Data: How Covid-19 has reshaped the European grocery market

Much like in the UK over the past year, the coronavirus pandemic has had a profound impact on the continental European grocery market as well. 

With unprecedented closures of restaurants and bars across much of the continent, European food retailers have experienced huge upticks in sales as a result. However, they too have had to grapple with many of the same cost increases as their British counterparts. 

A new report published today by McKinsey and EuroCommerce highlights a number of key trends that have emerged from the European grocery market over the past 12 months. 

While the UK has streaked ahead with its vaccination programme and many in the British Isles are cautiously optimistic about lockdown measures lifting soon, Europe by contrast is faced with the growing possibility of a third wave gripping the continent. 

The report also looks at how many of the customer behaviours created by the pandemic will likely continue as the region braces for another period of restrictions and closures. 

New channels and behaviours

One of the key findings from the report – which surveyed more than 10,000 respondents across Italy, France, Germany, Spain and the UK – is the huge volume of customers who have been willing to try new shopping behaviours during the course of the pandemic. 

Over 62% of respondents say they have tried a new shopping method over the past 12 months. Of those, 31% say they have tried a different retailer, store or ecommerce website; 27% have tried a different brand; 20% have tried different own-label products; 19% have tried a new channel from stores such as click and collect or delivery apps; while 18% have tried ecommerce for the first time. 

With people locked in their homes and alternative food spending channels closed, it is perhaps unsurprising that so many European grocery customers were willing to try new methods during the period. 

However, the key question now is how many of these new behaviours will stick beyond the pandemic. Of the percentage of respondents who say they shopped with a new retailer during the period, 75% say they will continue this after the pandemic. 

For respondents who shopped different brands during the pandemic, that number rises to 81%. Perhaps most revealing is that, of the respondents who tried new ecommerce grocery delivery for the first time during the pandemic, 82% say they will continue this behaviour. 

Online grocery sales overall grew 55% over the past 12 months across Europe, compared with just 10% in 2019. 

The biggest growth areas for ecommerce, alongside the UK, were Sweden, Italy and Spain. 

Flight to value 

With many European countries also reeling from the intense economic effects of Covid-19-related recessions, the report also finds a real polarisation between customers either trading up to treat themselves or trading down to conserve funds. 

While 30% of respondents say they will continue to spend more on food in the future, the majority say they will opt for more value-for-money purchases in future.

The report finds the key reason so many customers have been willing to shop around with new retailers and through new channels during the pandemic is due to becoming increasingly price conscious. 

Alongside value as a key driver for grocery shopping, European consumers are also increasingly being driven by convenience, with nearly 60% of respondents saying they have tried a new retailer, store or website for that reason during the past three months. 

In terms of the main reasons for valuing convenience, 24% of respondents say what is most important is that it is easily accessible from where they live; 20% most value good delivery and click-and-collect options; 18% most value shorter queues and less busy shops; while only 15% most value being able to find all the products they need. 

McKinsey said this flight to value and convenience represented “a historic opportunity” for European grocers to “attract new customers by better adapting to their changing needs and providing them with a superior value proposition”.

More money, more problems

Looking ahead to 2021, McKinsey found that respondents expect to spend more money on groceries through discounters and convenience stores as well as through super and hypermarkets. 

Another area in which consumers clearly intend to continue spending more money is ecommerce, with McKinsey signalling it expects it to become a “core” part of the European food retail market.

More than a quarter of respondents who had shopped online during the pandemic say they would increase spending through this channel as lockdown measures begin to unwind. 

The report also finds that the more often a customer used an online channel in 2020, the more likely they are to increase their online spend in 2021. 

McKinsey also surveyed 50 grocery chief executives from across the continent. Despite the net increases in intention to spend on groceries this year, nearly half of the chief executives say that 2021 will be an even more difficult year for the sector due to increasingly strong comparables. 

Many chief executives also anticipate that grocery sales will stagnate over the next year or two as lockdown restrictions are lifted and pent-up demand by consumers for pubs, bars and restaurants is played out. 

In terms of the most influential trends for 2021, chief executives say downtrading would be the most crucial, followed by consolidating the growth in online.