Euro internet grocery sales set to boom

By Anita Awbi

- Last updated on GMT

Related tags: Online shopping, Supermarket

The European e-tail sector is likely to grow 186 per cent by 2010,
but supermarkets should work to maximise market share by tackling
consumer barriers such as stock availability and allocated delivery
times, says analyst.

Latest research by Mintel suggests the European online retail market will be worth €115bn (£78.6bn) by 2010, taking five per cent of total retail sales.

Internet sales in the UK are currently the largest at €9.79bn per year, with Germany second on €9.71bn and then France with €6.5bn. Collectively they make up two thirds of the €40.2bn EU e-commerce market.

Since the late 1990s many supermarkets have developed online fascias to tap the growing trend in these countries, and Mintel's Neil Mason said the sector is starting to come of age.

"It is gaining consumer acceptance as a normal retail sales channel. We are confident that online sales of goods will grow strongly over the next five years as this channel matures,"​ he said.

But Verdict Research's senior retail analyst Nick Gladding suggests retailers may still have to work harder to make internet ordering more convenient and develop the sector further.

"I think there's a lot more potential for online grocery shopping but growth really boils down to restrictions,"​ he told FoodandDrinkEurope.com.

"Consumers don't find it as convenient as hitting the supermarket. They have to plan their groceries in advance. Also, I think stock availability, booking in advance for delivery - and sometimes not getting the slot you want - are all really acting as a break on the sector."

Following Monday's launch of Amazon.com's online grocery store selling everything from household products to organic food, internet grocery shopping looks set to move into the mainstream.

The world's largest e-tailer is bringing its online expertise to sell more than 1,200 brands from the likes of Nestle, Kellogg, Kraft and Procter and Gamble. About half its merchandise is natural or organic, from brands like Annie's Homegrown, Wild Oats and Newman's Own - to tap the value-added health trend.

The American-owned company first launched its UK service in October 1998 and is now ranked by research group MMXI Europe as Britain's top retail site. As a market leader other companies have much to learn from its ability to ensure availability and delivery times, and as Tesco branches out to offer more household items, books and CDs online, it often cites Amazon as its number one internet competitor.

However, Amazon.co.uk has no plans as yet to launch a grocery site in the UK, leaving Tesco as the number one grocery e-tailer in the UK and Ireland.

"I still think it's a case of Tesco and the rest with UK retail. Tesco continues to do really well with no slow down in internet sales growth, but for the other retailers it's a mixed performance,"​ Gladding said.

"Ocado is still doing well for Waitrose, but its rate of market share growth is slowing down. It is still attracting new customers though future growth could become more challenging as rivals, particularly Sainsbury, invest more in their online services."

According to Mintel's quarterly internet report, released in June, almost 65 per cent of adults in Europe now have access to the internet, rising to almost 80 per cent among those who work.

France will experience the greatest growth over the next four years, with retail sales increasing 200 per cent by 2010, to reach €19.6bn.

Related topics: Market Trends

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