Judging by the Christmas number one singles to have topped the charts over the years, the festive period is not usually a time to draw any big conclusions about long-term trends or spending habits (see for reference “Mr Blobby” by Mr Blobby, Shayne Ward’s “That’s My Goal”, and many more).
Many of those working in the grocery industry may wish all too well that the results of their Christmas trade were equally meaningless and easily forgotten, as the reality of poor sales, job losses, and store closures hit home.
However, as Ocado’s results today show, there was some good news for the grocery industry this Christmas, with e-commerce delivering solid growth for those getting it right. Ocado reported 15% year on year sales growth for the biggest day leading up to Christmas, with fulfillment centres handling nearly 40% more items for both Ocado.com and Morrisons.com in the week before Christmas than in the previous year. The e-tailer is now set to reveal its first-ever full-year profit next month.
“More and more shoppers heading online? Old news!” we hear you cry. Bear with us, though. Some of the recent figures suggest this Christmas was a definite tipping point.
Sainsbury’s experienced its biggest Christmas ever in terms of online sales. A staggering 110,000 orders were delivered in the three days to 23 December. Meanwhile, Waitrose said online sales were up 26.3% during the Christmas period and heading even further upmarket, Fortnum and Mason said online sales were up 31% in the five weeks to 4 January.
Whilst a proportion of non-food items will no doubt be included in the above figures, 40% of shoppers did say they would be heading online to buy their groceries at Christmas when surveyed by Shoppercentric. Even single price e-tailer Poundshop.com told The Grocer that it estimated groceries made up around 65% of its trade.
These figures follow the pre-Christmas warning from analysts that the supermarket digital war will replace the price war in 2015. Thomas Fell, IT solutions giant Wincor Nixdorf’s senior vice president for retail, explains why grocers are now waking up to the possibilities of “multichannel” shopping.
“Compared to fashion and electronics, grocery is coming a little bit later into the online market. This is partly just because margins in grocery are much lower than in categories like fashion. But also food retailers haven’t always created a seamless journey from instore shopping to online shopping. Now grocery retailers are starting to understand the value of e-commerce and they realise that the shopping experience can continue even after a shopper has left their store.”
So what can we expect next? Simply more and more shoppers heading online? Perhaps we can also expect new players entering the growth market, as some analysts think that our growing love for e-commerce could make the UK AmazonFresh’s first European destination.
Amazon’s online grocery delivery service recently underwent trials in Germany following its rapid growth across the US, hitting the east coast last autumn. Planet Retail research director for retail technology Joachim Pinhammer said that German shoppers just didn’t embrace online grocery “in a big enough way”.
“Whereas in the UK the picture is now quite different,” Pinhammer said, “and I think in somewhere like London, AmazonFresh could be particularly successful.”