Online Grocery Shopping Behaviour 2012

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Despite a lag in internet penetration behind other European and Asian countries, the UK has one of the most advanced online grocery markets in the world. It is estimated that online sales currently account for 3.5% of the total grocery sales in the UK, which is totalling approximately £158bn (around £6bn online, end 2012). The proportion of online sales is estimated to double in the next few years with a prediction of around 6% in 2016.
Remarkable growth within the UK’s online food & grocery market over the past few years has resulted in a large number of regular grocery shoppers using the online channel as well as their regular supermarket shop. Every increasing internet penetration and greater confidence in online shopping in general are pushing this growth, as well as increasing efforts by individual retailers to encourage shoppers to go online. Predicted growth of the online channel far outweighs that of the food & grocery market as a whole, and will continue to do so as shoppers continue to mix the channels they use for their food & grocery shop.

This report will:
-Look at the current penetration of the online grocery market
-See who current online shoppers are
-Show changes in the way online shops are carried out – particularly in reference to the use of smartphones
-See how loyal multi-channel shoppers are to retailers
-Look at both the drivers and dislikes of online shopping for current online shoppers. Specifically looking at: delivery, cost, retailer websites, personal situations and individual items.
-Find out the barriers to online shopping for non-online shoppers
-Chart the shoppers journey around a retailer website and see how shopping trips are started and the touch points visited

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Online Grocery Shopping Behaviour 2012

  1. 1. Online Food & Grocery:The Shopper Perspective2012SAMPLE EXTRACTEssential insight into shopper motivation and behaviourin UK food and grocery online Evolution Insights Ltd Prospect House 32 Sovereign Street Leeds LS1 4BJ Tel: 0113 389 1038 http://www.evolution-insights.com www.evolution-insights.com
  2. 2. Disclaimer Please note No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written consent of Evolution Insights Ltd. The content of this report is based on information gathered in good faith from both primary and secondary sources and is believed to be correct at the time of publication. Evolution Insights can however provide no guarantee regarding the accuracy of this content and therefore accepts no liability whatsoever for any actions taken that subsequently prove incorrect. © Evolution Insights Ltd 2012 www.evolution-insights.com
  3. 3. About Evolution InsightsEvolution is a leading research consultancy specialising in shopper motivation and behaviour. We deliver off-the-shelf, tailored and bespokeresearch for manufacturers, retailers and agencies. Our research and analysis helps • Evolution offer a range of products & services for clients develop targeted shopper clients in the field of shopper research:- marketing initiatives designed to • Off-the-shelf research influence shoppers at the point of purchase. – Evolution’s off the shelf research publications deliver affordable insight into shopper motivation and behaviours in UK food, drink and grocery • Insight Plus – Insight Plus offers your business the opportunity to engage in any of our We use a range of research regular shopper research projects in advance of publication, tailoring the methodologies to discover genuine scope to suit your needs insights. Our research incorporates a broad spectrum of robust • Bespoke Consulting qualitative and quantitative research techniques. – As publishers of research, we are able to draw upon a wealth of existing proprietary data for consulting projects As a leading publisher of shopper – helping to better inform and shape research, we are ideally placed to any further research requirements. offer your business actionable shopper insight. Further information is available at our website http://www.evolution- insights.com Visit and sign up for Reflections, our free quarterly newsletter offering analysis and commentary on topical issues www.evolution-insights.com
