UK spending on online grocery shopping in 2018 hit £12.3bn, up 9% from 2017, according to London-based market research company Mintel.
Mintel said UK online grocery spend is expected to hit £13.6bn this year. It also forecast online purchases to account for 10% of all grocery shopping over the next five years, with sales increasing by 60% to £19.8m in 2023.
The research showed that the number of consumers shopping online for groceries fell to 45% from 48% between 2015 and 2018. Of British consumers surveyed, 61% aged between 25-34 years old participated in online grocery shopping, with 27% saying they do all or most of their grocery shopping online.
Those aged 45 and over said they purchase some groceries online (35%), while the number of British people in this age range who have never purchased groceries online or have no interest in online grocery shopping increased to 42% in 2018 from 34% in 2015.
Mintel associate director of retail research Nick Carroll said: “Online grocery is, alongside the food discounters, one of the fastest-growing segments within the wider grocery sector. However, growth is slowing and the number of users is plateauing as retailers struggle to encourage new customers to try their services. Many consumers remain reluctant to buy fresh products online; concerns around substitutions persist and delivery charges are still off-putting, particularly in a market where value is key.
“However, most importantly, online services are still best suited to the traditional big-basket weekly shop, at a time when consumers are increasingly shopping on a top-up or when-needed basis. That is why we are seeing more retailers launch trial services designed to tap into the potential market for same-day or small-basket online grocery delivery. The difficulty is such services, at present, are costly to both the customer and the retailer, limiting their appeal and potential geographic rollout.”
Delivery and order issues concern customers
Research also found that 73% of UK consumers prefer to choose fresh products themselves over shopping online. High delivery charges (24%) and minimum spend (18%) also pose a concern for UK consumers.
Carroll added: “For some consumers, the larger basket-style shopping that online grocery best supports does not fit with their current habits, indicating that, should same-day delivery come to the mass market, with services targeted towards immediate meal solutions, it could be the next driver of growth for the sector.”
Mintel also revealed that 63% of UK online shoppers have experienced an issue with their order in the past. Issued experienced by customers include missing products (26%), incorrect product substitutions (25%), out of date/short shelf life products (24%), damaged goods (20%) and late deliveries (20%).
“The fact that nearly two thirds of online shoppers have experienced problems with orders in the past year should be worrying for the sector. For those retailers with bricks-and-mortar stores, this may not be as great of a concern given that groceries are, to a degree, non-discretionary and, therefore, consumers who experience issues online ordering do not simply stop buying groceries altogether; they just go back into the store.
“However, this is playing dice with customers given the level of promiscuity in-store and, despite the thin margins, how relatively loyal online shoppers can be to a business,” Carroll concluded.