Manufacturers ponder selling direct to consumers, finds IGD

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IGD: manufacturers consider engaging with shoppers online

IGD: manufacturers consider engaging with shoppers online

More than a quarter (27%) of food and grocery manufacturers said they would consider building their own e-stores in the future to engage directly with shoppers online, according to research published today (9 March 2011) by food and grocery analysts IGD.

According to the IGD’s Online grocery retailing – Building capability for a digital future report, the value of online grocery shopping is forecast to double by 2015 with sales set to reach £9.9bn – twice its value of £4.8bn at the end of 2010.

Online sales continue to grow at a faster rate than any other sector in the grocery market – up 21.4% last year – it says.

In 2010, the online grocery market accounted for 3.2% of total grocery spend in the UK but is projected to increase to 5.4% by 2015.

The study reveals more than two-fifths (43%) of manufacturers expect up to 10% of their total revenue to come from the online channel by 2015 – more than double the number (18%) currently generating this revenue level.

For shoppers, the removal of the delivery charge continues to be seen as the single most important factor that would drive them to shop online for their groceries and 13% of shoppers expect to use online grocery shopping more in the next year, rising to 24% of 18-34 year olds.

For 88% of shoppers, reliable delivery is the top factor driving online store choice, followed by suitable delivery slots (86%) and ease of setting up the order (84%).

Joanne Denney-Finch, chief executive, IGD, said:  “The world around us is changing and technology is leaping ahead. You only need to look at the last ten years to see that the digital age is evolving at an incredible pace.

“The strong growth predicted for the online grocery channel presents an opportunity for companies of all sizes and types – retailers, manufacturers, local producers – to meet the needs of today’s multi-channel shopper. It is encouraging to see manufacturers looking to flex their business models, participate in the digital explosion and engage with consumers in different ways.

“As the market is constantly changing, it’s still difficult to predict exactly what online grocery retailing will look like in the next few years. What is exciting, however, is how the digital revolution will evolve and shape our industry in the years to come.”