The benefits of internet shopping are considerable for time-starved, techno-savvy consumers, say its supporters. Supermarkets regularly point out that getting someone else to choose, pack and deliver your shopping saves time and energy and takes out the struggle of carrying lots of heavy bags.
Some of the UK’s supermarket giants such as Tesco, Asda and Sainsbury’s are actively promoting their online shopping services, with a range of incentives to entice their customers to buy on the web rather than in store. And judging by recent figures, these efforts are paying off.
According to MyVoucherCodes, online grocery shopping overtook internet sales of electronic items for the first time ever in 2008. Grocery shopping now accounts for 31 per cent of online sales, followed by electronics, clothing and holidays.
Mark Pearson, managing director of My Voucher Codes, says consumers are looking for the best bargains in these tough economic times. “As you would expect, the supermarkets are masters when it comes to marketing and we are seeing an increase in discount and voucher codes relating to free deliveries of groceries to encourage more people to use their online services,” he explains.
A recent article in Tesco Magazine highlighted the other advantages of shopping online: “Going online allows you to cut down on impulse buys and duplication as you order exactly what you need; reduce pester power - the kids can’t trail round after you hassling for treats; and save fuel - you avoid using the car and sitting in traffic jams.”
In order to entice those reluctant to shop online, some retailers also offer free deliveries for limited periods of time.
However, it seems that a proportion of the UK population still needs some convincing. According to a recent study by price comparison site Shopzilla.co.uk, two out of 10 consumers would not consider buying food and drink online. Indeed, some 21.9 per cent of respondents said they would never consider buying perishables over the net.
Despite the resistance from certain quarters, sales are climbing. The UK online grocery market is estimated to be worth approximately £1 billion and is expected to grow over the next few years.
Online grocery sales account for more than two per cent of overall online sales and this percentage is expected to rise to four per cent by 2013, according to market analyst IGD. “Many factors will drive further growth in online food and grocery retailing,” says Joanne Denney-Finch, chief executive of IGD. “Faster home broadband connections are making the shopping experience quicker. The major retailers are focusing on developing the online channel and making the shopping experience easier and more flexible.”
She says consumers are also becoming more familiar with online shopping, especially as fuel prices are making them think twice about using the car.
Other analysts anticipate sharper growth, estimating that online grocery sales could attract a market share of between five and 10 per cent by 2013.
Tesco, Asda, Sainsbury’s and Waitrose are the leading online food retailers, according to TNS data, with Asda enjoying the most growth over the 12-month period to November 30, 2008.
But when it comes to rankings, Tesco is the largest fruit and vegetable seller online. In the same 12-month period, the number-one retailer also dominated volumes, selling more exotics, root crops, berries and apples than its rivals.
However, Asda is gunning for growth and overtook rival Sainsbury’s for the first time to become the UK’s second-biggest online grocer in May last year. Asda’s home-shopping grocery sales grew by 71.8 per cent for the 12 weeks to June 15, 2008, compared with the same period last year, according to TNS figures.
Despite solid sales, however, retailers are still hampered by the fact that some consumers believe that fresh produce bought online may have a shorter shelf life than that bought in store.
Supermarkets are keen to refute this and have been busy offering their reassurances that the food bought online is as fresh as food found in store.
“We sell a lot of fresh produce online,” says Sainsbury’s press officer Cheryl Kuczynski. “Our pickers are trained to choose the freshest merchandise, with the longest ‘display until’ dates.”
Sainsbury’s online home delivery service continues to enjoy strong growth, she maintains. “The service has now achieved more than 100,000 customer orders a week and is turning over £500 million a year,” she says.
The service offered by Sainsbury’s is now available to 87 per cent of UK households and between the April-to-October period in 2008, an additional 18 stores started running the service, taking the total number to 165 stores.
“Sainsbury’s believes there is significant growth potential in its online operation and plans to increase capacity in areas of high demand,” says Kuczynski.
Tesco insists that its fresh produce is picked as carefully as you would yourself. In addition, it offers the same incentives on the web as in store, plus exclusive offers for Tesco.com customers. The supermarket giant is promoting its online shopping service aggressively, to highlight that the service suggests cheaper alternatives to branded products.
The Christmas period is traditionally a busy time for online sales and even with the financial downturn, 2008 was no exception.
Online grocery retailer Ocado, whose largest shareholder is Waitrose, with a 28 per cent stake, announced its best-ever Christmas trading figures in early January. Sales rose 25 per cent in the four weeks to January 3, compared to the same period in 2007-08. The online company has outlined plans to expand into areas such as clothing and health and beauty, as Waitrose rolls out its own delivery service, WaitroseDeliver.
Indeed, WaitroseDeliver has continued to show strong growth in 2008 and the company received record online sales in the run-up to Christmas, according to Peter Burns, Waitrose marketing manager of e-commerce.“The benefit to customers of using WaitroseDeliver is that they can shop from the comfort of their own home and receive the same quality, service and fresh produce they would expect from Waitrose, plus all the money-saving offers available in store,” he says.
Waitrose refreshed its site in 2008, adding new express shopping features such as the Shopping Jotter. “The jotter means that customers can note individual products onto one list and then it will find all the items in one go,” Burns explains. The firm plans on making WaitroseDeliver available to more customers in 2009.
A number of supermarkets are also benefiting from the sale of non-food items, including electrical items and homeware.
With more savvy shoppers targeting the internet for bargains, supermarkets plan to make the most of this growing business.
PROVIDING SOME RESISTANCE TO THE RECESSION
As the UK economy is confirmed as being in recession, a number of online shoppers are turning to the internet to make savings. More consumers are looking to the internet to conduct price research. According to recent figures, UK spending online reached £4.67 billion year on year in December.
While the high street reported its worst December for sales for 14 years, with clothing, furniture and homeware sales all posting losses, a survey by Lightspeed Research revealed that cost-conscious users intend to shop more online this year. A survey of 1,957 people revealed that 36 per cent plan shop more online and less on the high street this year. This figure rose to 45 per cent of 18-24-year-olds and 44 per cent of the 25-34-year-old market.
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