LONDON (Reuters) – The coronavirus pandemic is accelerating a digital shift in UK grocery shopping as Britons embrace home delivery, click and collect and technologies such as in-store scanning, the boss of Sainsbury’s (SBRY.L) said on Thursday.
FILE PHOTO: Mike Coupe, CEO of Sainsbury’s, poses for a portrait at the company headquarters in London, Britain, May 1, 2019. REUTERS/Toby Melville
Since the crisis started Sainsbury’s, Britain’s No 2 supermarket group, has increased online delivery and click and collect slots by nearly 50%, while sales volumes have nearly doubled.
In Sainsbury’s stores shopper participation in “Smartshop”, which enables customers to use in-store handsets or their smartphone to scan their shopping as they go round the store, has gone “through the roof” said Chief Executive Mike Coupe.
“Whatever was happening anyway, which is broadly speaking a move towards digital, will probably have been accelerated as a result of the COVID-19 situation as customers just get used to a different way of shopping,” he said after the group published 2019-20 results and updated on its response to the crisis.
In Sainsbury’s stores that offer Smartshop – about 600 supermarkets and a small number of convenience stores – sales from customers utilising the service now account for about 30% of total sales, up from 15% before the crisis.
“Once you’ve used it once and got used to it, I suspect you’ll not go back to a conventional check-out,” Coupe, who is retiring as CEO on May 31, told a media call.
“The jury’s out on the kind of volumes on online groceries but again I suspect once people get into the habit of ordering their groceries online it’s likely to be sticky.”
Before the crisis started, about 7% of UK grocery sales were delivered to homes – about one in every 15 households. Market leader Tesco (TSCO.L) had a 35% share.
This week market Tesco became the first UK supermarket group to fulfil one million online grocery orders in a week. It is targeting 1.2 million weekly slots – double the number of slots at the start of the crisis.
Coupe said the crisis had improved the economics of online grocery deliveries.
Order sizes were about 50% larger than pre-crisis, while an increased number of orders gives a higher “drop density” – more deliveries in a smaller geographical area. Also click & collect business has grown significantly.
“All of those things make the business more profitable, not as profitable, however, as people going to a conventional supermarket to buy their groceries,” said Coupe.
“On balance it’s still dilutive (to profits) but it’s certainly more profitable than it would have been pre-COVID-19.”
Reporting by James Davey; Editing by Susan Fenton