  4. 4. ContentsKey Findings and Summary 6 Circumstances 36 Approach to Online Grocery Shopping 38Online Grocery Shopping: Definition & Market 9 Planning 39Definition 10 Shopper Missions 40Online grocery shopping in the UK 11 Summary 42The Market 12 Retailer Choice 43The Rise of Internet & Smartphones 13 Introduction 44Drivers and Trends 14 Shoppers’ Primary Retailer Share 45Generation-Y 15 Drivers of Store Choice, by Retailer 46UK Internet Use 16 Using Multiple Retailers 47Smartphones 17 Online Retailer Penetration, by Offline Retailer 48M-commerce 18 Non-standard Retailers 49Social Media 19 Summary 50The Online Grocery Shopper: At a Glance 20 Delivery 51Introduction 21 Introduction 52Penetration and Frequency 22 Drivers of Online Grocery Shopping 53Demographic Profile 23 Barriers to Online Shopping for Online Shoppers 54Frequency, by online retailer 25 Barriers to Online Shopping for Non-Online Shoppers 55Frequency Online vs. Offline 26 Shoppers’ Ideas for Improvement 56General Dislikes 27 Drivers of Store Choice 57Shoppers’ Ideas for Improvement 28 Summary 58Increasing the Frequency of Online Shopping 29Summary 30 Saving Money 59 Introduction 60The Online Grocery Shopper: Context 31 Drivers of Online Grocery Shopping 61Introduction 32 General Dislikes & Drivers of Store Choice 62A Framework 33 Managing Budget 63Shopper Segmentations 34 Multi-buys and Pack Sizes 64 www.evolution-insights.com
  5. 5. ContentsComparison Sites 65 Starting Point 91Impulse Purchasing 66 Touch Points 92Summary 67 Online Journey 93 Ordering Results 98Personal Situations 68 Summary 99Introduction 69Drivers of Online Grocery Shopping 70 Methodology 100Drivers & Barriers to Online Grocery Shopping 71Click & Collect 72 Glossary 103Summary 73Retailer Websites 74Introduction 75Drivers of Online Grocery Shopping 76Barriers to Online Grocery Shopping 77Shoppers’ Ideas for Improvement 78Drivers of Store Choice 79Summary 80Products 81Introduction 82Dislikes of Online Shopping 83Barriers to Online Grocery Shopping 84Shoppers’ Ideas for Improvement 85Drivers of Store Choice 86Summary 87Online Journey 88Introduction 89Definition 90 www.evolution-insights.com
  6. 6. Online Food and Grocery Shopping: Online grocery shopping in the UK The food and grocery market in the UK is arguably one of the most sophisticated online grocery markets in the world. Sales are up each year with double digit year-on-year growth.Despite a lag in internet penetration behind other European and Asian countries, theUK has one of the most advanced online grocery markets in the world. It is estimatedthat online sales currently account for 3.5% of the total grocery sales in the UK, whichis totalling approximately £158bn (around £6bn online, end 2012). The proportion ofonline sales is estimated to double in the next few years with a prediction of around6% in 2016.Although online grocery sales are increasing, the channel is still in its relative infancyand remains comparatively small compared to alternative channels of shopping.However, with increasing internet penetration, improved broadband and retailersites, and higher awareness and confidence in online shopping, there is no reasonthis cannot increase. With more shoppers considering online shopping a way to savetime, money and hassle, we can see more and more shoppers turning to the internet.With a new generation of shoppers emerging that are have grown up in a digital -age,ecommerce is likely to increase. This new batch of shoppers have grown up with theinternet and will likely have no problem buying their food online as they would withother items.Most of the leading retailers in the UK that have an online presence are developingmobile websites and apps to make grocery ordering easier and more accessible. Suchinnovations should keep the UK in the forefront of online grocery shopping for someyears to come. www.evolution-insights.com
  7. 7. Online Grocery Shopping: Drivers and Trends Here we identify and discuss the current drivers of online food and grocery shopping. Over the subsequent pages in this chapter we then assess in more detail some of the innovations and trends which are set to shape the market over the next few years. Growth in Internet and broadband penetration continues to rise internet and and as a consequence the potential audience of broadband online grocery shoppers is increasing too. Strong penetration Busier growth in e-commerce and online shopping (outside Broader of food and grocery) will likely translate into growth lifestyles growth in e- driving in online food and grocery sales over the next few commerce convenience years as increasingly savvy online shoppers try new things. Drivers and The recession has encouraged shoppers to try online Evolving Trends in shopping over the past couple of years because many people find it easier to plan and budget online and UK Onlinedelivery model Price – greater comparison therefore see scope to save money. flexibility in prices Grocery is rising We have seen a steep rise in the use of retailer Shopping incentives over recent times. Free delivery offers remain popular with new and existing shoppers alike but there has been a strong increase in the number of ‘money-off first online shops’ - or indeed the first Incentives from Entry into few shops. retailers to start market by new shopping online players Finally we note that shoppers’ increasingly busier Education from lifestyles continue to drive online food and grocery retailers about penetration with convenience remaining the number benefits of one reason why people choose to shop online. online grocery www.evolution-insights.com
