be everlasting.
Curiously, Kantar says that UK customers over the age of 65 at the moment are integral to this, with the proportion of this demographic shopping for on-line doubling from 9% to 18% over the previous three years.
Older customers usually tend to be high-spend and online-only
Spryker and Appinio’s UK On-line Grocery Report 2022 additionally highlights the behaviour of older shoppers, with this demographic extra prone to be higher-spending, online-only clients.
Whereas the examine means that over 55s are much less naturally pre-disposed to purchasing on-line groceries than youthful shoppers (partly attributable to location), it discovered 55 to 65-year-old respondents to be the probably to say that they’ve moved all of their purchasing on-line previously few years.
What’s extra, when older shoppers do purchase on-line, the survey outcomes indicated that their spending matches in addition to exceeds that of youthful shoppers. Spryker and Appinio additionally discovered that this demographic is the probably to need to swap all of their purchasing on-line inside the subsequent two years, partly because of the ongoing risk of Covid.
Groceries now account for 8.9% of complete US ecommerce share
Information launched by Adobe means that groceries has turn into a significant ecommerce class within the US, now accounting for 8.9% of total US ecommerce share.
In 2020, US customers spent a whopping $73.7 billion on groceries, which represented a rise of 103% year-on-year. Adobe notes that this has since declined from the peak of the pandemic, nevertheless, US shoppers now spend a median of $6.7 billion every month for groceries, which is up 6.3% on the $3.1 billion spent on groceries in 2019. Altogether, Adobe predicts the class to generate greater than $85 billion in 2022.
2. Enthusiasm returns for purchasing in-store
Frequency of on-line grocery orders declines amongst most-engaged shoppers
Whereas gross sales progress stays regular, total on-line grocery gross sales have naturally dwindled from the peak of the pandemic. Analysis from Morning Seek the advice of has discovered that the share of US shoppers who report ordering groceries on-line a minimum of as soon as per week has declined among the many most engaged demographics. It discovered that, amongst high-income households, weekly on-line grocery ordering fell from 29% in October 2021 to 18% in April 2022.
There are numerous contributing components to this decline, corresponding to decreased concern about Covid, in addition to rising provide chain points and financial pressures. Curiously, Morning Seek the advice of additionally discovered that desire for purchasing in-store has elevated among the many similar teams which might be reporting decreased frequency in on-line orders.
World shoppers desire in-store grocery purchasing
Morning Seek the advice of’s ‘The State of Retail & E-Commerce’ report for H2 2022 states that preferences for in-store grocery purchasing stay excessive throughout the globe. The examine, primarily based on survey interviews with greater than 15,000 adults from international locations together with the UK, US, France, and China, discovered that 83% of shoppers desire to buy groceries and family items on-line versus 15% preferring to buy on-line.
Curiously, it additionally discovered that US shoppers’ enjoyment of on-line purchasing has dwindled over the previous few months. Fifty p.c of web shoppers stated in March that they most well-liked purchasing on-line as a result of they loved the expertise, which dropped to 41% in June.
3. Shoppers hunt down worth and comfort from a number of retailers, shifting away from single weekly store
Ocado sees baskets shrink regardless of progress in lively clients
Ocado’s latest earnings outcomes recommend that inflation is impacting on-line grocery gross sales as shoppers pull again on spend. Regardless of 12% progress in lively clients in comparison with the 12 months prior (and a 9% rise on pre-Covid instances), Ocado’s income declined 8% for H1 2022, which it says displays “altering buyer purchasing behaviours because the development in direction of purchasing smaller baskets with the top of Covid restrictions was additional compounded by the rising value of residing disaster within the UK.”
Certainly, Ocado is seeing clients buy fewer groceries on-line. It says that common basket worth for H1 2022 was £120, down 13% from £138 in H1 2021, pushed by clients including fewer gadgets to their baskets.
Differentiated presents will lead to break up baskets
McKinsey has predicted that smaller grocery baskets will turn into a standard incidence, pushed by shoppers splitting their purchases between ecommerce gamers relying on want.
Certainly, McKinsey’s analysis states that one-third of shoppers who store on-line weekly now purchase their groceries from three or extra ecommerce gamers. On-line choices are prone to turn into much more differentiated in future (together with ‘q-commerce’, click-and-collect, and scheduled deliveries for stocking up), with every serving the precise wants of extra shopper segments and their purchasing necessities. As Ocado has proven, this might lead to decrease common order worth for particular person grocery retailers.
On-line & omnichannel grocery customers spend extra in comparison with simply in-store customers
Dunnhumby’s Shopper Traits Tracker mirrors McKinsey’s findings, stating that on-line and omnichannel customers spend extra on groceries than in-store solely customers ($594 vs. $388 per thirty days), however unfold their cash throughout a better variety of retailers. The analysis discovered that on-line and omnichannel shoppers store with between 3.9 and 6.6 retailers per thirty days, versus 3.2 for in-store-only customers.
In consequence, Dunnhumby means that in-store grocery shoppers could also be extra loyal, with on-line and omnichannel customers shopping for the place and when it’s most handy for them.
Lidl and Aldi take pleasure in document market share as shoppers hunt down worth over comfort
Low cost grocery retailers Lidl and Aldi proceed to steal market share from omnichannel retailers, as shoppers more and more shift their spend to worth shops.
Based on Kantar, Aldi’s share rose to 9.1% within the 4 weeks to 7th August 2022, which suggests it would quickly overtaken Morrisons to turn into the UK’s fourth greatest grocery store. This time final 12 months, Morrisons held 10% share of the market.
Collectively, Lidl and Aldi have gained 1.8% of British grocery gross sales over the previous 12 weeks, which Kantar says represents a £2.3 billion annual shift in spending in direction of the low cost retailers.
4. Fulfilment: Click on & gather up whereas speedy supply faces value problem
Tesco aligns with continued demand for click on and gather
Regardless of total on-line gross sales falling, Tesco says that its on-line enterprise has “remained considerably bigger than earlier than the pandemic, with two 12 months like for like of 66%, which equates to £2.3 billion of extra on-line gross sales.”
One space of focus is click-and-collect. In its preliminary outcomes name again in April, Tesco additionally acknowledged that, having peaked at round 25% of orders throughout the pandemic, the grocery store remains to be seeing round double the proportion of click-and-collect than it had two years in the past. In consequence, Tesco is rolling out 102 additional click-and-collect areas this 12 months.
Along with this, and aligning with Tesco’s give attention to worth, the grocery store is rolling out a click-and-collect membership scheme plus two saver supply tiers, with costs beginning at £2.49 a month for ‘Anytime Click on + Accumulate’, and £4.99 for ‘Off Peak Supply Plan’ – each of which contain decrease minimal basket costs.
Shopper curiosity in speedy grocery supply skewed in direction of London
Analysis by TWC Traits has discovered that 51% of shoppers have an curiosity in speedy grocery supply, regardless of simply 17% utilizing the service. The identical examine additionally concluded that each utilization and curiosity is skewed to London, with curiosity ranges rising to 69% within the capital.
That is doubtless associated to the excessive focus of speedy grocery corporations working in dense city areas, together with Getir, Gorillas, and Zetir. With regards to the limitations for non-users, rising prices are the primary motive, with 44% saying they’re too costly, and 30% saying they aren’t ready to pay for supply.
