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Discounts Encourage More Consumers to Buy Groceries Online

08 January 2019 - 14:49 by Graham Miller

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Figures published by Nielsen this month show that while the popularity of ordering groceries via safe shopping online is on the rise, retailers are actually struggling to make a profit from this type of activity because of hefty discounting strategies.

Analysts found that the 1.8 per cent uptick in sales enjoyed by the market last month was actually much lower than experienced during the same period in 2017, with the blame being placed at the feet of bargain-hunting consumers.

Supermarket operators are squeezing their profit margins and providing offers across a range of items, with discounts helping to draw in customers while at the same time meaning that less money is being made from the average basket.

The upshot is that there was a three per cent fall in the typical amount spent at supermarkets, both in-store and online. Meanwhile, the fact that e-commerce orders for groceries rose by almost a tenth shows that this market is shifting towards the web.

Today in the UK around 7.5 per cent of grocery purchases are made over the internet, which is still significantly lower than the adoption rates of e-commerce services seen in the non-food segment of the retail sector.

Major brands are eager to get more customers to commit to their online services, even if this means taking a bit of a hit to their profits. And perhaps unsurprisingly, not all firms are suffering in the same way as their rivals.

Discount outlets like Aldi and Lidl enjoyed double-digit growth in the month leading up to Christmas, both as a result of the low prices they provide and the fact that they do not have to compete in the e-commerce sphere as well as in the bricks-and-mortar realm, unlike brands such as Tesco.