Ocado is betting big on the online shopping boom. Announcing a £1bn funding drive to expand its operations yesterday, CEO Tim Steiner said coronavirus had been a catalyst for a “permanent and significant acceleration” in the channel shift, which would “redraw the landscape for the grocery industry worldwide”.

There is no doubt the pandemic has sent digital grocery sales surging. They increased by 75% during lockdown, according to latest Kantar figures [12 w/e 17 May 2020], meaning online shopping now accounts for 11.5% of all grocery sales.

And Ocado has been one of the biggest beneficiaries. In the second quarter of 2020 to 6 May, Ocado Retail sales were up 40.4% and current trading remains “consistent with these trends”, it says. According to latest Kantar figures, the online specialist’s market share has reached a new high of 1.6%, up from 1.3% last year [12 w/e 17 May 2020].

But is Ocado right in assuming this shift will be permanent?

Despite joining Ocado in ramping up their online delivery capacity, rival retailers have been more reluctant to make predictions about what will happen to demand in the long term. Speaking to The Grocer last month, one supermarket CEO likened the act of forecasting right now to shaking a magic eight ball.

But recent consumer research does give some indication of intent among shoppers. A recent survey by consultancy firm McKinsey & Company, for example, found almost a quarter (23%) of shoppers planned to do more online grocery shopping versus pre-Covid levels once the crisis had eased.

Similarly, the recently published Recovery Report by Him/MCA Insight suggested 29% of Brits are shopping more online for food and drink than before the lockdown began, and 20% plan to keep doing so after lockdown ends.

That figure rises to 26% of 25 to 34-year-olds and 27% of 35 to 44-year-olds, says Sarah Coleman, project manager at Him & MCA Insight. “I guess demand might soften a bit as people are more willing to go outside, but I do think there will be people that hadn’t perhaps used online before, including some younger shoppers,” she adds.

Even more significant, Coleman notes, is the fact 20.9% of those aged 75+ plan to keep shopping for food and drink online more than usual after lockdown ends. “Older people are more likely to have a barrier with the technology or putting their credit cards into the computer. But because of necessity they’ve overcome that barrier, and they’ve discovered the convenience of that service.”

The Power List 2020: online shopping

With over-70s among the groups of people told they should still remain indoors as much as possible as lockdown eases, “I don’t imagine those people are suddenly going to stop using online” Coleman adds.

As a result, the Recovery Report predicts the use of online grocery shopping will be a “legacy behaviour” in the aftermath of coronavirus. “More consumers, especially the elderly and vulnerable, are now versed in the process and retailers are better able to cater to demand,” says Blonnie Walsh, head of insight at Him & MCA Insight.

But Jessica Moulton, senior partner at McKinsey & Company, is less convinced. With 58% of people surveyed by the consultancy firm still uncertain whether they’ll continue doing more grocery shopping after lockdown ends, the “jury is out” on whether the channel shift is permanent, she says.

“There’s a greater sea change in non-discretionary categories like apparel. But in online grocery, consumers really dislike paying for the actual cost of delivery and execution challenges make it really difficult to deliver a great consumer experience,” she adds. “We will see some lift but probably not a transformation.”

What impact is coronavirus having on the UK grocery market?

While it has contributed to the surge in demand for online deliveries, coronavirus has undoubtedly added to problems with customer experience, agrees Coleman. Delivery pass holders, for example, have found themselves struggling to get slots because retailers have been “prioritising the vulnerable or unable to cope with capacity”, she says.

Similarly, some retailers appear to have have struggled to cope with the strain put on their services and supplies – resulting in shoppers reporting high numbers of substitutions and low-quality produce being delivered, as well as difficulties getting through to customer services.

At best, that will test the until-now loyalty-driven nature of online shopping. At worst, it could put people off grocery deliveries altogether.

For now, online shopping is still riding the wave of necessity. But maintaining demand beyond the pandemic will depend on whether retailers can improve the online shopping experience enough to rival the experience shoppers get by visiting physical stores, analysts agree.

Ocado’s bid to raise £1bn to plough into its operations – including the automation efforts of its new partners worldwide – is certainly a good start.