A standing goal for any business should be to stay current on key developments within its industry. This is especially true for the fast-moving consumer goods (FMCG) retail space, whose landscape has changed dramatically throughout the past decade. The rapid rise of FMCG retailing online has left many retailers unsure of how to adapt. In fact, according to a Digital Readiness Assessment Survey by global research firm Nielsen and trade association Food Marketing Institute (FMI), many retailers and manufacturers are not prepared for the age of online grocery.
However, total eCommerce retail is predicted to grow by 20% to become a $4 trillion market by 2020, making it critical for retailers and manufactures to understand such recent trends and adapt accordingly to stay competitive.
For a clearer picture of what the future of FMCG retailing might look like, and how retailers can prepare and thrive, a brief history of how the industry reached its current state is necessary.
The story starts in 2011, when the Tesco-owned supermarket chain Homeplus introduced the first virtual supermarket. The walls of a South Korean subway station had been plastered with images of products and their respective barcodes, which customers could take photos of in their Homeplus mobile app. The selected goods would then be delivered to the customers. By the next year, other companies were adopting the concept and spreading it around the world.
This grocery shopping trend had grown considerably by 2016, with 26% of consumers purchasing food and beverages online. By 2017, nearly half of all Americans reported purchasing FMCG products online, according to the findings of the joint FMI-Nielsen “Digitally Engaged Food Shopper” annual study.
This number is expected to climb to between 70%-80% by 2022, when as much as $100 billion could be spent every year on online groceries, it states.
This growth is not exclusive to the younger generation, either. While millennials lead the movement, with 61% answering that they had purchased a FMCG product online in the last three months, Gen Xers are not far behind, with 55% answering “Yes” to the same question. Boomers tallied 44% in the affirmative, while even the Greatest Generation clocked in at 39%.
So, any FMCG retailer hoping to thrive in the coming age of online grocery shopping, regardless of their target, needs to be prepared, as the growth of mobile grocery shopping has shown no signs of stopping.