Online FMCG sales up 7.6% in UK
Online share of grocery and FMCG sales has reached 7.5% in the UK – the highest share in Europe – but growth is stalling as the market matures, according to Kantar Worldpanel’s fourth annual Future of e-commerce in FMCG global study. The UK e-commerce growth rate of 7.6% compares to a global increase of 30% and is down from 9.8% last year, while online purchases now account for 4.6% of all FMCG sales worldwide.
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, comments: “The UK is well ahead of its European counterparts in e-commerce, but the levels of growth we’ve seen in recent years won’t necessarily be sustainable. Saying that, online sales have been an important source of growth at a time when bricks and mortar grocery sales have fallen by 1.0%.
“E-commerce retailers are bound by the limitations of the current delivery model. Home delivery is the norm for the British consumer, even more so since the growth in popularity of services like Deliveroo. However, this is an expensive option for retailers, and substantial delivery costs are an obstacle to completing orders at the quick turnaround shoppers demand. This hasn’t stopped retailers innovating to find new ways of satisfying this ‘right here, right now’ mindset, such as one-hour delivery from the likes of Tesco and Sainsbury’s, or Amazon’s up-front Prime Now subscription model.”
Kantar Worldpanel predicts that online’s share of the UK grocery market will climb from 7.5% today to 12% by 2025, though the profile of the average online shopper is likely to look very similar in five years as it does today.
Fraser McKevitt continues: “New e-commerce consumers have a positive effect on the FMCG market in the short term, cumulatively spending more on and offline in their first year of online shopping that they did the previous year. However, by their second year of online shopping consumers tend to moderate their budget and year-on-year growth falls back in line with the market average.
“In the longer term, a shift to online is presenting a real challenge for the overall FMCG market. Online, shopping lists are repeated from trip to trip, meaning opportunities for unplanned purchases are quashed. Brands and retailers should focus on how to generate more impulse buys online. The growth of voice recognition technology, such as Amazon’s Alexa, could be one solution, as it allows consumers to make real-time, spontaneous decisions with few barriers to purchase.”
