UK E-Commerce: The Internet Grocery Market - 2016 Market Update
- ID: 3674004
- February 2016
- Region: United Kingdom
- 50 Pages
- Key Note Ltd
This market update explores the UK Internet grocery market, which is divided into two main sectors: supermarkets online; and niche and specialist suppliers. The overall e-commerce industry is a relatively new market in the UK, as the constant evolution of Internet technology and product innovation is creating new platforms through which to encourage online retail sales. As Internet innovation has developed, the convenience of making purchases and placing orders via online channels has expanded to include fresh food and drink products.
Consumers can visit websites or smartphone apps to make purchases, which can be sent to a convenient store or pick-up point (click and collect service), or they can be delivered direct to the shopper’s home. As a result of high-speed Internet access, the roll-out of 4G Internet connectivity and fibre optic broadband across the UK, in addition to widespread delivery services available across the country, the convenience of the online grocery market is increasingly appealing to modern consumers. Logistically, the delivery of chilled products is much more complex and expensive for business operations than is the same process for non-perishable products.
For the purposes of this report, the focus is on the consumer market, as consumers are the primary target market for online grocery retailers, despite some businesses utilising the e-commerce grocery market; for example, ASDA operates a business-to-business (B2B) arm via its business.asda.com website, boasting 20,000 business clients at present, which include care homes, schools and offices.
The sector for supermarkets online is the biggest sector within the Internet grocery market. It consists of several leading supermarket retail chains - Tesco PLC, ASDA Group Ltd, J Sainsbury PLC and Waitrose Ltd - and also includes the online-only grocery retailer Ocado Ltd. In 2014, Morrisons - the last of the ‘big four’ alongside Tesco, ASDA and Sainsbury’s - entered the market. Each of these supermarkets, with the exception of Ocado, operates primarily in a retail domain and has developed online e-commerce sites to appeal to the modern shopper. The already established online supermarkets offer a full range of grocery goods with home-delivery services, as well as offering click and collect services. As Morrisons is in the early stages of developing its e-commerce business, it only offers home delivery in some areas of the country at present and has not expanded into a grocery click and collect service.
Tesco is the leading online supermarket business in the UK, whereas some of the other leading UK supermarket chains, such as The Co-operative, and discounters Aldi and Lidl, are yet to enter the Internet grocery marketplace. Ocado is the only company within this sector that operates solely within the e-commerce domain and does not have any retail floor space that consumers can shop.
Niche and Specialist Suppliers
The sector for niche and specialist grocery suppliers makes up the remainder of the UK e-commerce grocery market and includes businesses that usually specialise in a specific product range, such as Iceland specialising in the frozen foods market. In general, the sector covers online-only niche stores that often have little or no retail presence, with their only floor space being warehouse or ‘dark store’ space. Some other businesses within this sector include high-street multiple retailers that have only a small Internet grocery retail offering, such as Marks and Spencer (M&S), from whom buyers can order and collect in store; despite being a key player in retail grocery sales, the company is yet to set up a complete online grocery site, mainly offering pre-order party foods at present.
Several small, independent organic produce, health-food and diet-food grocery businesses work solely online or have migrated services online to capitalise on opportunities for business expansion. Small, relatively unknown companies benefit from the ease of widening their consumer base, while online retailing is a low-cost means for emerging businesses to make headway in the marketplace, allowing these firms to avoid retail space leases. Companies in this sector often use third-party networks to deliver products, or they independently run a small number of delivery vehicles themselves.
The number of small- and medium-sized enterprises (SMEs) entering this sector has been on the rise in recent years. Such companies include those specialising in imported products, ethnic foods, organic produce, confectionery, food hampers, dietary-specific foods, meat and dairy produce and locally sourced foods, among others. These companies often operate subscription services to deliver pre-prepared meals or complete dietary needs of the subscriber to the door on a regular basis. Meanwhile, other leading players in the non-supermarket online retail industry, namely Amazon, have recently entered the market to take advantage of the expanding industry. SHOW LESS READ MORE >
1. Introduction & Definition
- Report Coverage
- Market Sectors
- Supermarkets Online
- Niche And Specialist Suppliers
2. Executive Summary
3. What’s Key In The Market?
- Key Drivers
- Market Trends
- Supermarket Price War
- Ongoing Collaborative Partnerships
- New Niche Brands Enter Online Market
- Economic Trends
- Market Position
- How Robust Is The Market?
4. Market Size, Segmentation & Forecasts
- Market Size & Segmentation
- The Total Market
- Market Sectors
- Future Trends
- Future Economic Trends
- Forecast Total Market
- Market Growth
5. Strengths, Weaknesses, Opportunities & Threats
- The Groceries Supply Code Of Practice And The Tesco Accounting Scandal
- Food Price Deflation
- Festive Food Spend
- Diet Trends Raising Demand For Niche Online Grocers
- Consumer Habits In Grocery E-Commerce Market
- Internet Access
- Mobile Technology And Smartphone Apps
- Click And Collect Innovation
- Plastic Carrier Bag Charge
- EU Food Labelling Regulations
7. Company Financials
8. Further Sources
- Government Publications
- Other Sources
9. Understanding Consumer Survey Data
- Number, Profile, Penetration
- Social Grade
- Standard Region