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Online Food & Grocery: The Shopper Perspective 2013 Sample Extract Essential insight into shopper motivation and behaviour in UK food and

grocery online

Evolution Insights Ltd Prospect House

32 Sovereign Street Leeds

LS1 4BJ Tel: 0113 389 1038

http://www.evolution-insights.com

Evolution Insights: Shopper Insight Series

Disclaimer

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Please note No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written consent of Evolution Insights Ltd. The content of this report is based on information gathered in good faith from both primary and secondary sources and is believed to be correct at the time of publication. Evolution Insights can however provide no guarantee regarding the accuracy of this content and therefore accepts no liability whatsoever for any actions taken that subsequently prove incorrect. © Evolution Insights Ltd 2013

About Evolution Insights

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Evolution offer a range of products & services for clients in the field of shopper research:

Off-the-shelf research Evolution’s off the shelf research publications deliver affordable insight into shopper motivation and behaviours in UK food, drink and grocery

Insight Plus

Insight Plus offers your business the opportunity to engage in any of our regular shopper research projects in advance of publication, tailoring the scope to suit your needs

Bespoke Consulting

As publishers of research, we are able to draw upon a wealth of existing proprietary data for consulting projects – helping to better inform and shape any further research requirements

Our research and analysis helps clients develop targeted shopper marketing initiatives designed to influence shoppers at the point of purchase.

We use a range of research methodologies to discover genuine insights. Our research incorporates a broad spectrum of robust qualitative and quantitative research techniques.

As a leading publisher of shopper research, we are ideally placed to offer your business actionable shopper insight.

Evolution is a leading research consultancy specialising in shopper motivation and behaviour. We deliver off-the-shelf, tailored and bespoke research for manufacturers, retailers and agencies.

Sign up for Shopper Trend Report, our free monthly newsletter offering analysis and commentary on topical shopper issues.

Contents

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Key Findings & Summary 6 The Online Grocery Shopper: Shopping Habits 36 Introduction 37

The Online Grocery Shopper: At a Glance 9 Key Drivers & Trends 38 Introduction 10 Circumstances 39 UK Grocery Market 11 Planning 41 Predictions 13 Starting Point 42 Timeline 2012-2013 14 Planning & Starting Points, Demographics 43 Key Drivers & Trends 15 Ordering Results 44

Penetration and Frequency 16 Touch Points 45 Demographics 17 Shopper Missions 47 The Off-line Shopper 18 Spend 48 Summary 19 Delivery 49

Changing Habits 50 The Online Grocery Shopper: Retailer Choice 20 Summary 52 Introduction 21 Tesco 23 The Online Grocery Shopper: Drivers & Trends 53 Asda 24 Introduction 54 Sainsbury’s 25 Key Drivers & Trends 55 Morrisons 26 Delivery Charges 59 Waitrose 27 Click & Collect 60 Ocado 28 Recipe Boxes 61 Amazon 29 Opinions on Delivery & Substitutions 62 Online 30 Opinions on Delivery & Substitutions, by Retailer 63 Shopper Profile, by Retailer 31 Abandoning Online Shopping Carts 65 Drivers of Store Choice, by Retailer 32 Customer Reviews 66 Online Retailer Penetration, by Offline Retailer 33 New Products 67 Drivers 34 Drivers to Online Shopping 68 Summary 35 Barriers to Online Shopping 69

Contents

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Shoppers’ Positives of Online Shopping 70 Shoppers’ Negatives of Online Shopping 71 Summary 72

The Online Grocery Shopper: Online Categories 73 Introduction 74 Categories Shoppers Don’t Like to Buy Online 75 Fruit & Veg 76 Meat 77 Dairy 78 Summary 79

The Online Grocery Shopper: Typologies 80 Shopper Segmentations 82 Demographics 83 Retailer 84

Methodology 85

The UK food & grocery market is continuing to rise year-on-year, but at a slower rate as the market becomes increasingly saturated. There is great potential to increase the frequency of online shops within those who already shop online in order to increase sales.

