With more customers worried about problems with their orders, delivery costs, and increasingly preferring to choose fresh produce themselves, online grocery shopping is set for slow growth in the UK, analysts from Mintel have revealed. It seems many consumers remain reluctant to order fresh produce online.
In a survey of 2,000 internet users, the private London-based market research firm also found that at least 42% of older internet users have never bought groceries online and had no intentions of doing so, at least not in the immediate future.
Nick Caroll, the associate director of retail research at Mintel indicated that alongside food discounters, online grocery shopping is one of the fastest growing sectors in the overall grocery sector. But research now shows that the number of online grocery shoppers is plateauing, and that retailers are struggling to entice new customers to use their services.
Mintel revealed that online grocery deliveries comprised around 7% of the whole sector, valued at £12.3 billion and with a projection of 10% by 2023. According to the forecasts, sales were expected to rise to £19.8 billion. However, if the research is anything to go by, this is unlikely to materialize. 45% of consumers polled said they had shopped for groceries online, down from 49% in the previous year.
Mintel found some evidence of disparity between the younger, more enthusiastic people and the older more sceptical shoppers who regarded online grocery shopping with suspicion. Only 35% of shoppers aged 45 and above had ever used online shopping for their groceries. It is now emerging that the older shoppers are getting more reluctant to join the online grocery shopping revolution, and that their reluctance is now growing. The number of UK shoppers aged 45 and above who have never bought groceries online and have no intention to do so has now increased from 34% in 2015 to 42% in 2018.
But there may be other potential issues as well. About 1 in 4 reluctant shoppers thought the delivery charges for online shopping were too high. 18% quite disliked being subjected to minimal order quantities or values, a common requirement for most online stores. Further complaints revolved around missing products, receiving goods that were so close to their expiry dates, incorrect substitutions, and late deliveries.
According to the research, online shoppers in the UK (63%) said that they have had at least one issue with an order in the past one year. For online stores who also operate traditional brick and mortar stores would not be too worried about this because grocery shoppers are likely to go back to the store if they run into challenges with their orders.
Mintel’s research indicated that a great majority of shoppers (73%) said they just preferred heading out to the store and picking out fresh groceries for themselves. This might be a great concern moving forward given the thin margins that traditional brick and mortar stores now provide.
High Street Retailers
Big food retailers have increasingly relied on online grocery shopping as an important element of their business strategy. Most notably in recent days, Marks and Spencer £750 million deal to acquire a 50% share of Ocado’s retail business. It was a clear indication that Marks and Spencer, which has struggled in recent times, wanted an immediately scalable, rough and ready platform to strengthen its online business and grow its sales.
High street retailers will for the first time get at home delivery service. Overall sales in the high streets have fallen in recent times due to the overall challenging conditions. The lack of a reliable online delivery system has been chief among the challenges. This is hardly surprising as Mintel’s research revealed that more than two thirds of online shoppers in the UK have had an issue with at least one of their orders in the past year.
However, Mintel now points out that not all retail shopping trends are working in favour of the internet. Online shopping services are best suited to some of the traditional big basket weekly shopping routines, especially at a time where many consumers are shopping on a top-up basis or as-needed basis.
Large, basket-style shopping, which online grocery shopping best supports does not quite fit with the current shopping habits. Other innovative service offerings such as same-day delivery targeted towards immediate meal solutions could drive growth in the sector. Once hailed as a growth area for many retailers, online grocery shopping may be losing its shine after all, at least in the UK.