After the best part of three years of continuous growth in the wake of the pandemic, soaring costs in 2023 put huge pressure on the grocers’ ecommerce sales and sent some ripples through the sector.
Retail Week teamed up with sister brand Retail Navigator to reveal which supermarket had the biggest ecom sales, and which one is growing the fastest.
In a year marked by supply chain disruption, ongoing political instability at home and abroad, and sustained food price inflation, ecommerce more generally, and online grocery more specifically, had a tough 2023.
After a few bumper years of growth in the wake of the Covid-19 pandemic, customers struggling with the cost-of-living crisis turned their backs on online grocery delivery – which across the customer spectrum increasingly came to be seen as an expensive luxury – in favour of a return to stores. And a switch to the discounters, to be more precise.
Despite the gloomy background, grocers can be more hopeful that the sun will come out in 2024. Consumer confidence is inching up, inflation inching down and while the geopolitical landscape is as fractious and unstable as it’s ever been, change may be on the horizon in the UK.
All of this is already seeing customers who fled to the discounters over the last few years begin to return to shopping online for their food.
Based on data compiled by Retail Navigator by Lumina Intelligence, The UK’s Top 30 Ecommerce Retailers predicts that in 2024 Sainsbury’s, including Argos sales, will retain its top spot of all the grocers in terms of total volume of sales, although surprise package Asda is nipping at its heels, while Ocado, Iceland and Waitrose will all grow.
In terms of fastest-growing, all the investment and effort that the Co-op has put into its ecommerce business under the guidance of group chief executive Shirine Khoury-Haq and food boss Matt Hood looks set to pay off.
Sainsbury’s supreme, Asda ascendant
In terms of the top 30 retailers ranked by sales, eight are grocers. Despite this, three of the top 5 are supermarkets: with Sainsbury’s the second largest by forecasted sales volumes thanks to its online presence in grocery and non-food, followed by Tesco in third and Asda in fourth.
While the top five remains unchanged from the same ranking last year, in sixth place is pureplay grocer Ocado, which grew one spot, leapfrogging John Lewis and Partners along with Next in the process.
Along with cementing its place in the top five by total sales volume, Asda also made it to 15th place in terms of the top 30 fastest-growing retailers online.
The retailer has been focused on digital transformation, acquisitions and a move into q-commerce this year, combined with a focus on expanding its value-led c-store chain Asda Express.
2024 has also seen a number of the more disruptive rapid delivery players such as Getir, Gorillas and GoPuff either completely retreat from, or massively reduce their presence in, the UK.
More established grocers such as Asda are looking to exploit this gap in the market, partnering with the likes of Uber Eats, Just Eat and Deliveroo to fulfil orders within half an hour, while also leveraging its growing Asda Express convenience network to offer deliveries in as little as an hour.
Ocado bounces back
After being held back from fully capitalising on the digital growth spurt during the pandemic due to capacity restrictions, Ocado has pushed through the cost-of-living crisis and is back into growth.
The pureplay retailer has been the fastest-growing grocer four months in a row, according to market share data from Kantar. Despite questions over how well its joint venture with Marks & Spencer is going, Retail Navigator forecasts that its sales will grow 5.5% this year to more than £2.3bn.
The reasons for this is that Ocado has invested in integrating technology such as AI into its ecommerce platform, to better personalise the shopping journey for customers.
As well as integrating tech into the customer journey, it has also employed AI-enabled forecasting to cut stock waste levels and lowering costs by as much as 50% below normal industry levels as a result.
This tech has also improved availability and stock levels, leading to fewer substitutions for customers and higher satisfaction scores as a result.
Co-op cruising
The Co-op is forecasted to be the fastest-growing online grocer this year, and the third-fastest retailer overall, according to Retail Navigator.
Much like Asda, the c-store specialist has also spotted an opportunity in the q-commerce market, with one of the key priorities of its leadership team of Khoury-Haq and Matt Hood being capturing 30% of the total market by 2027.
The retailer has also invested £70m in member pricing, increasing the number of loyal customers while cutting prices across 200 everyday items and on over 600 lines. The retailer has earmarked a further £240m of investment into its scheme by 2028, with the goal of boosting active members to 8 million by 2030.
The Co-op has also long been something of a leader in partnering with apps such as Just Eat, Deliveroo and Uber Eats, as well as with delivery giant Amazon and has begun integrating its membership scheme prices into these rapid delivery partnerships.
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