  8. 8. Online Grocery Shopping: Generation-Y Having grown up with the internet and modern technology, generation Y are becoming an increasingly large group of food and grocery shoppers. Their familiarity with the internet and concepts like social networking not only make them more likely to try online shopping but also more likely to use media-rich and social networking features.Over the next few years we will witness an important demographic shift which looks set to boost interest and usage in online groceryshopping. The so-called Generation Y age group i.e. the ‘digital natives’ – characterised by the fact they have grown up with the internetand are among the most tech-savvy shoppers there are – are forming households, families, and are starting to take food and groceryshopping seriously. As they settle into jobs and move out on their own, they will become the first generation of grocery shoppers that arecompletely comfortable shopping over the internet.Unlike older shoppers this generation do not have a habitual attachment to supermarkets and are fully au fait with the concept of buyinggoods over the Internet. We expect that marketing efforts to attract Gen Y’ers onto online grocery sites will prove increasingly effective.We anticipate this will have interesting implications over the next few years in terms of shoppers’ appetite for improved digital media andsocial networking. These topics are discussed over the next few pages.UK population age profile, 2012 estimate and 2015 projection: 1000 Number of people (000s) 800 600 Generation 400 s X and Y 200 0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90+ Age 2012 2015 Source: ONS, Evolution Insights www.evolution-insights.com
  9. 9. Barriers to Online Shopping: Increasing the Frequency of Online Shopping We look here at some ideas from current online shoppers of initiatives that would encourage them to shop online for groceries more frequently.Shopper ideas of how to increase frequency of online grocery shopping: If they made the website easier to use Discounts/offers Being able to set a and more lifelike A call from the supermarket saying they need best before date so because its very hard to substitute an item, asking a preference that for example meat to search for some would be useful, as would a text message or veg isnt about to things. saying the driver is on their way. Asda also do expire money off vouchers, but you cant use an in- store voucher online or vice versa. Sometimes I dont know what x kgs of a product is without seeing it. i.e. is 5kg of bananas 3 items or 10 items? A guarantee of fresh product with good sell by dates Being able to choose from the same range as in the shops. I find that products that are available in A lower minimum order and Have an store are often missing from the cheaper delivery slots interactive store website. When I queried this with the store I was told it was because no-one had ordered the products recently so they were removed Definitely no from the website. Not helpful to An option to put notes for the items Be able to track substitutes people trying to shop online. you want, i.e. “bacon with less fat", where the driver www.evolution-insights.com
  10. 10. The Online Grocery Shopper Context: CircumstancesWe can see here that the vast majority of shoppers (9/10) order their groceries from home, in particular on a weekdayevening.Location and time where shoppers order their online grocery What is interesting to note here is that 10% ofshopping shoppers order their shopping from their place of work. What would work well here is Click & At work – 10% Weekday - midnight-9 Collect – if shoppers were able to order their am (or before work) groceries at work (e.g. during lunch) and collect Weekdays - 9 am-5pm them on their way home, this would add to the (or during work hours) levels of convenience found in standard online 13 grocery shopping. 51 Weekdays - 5 pm- 17 3 midnight (or after work) Weekends 24 Weekday - midnight-9 am (or before work) Weekdays - 9 am-5pm 45 (or during work hours) Weekdays - 5 pm- Online shop – 6pm midnight (or after work) Weekends www.evolution-insights.com
