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Online set to be the fastest growing grocery channel over next five years: IGD

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Online will be the fastest growing channel for grocers over the next five years, with the UK food and drink industry set to see its turnover reach £217.7bn by 2024, new analysis suggests.

Ecommerce sales are set to grow by £5.1bn, or 43.8%, over that time, says a forecast from grocery analyst the IGD. Discount sales will be close behind, growing by £9.8bn, or £40.2%. Together their combined market share will grow to 23.4% from 18.6% over the next five years, contributing two thirds of growth to the food and drink industry.

Shoppers, says the IGD, spend an average of 22 minutes planning a main online food shop, 31 minutes shopping and 13 minutes unpacking. On average, they shop online for food once a month. 

Simon Wainwright, director of insight at IGD, said: “Growth in the online channel will come from a number of directions. Firstly, newer players are entering the space such as Amazon and meal box operators such as Hello Fresh, Gousto and Mindful Chef. Faster and more convenient options to shop for groceries online are being introduced, such as Sainsbury’s, Ocado and Amazon all offering orders within an hour and widening the availability of delivery. More sophisticated analytics are also helping to strengthen customer loyalty

“From a shopper perspective, the key benefits of shopping more online in future are good value, time saving and ease of shop. Our research tells us that online is preferred the most for the main food shop, with online shoppers saving 23 minutes on average shopping online for their main shop than if they were to do this in a large store.”

Meanwhile, shoppers spend an average 15 minutes planning a trip to a food discounter, 25 minutes travelling, 34 minutes shopping and 12 minutes unpacking – carrying out three such trips a month. 

The figures contrast with time spent carrying out a main food shop at a large supermarket, with 12 minutes planning, 28 minutes travelling, 38 minutes shopping and 11 minutes unpacking – a job that is repeated an average of 10 times a month. 

“Large stores remain a core part of the multichannel approach shoppers continue to take,” said Wainwright, “ with the average shopper still visiting larger stores 10 times a month, which is three times as many as food discount stores. 

“Over the next five years we’ll see these retailers investing more in how they can improve the shopper experience at existing stores over introducing new sites, with key trends including easier in-store navigation for shoppers conducting smaller shops and introducing more foodservice and concessions. Developments are also taking place in product innovation, brand partnerships, local sourcing and offering new services, which is largely being driven by competition from the likes of Aldi and Lidl

“To remain relevant to shoppers, large store retailers should focus on providing better value, more ways to save time and an easier shopping experience.”

Image courtesy of Ocado

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