Approximately 96% of global FMCG growth took place outside hyper- and supermarkets in 2018, with e-commerce growing 10 times faster than all other channels combined, according to new Kantar Worldpanel research.
In the 47 countries analysed in the Winning Omnichannel report, shoppers are switching hypermarket trips for discounters, cash and carry, convenience and e-commerce.
E-commerce is far outstripping any other medium, with 20.3% growth in 2018, up from 15% growth in 2017.
Discounters (+5.7%) and cash and carry (+5.4%) are the next-fastest growing channels globally, while growth in convenience was +2.5% in 2018.
Kantar forecasts that e-commerce will represent 10.1% value share of total FMCG by 2025, up from 5.1% in 2018, with discounters predicted to be up from 10.6 % to 13.4% and convenience up from 4.1% to 4.4%.
In the UK the e-commerce share of the total FMCG market was 7.2% in 2018, the fifth highest globally after South Korea, China, Taiwan and Japan.
The report concluded that channel growth is at the expense of another: shoppers are not making additional trips and are therefore not increasing opportunities for retailers, they are simply swapping channels.
In addition, cross-border buying alliances - such as Tesco’s with Carrefour - and mergers are becoming more viable options to grow the top line.
“If we look exclusively at trade aspects, the past years have seen the decline of larger formats, the rise of value-for-money models, the boom of e-commerce, and cannibalisation between channels. This is a very challenging environment that is set to continue—and will require a high dose of reinvention to navigate successfully,” said Kantar global shopper and retail director, Stéphane Roger.
“Luckily, within this reinvented landscape, shoppers are exhibiting behaviours that retailers can cater for in order to grow. They want frictionless experiences, good pricing and proximity—in the sense that they want a fast and convenient service.”
He pointed to three clear ingredients for retailers to achieve success:
- Provide simple solutions for shoppers, both in product selection and payment.
- Adapt formats to an ever-urbanising customer base. Find ways to reduce the distance to consumers.
- Provide an online and offline offer—essential in reaching the maximum number of shoppers possible. E-commerce alone is still not enough, being centred on ‘stock up’ and replenishment missions for affluent shoppers.