The Online Grocery Shopper: UK Grocery Market

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1.7 2.3

3.0 3.6

4.2

4.9

5.6

6.7 37

35

30

20

17 17 14

20

0

5

10

15

20

25

30

35

40

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2006 2007 2008 2009 2010 2011 2012 2013F

Year

-on

-ye

ar g

row

th (

%)

Exp

en

dit

ure

est

imat

es

(£b

illio

n)

UK online food, drink and grocery market expenditure estimates (2006-2013f):

The food and grocery market in the UK is arguably one of the most sophisticated online grocery markets in the world. Sales are up each year with double digit year-on-year growth

The Online Grocery Shopper: Predictions

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It is expected that in 2018, one pound in every seven spent on retail will be made online

A key driver in the growth of online shopping is it’s enjoyableness.

Shoppers are largely rating online shopping as

more enjoyable than traditional in-store

shopping

The growth in penetration of smartphones and tablets has allowed for the evolution of ‘second screening’. Shoppers no longer have to be tucked

away in a separate room with a PC to shop in their homes –

they can shop whilst watching TV with the rest of the family

It is likely that online F&G sales will grow quicker than the overall F&G market in the next few years

Reports predict that online retail is set to grow by almost 50%

over the next five years to be worth over £50bn

The Online Grocery Shopper: Timeline 2012-2013

As the online grocery market is estimated to dramatically increase in value to £11bn by 2018, supermarket giants battle to take market share and remain at the forefront of shopper’s minds. The timeline pictured below highlights the key online food and grocery developments of 2013.

Dec Jan Feb March April May June July August September October

Morrison’s and Ocado do a trial run of the supermarkets new online store which launches in 2014.

Aldi reveals plans to launch an online liquor store in Australia, in an attempt to take market share from Woolworth’s.

Tesco Lotus commences its online delivery service in Shanghai and Bangkok.

Asda expands click and collect to better suit the needs of commuters. Lockers are now available in strategic locations such as Universities .

Amazon Fresh trials its delivery service in California, LA. Depending on the success of the trial; the company is expected to enter the UK grocery market.

Iceland considers trading online in order to rival Morrison’s.

Morrison’s and Ocado enter a 25 year (£200m) partnership.

Brewer AB inbev aim to improve their ecommerce strategy using social media. By clicking on Facebook/ Pinterest ads beer can be added to online shopping baskets.

Tesco makes online delivery more efficient by installing automated picking machines , in selected dark stores.

Tesco, Sainsbury's and Waitrose benefitted greatly from the festive period, as Tesco announces a 1.8% increase in sales. Waitrose thanks the popularity of tablets for its success as 22.8% of festive orders were made via the platform.

Sainsbury’s online saw sales of £1bn for the first time.

Forecasters predict that online sales will double in the next five years.

Retailer Choice

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30.2% 37.1%

Overall and Online Market Share

Over the next few pages we take a look at the market share by individual retailers. The pages will look a little something like this…

Overall Online

Please note that the online market share stated on these pages is not the same as the shopper share that we look at on P30. Shopper share takes into account the proportion of shoppers that use that store as their main online retailer and not the market share of that retailer.

Tesco.com Asda.com Sainsburys.co.uk Ocado.com Average

They offer the best value for me/are the cheapest 44 72 25 16 49

They have the best promotions 34 42 28 20 37

They have the most suitable delivery times

for me 26 30 30 36 30 They have the cheapest

delivery 21 29 15 18 24 Their produce tends to

be the freshest/best quality 14 14 38 47 24

Their website is the easiest to use and

understand 30 26 22 22 29 Their range is better

than the rest 20 13 32 33 24 They don't send product substitutes as much as

their competitors 8 9 13 33 12 Because they are the same company as the supermarket I usually

use 24 19 23 9 23 They have my favourites

list 19 10 13 7 16 It's the only one I've

ever considered 8 5 8 2 8

Retailer Choice: Drivers of Store Choice, by Retailer

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Highlighted numbers indicate a large deviation from the average

3 5 5

1 4

32 35

15

Weekday – midnight-9am

Weekdays – 9am-5pm

Weekdays – 5pm-midnight

Weekends

14% of shoppers have their order delivered to their place of work. Here we an see the majority have delivery between 5pm-midnight on a weekday.

Shopping Habits: Circumstances (2)

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Location and time where shoppers have their online grocery shopping delivered At work –

14%

Understanding when shoppers choose to have their items delivered is

important for retailers who can distribute their

resources appropriately.

We look here at perceived changing habits of online shoppers. If shoppers predictions are right, online shopping will continue to grow into 2014, with 1/3 thinking they will shop online more next year than they currently do.

