Online sales of seafood have soared during the coronavirus lockdown and experts believe the long-term future looks good.
While these remain uniquely challenging times, with the COVID-19 crisis continuing to instigate traumatic, perhaps permanent change to economies, businesses and people’s lives, the past year’s disruptions have also brought one or two silver linings that could potentially have long-term beneficial impacts on society.
Ranking high among these pandemic positives is the greater connection that consumers are today having with food. With the public already concerned about the origin and impact of the products that they buy and eat, and with more time on their hands, people this past year have become much more aware and better informed about what they are consuming, where it’s coming from, and how it was produced, as well as the environmental and social issues in those supply chains. Aligned with this is the considerable and growing awareness surrounding healthy eating, and the desire to access foods that meet wellbeing expectations. Unquestionably, this scrutiny plays into the hands of the seafood category, with e-commerce becoming one of the main beneficiaries during lockdown.
Speaking at the recent Norwegian Seafood Council’s UK Summit, James McKenna, client executive at market research company Kantar, explained that the online market has grown to account for 13.1% of the UK’s total sales of seafood, which is more than the total channel output of both Asda and Morrison’s, and nearly as much as Aldi and Lidl combined. Furthermore, e-commerce accounted for two-thirds of the growth experienced by seafood over the past twelve months, contributing an additional £162 million to the overall category.
Record sales
Comparing the pre-COVID market with today’s landscape, McKenna highlighted that in 2008, the online market accounted for around 3% of total UK sales in grocery. In the subsequent twelve years (up to January 2020), it increased to about 8%. But then in the six-month period between January and July 2020, that soared to 13%. This growth was seen across the market – in premium, standard, fresh and frozen, and across a range of species.
“All of the progress made by online in the preceding twelve years – just before COVID – was replicated in the first six months of 2020,” he confirmed. “For seafood, this was even more pronounced. In the 26 weeks to July 2019, the online seafood market growth was worth around £49 million, in the same period of 2020, it was worth £99 million – almost 100% growth. This was way ahead of the wider seafood, meat and poultry average, which totalled only 86%.”
“Online seafood thrived in the initial lockdown period. And this growth was not merely stolen from the wider offline category, but actually added to – increasing the value of the category overall. Over half of the online seafood growth was incremental to seafood as a whole. This added an additional £25 million to seafood just in that initial lockdown period alone.”
Further underlining the role that online will have in the market “in the foreseeable months and years ahead”, McKenna said the 800,000 households that started purchasing in this way during lockdown have continued to do so in every single period of the crisis since.
The festive period alone was worth £35 million to the online seafood channel, making it bigger than any other Christmas in the past. This year-on-year growth of £19 million, accounted for over a third of seafood’s total growth during that period.
While the online purchasing trend did slow between July and September last year when UK restrictions were eased and foodservice outlets temporarily came back onstream together with government schemes such as “Eat Out to Help Out”, Kantar’s own analysis found that shoppers were generally pleased with the online experience, with lots of indication that it has been having an important, beneficial role in people’s lives.
Ideal positioning
Tackling the question of what comes next for seafood, particularly with the UK in the midst of a recession and still in lockdown, McKenna pointed out that historically, even in crises such as the 2008 global economic recession, people don’t tend to purchase less groceries. In fact, in that particular instance, the actual volume purchased by each household continued to grow, with consumers’ purchasing decisions including trading down to lower production tiers, spending less via promotional offers, or switching to cheaper stores.
“However, it’s important to remember that today’s recession is not the same as 2008. A global financial crisis is not the same as a global disease pandemic, and the opportunities and challenges within this are different as a result,” he said.
“It’s also worth pointing out that even if promotions, value for money and budgeting are as important in 2021 as they were in 2008, online seafood is actually uniquely well placed to win, even in comparison to offline channels. One area we can particularly see this is with promotions – for online seafood, 35% of volume purchases had some sort of promotion attached to them, which is significantly above the 28% which was the average for offline.”
A key reason why seafood promotions are more impactful in e-commerce than in offline retail is that online promotions can be uniquely targeted to the shopper – luring them into aisles that they may not have walked down in a physical store format, McKenna said, giving the example of Tesco’s online checkout, where shoppers are immediately recommended all of the biggest promoted items, which “really helps to tempt them” into categories that they may have otherwise not engaged with.
“This is particularly impactful for seafood because it’s an industry that’s particularly for fresh and frozen, but also limited logistically by the chillers and freezers that products are supplied in. You can’t bring a chiller or a freezer to the front of a physical store, but you can bring a fresh or frozen seafood promotion to the front webpage on an online retail website.
“Going forward, online seafood is uniquely placed to offer value for money, promotions and help with budgetary concerns. Focusing on these going forward is a unique and powerful opportunity for the seafood industry,” he said.
Growth opportunities
Despite its success in the past year, seafood as an online category can still be regarded as “under-potentialised” in the UK market, the conference was told, with a recent survey by the market research and data analytics firm YouGov finding that 55% of Brits want to eat more seafood. At the same time, just one-third of the population is eating the recommended two portions per week.
Asked whether the online model offers the opportunity to increase seafood’s share of the market, Steve Challouma, General Manager of Birds Eye, confirmed that e-commerce has been highly disruptive.
“Pre-pandemic, about 12% of our sales went through online retailers. That has doubled - it’s probably about a quarter of our sales now,” he said.
While frozen was on a positive trajectory before the pandemic, giving Birds Eye growth of 4-5% in 2017/18, there was a real acceleration last year with the total frozen category growing 16% versus a total grocery store growth rate of 8.5%.
“Fish was a key driver of that – growing 20% last year,” Challouma said. The total growth of frozen food was £570 million, with fish accounting for about a quarter of that or £144 million.
“Frozen fish has really offered the kind of familiarity, reliability and ability to store that people want. Many have rediscovered the benefits of the category and what frozen fish offers. There’s been a lot of reappraisal about fish through this period, so there’s a real opportunity for the industry to capitalise on that.”
Cate Trotter, Head of Trends at retail consultancy firm Insider Trends, also believes there’s much more that brands and can do “to wrap an experience” around fish and seafood, especially if they want to connect more with consumers.
“There’s been a huge amount of change, and in change there’s opportunity,” she said. “People are looking for entertainment – not just in terms of cooking something new, but also actually having this additional content to interact with. We’ve seen a number of brands that offer video tutorials or social sessions to cook together online and they’ve done really well. I think there’s a lot more that can be done in terms of building out that experience.”
Ultimately, consumers have caught on to the benefits of online shopping so in the long-term sales will probably match or even exceed those of lockdown, McKenna added. “E-commerce is so much about convenience, beneficial ranging, inspiration and education – these benefits are not going to disappear from people’s minds. In the long-term, online will definitely continue to win.”
