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The way consumers shop for groceries is changing fast, and looks to continue changing quickly in the months and years to come.
We are in the midst of a massive change in the way people approach shopping for groceries. Smart devices are on the cusp of allowing consumers to replenish staples instantly. Smart packaging and shoppable advertising are allowing brands to get their products to consumers with little more than a snap of the fingers. Retailers and brands are quaking in their boots at the thought of the Amazon/Whole Foods juggernaut starting to roll.
Change is afoot for the FMCG industry, and eCommerce is driving it.
Let’s take a look at five key changes that are already impacting the grocery business that every brand should take note of...
We’ve discussed this before, and we’ll certainly tell you again, but one area where we expect online shopping to gain a much bigger share of the FMCG market is in product replenishment. Technology has reached a point where consumers, and their smart speakers, can consistently order everyday items like toilet paper or laundry detergent without the consumer ever contemplating the purchase or making a trip to the store. You can learn more about the trend here, or check out technology like the Amazon Dash Button, and businesses like the Dollar Shave Club, which have generated profits by allowing consumers to bypass trips to the supermarket for the items they consistently use. As more and more consumers realize how easy it is to replenish products automatically or through smart speaker shopping, trips to brick and mortar stores will soon be dramatically reduced.
People seem to spend more and more time thinking about food. We’re sure you’ve seen hundreds of recipe videos pop up on your Facebook feed, drooled over Instagram snaps of exotic dishes, and watched shows like The Great British Bakeoff and Ugly Delicious on Netflix. As consumers become less likely to watch broadcast TV and read magazines or newspapers, they’ll increasingly get their recipes, meal ideas, and information about new products from social media and other digital channels.
Allowing busy people to purchase all of the ingredients for a recipe with one or two clicks before leaving work and find those ingredients on their doorstep when they arrive home is bound to be a popular concept. According to an article in Digiday American publisher Meredith “partnered in March with eMeals, a subscription meal-planning app, where editors from Better Homes and Gardens, EatingWell and Allrecipes contribute meal plans and recipes to the app in exchange for a portion of subscription revenue. People can click to buy the ingredients in those recipes though grocery stores or delivery services. Meredith integrated AmazonFresh into some recipes in the meal-planning section of Allrecipes, which lets readers click to add groceries to a shopping cart…Since Meredith added shoppable features to its food sites two years ago, commerce and shopper marketing now deliver nearly 25 percent of its food sites’ digital revenue.”
Restaurants, chefs, celebrities, and influencers are likely to drive shoppable digital marketing for FMCG products, which we predict will eclipse traditional marketing in the near future.
A recent article in Confectionary News gives an excellent overview of smart packaging that is available in 2018. Many of the products on offer allow brands and shoppers to follow a product throughout the supply chain. Others can control temperature and moisture levels, while some use QR codes and augmented reality to enable a free exchange of information between retailer, consumer, and manufacturer.
Smart packaging will be one way eCommerce retailers can elbow their way into the fresh food market, a market in which consumers have been reluctant to shop online. If you can follow produce or meat from the farm to your table, ensuring freshness and quality, you’ll be much more likely to buy them online. Other packaging innovations will allow consumers to find product information, tutorials on how to use an item, instant replenishment, or interaction with a brand. Smart packaging will be a crucial tool for building brand loyalty in the online world, and is almost certain to reduce trips to brick and mortar grocers.
As Forbes has noted, large US retailers Sam’s Club and Target have recently signed deals with Instacart and Shipt, respectively, to provide same day shipping in some large American markets. These moves are a clear response to Amazon Fresh and the merger with Whole Foods. Major grocery retailers are realizing that in order to compete with the eCommerce behemoth, they’ll need to offer similarly quick shipping times and invest heavily in logistics. For FMCG brands that hope to sell directly to the consumer, delays of hours or days in shipping time will be fatal.
According to McKinsey industry expert Louise Penny, “there’s a whole plethora of technologies becoming available... You have shelf-stacking robots and store-cleaning robots—the types of technologies trialed through Amazon Go. The returns are all available there, but retailers are in the process of thinking through how to plug those into their IT infrastructures and their roadmaps.” Robots are also being used far more frequently to stock shelves and pick orders for delivery. In an industry where profit margins are razor thin, the efficiency they can potentially offer will be crucial. Penny also feels that Amazon has the right idea in working to eliminating checkout counters entirely. She notes that the idea “has massive benefits, both on the labor task—30 percent of the labor task in store—and also it’s one of the top pain points in the shopping experience of the customers.” While the kinks are still being worked out of the system, a future without checkout is right around the corner.
While brick and mortar grocery stores are unlikely to disappear in the near future, eCommerce has already had a profound effect on how they do business. At Adimo, we’re certain that these and other trends will continue to revolutionize the industry, and that eCommerce will eventually dominate in FMCG. If you aren’t working to understand and adapt to these changes, you’ll soon be extinct!