Shopping Habits: Changing Habits

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43

51

6

Shop onlinemore

Shop online thesame

Shop onlineless

33

61

6

Shop onlinemore

Shop online thesame

Shop onlineless

Now, compared to last year Next year, compared to now

56% Have

returned grocery items

in the past

53% have had a delivery in

the past that has been late

32% Would pay

more to get a faster

delivery

With many online retailers offering services such as delivery tracking/alerts, it is not surprising to see a large proportion saying that they would like to have this option for their grocery delivery.

Drivers & Trends: Opinions on Delivery & Substitutions

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79% Would like to

receive an alert to say that their

delivery is on its way (e.g.

text)

67% Would like

tracking information on their delivery

72% Know the

returns policy prior to making

an order

60% Are often sent

substitute products

Online Categories: Fruit & Veg

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0

1

2

3

5

6

6

21

56

0 10 20 30 40 50 60

I worry it won’t stay at the right temperature

I like to read thelabel/packaging

It’s hard to tell the size online/understand the …

It is too difficult to choosebetween them online

I don’t buy this category

Other

Worried about them beingdamaged during delivery

I don’t think it’ll arrive fresh

I like to choose my own

Fruit & Veg

Bad past experience

I like to feel the quality in my hand

On several occasions I have received poor quality fruit and vegetables

I shop locally for it fresh

Have local shop that is cheaper

Typologies: Shopper Segmentations

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Evolution’s extensive research into online shopping behaviour has allowed us to segment shoppers into varying shopping styles. It is of course possible for individual shoppers to change as their circumstances change, but we believe it is useful to understand different modalities based on differing circumstances. Special Offer Junkie – Shoppers whose first thought is to look at the special offers section, and to seek out special offers within other sections. Speed Freak – Pre-plans the majority of items and goes straight to them with little browsing. Relaxed Browser – Generally enjoy online shopping and take their time to browse all sections and results. Frustrated Technophobe – Not the best at using technology and often struggle to find the items they want. Find it a frustrating experience. Creature of Habit – The main items bought tend not to differ between shops. Most items are bought from the favourites section.

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This presentation is a Sample Extract. Full Report 87pages. For Details on the full report please contact dale.henry@evolution-insights.com

Evolution Insights Ltd Prospect House

32 Sovereign Street Leeds

LS1 4BJ Tel: 0113 389 1038

http://www.evolution-insights.com

Evolution Insights: Shopper Insight Series

SAMPLE EXTRACT

Methodology

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Secondary and desk research

Preliminary qualitative and quantitative research

Main quantitative surveys

Detailed accompanied shops, including pre- and

post-shop in-depth interviews & Remote

Moderated Usability Test

Insights

• Evolution carried out a preliminary survey of 100 shoppers, to test questions for the main survey and establish an initial view of market penetration. Detailed online store audits were also completed, to facilitate awareness and commentary of online grocery retailer features, functionality and initiatives. Initial insights gained were used to help further design the main survey.

• Two quantitative surveys were utilised in this report. The first was part of a wider research programme and had a sample of UK adults who said they regularly shop for food & grocery. This survey was used to determine overall penetration rates, barriers to online food and grocery retailing and offline retailers used. The second survey included only shoppers who shop for food and grocery online at lease occasionally. This sample of 1000 completed all questions relating to their online shopping behaviour.

• Comprehensive and detailed assessment of all the data received was then used to discover insights. Throughout this process, primary research was supported by secondary research drawing on Evolution’s proprietary databases, national statistics, news and industry resources. Evolution’s consultants also maintained close relationships with industry figures across retailers and manufacturers.

Methodology

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Evolution’s methodology

• Detailed shopper insights were gained from 1,000 UK adults said they shopped online at least occasionally. The questionnaire was fully representative of the online grocery shopper population in the UK.

• The survey contained 27 questions relating to topics outlined to the left – in addition to standard demographic profiling questions.

• The questions were designed to give maximum insight into shopper’s motivation and behaviour before, during and after online grocery shopping.

Methodology: Quantitative Research – Survey

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Source: Evolution Insights

Categories NOT shopped online

Delivery, substitutes and spend

Circumstances, approach and modality while shopping online

Missions in terms of frequency and most regular

Context of online shop

Drivers of store choice

Online retailer usage in terms of frequency and most regular

Barriers for non- online grocery shoppers

Frequency of online grocery shopping

Demographic profiling

Topics of questions in quantitative survey