Insights: Online shopping

Online has naturally been a popular channel in lockdown, with many opting for home delivery services for the first time. Recent data shows online retail sales have soared to a 10-year high but within this, other trends have started to emerge.

The IMRG Capgemini Online Retail Index, which tracks the online sales performance of more than 200 retailers, showed that for April, the UK’s first full month under lockdown, online sales grew 23.8% year on year. The data showed the spike was “overwhelmingly driven by multichannel retailers”, with sales for these up 35%, versus onlineonly retailers’ more modest rise of 8.3%. 

The data covered a wide range of sectors with many, such as gardening, benefiting from hot weather in April.

Lucy Gibbs, managing consultant for retail insight at Capgemini, says: “We are also starting to see a differential by retail tier, with mid-market losing out to budget retailers, a trend to watch as consumers seek value for money in uncertainty. However, on the other hand, we are likely to see consumers looking for brand trust and quality. This can result in a squeeze in the mid-tier,
where appealing to both needs has been traditionally harder to balance.

“Retailers will need to listen to their customers, and find new ways to become increasingly transparent, flexible and innovative in order to navigate the rocky and uncertain road ahead.”

ONLINE GROCERY BOOM

Mintel data on online grocery shows that Britons are forecast to spend an estimated £16.8 billion on grocery shopping online during 2020, which is an annual increase of 33%, up from £12.7 billion in 2019. This follows four years of slowing growth for online shopping, with 2019 recording a rise of only 2.9% compared to the year before. The online grocery market is set to grow by almost 41% by 2024.

Mintel also predicts the dramatic change in online shopping habits recorded over the Covid-19 lockdown period could prove long-lasting.

Nick Carroll, associate director of retail research at Mintel, said: “Over the course of just a few months, Covid-19 has had a seismic impact on Britain’s grocery sector. The pandemic is giving a significant short-term boost to online grocery services, as shoppers look to avoid stores and limit their contact with the outside world. However, the impact will last beyond the crisis.”

REACHING OLDER SHOPPERS

The outbreak is bringing a new audience to online grocery, and this should boost the market long term with strong growth forecast through to 2024, according to Carroll.

One of the challenges, he said, is that while older shoppers are more likely to remain at home more often, as a result of the pandemic, they are also less experienced at ordering online.

The data shows that fewer than three in 10 (28%) of internet users aged 65+ were online grocery shoppers prior to the outbreak. Since lockdown started 37% of over-65s have increased the amount of online shopping they have done since the outbreak began, but many are still relying on the kindness of friends and family for grocery deliveries.

He said: “Older generations that had previously shied away from online grocery have, effectively, been forced to change their habits in the face of social distancing measures. While there has been a rise in online grocery shopping among the over 65s, the reality is a significant number of consumers in the older age groups have no experience shopping online for groceries and/or are
not digitally native.

“There is a real need to ensure access to online grocery deliveries for older consumers. We’re seeing some retailers already thinking of easier ways to order goods, including phone orders for nextday delivery.”

AN OPPORTUNITY FOR WINE

Wine producers and retailers are looking at ways to tap into the new online audience, while also reaching out to older shoppers, especially those who are reluctant to visit shops.

Alex Price, category & insights controller at Concha y Toro, said: “Total grocery has a 12% share of the online channel, which is up from 7.8% on a year ago. The share of wine sold online has grown but wine actually under-trades online compared to total grocery, so there is definitely an opportunity here.

“Wine has a massive opportunity online and we need to think about how it is displayed and how it is found online. We need to look at imagery and navigation. We need to help people shop not just by price but also by finding pairings and recommendations. We have to target and create new wine occasions.

How do shoppers celebrate the holiday occasion at home, for example? We are looking at how to reach out to shoppers
in new ways.”

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