  11. 11. Drivers of Online Grocery Shopping: Delivery The delivery has always been one of the biggest drivers and barriers to online grocery shopping. Almost half of online shoppers say that choosing a delivery time is a driver to online shopping. I can have the delivery when it is convenient For many online shoppers (non-grocery), to me.. delivery times are a source of anguish that discourage many from buying online. The chance of missing a delivery and having to re-arrange, or collect from an inconvenient location is tiresomeness. The fact that grocery retailers 2012 45% allow you to choose a convenient time slot is important to online shoppers. As we will see later, amendments to time slots to make them more specific as posed as improvement ideas by online shoppers. The delivery charge is less than it used to be.. As we can see, the delivery charges aren’t a driver to online grocery shopping. Only 1 in 10 think that the charge is less than it used to be. Lowering delivery charges or creating offers for 2012 10% loyalty would go a long way in increasing the 2011 12% penetration of online shoppers. 2010 11%Base = UK adults who say they shop for food & grocery regularly and shop online for food & grocery at least occasionally, n=1007. www.evolution-insights.com
  12. 12. The Online Grocery Shopper Journey: Online Journey (5)Here we can see the shopping styles of those that start by looking through the category menus. For example, around 2/5will then look in the special offers section. Favourites Keyword search Category menus …Category menu Special Offers section 13% 25% 44% 31%55% 45% 41% 51% 49% 59% www.evolution-insights.com
  13. 13. Methodologywww.evolution-insights.com 13
  14. 14. Methodology • Evolution carried out a preliminary survey ofEvolution’s methodology 100 shoppers, to test questions for the main survey and establish an initial view of market penetration. Detailed online store audits were also completed, to facilitate awareness and commentary of online grocery retailer Secondary and desk Preliminary qualitative and features, functionality and initiatives. Initial research quantitative research insights gained were used to help further design the main survey. • Two quantitative surveys were utilised in this report. The first was part of a wider research programme and had a sample of 1,665 UK adults who said they regularly shop for food & grocery. This survey was used to Detailed accompanied determine overall penetration rates, barriers shops, including pre- and to online food and grocery retailing and post-shop in-depth Main quantitative surveys offline retailers used. The second survey interviews & Remote included only shoppers who shop for food Moderated Usability Test and grocery online at lease occasionally. This sample of 1007 completed all questions relating to their online shopping behaviour. • Comprehensive and detailed assessment of all the data received was then used to discover insights. Throughout this process, primary research was supported by secondary research drawing on Evolution’s proprietary databases, national statistics, Insights news and industry resources. Evolution’s consultants also maintained close relationships with industry figures across retailers and manufacturers. www.evolution-insights.com
  15. 15. Methodology: quantitative research - surveyTopics of questions in quantitative survey Demographic profiling • Detailed shopper insights were gained from two surveys - one of 1,665 UK adults who say they regularly shop for food and Frequency of online grocery shopping grocery, the other of 1,007 UK adults said they shopped online at least occasionally. Reasons / barriers for online grocery shopping The first sample was fully representative of the UK population who regularly shop for food & grocery, while the second was Online retailer usage in terms of frequency and most regular fully representative of the online grocery shopper population in the UK. Drivers of store choice • The survey contained 27 questions relating to topics outlined to the left – in addition to standard demographic Offline retailer usage in terms of frequency and most regular profiling questions. Missions in terms of frequency and most regular • The questions were designed to give maximum insight into shopper’s motivation and behaviour before, during Circumstances, approach and modality while shopping online and after online grocery shopping. Dislikes with online grocery shopping Barriers to increased frequency Source: Evolution Insights www.evolution-insights.com
  16. 16. Glossarywww.evolution-insights.com 16
