Online grocery shopping is not booming because the supermarkets are not motivated towards the trend, according to analyst Mintel.
Mintel’s director of retail research Richard Perks poured cold water on new research reporting that online grocery shopping is set to double by 2015 breaking the £9 billion mark in the process this week.
New IGD research shows the value of grocery shopping conducted over the internet is predicted to nearly double to £9.5bn in five years compared to its current level of £4.8bn.
But Perks believes that to build an infrastructure to effectively deal with large scale online demand would be “massively expensive” and doubts “if any of the major retailers really want it to take off as it would be a huge investment”.
He said: “Tesco has just three dedicated online stores and its only around five per cent of sales, if it is pushing it then it is very gently. We have seen from Ocado that dedicated warehouses for online are extremely expensive to set up and Ocado is yet to make it work and turn a profit.
“The retailers want people to visit the supermarkets. It is much more likely people will spend more and impulse buy in person.”
But IGD ceo Joanne Denney-Finch disagreed: “Online grocery retailing is already growing at a phenomenal rate and there is still plenty of potential for significant expansion. Although online has a small share of the overall grocery market, it will be the fastest growing channel. Retailers are driving online growth through new developments, such as ‘click and collect’, introducing smart phone apps and building stores specifically to cater for online orders.
“Wider delivery coverage and better home internet connections are some of the other reasons why internet grocery retail has the potential to grow significantly.”
Online shopping will represent 5.2 per cent of the overall UK grocery market by 2015, compared to 3.2 per cent at the moment, according to IGD.
The research found seven per cent of shoppers say they are buying all their regular groceries online. IGD’s latest ShopperTrack data shows 13 per cent of those surveyed say they will use the internet to do more of their food and grocery shopping over the next 12 months, mainly driven by 18-34 year-olds.
Perks questioned media speculation that Morrisons is considering a deal with Ocado. He said: “You have to question whether Morrisons are really missing out by not being online. The idea it would team up with Waitrose’s supplier makes no sense, it would be different if Morrisons were to have a dedicated warehouse for online but I don’t see it happening.”
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