In numbers: How coronavirus transformed grocery retail in three months

Kantar today published the latest grocery market share data covering the full 12-week period of the coronavirus lockdown.

The figures paint a stark picture and reveal an industry and consumer that have been radically altered by the pandemic.

The data points from the latest figures highlight not only where the grocery sector has been, but also give indications of where it is might go as lockdown measures continue to be eased.

Online on a roll

One of the big trends that has come out of the coronavirus lockdown is the rapid rise in demand for online grocery shopping – a trend that has only gained momentum as lockdown has carried on, despite eased shopping restrictions and improved in-store availability.

For the four weeks to June 14, online sales soared by 91% with Kantar estimating that one in five UK households purchased groceries online during the month.

Kantar’s head of retail and consumer insight Fraser McKevitt puts this down to the huge amount of work the grocers have put into increasing capacity.

At the beginning of the lockdown in March, as demand spiralled, the big four supermarkets and even online specialist Ocado struggled to meet demand.

As a result, despite a 20.6% surge in overall grocery demand during the month, online sales only increased by 14%.

“Online groceries have taken 25 years to get to 8% of our business and eight weeks to get to 15%, and it’s still growing like there’s no tomorrow”

Mike Coupe, former Sainsbury’s chief executive 

In the time since, however, Tesco has added an extra 145,000 new online delivery slots, while Sainsbury’s has also increased its capacity to more than 600,000 a week.

Former Sainsbury’s chief executive Mike Coupe told Retail Week the huge growth in online since lockdown began has been “remarkable”.

“Online groceries have taken 25 years to get to 8% of our business and eight weeks to get to 15%, and it’s still growing like there’s no tomorrow,” he said. 

Another reason for this enormous growth has been the entrance into the market of a number of new players, namely convenience store groups such as Costcutter.

The convenience retailer has not only ramped up the partnership it forged with Uber Eats in December 2019, but has also begun fulfilling deliveries itself from stores.

The Co-op has also used the lockdown as a push to rapidly expand online capacity, both through its partnership with Deliveroo and through its own website. Even discounter Aldi has got into the online grocery game, launching its first delivery service in mid-April.

Kantar’s McKevitt believes that, despite struggling with demand at first, the lockdown has left Ocado in a great position.

It achieved its largest ever market share in the last month – hitting 1.7% – and saw industry-high sales growth of more than 42.2% during lockdown.

However, Jefferies analyst James Grzinic notes that the rigidity of Ocado’s automated fulfilment model versus the flexibility of the pick-at-store model may have limited how much it could have grown during the period, saying the pureplay has “lost market share at a rapid rate”. 

Some form of normality

For the full 12-week period of the lockdown ending June 14, the Kantar data shows that grocery sales grew 13.7% – a dramatic sales spike year on year.

To put that into some kind of context, for the corresponding 12-week period last year, overall supermarket sales grew 1.4%. Kantar at the time hailed that growth as a “new milestone” for grocery, as it represented three years of continuous sales growth.

In the last four weeks, sales growth continued to boom, up 18.9%. However, Kantar notes that the market has begun to “edge back towards normality”. While shopping trips were still greatly below pre-lockdown levels, Kantar says the number of trips made in June were well up on May.

McKevitt explains: “We’re still shopping less frequently, but shoppers are gradually changing their behaviour.

“Households made 77 million fewer trips to the grocers in the latest four weeks compared with last year, but that’s still 19 million more than in May, reflecting the slight easing of government restrictions.”

Despite shopping in store with less frequency, customers are continuing to spend more per visit than pre-lockdown. In the last month, consumers were spending £26.37 on average per grocery trip – a 42% increase in terms of basket cost year on year.

Convenience is king

Another key trend from the lockdown is the continued growth of the suburban convenience store. With people travelling less and working from home much more, Kantar says convenience stores have become “an increasingly important outlet for shoppers”.

The pandemic has been a huge boon in particular for independent convenience store retailers, which have collectively seen sales growth of 69.3% during the lockdown. However, convenience stores and smaller-format stores from the major outlets have also traded well.

In the last four weeks, convenience store sales accounted for 14.7% of all grocery sales. While this is slightly down on April’s peak of 16.3%, it is still “higher than normal levels”.

The Co-op in particular has performed strongly, growing 34.5% over the last 12 weeks and increasing its market share to 7.4%, its largest share of the market since March 2001.

Convenience specialist Nisa has also enjoyed a strong lockdown trading period. As a result, it has been on something of a recruitment spree – snapping up 242 new franchise stores in the first five months of the year.

Overall, Kantar’s McKevitt says convenience retailers took some £1.6bn through the tills during the three months of lockdown. Despite this, food and drink on-the-go sales plummeted, which accounted for £347m to grocers in June last year.

The chasing pack

In terms of overall market share, while the rankings of the UK’s big four grocers remain unchanged, each has seen their overall share slightly diminish year on year.

In the 12 weeks to June 14, 2020, Tesco’s overall market share was 26.9% – a 0.4% reduction on the same period in 2019.

Sainsbury’s with 14.9%, Asda with 13.9% and Morrisons with 10.1% have also all seen their market shares slip year on year, as the likes of German discounters Aldi and Lidl, convenience retailers and independents continued to chip away.

The discounters seem to have rebounded after Aldi in particular suffered a bit of a mid-lockdown wobble. Between them, Lidl and Aldi saw 17.6% overall growth in June, which Jefferies’ Grzinic notes was likely down to “shoppers becoming more comfortable with navigating smaller stores as lockdown progressed”.

Another lockdown winner has been frozen food specialist Iceland. Sales for the 12-week period to June 14 have risen by 31.4% at the retailer and it has seen its overall market share climb to 2.5% of the market, its highest ever.

Another worry for the big supermarkets will be consumer concerns about the state of the economy, which is already facing a recession as a result of the coronavirus lockdown.

Kantar’s McKevitt says that two-thirds of consumers are “very concerned” about the economic outlook for the rest of the year and “efforts to tighten purse strings can already be seen in a preference among furloughed workers for budget own-label lines and a move away from premium products”.

As lockdown measures continue to be eased and the government begins making alterations to its social distancing guidelines, Kantar says that safety while shopping remains a concern for many customers.

However, as they had been trading throughout the pandemic, McKevitt says many customers feel safer shopping in supermarkets or convenience stores, compared with other retailers. Despite this, only 54% of customers reported feeling comfortable shopping.