CPGmatters: CPGs Need to Prepare for Growth of Online Grocery Shopping
Through a special arrangement, presented here for discussion is a summary of a current article from the monthly e-zine, CPGmatters.
While online grocery retailing has become a solid niche in the United Kingdom, it has been slower to take off in the U.S. That is about to change, according to executives from U.K.-based IGD, which serves the consumer goods industry.
"This is an immature channel, but it is growing very fast," said Richard Wallace, digital and e-commerce analyst, IGD.
Mr. Wallace, whose main focus is the U.K., points out four essential challenges for CPGs:
- Harnessing growth
- Developing an effective internal structure
- Understanding the online shopper
- Building category management skills for online.
In the U.K., this online channel for grocery is still between 3 to 4 percent of the total market, but expected to double over the next five years and starting to make "a material contribution to retail or manufacturer top-line sales."
But one challenge with online is that traditional sales and marketing roles do not necessarily apply to the online environment. U.K. businesses have taken a number of different approaches to structure. Mr. Wallace said, "There is no fixed route that works. It's more about more agile thinking, taking the right skills, which means you have people who understand the digital shelf, and then finding a structure that works," he added. That may not be the kind of thinking CPGs have done before.
In the U.K., the online shopper shows a bias toward females, particularly younger moms. Shoppers' missions must also be understood. Mr. Wallace said, "Why are they shopping online? Is it a monthly top-off, or is it a weekly full shop? Those are big challenges because this is a different channel, and you have to acknowledge that online is part of a multi-channel approach. Integrating online into multi-channel plans is really important for a manufacturer."
The most distinctive advantage that manufacturers bring to the online sales effort is building category management skills. Said Mr. Wallace, "Understanding how the website, or how the mobile device, is actually shopped for your product is a huge challenge, because every category is shopped differently."