  17. 17. Glossary3G – Third generation mobile phone network capable of improved data connectivity Main trolley mission - Main household shops, usually planned covering most categories. Often at weekend.2G – Second generation (GSM) mobile phone network technology M-commerce - buying and selling of products or services over mobile electronicABC1C2DE – Socio demographic profile using job type (if applicable). systems such as the smartphonesAbove the line (ATL) – Advertising using the main 5 media types of television, press, Mental budget - An often subconscious budget most shoppers possess before and during a shopping trip, which influences overall and individual item spend.radio, cinema, and posters to promote brands. Microsite – Internet website dedicated to a particular brand, using a differentApp – A smartphone application (branded) URLApproach – the way a shopper typically builds their online shopping basket Modality – The way a shopper behaves in-store.BBE date – Best before end date Online journey – See journey. On-the-go – Buying any food and/or drink for immediate consumption, i.e. outside theBelow the line (BTL) – Advertising using non-media communication. Typically sales homepromotions as short-term incentives, largely aimed at consumers in-store. Personalisation – Targeting of marketing campaigns to individuals based uponBig Four – The largest four grocer retailers in the UK by market share. detailed information about their demographic and shopping habitsCategory driver – key influences driving the growth of any given category POP – Point of purchase POS – Point of saleChannel – Retail distribution type for example supermarket, c-store, CTN POS Material– Marketing communications at the point of sale.Circumstances – The circumstances of the shopper when and where they undertake Push delivery – delivery where content is sent to the recipient without theirtheir shop interaction at the time of deliveryDemographic – Characteristics of the population (including sex, race, age and Pull delivery – delivery where content is requested by the recipient reactively.income). QR code – Quick response code (new form of 2D barcode that carries more information)Digital media – digital marketing medium for example social media, mobile, digital Revenue – Total reported turnover (excluding VAT).signage. ROI – Return on investmentDigital shopper marketing – Shopper marketing that utilises digital media Shopper context – Evolution’s model for determining the profile of an individualDSM – Digital shopper marketing shopper.EAN – European Article Number (barcode standard) Shopper marketing – Any marketing activity aimed at the shopper throughout their path to purchase.E-commerce - buying and selling of products or services over electronic systems such Shopper mission – the reason/purpose of the shopping trip from the shopper’sas the Internet and other computer networks perspective.ePOS – electronic point of sale system, e.g. checkout technology Smartphone – An internet enabled mobile phone device that runs applications (‘apps’).e-retailer/e-tailer – a retailer which trades online. SMS – Short message service (mobile text messaging)EDLP – Everyday low prices. Socio-demographic - Characteristics of the population (including sex, race, age andFavourites – a feature of some online food and grocery retailers that allows shopper income).to access a list of products they have bought in the past, most often or most recently. Social network – electronic social interaction platform for example Facebook, TwitterFMCG – Fast moving consumer goods, often used to refer to a manufacturer. Stock up mission - Planned, infrequent and typically high volume. Typically once a monthFood and grocery - Foodstuffs and various household supplies Top-up - A shopping mission to buy food and grocery for the home in between theGondola end - The promotional position at the end of a main aisle. main household shop. It excludes food and drink on the go, newsagent products and takeawaysGPS – global positioning system (technology incorporated into mobile devices for URL – Uniform resource locator (web standard for internet website addressing)geographic location identification and tracking)Impulse – A sudden wish or urge that prompts an unplanned act or feeling.Journey - the path of the shopper through the website. www.evolution-insights.com
  18. 18. Contact us Evolution Insights Ltd Prospect House 32 Sovereign Street Leeds LS1 4BJ Telephone: 0113 336 6035 e-mail: craig.bradley@evolution-insights.com Web: http://www.evolution-insights.com Company No. 07006001 Country of Incorporation: United Kingdom www.evolution-insights.com

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