Online Grocery Retailing - UK - March 2015

INTRODUCTION
Definitions
Market size and market shares
Financial definitions
VAT
Other
Abbreviations
EXECUTIVE SUMMARY
The market
Figure 1: Online grocery sales (including VAT), 2009-19
Segment size and forecast
Market drivers
Figure 2: Consumer prices index: Annual % change, January-December 2014
Companies, brands and innovations
Market shares
Figure 3: The leading retailers: Online grocery market shares (%), 2013 and 2014
Groceries/general merchandise split
Figure 4: The leading retailers’ estimated online breakdown, by groceries and general merchandise, 2013 and 2014
The consumer
Consumer usage
Figure 5: Usage of online grocery shopping, November 2014
Where they shop online
Figure 6: Retailers used for the majority of grocery shopping, November 2014
Disadvantages to online grocery shopping
Figure 7: Disadvantages to shopping for groceries online, November 2014
Advantages to online grocery shopping
Figure 8: Advantages to shopping for groceries online, November 2014
Attitudes towards online grocery shopping – Innovations and improvements
Figure 9: Agreement with statements relating to innovations or improvements, November 2014
What we think
ISSUES AND INSIGHTS
Where next as the online market matures?
The facts
The implications
How can grocers improve the shopping experience?
The facts
The implications
Delivery is a key battleground
The facts
The implications
Click-and-collect – Integration at its best
The facts
The implications
TREND APPLICATION
Trend: Make it Mine
Trend: Help Me Help Myself
Mintel futures: Access Anything, Anywhere
MARKET SIZE AND FORECAST
Key points
Growth continues to slow despite Morrisons entering the market
Figure 10: Online grocery sales (including VAT), 2009-19
Online sales account for 5% of all grocery retailers’ sales
Figure 11: Online grocery sales as a % of all grocery retailers’ sector sales, 2009-19
Looking further ahead
Figure 12: Online grocery sales (including VAT), at current and constant prices, 2009-19
Segments
Segment size and forecast: Major online grocers
Figure 13: Online grocery sales by major online grocers (including VAT), 2009-19
Figure 14: Online grocery sales by major online grocers (including VAT), at current and constant prices, 2009-19
Segment size and forecast: Specialist and small online retailers
Figure 15: Online grocery sales by small or specialist online grocery retailers (including VAT), 2009-19
Figure 16: Major online grocers versus small or specialist online grocery retailers’ share of the total online grocery market, 2009-19
Figure 17: Online grocery sales by small or specialist online grocery retailers (including VAT), at current and constant prices, 2009-19
Mintel’s forecast methodology
MARKET ENVIRONMENT
Key points
Broadband connections
Figure 18: UK household internet access, % of households with broadband access with at least one member aged 16-74, 2007-14
Figure 19: UK household internet access, % of households with broadband access with and without dependent children, 2014
Digital trends – Shopping via device
Figure 20: Percentage of individuals who have shopped online in the last three months, by age, October 2014
Figure 21: Personal ownership of mobile phones, January 2012-October 2014
Click-and-collect market
Figure 22: Last use of click-and-collect: Groceries versus non-groceries, June 2014.
Consumer confidence and inflation
Figure 23: Consumer confidence levels, January 2013-January 2015
CPI
Figure 24: UK: Consumer Prices Index: Annual % change, January-December 2014
Retail prices index and average weekly earnings
Figure 25: Retail prices index and average weekly earnings: Annual % change, January 2009-November 2014
STRENGTHS AND WEAKNESSES
Strengths
Weaknesses
WHO’S INNOVATING?
