Online Grocery Shopping and Fresh Produce

16th November 2016

We are currently living through one of the biggest changes to how the UK shops for groceries since the big four emerged and took hold of our shopping budgets. Between the discounters, online shopping and the start of a fluid as-I-need-it shopping pattern that involves different shops, brands and channels on a weekly basis we are really starting to move on from the once a week big shop in a huge store.

At the end of 2015 Mintel forecasted that online grocery sales would increase by 13% in 2016 and be worth £9.8 billion by the end of the year. They also forecast that the online grocery sector will be worth a whopping £15 billion by the end of 2020. From August 2015 to August 2016 the sector grew 4.8% so Mintel may have slightly overcooked their prediction but it is definitely a growing channel for grocery shopping.

In 2015 6% of all grocery sales were done online (up 3% from 2010). 48% of us Brits shop online with 11% buying all their groceries online and 12% buying most of their groceries online (for full disclosure I am in one of those two groups every week of the year). Younger consumers are driving the online grocery shopping phenomenon with 19% of all 25-36 year olds doing all their shopping online (again, for disclosure, I just about sneek into that group!). Advocates of the online shopping channel name convenience and tracking their spending as the main plus points. Online shopping is especially popular in London.

Not everyone is convinced though – 24% of Brits never buy on line (38% of over 55’s have never bought groceries online). 11% of us are also shopping less online in 2016 and produce is one of the key reasons. Some people cite using discounters for their shopping now and some people cite high delivery charges as their reason for shopping for groceries less on line but nearly two fifths of people shopping less online cite produce as the reason. For many people buying produce is a personal experience involving sight, smell and touch and losing that control over their fresh produce haul is a step too far. Certainly this is likely to be a reason why online grocery shopping in mainland Europe is, to all extent and purposes, non-existent.

Produce is becoming a key player on the other side of the online grocery shopping fence as well though. Produce is growing at 8.6% online which is obviously a huge over performance against the market average of 3%. The produce SKUS seeing the biggest growth through online are limes, avocado, sweet potatoes, kale and spinach. Berries and currants are the biggest produce type sold through the online channel, bringing a total spend of over £12 million into the category.

As well as the three reasons for not buying groceries online mentioned above the other challenge the channel faces is how to keep up with the fluid as-I-need-it shopping trend. Delivery saver passes is one way that supermarkets are enabling their online channels to do this as people can then book multiple home deliveries a week without spending any extra then they have already paid (and these passes are also proving to help with consumer loyalty, something which is more important than ever in today’s grocery world). Click and collect is also really helping with this as the majority of people using click and collect services do it in conjunction with home delivery, not instead of.

Amazon Fresh launched in the UK this year as well. At the moment it is London only but it is offering free delivery over £40 and delivery on the same day. It also offers the chance to shop specialties from London markets as well as basic day to day groceries. The plan is, we believe, for it to slowly start rolling out nationwide.

I think we can be certain that online grocery shopping as a channel is here to stay.