Understanding the rise of fresh produce in overall online sales

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Produce is growing faster online at 8.6% than the market average of 3%

Online grocery shopping is enjoying a period of unprecedented growth and within that, fresh-produce is outstripping the market. Here Chris Cowan, consumer insight director from global specialist in consumer behaviour Kantar Worldpanel UK, gives his insight

No doubt about it: shopper behaviour has been changing and shopping from our sofa or our desk has never been easier. This is clearly illustrated by the fact that online grocery has grown by almost 70% over the past five years.

See Chris Cowan's presentation here.

“If we look at the most recent year, online has been performing well at grocery level and has seen growth of 4.8% over the 52 week ending period 14th August 2016,” says Cowan. “This was predominantly driven by shoppers doing their grocery shopping more often through online channels.”

Drilling further down, within online grocery the fastest growing categories are healthcare – showing 14.7% growth over the period – and the fresh & chilled category registering 6.5% growth. “The whole-head produce market has outperformed fresh & chilled online in the past year: seeing strong growth of 8.6% which highlights the growing importance of online,” says Cowan.

This growth in whole-head produce shopping online over the past year is driven both by shoppers buying more per trip and also by shopping online more frequently. Spend has risen by £53.7 million to nearly £6.8bn as shoppers have bought over 31 tonnes more volume. 

Share winners

Produce is growing faster online at 8.6% than the market average of 3%. “Over time, online has increased its share of the produce market from 4.1% to 6.6% whilst main estates have seen a continuous fall of their shares,” says Cowan. “…The value of online in produce doubled over the past five years. This supports the fact that online is becoming an important channel in fresh produce; it gained shares by more than 50% and stands for 6.6% of spend share in total produce.”

Main estates (Tesco supermarket and Extra stores, Sainsbury’s supermarket, Asda and Morrisons) stand for more than half of total spend in fresh produce but they have seen a decline in the past 12 months from 56.5% of the market to 54%. Undoubtedly online has pinched from this segment. But online has gained share to from convenience; to the tune of some £2.2m of produce spend, and from the premium retailers such as Waitrose and Marks & Spencer. 

Market winners

“If we look at the different produce types which are performing well online; lime, spinach, avocado, kale and sweet potatoes are seeing the fastest growth,” says Cowan. “Interestingly, berries and currants are the biggest produce type sold online with yearly growth of 22.2% bringing more than £12m into the category.”

Carry on growing

The online market is evolving as it is gaining spend across the spectrum. “Shoppers are switching from traditional ways of shopping,” says Cowan. “Even though switching significantly contributed to the wholehead produce online market, more than 50% of total gains come from new and repeat shoppers.

“The market has seen new players entering the online market including Amazon Fresh. It will be interesting to see how the future of produce online will change.” 

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