Key points
Tesco launches shopping app for Google Glass
App for pre-ordering deli, lunchmeats and subs
Online recipe delivery service groceries
Home delivery recipe boxes
Sainsbury’s to the rescue
Amazon’s ‘magic wand’ that automates the task of creating a shopping list
Ocado’s shopping centre click-and-collect service
Innovative grocery service at Helsinki Airport
LEADING RETAILERS AND MARKET SHARES
Key points
Market shares
Figure 26: Leading online grocery retailers’ estimated market shares (including VAT), 2012-14
Online revenues: Strong growth from Waitrose
Figure 27: Leading online grocery retailers’ net internet revenues, 2012-14
Online dominated by groceries
Figure 28: Leading online grocery retailers’ estimated total online revenues, by grocery and non-grocery, 2013 and 2014
Contribution to total sales: Tesco nearing 10%
Figure 29: Leading online grocery retailers’ online sales as % of their total UK sales, 2013 and 2014
Smaller online retailers: A small proportion of the market
Figure 30: Smaller online grocery retailers’ estimated market shares, 2012-14
Coverage and fulfilment
Figure 31: Selected leading online grocers’ coverage and fulfilment centres, 2014
Ramping up capabilities
Click-and-collect – A growing concern
Figure 32: Major grocery retailers offering grocery click-and-collect services, 2014
Tesco attracts the highest number of visitors
Figure 33: Leading food retail websites, ranked by total unique visitors, December 2014
THE CONSUMER – PROFILING ONLINE GROCERS’ SHOPPERS
Key points
Online more popular with female consumers
Figure 34: Customer profiles of leading retailers, online and in-store, by gender, November 2014
Younger online shoppers
Figure 35: Customer profiles of leading retailers, online and in-store, by age, November 2014
Waitrose more popular with affluent consumers
Figure 36: Customer profiles of leading retailers, online and in-store, by socio-economic group, November 2014
Morrisons and Asda more popular in the North
Figure 37: Customer profiles of leading retailers, online and in-store, by geographic region, November 2014
Figure 38: Customer profiles of leading retailers, online and in-store, by type of location, November 2014
THE CONSUMER – USAGE OF ONLINE GROCERY SHOPPING
Key points
What we asked
Over 40% of consumers shop for groceries online
Figure 39: Usage of online grocery shopping, November 2014
Participation dips in 2014
Figure 40: Proportion saying they do most or all of their grocery shopping online, 2011-14
Figure 41: Usage of online grocery shopping, December 2013 and November 2014
Frequency of shopping by retailer used
Figure 42: Usage of online grocery shopping, by retailers used for majority of grocery shopping in-store and online, November 2014
Younger people greatest enthusiasts
Figure 43: Usage of online grocery shopping, by average age and affluence, November 2014
Market skewed to the family shopper
Figure 44: Usage of online grocery shopping, by family type, November 2014
Regional
Figure 45: Usage of online grocery shopping, by region, November 2014
THE CONSUMER – WHERE THEY SHOP ONLINE
Key points
What we asked
Tesco dominates the online arena
Figure 46: Retailers used for majority of grocery shopping, in-store versus online, November 2014
Morrisons has a lot of catching up to do
Trend data
Figure 47: Retailers used for majority of grocery shopping, online: Selected major retailers, 2012-14
Online’s contribution to shopper numbers and sales
Figure 48: Online shopper numbers relative to total shopper numbers, and online grocery sales as % of total UK company sales, selected retailers, November 2014
Online shoppers are younger
Figure 49: The consumer: Retailers used for majority of grocery shopping, in-store and online: Selected major retailers, by average age and affluence, November 2014
Tesco online shoppers are from larger households
Figure 50: Retailers used for majority of grocery shopping, online: Selected major retailers, by size of household, November 2014
North West and North East most important region for Asda
Figure 51: Retailers used for majority of grocery shopping, online: Selected major retailers, by region, November 2014
THE CONSUMER – DISADVANTAGES OF SHOPPING ONLINE
Key points
What we asked
Not choosing in person the greatest disadvantage
Figure 52: Disadvantages to shopping for groceries online, November 2014
Delivery-related issues another drawback
Substitutions
Appetite for Aldi and Lidl to sell online
Sell-by dates
Encouraging more silver surfers to shop online for groceries
Figure 53: Disadvantages to shopping for groceries online, by age, November 2014
‘Group buying’ for students?
