KANSAS CITY — A clearer picture is emerging of how online shopping may affect overall food and beverage sales. As consumers become more comfortable and engage with digital platforms, retailers and manufacturers are learning which experiences drive greater engagement and consistent sales. This knowledge will form the foundation for future digital strategies.
That consumers are purchasing more consumer packaged goods online is undeniable. A report from the market research company I.R.I. shows e-commerce C.P.G. sales reached $58.9 billion for the 52 weeks ended Dec. 30, 2018, an increase of 36 per cent compared with the same period of the previous year.
Momentum will be sustained. Forty-eight per cent of consumers in the United States say they do some or all their grocery shopping online, according to a consumer survey by the consultancy KPMG, and 59 per cent say they are planning to do so in the future.
Yet coffee is the only food product in the top 10 C.P.G. e-commerce categories by dollar sales, I.R.I. said. The other leading C.P.G. categories are health and personal care items like vitamins, cosmetics and fragrances. But from a growth perspective as measured by the per cent change in dollar sales year over year, many food categories are on the rise, including hot cereal, refrigerated lunch products, frozen appetizers/snack rolls, frozen breakfast foods, refrigerated biscuit dough, baking mixes and cheese spreads.
More consumers are becoming comfortable with the online shopping experience, whether it is through click-and-collect or home delivery models. But a survey of U.S. grocery shoppers conducted by the consultancy Bain & Co. in conjunction with Google shows retailers and C.P.G. manufacturers have a distance to go in making the online purchase of groceries a convenient process. Only 42% of the shoppers surveyed said their online grocery shopping experience saved them time versus visiting a brick-and-mortar store. This perceived convenience gap remains a major impediment to regular adoption of online grocery in the United States.
A perceived convenience gap remains a major impediment to regular adoption of online grocery in the United States.
E-commerce is transforming the consumer’s shopping experience. What is three dimensional and actual in store is two dimensional and virtual online, but digital consumers benefit from a greater selection across numerous online retail platforms and a breadth of information about products and manufacturers. This distinction means, for example, budget-conscious shoppers may make price comparisons and leverage digital coupons to save money.
Consumers also are using reviews and recommendations from online sources to help guide their buying decisions, according to I.R.I. Product consistency and performance as well as maintaining brand and corporate reputation will become even more critical components of any go-to market strategy.
Bain & Co. forecasts grocery e-commerce penetration among U.S. consumers will triple in the next decade. The historical drivers of the consumer’s purchasing strategy — price, convenience and, for food, taste — will remain priorities. A challenge facing food manufacturers and retailers is understanding how these priorities are translating to the consumer’s digital shopping experience in a marketplace that continues to evolve at a breakneck pace. The significant investments necessary to meet online users’ ever-rising expectations will continue into the foreseeable future.