Online is price war saviour for big four
Recent data from the Centre for Retail Research predicted online retail sales would reach £52.25bn this year – a 16.2% increase on 2014.
Such a rise would turn online into the fastest growing channel for grocery goods, according to Nick Miller, head of fast moving consumer goods at supply chain consultancy Crimson & Co.
“Online grocery shopping will accelerate the decline of traditional superstores and hypermarkets,” said Miller.
Decline in customers
“The growth in online shopping will be offset by the decline in consumers visiting the grocery ‘big-box’ … we could reach a point when superstores and hypermarkets are surplus to requirements.”
Previous barriers preventing consumers from shopping online, such as product availability, quality and delivery issues, had been resolved, he added.
Technological advances, such as the development of smartphones, had also forced retailers’ hands to provide “anywhere customers” with the opportunity to shop from their mobile devices while on the go, Miller said.
“Increasingly, supermarkets are [also] offering same-day click & collect services meaning consumers are able to collect their shopping at designated collection points, at times which suit them,” he added.
Online shopping was rapidly becoming more mainstream and was here to stay, Miller affirmed.
Other factors contributing to the growth of online sales were new mums, said the global consumer trend tracker Dunnhumby.
Seven million people
According to a survey of seven million people in 14 countries, the birth of a new child was one of the main drivers of an increase in online shopping.
Julian Highley, global director of customer knowledge at Dunnhumby, said: “Growth in multichannel is particularly strong among sleep-starved parents, who benefit most from being able to shop anytime, without leaving the home.
“Baby food and [baby] care products not only appear in the top three categories, but these are clearly important gateway products for new online shoppers."
Meanwhile, online grocery retailer Ocado hit the black and recorded a profit this month for the first time since its launch 15 years ago.
Ocado reported revenue up by 19.8% in the 52 weeks to November 30 2014 to £948.9M, while earnings before interest, taxes, depreciation and amortisation rose by 56.3% to £71.6M.
Despite the good performance, City analysts questioned why it had taken the firm so long to turn a profit.
Clive Black, director and head of research at Shore Capital, said: “Following a decade and a half of trying, Ocado has worked out how to deliver baked beans, ice cream, Jaffa cakes and chipotle chillies without booking a bottom line loss.”
