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Growth in the UK Online Market through Smartphone and Virtual Stores
- 06 November 2012
The UK online food and grocery market will be worth £11.1bn by 2017, almost double its current value of £5.6bn, according to new IGD research. This represents a compound annual growth rate (CAGR) of 14.6% between 2012 and 2017. This growth is largely being driven by customer uptake and shopping frequency on Smartphone and tablet formats. The research also found that one third of shoppers would shop more online if petrol prices go up further and that 46% would be encouraged to buy more groceries online if they received personalised promotions by email.
The research highlights how consumer's online shopping habits are evolving. IGD shopper insight manager Michael Freedman noted that online shoppers are becoming more forensic and demanding which has resulted in retailers developing significant online platforms and ensuring that digital is a key element to their strategies. Tesco UK recently announced that digital is at the heart of their plans to build a better Tesco and Morrison's, which is currently the only UK multiple retailer without an online presence, has plans well under way with the development of grocery click & collect. Retailers will increasingly move to integrate both their online and offline platforms to allow for seamless shopping across all channels.
According to the research digital engagement will be key, making greater use of QR codes in-store to make Smartphone's an even more important shopping enabler. Virtual stores whereby shoppers can download apps to enable them through QR codes to buy individual items or put together a full shopping basket are growing across the retail sector, it also means that retailers can interact with customers and at anytime and at any place.
Since Tesco's launch of its virtual store in South Korea, the format has spread around the world, with retailers, suppliers and payment systems utilising it. Tesco said that the launch and coverage of the virtual store encouraged 900,000 people to download the Homeplus App. Tesco has since brought the concept to the UK, adding a virtual store at Gatwick airport. Ocado opened a virtual store in a shopping centre in London, adding a 'physical' presence to its online model for the first time. By April 2012 Ocado's mobile app accounted for nearly 25% of sales. Ocado has since opened further virtual stores at shopping centres in Birmingham and Bristol.
As Smartphone penetration rates rise, opportunities for mobile shopping and virtual stores will become increasingly apparent for retailers and suppliers alike.
Source: BordBia - Growth in the UK Online Market through Smartphone and Virtual Stores
