The grocery market has seen enormous change since the days of numerous small independent shops selling to their immediate local street catchment areas. In particular, the way that customers shop and the format of retail operations have changed significantly. Changing formats have reflected "channel shift" in the market.

A number of features are common to each of these channel shifts:

Pre 1950s

Prior to the 1950s, groceries were sold in small stores, with limited range and prices set by suppliers under retail price maintenance (“RPM”).

1950s to 1960s

The introduction of self-service started in the 1950s, where customers picked their own products rather than being served “over the counter”.

RPM was abolished in the 1960s giving rise to price competition, and different product categories were then introduced into larger stores leading to the emergence of “supermarkets” in the high streets.

1970s to 1990s

Next, retailers started to build larger stores out of town, and attracted customers to these emerging superstores and hypermarkets through the lure of even greater range and lower prices.

Today and into the future

The next channel shift is online. We have seen other segments of retail migrate to online with very significant impact, and customers are shopping online for their groceries in increasing numbers. Ocado has built its business to be at the forefront of, and benefit from, this next channel shift in grocery

Key

Key
  • Channel shift has taken place over a sustained period of time, typically 20-25 years before the next format becomes mainstream
  • Over 50% of customers move to the next format which in time becomes the primary shopping channel
  • The range of products offered and the pricing improves with each shift. The level of service has steadily eroded, with the customer doing increasing amounts of the required work (driving to the store, walking the aisles and picking the items, packing product at the checkout, loading the delivery vehicle (car), and delivering to home)
  • The market leader has changed over time, often coinciding with the changing way in which people shop.