HSBC argues that supermarkets should reduce online investment

Thursday, June 12, 2014 - 15:03 by Simon Crisp

HSBC analyst, David McCarthy, has revealed this week that he believes big supermarkets in the UK do not need to spend as much on improving their home delivery services, according to the Guardian.

Speaking specifically about Sainsbury's, McCarthy said that although the firm has spent £1 billion over the past 12 months, it has not managed to improve its share of the marketplace.

Each year shopping online is accounting for an additional percentage point of the supermarket industry's total sales, but McCarthy argues that retailers need to take a look at their prices, before simply assuming that spending big on delivery will make all the difference.

His biggest piece of evidence that price is king comes in the form of the rise of budget supermarket chains, Aldi and Lidl, both of which have helped to cause upset for the mainstream firms like Sainsbury's and Tesco in the past couple of years.

Of course at the other end of the spectrum, there are analysts arguing that supermarket chains simply cannot be secure in the long term, without offering customers some way to order their groceries online.

Morrisons in particular has been chastised by third parties, for being slow to embrace e-commerce, leading to issues with its own revenues across the UK.

Another way of looking at this issue is to consider that the rise of Aldi and Lidl has occurred during a time of economic uncertainty, with consumers keen to make sure that food shopping does not cost more than is necessary.

Now that the recovery seems to be gaining traction in the UK, confidence is returning and using safe shopping online to order groceries could continue to increase in popularity. And with affordable delivery options and more flexible schedules available, retailers are giving consumers what they want.