The Co-operative has unveiled plans to enter the £6.5 billion online grocery market. The grocer will begin the first of four trials before Christmas to uncover the most profitable delivery model to fulfill online grocery orders, just ahead of Morrisons who plans to launch its online grocery service in January.
According to Steve Murrells, Chief Executive of The Co-operative Group Retail, the online grocery launch is in part a defense strategy as the supermarket looks to retain shoppers that it could lose to ecommerce, however he believes it has a ‘dramatic’ opportunity to gain shoppers online.
According to Kantar Worldpanel data for the quarter to 7 July, The Co-operative had a 6.4% share of the supermarket sector, with Aldi, Lidl and Waitrose all fast gaining ground on its position as the fifth biggest supermarket in the UK.
The various delivery models open to The Co-op include utilising its own fleet to fulfill orders made online and picked from store, as well as building its own click-and-collect service. The grocer currently hosts Amazon Lockers in 165 stores for shoppers to collect non-food orders. The digital push will also be supported by a new ‘digital deals’ service whereby shoppers receive orders via an app.
However, one of the biggest questions for the supermarket is its small £6 average basket size, with Kantar Retail questioning whether the retailer has the ‘big trolley shop’ shopper base that would easily and profitably shift to the online environment.
One thing that is for certain is the continued growth in online grocery shopping – with online a key focus for grocers looking to expand their sales. The Co-op’s announcement, along with the imminent launch of Morrisons’ online grocery offer, means that it now leaves just Marks & Spencer, Aldi and Lidl as the only major grocers without a digital food offer. Figures from retail analyst IGD suggest that the UK grocery market will be worth £169.7 billion in 2013, with online sales accounting for £6.5 billion.
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