Global market review: online grocery retailing
Online and internet shopping represents one of the fast growing sectors within the global food and grocery market at present, especially across the more developed parts of the world. With household internet access continuing to increase, the customer base for online grocery shopping is widening, while other technological innovations such as the advent of smart phones is further benefiting the market.
The global online grocery retailing market is dominated by the UK and the US, which together accounted for almost 75% of the world total in 2009. At less than 1.5%, however, online and internet channels still account for a very modest share of the global retail grocery market. Furthermore, food and groceries continue to lag well behind non-food items as far as the online retailing market is concerned, with consumers using the internet most frequently for booking travel and holidays, as well as for financial-related tasks such as banking.
The global market for online grocery retailing remains at a relatively early stage of development in many parts of the world. To date, sales of food and drinks over the internet have yet to make the same impact observed in other parts of the consumer goods industry, most notably books, clothing and electronic items such as computer equipment.
Global sales of food and drinks online were valued at US$19.9bn in 2009. This figure is limited to countries where a quantifiable market exists, all of which are mainly located in either Western Europe or North America. A truly global figure is thought to lie somewhere between US$20bn and US$30bn.
A number of major trends are shaping the development of the global online grocery retailing market. From a retail standpoint, the economic recession has altered ways in which people shop for groceries, while ongoing technological developments continue to affect the strategy of many leading operators within the e-commerce sector (eg: Tesco’s iPhone wine app, which provides product information such as price and tasting notes).
Although penetration levels have widened during the last decade, making purchases over the internet is still heaviest among society’s more affluent consumers, since a computer and modem are required to carry out the transaction, as well as either a debit or credit card. It is mainly for this reason that online grocery shopping tends to increase with social grade.
The supply structure for the online grocery retailing market differs throughout the world according to region. In the UK and Europe, the leading suppliers are the major food retail groups, whose profile and brands are already familiar to shoppers. As far as the major supermarket groups are concerned, online and internet shopping enables them to gain easy access to their customers, offering a wide range of items (both food and non-food) that shoppers might not have time to peruse in store.
As the next decade progresses, countries such as the UK, the US and some of the Western European nations are expected to retain their dominance of the global online grocery retailing market. Nevertheless, increasing household penetration of both internet and broadband throughout many parts of the world are expected to increase the consumer base and therefore make grocery shopping via the internet a more common practice for the global population.
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