ACNielsen Homescan provides some valuable insight on who is shopping on line and how retailers might make the most of this growing area of trading.

Published in Checkout July 2005l

With the retail environment more competitive than ever many retailers are struggling to maintain sales and profits.  The high street has seen the worst performance in the 3 months to May since recession blighted 1992. Consumers are evermore savvy and are demanding choice, convenience and importantly, with economic confidence not as robust as recent years, value.  One route many consumers are taking is online shopping.  This is challenging the traditional high street but offers opportunities for those retailers who get their online offering right. 

The concept has been in existence for years and is now bigger than ever.  The major retailers are investing more and more in the online shopping experience; sites are sophisticated, security is good, delivery times are efficient and shopping via a pc really does offer true convenience to the time poor consumer. 

Nielsen NetRatings data shows that more than 55% of people in the UK have internet access at home and when adding in access from work, school and internet cafes then the number rises to 80%.   More than 25 million people are surfing the web every month, the majority of these visiting commercial sights.  Online shopping activities such as researching, comparing prices and actually buying on line are now an important part of overall purchasing behaviour in the UK.

ACNielsen Homescan panel data indicates that for the 3rd consecutive year there has been growth across all key consumer measures – the number of shoppers, their annual spend, their purchase frequency and the average amount spent per trip. (See Chart 1)

Demand for books, music and videos have been catered for with websites such as Amazon and we have seen the popularity of ebay flourish but what is interesting is that many of the top sites are online versions of traditional stores.  NetRatings NetView shows John Lewis, Next, Boots and Woolworths to name a few all hold high positions in the online league.   Furthermore, ranking above all these we have Tesco.  More and more people are now buying their groceries over the internet and Tesco is one of the most successful sites in the UK.  It dominates the online grocery shopping sector.  In the year to Dec 04, 6.9% of the population had bought online, 3.9% had bought online from Tesco (ACNielsen Homescan).

So who are these online shoppers – Homescan shows they are upmarket and from larger households (40% more likely to be AB households, and 77% more likely to be 5+ member households versus the GB average).  The main shopper has a greater propensity to be younger – between 25 and 44, and working.  This supports the busy, time starved working families theory and offers e-retailers and manufacturers looking for online listings a very desirable target market. 

Categories which perform well continue to be made up of heavy and ambient products with frozen also performing well, the benefit of in van freezer facilities really being a plus here for the consumer.  Versus all GB spending, the share of spend which goes on household, liquor, softdrinks, health & beauty and aforementioned frozen all over index on web sales.  Bakery, confectionery, dairy, meat fish and poultry all underperform by over 20%.  So while consumers are happy to leave the struggling through crowds and lugging of heavy bags behind it seems they are still reluctant to let others choose their fresh produce. 

 Whatever consumers are buying and from whom, it seems that internet shopping, particularly for everyday goods such as groceries is here to stay.  It marks a new era in home shopping and is fast becoming an established part of our lifestyles.  Internet shopping still accounts for a relatively small percentage of total grocery spend, but with this figure growing YoY traditional retailers not in this sector may need to look to the future.