The report, “The State of Online Grocery Retail in Europe 2015”, profiles online shopping habits in the four most developed European e-commerce markets: The Netherlands, UK, France and Germany, as well as the United States, the world’s biggest online grocery market. It follows a similar report from Syndy last year, released before the company changed its name from SyndicatePlus.
“The grocery industry is reaching a digital tipping point, with much of its growth expected to come from online,” it said. “In fact, some FMCG (fast moving consumer goods) brands are already claiming 20-50% of sales from online purchases.”
It suggested that expanding product ranges, new technologies, increased efficiencies and consumer preference for convenience are the most important driving factors, but a shortage of home delivery options in some markets may challenge its growth in the longer term.
Pick-up points preferred by retailers – not consumers
France is the number one market for pick-up points, which dominate its online grocery market. The country’s low population density (averaging 120 people per square kilometre) and the extreme price sensitivity of French consumers have limited the feasibility of home delivery.
However, even with the country’s more than 3000 pick-up points, French consumers would prefer home-delivered groceries – but they are not prepared to pay more for the service, the report found.
“As the country’s terrain of pick-up points becomes saturated, the industry’s growth will be dependent on the development of home delivery models,” it said.
“…Syndy expects that the French online grocery retailers will be expending considerable effort to lower the cost of the “last mile” so the price of delivery is at a level which French consumers are willing to accept. The first to succeed will very likely win over the favour of online grocery shoppers in France, which will provide a significant competitive advantage over the less successful competitors.”
The market researcher expects the French online grocery market to reach sales of €10.6bn by the end of next year, up from €8.4bn last year.
Starting from a low base
The UK’s online sales outstrip all other European countries, and the online market is set to double by 2019, according to the report. The UK’s ‘Big Four’ supermarkets are expanding their network of pick-up points, which 73% UK shoppers use. However, home delivery is still the UK consumer’s preferred option, with only 1% preferring to use pick-up points.
Although online grocery shopping is growing rapidly in Western Europe, it still accounts for a small overall proportion of the total grocery market. In the UK, it accounts for 4.4% of all grocery sales, while it is 3.6% in France, 1.5% in The Netherlands, and just 0.8% in Germany.