Figure 54: Disadvantages to shopping for groceries online, by employment status of main income earner in household, November 2014
THE CONSUMER – ADVANTAGES OF SHOPPING ONLINE
Key points
What we asked
Saving effort, time and money seen as greatest benefits
Avoiding the supermarket slog
Figure 55: Advantages to shopping for groceries online, November 2014
Time is precious
Financial benefits
Supporting older people
Figure 56: Selected advantages to shopping for groceries online, by age, November 2014
Figure 57: Selected advantages to shopping for groceries online, by marital status and household size, November 2014
THE CONSUMER – ATTITUDES TOWARDS INNOVATIONS AND IMPROVEMENTS
Key points
What we asked
Fears over substitutions prevalent
Figure 58: Agreement with statements relating to innovations or improvements, November 2014
Figure 59: Agreement with statements relating to innovations or improvements, by retailers used for majority of grocery shopping in-store and online, November 2014
Figure 60: Attitudes towards innovation and improvements in online grocery retailing, by age and affluence, November 2014
Delivery: Clarity and choice needed
Figure 61: Attitudes towards innovation and improvements in online grocery delivery, November 2014
Figure 62: Agreement with innovation and improvements in online grocery delivery, by type of location, November 2014
Interest in click-and-collect via convenience stores
Figure 63: Attitudes towards innovation and improvements in online grocery click-and-collect, November 2014
Figure 64: Agreement with innovation and improvements in online grocery click-and-collect, by type of location, November 2014
Website improvements: Searching for inspiration
Figure 65: Attitudes towards innovation and improvements in online grocery websites, November 2014
Figure 66: Agreement with innovation and improvements in online grocery websites, by age, November 2014
An ability to dictate how they like their food
Figure 67: Attitudes towards innovation and improvements in online grocery products/services, November 2014
Figure 68: Agreement with innovation and improvements in online grocery products/services, by retailers used for the majority of shopping in-store and online, November 2014
THE CONSUMER – CHAID ANALYSIS
Methodology
Shoppers want lower delivery charges
Figure 69: Online grocery retailing – CHAID – Tree output, November 2014
Figure 70: Online grocery retailing – CHAID – Table output, November 2014
AMAZON.CO.UK
What we think
UK grocery offer limited
A poor start in own-brand grocery lines
Company background
Company performance
Figure 71: Amazon Europe: Group sales performance, excl. sales tax, 2009-14
Retail offering
Figure 72: Number of products listed in Grocery on amazon.co.uk, by sub-category, February 2014 and February 2015
ASDA GROUP
What we think
Convenient delivery options
Innovative solutions for busy shoppers
See it, click it, buy it…‘shoppable’ online ads
Company background
Company performance
Figure 73: Asda Group Ltd: Group financial performance, 2010-14
Figure 74: Asda Group Ltd: Estimated online grocery revenues, 2012-14
Figure 75: Asda Group Ltd: Outlet data, 2010-14
Retail offering
J. SAINSBURY
What we think
Launches its first store click-and-collect service
Rollout of new grocery platform
New shopping app
Click and commute
Launches Tu online
Company background
Company performance
Figure 76: J. Sainsbury: Group financial performance, 2010/11-2014/15
Figure 77: J. Sainsbury: Estimated online grocery revenues, 2011/12-2014/15
Figure 78: J. Sainsbury: Outlet data, 2009/10-2014/15
Retail offering
OCADO
What we think
Leveraging its market-leading IP potential
Extending its multichannel reach
Expanding its non-food offer
Improving the online experience
Company background
Company performance
Figure 79: Ocado Ltd: Group financial performance, 2009/10-2013/14
Figure 80: Ocado Ltd: Key customer metrics, 2009/10-2013/14
Retail offering
TESCO
What we think
Profits overstatement
Lewis’ turnaround
Cutting back ranges to simplify shopping
Leading the way online
The future
Company background (UK)
Company performance
Figure 81: Tesco UK: Sales growth, 2014/15
Figure 82: Tesco Plc: Group financial performance, 2009/10-2014/15
Online grocery sales
Figure 83: Tesco UK: Estimated online grocery revenues, 2012/13-2014/15
Profitability
Performance by store format and channel
Figure 84: Like-for-like sales growth, by format and channel, Q1-Christmas 2014/15
Outlets
Figure 85: Tesco UK: Outlet data, 2009/10-2013/14
Figure 86: Tesco sales breakdown, 2013/14
WM MORRISON GROUP
What we think
Freshness and affordability
Early setback, but company claims the service is ahead of its expectations
A differentiator to distinguish itself from already-established online rivals
Delivery coverage weakness
Online price-checker tool and loyalty card
Company background
Company performance
Figure 87: Wm Morrison Group: Group financial performance, 2010/11-2014/15
Figure 88: Wm Morrison Group: Outlet data, 2010/11-2013/14
Retail offering
WAITROSE
What we think
Changing the way people shop online for groceries
Market-leading click-and-collect trial
Specialist sites
Company background
Company performance
Figure 89: Waitrose Ltd: Group financial performance, 2010/11-2014/15
Figure 90: Waitrose: Estimated online grocery revenues, 2011/12-2014/15
Figure 91: Waitrose Ltd: Outlet data, 2010/11-2014/15
Retail offering