Baby boomers hold the key as online food and grocery sales set to rise

Posted by Daniel Palmer on 9th December 2008

In the wake of an Australian survey by Deloitte finding Australians were yet to embrace online grocery shopping, new UK research has established that baby boomers hold the key to growth of online grocery sales.

The Golden Generation report, from international food and grocery insight and information providers IGD, predicts that the value of online food and grocery shopping in the UK will nearly double in size by 2013 to be worth £6.2b (A$13.94b) (up from £3.2b in 2008). Food and grocery sales in the UK have escalated in recent years, with the sector vastly more developed than Australia’s. Their leading retailer, Tesco, recently reported online growth continued with “very strong sales” last quarter and a report released earlier in the year claimed food and grocery could overtake electricals as the number one category in e-retail within five years. Electricals currently command 25% of online sales in the UK but food and grocery growth rates are expected by Verdict Research to see it overtake electricals by 2013.

Online shopping cart

According to Deloitte, only 5 per cent of Australians ‘will purchase groceries and food online’, making it the second least likely category and comparing unfavourably to statistics in the UK and the US.

The IGD report suggests that over 50s today remain open to new ideas and experiences and many enjoy shopping online. However, food and grocery is lagging behind certain other categories and there are some barriers to overcome.

The over-50s represent a big opportunity for retailers to increase online market share if they address a few key issues such as: delivery charges; ease and security of ordering; and product reliability.

In a survey of just over 1,200 older shoppers (50+) conducted in the autumn, 27% said that they would start shopping for food and grocery online in certain circumstances.

* Nearly half (48%) of those considering online food and grocery shopping would do so if various price issues were dealt with – eg, scale of delivery charges for small orders, guaranteed same prices as in store, and the same promotions available.
* More efficient and secure ordering was mentioned by 46% – including greater security against ID fraud, better view of products on the web site and a quicker ordering process.
* Two-fifths (39%) were unsure about the reliability of product quality and delivery – suspecting, for example, that they would receive products with a short shelf life.

“Many food and grocery retailers that are operating online have already been proactive in addressing consumer concerns around sell-by dates, identity fraud and product reliability, and many do indeed repeat their in-store promotions online. So the challenge seems to be to raise the level of the game in communication with the older generation,” Joanne Denney-Finch, Chief Executive, IGD, said. “Once that is achieved, online shopping will receive another big boost.”

The over-50s punch above their weight – accounting for 51% of national food and grocery spend, while representing just 34% of the population. They also account for 80% of disposable income in the UK and 60% of national savings.

“During these tough times, spending by the over-50s is likely to stand up better than amongst the more heavily indebted younger generations. So retailers need to be particularly alert to their needs,” Michael Freedman, Senior Consumer Analyst, IGD, and author of the research, advised. “An additional 5.7 million shoppers over the age of 50 are amenable to online shopping for groceries. This represents a big opportunity for those who can provide reassurance about the threats from ID fraud and that online shoppers will not be penalised through shelf life, quality of produce or missing out on offers.”