£246m black hole looms for ‘overexposed’ supermarkets

British supermarkets could see their profits cut by a quarter of a billion following the Covid-fuelled surge in online grocery shopping.

According to insurance company Euler Hermes, retailers could lose up to £246 million for every percentage point that e-commerce increases its share of the market.

The problem is worse for the UK’s “overexposed” supermarkets because 12 per cent of sales take place online.

This stands at just 8 per cent in France, and four per cent in Italy, Spain and Germany.

READ MORE: Aldi fends off rivals to claim cheapest supermarket top spot

However, it is still a concern for European retailers, with a one per cent rise threatening €13.6 billion in sales and €1.9 billion in profits across the Eurozone.

Euler Hermes sector adviser Aurelien Duthoit called on grocers to “prioritise profitability” by improving their warehouse technology.

He said: “The UK’s already well-developed appetite for online grocery shopping has left it overexposed by the surge in household demand during the pandemic. 

“It’s imperative that retailers are able to meet any further uptick in online demand efficiently.

“More sustainable models will need to prioritise profitability – including a redesign of current logistics infrastructure and extensive uptake of new warehouse automation technologies.”

Supermarkets have massively expanded their online businesses since lockdown started in March 2020.

New data shows Sainsbury’s e-commerce sales soared by 120 per cent last year, at least double any of its Big 4 rivals.

Morrisons saw a 55 per cent rise, Tesco joined the podium with 49 per cent, while Asda brought up the rear on 13 per cent.

Ocado Retail, which relies on a network of automated warehouses, enjoyed an increase of 35 per cent.

Click here to sign up to Grocery Gazette’s free daily email newsletter



Leave a Reply

Your email address will not be published. Required fields are marked *

Fill out this field
Fill out this field
Please enter a valid email address.



Sign up to our daily newsletter to get all the latest grocery news and insights direct to your inbox.

  • This field is for validation purposes and should be left unchanged.