Online grocery sales to rise by a third this year due to Covid-19

Online grocery sales are expected to grow by around a third during 2020, due to the “seismic impact” that Covid-19 is having on people’s shopping habits.

The online grocery market is forecast to grow by 33 per cent in 2020 to reach an estimated value of £16.8 billion, up from £12.7bn in 2019, market research agency Mintel said.

The big jump follows four years in a row of slowing growth. In 2019 growth fell to a historic low of just 2.9 per cent.

Mintel estimates the market will be worth £17.9bn by 2024, growing by 41 per cent over the five-year period. It said recent changes in people’s shopping habits may be longlasting, with 36 per cent of people having increased the amount of online shopping they do generally, 50 per cent trying to limit the time they spend in-store and a further 9 per cent using “click-and-collect” services more.

There has been a huge surge in online grocery orders due to the Covid-19 pandemic

Nick Carroll, associate director of retail research at Mintel, said: “Over the course of just a few months, Covid-19 has had a seismic impact on Britain’s grocery sector.

“The pandemic is giving a significant short-term boost to online grocery services, as shoppers look to avoid stores and limit their contact with the outside world.

“However, the impact will last beyond the crisis. Shopper numbers in the online grocery market have plateaued in recent years as retailers struggled to get new customers to try these services.

“The outbreak is bringing a new audience to online grocery, and this should boost the market long term with strong growth forecast through to 2024.

“While there is currently a significant disruption to the online grocery market, with some retailers not accepting new customers, this will ease in the short term as more capacity is brought online.”

The head of Tesco said the pandemic has changed the public’s shopping habits, which have reverted to how they were ten or 15 years ago, the head of Tesco has said.

Chief executive Dave Lewis told the BBC “just about everything” in the business has changed since the outbreak.

Mr Lewis said that, while the number of sales in April had almost halved, customers were buying twice as much on average.

“People are shopping once a week, a little like they did ten or 15 years ago, rather than two, three or four times a week that was happening before the crisis,” he said.

Mr Lewis said a significant change is the increase in online shopping, with only 600,000 deliveries per week prior to the pandemic.

For the first time, the supermarket now provides one million online delivery slots a week.

Mr Lewis said Tesco is expected to add a further 200,000 in the next two weeks, particularly to help vulnerable customers.

The supermarket boss said incidents of panic-buying had seen seven weeks worth of sales of certain goods in a number of days.

He added that the food chain is “now back in good shape”, though stocks of flour remain low.

He said: “I think the food chain has done really very well. Two weeks after such a big demand spike everything did recover, so there is resilience.”

Tesco has hired around 45,000 temporary workers to help with expanding online deliveries as well as cover for the more than 50,000 staff who were unable to work due to Covid-19.

“I think what was really quite humbling was the willingness of people to come and work in a supermarket and help us feed the nation,” Mr Lewis said.

“We’ve had some very interesting new colleagues, from BA pilots, West End theatre, to racing drivers.”

Mintel’s latest research was carried out between 28 February and 23 April.