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October 21, 2011

UK: Mobile touted as “game-changer” for online retail

The use of smart phones to buy groceries could transform the UK's fast-growing online retail sector, an industry conference heard.

By Dean Best

The use of smart phones to buy groceries could transform the UK’s fast-growing online retail sector, an industry conference heard.

Online is the fastest-growing channel in the UK and sales are forecast by industry analysts at the IGD to almost double to over GBP11bn (US$17.53bn) by 2016.

However, speakers at the IGD’s Online Grocery Retailing conference in London this week said more consumers were using their phones to access the Internet and would increasingly look to do their shopping via their handsets.

“Mobile grocery shopping is very much in its infancy,” said Ben Miller, head of shopper insight at the IGD. He cited research that showed 10% of people use their smart phone for online shopping.

However, he added: “You’ve got another 56% saying: ‘Actually I’m really interested in the idea’, drawn by the premise of convenience and time-saving. When it comes to online grocery shopping, the real game-changer could already be in the palms of our hands.”

There are obstacles to convincing consumers to shop on their phone, with Miller saying consumers concerned they are missing out on offers in stores.

Nevertheless, the increasing number of people with smart phones is opening up new ways for manufacturers and retailers to attract consumers.

“The mobile web is giving retailers and brands new opportunities to target customers at specific times, with specific messages to ultimately drive engagement, loyalty and sales,” Simon Hall, retail industry manager at Google UK, said.

Some 21m people in the UK now have mobile internet, an increase of 50% on the year, Hall said. “With smartphone and tablet sales outselling PCs now, the future of the web is mobile. The PC is no longer the personal computer it once was. It is being succeeded by the new personal computer – the smart phone.”

Hall revealed that 11% of queries in the grocery category made on Google are from a mobile device, more than double the level a year ago. He also said that around a quarter of shoppers take their phone into physical stores with them to compare prices.

The Co-operative Group, the UK’s fifth-largest retailer with an estate that centres on convenience outlets, believes smart phones could benefit its business. The company has a fledgling home delivery service but is “looking at opportunities” to expand in the online sector.

Helen Bridgett, head of strategy, insight and planning at The Co-op, said the retailer had teamed up with mobile phone operators for “proximity marketing” where, to attract new customers, consumers were sent coupons via their phones. “This is a very effective mechanic for us. “It is driving incremental sales, it’s driving people into stores and it is driving people to pick up extra products once they are in the store.”

However, Bridgett believed the use of smart phones for shopping could benefit convenience retailers more broadly. “There are a lot of people saying they would start ordering groceries through a mobile device. I think you are probably more likely to be ordering more frequently and less,” she said.

“Online convenience is coming because it makes so much sense. Convenience is mobile. The mobile phone is the new convenient shop. People are buying less, wasting less, shopping more often, shopping in smaller baskets. These things all lend themselves, if we can get the business model right, to convenience shopping.”

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