A new study by TWC Trends, exploring the digitisation and delivery of food & drink and its impact on the convenience retail sector, confirms that online grocery shopping is not just for the main shop but is increasingly being used for top-up shopping.

The ‘Online Explosion’ report found that 38% of consumers buying groceries online do top-up shopping missions online, with this proportion increasing to 42% amongst the 18 – 34 age group. Meanwhile, 22% said they are only doing top-up shopping when they buy groceries online, rising to 28% of the younger cohort.

The research also found that 30% of consumers have shopped in a channel other than supermarkets for some of their purchasing of groceries online. Amazon is leading this charge with 13% of consumers saying they have ordered groceries from the online giant – that’s 60% more than have ordered from third-party aggregators, such as Deliveroo.

Sarah Coleman, Communications Director for TWC, suggested that this figure is high given Amazon’s small market share in grocery. She said: “Frequency and basket size will need to increase for Amazon to make significant headway in grocery. As we’ve already seen, appealing to the younger shopper will be key to winning the online grocery top-up mission.”

Whilst 35 – 54 is the key age demographic for shopping online for groceries from a supermarket’s website, other channels for grocery deliveries such as Deliveroo, Amazon, delivery direct from a convenience store, and meal kit boxes, all over-indexed with 18–34-year-olds. TWC believes that the online shopping behaviour of this cohort is likely to drive the shift towards faster, smaller, online grocery deliveries.

Coleman commented: “This is also evidenced in the type of tech that is being used. Whilst the uptake of QR codes and live streaming is fairly consistent across all age groups, other tech such as Apple/Google Pay, voice search and buying items directly from social media posts are all biased towards the younger shopper.

“For instance, 41% of 18–34’s have used Apple/Google Pay in the last month, whilst 1 in 5 have purchased an item directly from a social media post on Instagram, TikTok or Facebook, making this age group 60% more likely to do this than the average consumer.”

Whilst over half of this age cohort stated that the use of cutting-edge technology like Augmented Reality to showcase products is important when ordering food/drinks online (vs. 43% across all consumers), only 2% had seen AR in practice.

Coleman said: “Augmented Reality has been adopted well within fashion but is yet to make significant traction in food and drink. In our view, this could offer an effective way of replicating the in-store experience, which we know is the biggest barrier to online grocery shopping. Half of shoppers that hadn’t shopped online for groceries said it was because they prefer going to the shop for groceries in person, whilst a similar proportion agree that they like to browse the aisles.

“Two-thirds of shoppers who haven’t shopped for groceries online in the last three months think it is unlikely that they will do so next year, suggesting that online grocery penetration could plateau – at least unless some of the current barriers are addressed. Driving more online top-up shops will certainly help to drive frequency, especially amongst the younger generation who are most engaged with this mission.”

She concluded: “Who can own this space is still unclear – and also whether it can be done profitably, especially outside of London and other big cities. We can’t deny that Amazon remains a real threat to the traditional wholesale and retail markets, but frequency and basket size will need to increase before it can make significant headway in grocery.”

NAM Implications:
  • ‘Frequency and basket size will need to increase for Amazon to make significant headway in grocery’
  • i.e If Amazon maintains customer-centricity and service level, their share of online grocery will grow.
  • Watch this space…

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