At the end of January, the Office for National Statistics published its Retail Sales Report for December 2020 which showed a surge in e-commerce growth.
This showed that in December alone, e-commerce sales grew by 61.4%, compared to the previous December, accounting for 29.6% of sales across all sectors and with the highest growth since 2008.
Within this, online food sales grew by a massive 126.4%, with 11% of all grocery sales taking place through e-commerce, pushing the sector towards achieving its 2030 forecast ten years early.
And this was also the only category where online sales grew compared to the previous month (+2.6%) as other sectors saw a slowing in spend.
So what is behind this significant increase in growth in the food sector?
The multiple retailers lead the way
Unsurprisingly, given the stockpiling of loo rolls and hospitality curfews, the multiples have seen a significant jump in sales, bolstered by the highest level of home deliveries ever.
A significant 69% spike in online sales helped bolster sales across the business as the grocer more than doubled its online order capacity to 1.5 million slots per week.
The supermarket giant has also been on a drive to boost customer loyalty with its Aldi Price Match scheme across 500 branded and own-label lines and its Clubcard loyalty scheme.
Clubcard members are currently benefiting from Clubcard Prices on around 2,000 lines, while members of Tesco’s £7.99-a-month Clubcard Plus subscription service get 10% off two ‘big shops’ a month in-store.
Tesco’s work to boost loyalty by strengthening its reputation for price and quality will remain key into 2021.
The Co-op has also focused on revamping its membership scheme, overhauling customer rewards on purchases and doubling the funds going to community groups as customers shopped closer to home and ate out less frequently during lockdown.
The new scheme provides more personalised offers – allowing members to choose two tailored offers a week, as well as exclusive in-store-only discounts.
Elsewhere, many hospitality businesses have pivoted to collection and home delivery and numerous brands have added direct to consumer sales via their websites.
And there is no doubt, that during COVID, many consumers have become first-time online purchasers as they seek the convenience of home delivery and a reduced need to venture away from the safety of their homes.
At the same time, many consumers have sought the new and the different in food and drink as a way of replacing the enjoyment they used to experience when eating out.
And it seems that the demand for quality has increased too with many prepared to spend more on exciting, different products at premium price points.
However, a short-term dent to continued growth is an acute lack of ecommerce packaging with many paper mills stock exhausted and re-order lead-times stretching to some 8-10 weeks currently.
A big downside of course being the surge in volume of single-use packaging and the increased pressure placed on waste management centres to up their material recovery percentages.
Last Updated on 17/03/2023 by Eddie Stableford