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Online Grocery Retailing - UK - September 2009

ISSUES IN THE MARKET
Key themes
Definitions
Abbreviations
FUTURE OPPORTUNITIES
Making it mycybermarket.com
Providing inspiration
Simplifying healthy choices
Broadening access
Online top-ups
MARKET IN BRIEF
Robust growth ahead to £6.9 billion
Figure 1: Consumer spending on online purchasing of food and drink*, 2004-14
Tesco leads but losing ground
Figure 2: Leading retailers’ estimated shares of online food retailing, 2008/09
One in three buys food online, 7% would like to do so
Top-up in-store makes e-groceries pointless?
Themes of 2008/09
INTERNAL MARKET ENVIRONMENT
Key points
The rise of broadband
Figure 3: Broadband penetration at home, 2004-08
Figure 4: Broadband penetration at home, by detailed age and socio-economic group, 2004 and 2008
Online shopping still gaining
Figure 5: Purchasing from any websites in the last three months, 2002-08
Figure 6: Purchasing from any websites in the last three months, by age group and gender, October 2008
Fashion and books lead e-shopping
Figure 7: Type of websites purchased from in the last three months, April 2009
Figure 8: Selected websites purchased from in the last three months, Oct 2002-Oct 2009
Security concerns remain a challenge
Figure 9: Extent to which security concerns affect purchasing on the web, by age, April 2008
Figure 10: Extent to which security concerns affect purchasing on the web, by socio-economic group, April 2008
BROADER MARKET ENVIRONMENT
Key points
Disposable incomes stagnate
Figure 11: UK PDI and consumer expenditure, current and constant 2009 prices, index, 2004-14
Figure 12: Ways in which grocery shopping habits have changed in the last 12 months, July 2009
The retail sector hit by downturn
Figure 13: UK: Year-on-year retail sales value growth, monthly, January 2008-June 2009
Figure 14: UK: Year-on-year retail sales volume growth (excluding inflation), monthly, January 2008-June 2009
Food price inflation leaped ahead in 2008
Figure 15: Food and overall Consumer Price Inflation, 2004-09
An ageing population
Figure 16: UK: forecast change in population, by age group, 2009-14
MARKET IN CONTEXT
Key points
The big four take two thirds of food sales
Figure 17: Leading UK food retailers’ shares of all food retail, 2008/09
Food and drink is the top category by spend, after housing
Figure 18: Consumer expenditure, by category, 2009 (est)
Figure 19: Year-on-year growth in spending on in-home food and eating out, 2005-09
STRENGTHS AND WEAKNESSES
Strengths
Weaknesses
WHO’S INNOVATING?
Key points
The established level
Mobile shopping
Better communication
Providing inspiration
Ease of use and information
Health help
Offering value – virtually
MARKET SIZE AND FORECAST
Key points
Is online growth in the grocers' interest?
Figure 20: Share of online in total grocery sales*, 2005-09
Rising access drives recent growth
Figure 21: Consumer spending on online purchasing of food and drink*, at current and constant 2009 prices, 2005-14
Young families to remain key group
Non-food to grow
Factors used in the forecast
RETAIL COMPETITOR ANALYSIS
Key points
Figure 22: Leading retailers’ estimated shares of online food retailing, 2008/09
Figure 23: Supermarket usage, online and in-store, leading online grocers, July 2009
Tesco's lead unchallenged
Sainsbury's breaks £0.5 billion mark
Asda lags behind despite expansion
Ocado regains steam in 2008
Waitrose remains in the minor league
Organic box schemes still niche
The milkman goes online too
Figure 24: Leading retailers’ estimated sales and shares of online food retailing, 2006-08
Who’s missing (out)?
