Lisa Byfield-Green Senior Retail Analyst, Online & Digital 25 November 2015
Today s presentation UK channel overview Drivers of growth Future trends Winning strategies for retailers / suppliers Source: IGD Research
Update and Forecasts
UK is the #2 global online grocery market $ billions 200 180 160 140 120 100 80 60 40 20 $ billions 30 25 20 15 10 5 2015 2020 0 China 0 Source: IGD Research, July 2015
UK Forecast summary UK market s positive trends to continue billions 250 CAGR 13.7% 200 150 CAGR 13.0% Top 3 online grocery retailers 100 50 3.2% 3.5% 4.0% 4.4% 5.0% 5.7% 6.3% 7.0% 7.8% 8.6% 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total grocery market Online market Note: Year to April 2015 8.9bn 5.0% online 2020 17.2bn 8.6% online Source: IGD Research
UK Forecast summary Channel forecasts Source: IGD Research Convenience, discount and online together will grow sales by 25.1bn 2015-2020 These three growth channels will overtake superstores and hypermarkets by 2018 to account for 4 in every 10 spent 40.4% 34.7% 2015 2020 20.0% 21.2% 17.8% 22.0% 7.2% 11.6% 8.6% 5.0% 6.2% 5.4% Superstores and Hypermarkets Small supermarkets Convenience Discount Online Other > 25k sq ft 25-3k sq ft < 3k sq ft bn Change Source: IGD Research -2.1 +0.3 +6.4 +10.5 +8.3-0.3 Total +23.1
UK Forecast summary Where will your growth come from to 2020? Online will grow by 8.3bn between now and 2020 That s a BIG opportunity Source: IGD Research
Where are shoppers buying their frozen food? 80% 70% 60% 50% Channels used to buy frozen food Shopper s missions when frozen food is purchased 50% Normal main shop 40% 30% 20% 28% 10% 0% Total Frozen Ice cream Frozen vegetables Frozen meat and fish Big main shop Supermarket Food discount Online Frozen food specialist Hypermarket Convenience High street discount Top up 14% Source: IGD ShopperVista, Oct 14 base 1,000 GB grocery shoppers
Drivers of Online Growth
What is driving online growth? Loyalty Biggest growth from retailers combining all three Mobile Convenience Source: IGD Research
Convenient solutions are driving interest in online shopping Used in the last month 11% say online is their main way to shop How to capture opportunities e.g. click & collect shoppers going into the store? Base: all past month online grocery shoppers Aug-Sept 15
Convenience Shopper-centric innovation Faster, easier, simpler Challenge: keeping ahead of shopper trends Supply chain readiness Source: Uber, Instacart, Asda, Tesco, Amazon
Mobile-first an essential strategy for growth Technology to serve shoppers, make life simpler Multi device journeys Mobile is personal Digital in-store IOT Source: Amazon, Apple, Yihaodian, Ocado
Loyalty Multichannel shoppers are valuable New initiatives becoming more exclusive, personalised Source: Amazon, Waitrose, Tesco
Inspiration frozen outperforms online Cross-selling, events, merchandising can all inspire Source: Iceland, Ocado, Tesco, Asda
Future Trends
New entrants and disruptors Continued evolution of the UK market are you ready? More players More convenience and choice More channel blurring How will Amazon and the discounters change the landscape? Source: IGD Research
Profitability under the microscope What could change here? Are you ready to align your business with the retailers? The fact is online is a less profitable channel. You have to think about how to rebuild your core business in that world Source: IGD Research
Winning Strategies for Online
Using technology to provide better solutions Finding ways to personalise the multichannel experience Location Time Mood Anytime Anywhere Purpose Need Preferences In-store, online, social, across devices and missions Source: IGD Research
Priorities for suppliers Do I have the right resource in place? How can I partner with retailers on new initiatives? Multichannel approach, prioritising mobile How will change impact my category? Maximise changing opportunities Innovation, inspiration, test & learn
The centre of excellence for strategic insights and capability development Get in touch! For further information, please contact: lisa.byfield-green@igd.com Or visit: www.igd.com