UK Online Grocery sales up, set to double in 5 years
Sam Silverwood Cope, 10 Sep 2013
Ecommerce sales for the grocery market have increased 19% in 2013 compared to the same period last year and are set to double over the next 5. Tesco is a clear winner in the online food shopping market, in fact they take almost 50p of every £1 spent on food shopping online.
The supermarket is where around 65% of all our food purchases take place in the UK and has risen 2% over 2013 overall. This is impressive given the maturity of the grocery market and current economic climate according to Kanter. This 19% rise in ecommerce sales sees the biggest growth spurt in the sector since 2003 and beats all other channels in terms of growth.
However, despite the recent growth for online, the share of all the groceries we buy in the UK is just 5.1% compared to 4.5% this time last year. That equates to the online grocery market being worth only £5.6bn compared to the whole of the grocery market being worth £157bn.
The Big Spenders Online
Though only 5% overall, the share of the digital sector for online grocery shopping rises for richer households. Those with an annual income of £60,000 or more 10p in every pound is spent online. It seems obvious, but the well planned, big shop happens more frequently online than the quick shop. When we spend more from the supermarket we are more likely to do it online than when we spend less. Online sales accounts for 12% of all £60 plus checkouts whereas only 1% of checkouts with a value below £60 are purchased online.
The Big Players in the UK Online Grocery Market
Tesco Is by far the biggest online grocer according to Kantar consultancy and has increased its share of the industry this year by 2.4%. It has five “dark stores”, specially created outlets with the soul purpose to offer online distribution. This focus on online shopping means it takes close to 50p of every £1 spent on food shopping online.
Sainsuburys on the other hand has no “dark stores” with staff picking products from shop floors rather than dedicated distribution facilities. They promise to be primed to deliver to 88% of the country geographically and hold around 18% of the online grocery market which is a similar share (16.7%) of the whole grocery market.
The largest of the online-only grocers, who has none of the P&L (nor the branding) of the high street or the out of town outlets, commands a share of 5% of the the online grocery market. Ocado have, as yet, been unable to register a profit, but have formed a loyal customer base and are well positioned to meet the “over £60 basket” consumer – the largest segment of online food-shopping.
Who are now going it alone (since splitting away from Ocado’s delivery service in 2011) have been aggressively pushing their online offering recently. Like Ocado, the upmarket supermarket chain are well placed to appeal to the “Above £60 basket” customer, and Waitrose are pursuing this sector with free delivery on any checkout worth over £50.
Seem to have all the content on their site to appeal to anyone searching for foodstuff, but as yet do not offer the ability to purchase online, unless you are after wine.
Grocery spending compared to UK Retail Ecommerce Sales
The online share of the grocery market is still relatively tiny compared to other sectors within retail. Books, DVDs and Music have long performed well online, perhaps partly due to the Amazon Effect and the little consideration of brand loyalty when purchasing such products. Compared to overall share of online sales, groceries are very much lagging behind, with 11.7 of all gods being purchased online, compared with around 5% of food groceries being bought via the web.
Supermarkets SEO and Natural Search performance
At IP we are tracking 100s of food items and online shopping specific searches. Based on all these search terms we have given a single score to the main players for the presence in Google UK.
As with the industry as a whole, Tesco is light-years ahead of the competition and, to us, it is no surprise that they have 50% of the ecommerce grocery market and are doing so well in the online shopping channel – as their search positions dominate the sector.
However what seems to be shown from this chart is that a non-traditional UK supermarket, Amazon (pink line), is really making in-roads on the traditional players – and in terms of search at least, is catching Ocado.
Comparative Supermarket Visibility Score in Google UK across 100s of major search terms
We will be doing a fuller supermarket sector post shortly, if you would like to see more results for the grocery market please contact us.