Morrisons a maybe
No plans announced by M&S
The Co-op has its hands full
Amazon entry rumoured
RETAILER PROFILES
Figure 25: Leading online food retailers’ comparison data, 2009
 ASDA
 OCADO
Figure 26: Ocado product mix, by number of lines, 2008/09
 SAINSBURY’S
 TESCO
 WAITROSE
 ABEL & COLE
 RIVERFORD
BRAND COMMUNICATION AND PROMOTION
Key points
Adspend dips in 2008
Figure 27: Main monitored media advertising expenditure on online grocery shopping*, 2005-08
Direct mail loses out to TV
Figure 28: Main monitored media advertising spend on online grocery shopping, percentage by media type, 2006-08
Tesco becomes top spender as Ocado cuts back
Figure 29: Main monitored media advertising spend on online grocery shopping, percentage by advertiser, 2006-08
The channel makes a difference for brand promotion
No more passing traffic
New opportunities online
THE CONSUMER – ONLINE FOOD SHOPPING PATTERNS
Key points
Figure 30: Online shopping for groceries, July 2009
Changes to grocery shopping habits
Attitudes towards grocery shopping
THE CONSUMER – ATTITUDES TOWARDS ONLINE FOOD SHOPPING
Key points
Figure 31: Attitudes towards shopping online for groceries (% agreeing), July 2009
One-stop-shoppers
Focus on fresh
Delivery issues
Attitudes by age
The divided young
Positive 35-44s
Older consumers come across negative
Attitudes towards grocery shopping online – the positives
Figure 32: Attitudes towards shopping online for groceries among regular and occasional online shoppers, (% agreeing) July 2009
Barriers to online shopping
Figure 33: Attitudes towards shopping online for groceries among non-online shoppers, (% agreeing) July 2009
THE CONSUMER – TARGET GROUPS
Key points
Figure 34: Marketing targets based on attitudes towards online food shopping, July 2009
Online positives (41%)
Unconvinced (21%)
Store-engaged (38%)
APPENDIX – INTERNAL MARKET ENVIRONMENT
Figure 35: Broadband penetration at home, by detailed demographics, 2004 and 2008
Figure 36: Purchasing from any websites in the last three months, by detailed demographics, October 2008
Figure 37: Type of websites purchased from in the last three months, November 2002-April 2009
Figure 38: Extent to which security concerns affect purchasing on the web, by detailed demographics, April 2008
APPENDIX – BROADER MARKET ENVIRONMENT
Figure 39: UK adult population aged 15+, by age group, 2004-14
Figure 40: PDI, at current and constant 2009 prices, 2004-14
Figure 41: Consumer expenditure, at current and constant 2009 prices, 2004-14
Figure 42: Monthly year-on-year retail sales value growth, food, non-food and all retail stores, January 2007-June 2009
Figure 43: Monthly year-on-year retail sales volume growth, food, non-food and all retail stores, January 2007-June 2009
APPENDIX – MARKET IN CONTEXT
Figure 44: Spending on in-home food and eating out, 2004-09
APPENDIX – THE CONSUMER – ONLINE FOOD SHOPPING PATTERNS
Figure 45: Statements on shopping for groceries at the supermarket, July 2009
Figure 46: Usage of online shopping for groceries, July 2009
Figure 47: Usage of online shopping for groceries, by demographics, July 2009
APPENDIX – THE CONSUMER – ATTITUDES TOWARDS ONLINE FOOD SHOPPING
Figure 48: Attitudes towards shopping online for groceries, July 2009
Figure 49: Attitudes towards shopping online for groceries (agree), by demographics, July 2009
Figure 50: Attitudes towards shopping online for groceries (agree), by demographics, July 2009 (continued)
Figure 51: Changes to grocery shopping habits in the last 12 months, by usage of online shopping for groceries, July 2009
Figure 52: Attitudes towards shopping for groceries at the supermarket (agree), by usage of online shopping for groceries, July 2009
Figure 53: Attitudes towards shopping online for groceries (agree), by usage of online shopping for groceries (continued), July 2009
APPENDIX – THE CONSUMER – TARGET GROUPS
Figure 54: Attitudes towards shopping online for groceries, by target groups, July 2009
Figure 55: Target groups, by demographics, July 2009
Figure 56: Changes in grocery shopping habits in the last 12 months, by target groups, July 2009
Figure 57: Attitudes towards shopping for groceries at the supermarket (agree), by target groups, July 2009

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