FDBusiness.com

British consumers are increasingly taking advantage of fresh milk and frozen peas being just a click away. Indeed, new research from Mintel forecasts UK online grocery sales to reach £11.1 billion in 2017, up from an estimated £9.9 billion in 2016.

With the market forecast to grow by 12% this year, the value of virtual shopping baskets is growing at a faster rate than physical ones. In 2016, sales in the online grocery market rose by an estimated 15%, while total food retail sales grew by just 1.5%.

The growth in the market comes as an increasing number of shoppers are choosing to forgo their trip to the supermarket. Almost one in three (29%) online shoppers say that in the past 12 months they have done more of their grocery shopping on the web.

What’s more, the proportion of Brits who say they do all of their grocery shopping online has doubled in recent years. As many as 14% of Brits currently do all of their grocery shopping online, up from 7% in 2014. Meanwhile, the proportion claiming to do most of their grocery shopping online has risen to 13%, up from 10% in 2014. Overall, 48% of Brits do at least some of their grocery shopping online, up from 43% who said the same in 2014.

Nick Carroll, Senior Retail Analyst at Mintel, comments: “Online grocery is the quickest growing grocery channel. Once seen as simply a service to replicate the needs of a supermarket shop online, a number of new services came to market in 2016 that have the potential to elevate online grocery beyond this barrier and adequately serve the more fluid and frequent shopping behaviours seen in the wider market. Growth is being driven by encouraging users who have done most or some of their shopping online to do more. This suggests that it’s just as crucial for online grocery retailers to engage as much with their current consumer base as it is for them to attract new shoppers to drive sales.”

While the online grocery market has experienced rapid growth in recent years, it remains a small part of the wider market, accounting for an estimated 6% of all grocery retail sales in 2016. However, it is poised for strong growth over the next few years, forecast to reach £16.7 billion in 2021, accounting for a 9% share of the total grocery market.

Key to this growth and showing the longevity of the market, Mintel research finds that younger consumers are the most likely to do their grocery shopping online. Almost two thirds (62%) of Brits aged 25-34 are current grocery shoppers, as well as 57% aged 35-44 and 56% aged 16-24. What’s more, almost a quarter of (23%) Brits aged 25-34 currently do all of their grocery shopping online, as do 20% aged 35-44 and 16% aged 16-24.

In comparison, just one in three (32%) consumers aged 55 and over are current online grocery shoppers, while approaching half (47%) of this group say they have never bought groceries online and have no interest in doing so.

Nick Carroll continues: “The fact that younger consumers are far more likely to shop online highlights that rising smartphone ownership and internet connectivity has created an expectation from consumers that they can get what they want, whenever they want it. A younger online grocery shopping consumer base means it is crucial that grocery retailers have a well thought-out desktop and mobile site to best interact with the core online grocery consumer base.”

While younger consumers are currently the most engaged group in this market, same day delivery is a pivotal service that they, in particular, are demanding. As many as half (53%) of all Brits who shop online for groceries say that it’s important to have the ability to have online grocery orders delivered on the same day, rising to over two in three (71%) consumers aged 16-24 and 65% of those aged 25-34.

Finally, it seems that the majority of Brits are keen to see some new players in the market. Mintel research finds that as many three in five (60%) of those who shop online for groceries say they would be happy to purchase a full weekly shop online from discounters.

“A number of same-day grocery delivery services have launched in the past year from both established players and new entrants to the market. While providing a same-day delivery service is highly challenging, it is something that consumers are demanding. When it comes to the discounters, they have been a disruptive force in the UK grocery market, but this has been limited to physical retail to date. Our research shows there will certainly be a market for the discounters if they decide to take the plunge into online retailing,” Nick Carroll concludes.