Online grocery has continued to grow above the market average in recent years and will continue to do so, according to the Institute of Grocery Distribution (IGD).
IGD, which presented at the Co-operative Retail Conference in March, predicts the channel will be the fastest-growing globally, with a compound annual growth rate of 6% between 2024-2029, reaching a value of US$646bn (£477bn) in 2029.
In the UK, online grocery is expected to grow at a rate of 3.8%, reaching a value of £29bn in 2029.
But while it is a rising force, questions remain over the ethics of delivery businesses, the higher price of home shopping, and just how profitable it can be for retailers, with high overheads on what are often small orders. So how are the country’s retail co-ops responding?
“This is not a flash in the pan,” says Michaela Jay, lead author of IGD’s Online Trends report. “Online grocery shopping will continue to gain share over the coming years.
“While it is a smaller channel compared to convenience stores or supermarkets, online is an established channel. Even sub-channels within it, such as quick commerce, are becoming core elements of retailers’ online offers.”
Quick commerce, or Q-commerce, involves on-demand delivery of goods in under an hour, and gained popularity during the pandemic when retailers were looking for ways to continue operating under lockdown.
Jay cites the Co-op Group as a retailer that is seeing strong growth in Q-commerce, with the goal of capturing 30% of the market in 2025.
In the past five years, the Group has become the leading Q-commerce supermarket, with 86% of the population having access to Co-op groceries through its online shop and delivery aggregator platforms such as Uber, Just Eat and Deliveroo.
Last year, the Group became the number one quick commerce supermarket across all the major platforms, and reported its 2024 online sales up 46% at £460m, compared with £315m in 2023.
Central Co-op has also significantly grown its online delivery offering, which is now available from almost 140 of its stores through Just Eat, alongside partnerships with Deliveroo and Uber Eats.
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“This approach lets us maximise the value of our community-based store network” says Central, “while benefiting from the speed and scale of trusted delivery platforms, enabling us to offer online shopping to valued customers across more than 75% of our trading estate.“
Scotmid is also seeing growth through its partnerships with Snappy Shopper, Just Eat, Uber and Scotland-based platform Scoffable.
Brian Boyle, Scotmid’s chief operating officer of retail, has “ambitious plans to further expand and refine our online offering to meet the evolving needs of the communities we serve”.
Rebecca Longyear, community lead at Southern Co-op, says the continued growth of online grocery shopping presents both “significant opportunities and unique challenges”. On one hand, she thinks, consumer demand for convenience, speed and flexibility has driven innovation in last-mile delivery, fulfilment technologies and digital customer engagement. On the other hand, managing the logistics and rising operational costs remain key challenges.
“We are continuously working with our aggregators to enhance our customer’s experience through improved online menus and membership support,” she adds, “while looking to expand to more aggregators to cover all geographical areas of our sites providing a service for many more customers.”
Heart of England Co-op was about to embark on a multiple partner rollout of its Q-commerce offer, but this had to be delayed due to the recent cyber attack on the Group, its distribution partner. CEO Steve Browne says Q-commerce is “a major part of our plan” and he is “excited about the potential this channel brings”.
Gavin Field, commercial manager of food services and Q-commerce at Heart of England, adds: “As a co-operative with a proud history spanning over 190 years, one of our most significant challenges has been adapting our internal technology infrastructure to meet the expectations of today’s digital-first consumers.
“The growth of e-commerce – particularly in the convenience retail sector – has introduced a new level of complexity and urgency. Customers now expect seamless, real-time access to products, flexible delivery options, and personalised digital experiences.
“For a legacy organisation like ours, this shift requires not only investment in new systems and platforms, but also a cultural evolution – embracing agility, data-led decision making, and omnichannel integration. Balancing our heritage and community values with the pace of technological change is a challenge we continue to meet with determination and innovation.”
This balance has not always been easy to strike, with co-op retailers drawing criticism from parts of the movement for partnering with larger gig economy platforms such as Uber and Deliveroo.
In 2020, after the Group announced its partnership with Deliveroo, Oliver Sylvester-Bradley from Open Co-op argued that this was “the antithesis of Principle 6”, and that “the Co-op Group, with its significant resources, is in a unique position to help kick-start a delivery co-op here in the UK”.
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In recent years, issues with platforms such as Deliveroo have prompted the riders to develop their own delivery co-ops, many of whom are supported via the global network of bike delivery co-operative CoopCycle federation.
Cost to consumers is also a challenge, with a study by Which? finding that a basket of groceries can cost around a third more via Deliveroo than if purchased in store. Last year the Group introduced member price savings across its own online shop and with Uber Eats, followed this year by member price savings on a range of products via Deliveroo, though online grocery remains a pricier option for all consumers.
Nor are the figures all that great for retailers: profitability from online grocery is currently the exception rather than the norm, due to small order sizes, tight delivery windows, third party platforms taking a cut, and the cost of last-mile delivery (getting the orders to people’s doors).
But, says Jay, “while profitability remains a challenge within the online channel, online penetration will continue to increase due to its convenience and ease. Retailers cannot ignore this channel and need to find ways to add new revenue streams and offset the channel’s higher operating costs.”
One of the key strengths of the UK’s co-op retail sector is the number of stores present in local communities, meaning local shops can become fulfilment hubs for online orders, rather than out-of -town warehouses.
“Unlike companies that operate purely online, we use store-based picking to fulfil orders, offering a lower-cost and community-focused alternative that keeps us close to our members and customers,” says Central Co-op.
“As we look ahead, we’re focused on expanding online choice and convenience, listening to what our online customers want and need, and adapting the menu for them – all while remaining rooted in the local communities we serve.”
Lincolnshire Co-op also works with delivery services like Uber Eats and Just Eat, which it says helps to target customers who are ordering groceries online, but at the same time is making “significant investments” in a store refresh programme, highlighting its place in the heart of local communities.
In February, the Group launched a new rapid delivery grocery app, Peckish, which, it says, offers a “technologically advanced service” to thousands of local retailers looking to serve their customers and communities online.
Independent grocery businesses, shops and other co-ops can use Peckish to deliver online orders themselves, or opt for delivery to be managed through the Group’s system and delivered by its partners such as Just Eat and Uber Direct.
The Group is making an initial £1m investment in Peckish for its first year, following a 30-store trial in 2024. It aims to sign up over 1,000 stores this year, with potential to triple that by year three.
“Online grocery shopping is not just a trend; it is a fundamental shift in consumer behaviour that is here to stay,” says Jay. “Retailers must adapt and innovate to meet the growing demand and leverage the opportunities this channel presents.”
