Knowing where consumers are shopping—whether it be in-store, out-of-home or online—is key to devising a comprehensive retail strategy to succeed in today’s increasingly digital marketplace. But what’s even more important is understanding which categories are driving growth, online impulse shopping trends and how generations shop differently online.
In aggregate, e-commerce represents a small, but growing portion of fast-moving consumer goods (FMCG) sales in the U.S. Through the first three quarters of last year, e-commerce represented an average of 8.1% of total U.S. retail sales. The pace of growth is increasing, however, and Nielsen projects that grocery e-commerce will grow at a combined average growth rate of 12.2% through 2020. As more consumers are shopping online for groceries, they’re simultaneously driving overall e-commerce growth (+1% across total store). That said, however, dollar spend per trip was down 0.7% on average across both in-store and online for the year ended Jan. 28, 2017.
Recognizing specific categories that drive growth will help retailers and manufacturers better plan in-store and online assortment. For example, e-commerce drove more than 10% of sales last year for the beauty and personal care categories, while comparable in-store sales growth was minimal (0.6% for beauty and 1.3% for personal care). The pet care category is also performing strongly online, with e-commerce driving 16% of sales in 2016 and accounting for more than 80% of the category’s overall sales growth.
HOW DO GENERATIONS SHOP FOR GROCERIES DIFFERENTLY ONLINE?
As consumers spend more money shopping for groceries online, it’s critical to understand who is shopping online and why. Millennials are the most likely to use e-commerce for small orders, 10 items or less (65% say they shop for small orders online, compared to 57% of Boomers). However, Millennials are the least likely to use e-commerce for large orders, 40+ items (15%, compared to 22% of Boomers). Preference for home delivery increases with age: 83% of Boomers prefer to have the items they order online delivered to their homes, compared with 76% of Millennials. However, younger generations, like Millennials, are more likely to engage with “click & collect” options—18% order online and pick up their items in-store, compared with 13% of Boomers.
According to research from Nielsen and the Food Marketing Institute, the online grocery industry could grow into a $100 billion opportunity over the next decade due to the advent of disrupters like grocery delivery services, meal kits and direct-to-consumer brands in the FMCG industry. Understanding the impact of omni-channel performance and shoppers is critical for future success. For retailers and manufacturers, understanding consumers, including where they shop and why, is vital part in understanding which categories to focus assortment on and how to resonate online with consumers, regardless of which age group they represent.