ONLINE GROCERY MEANS GROWTH FOR CPG; CAPITALIZE ON THE TREND

The days where shoppers wander the grocery aisles and squeeze the produce are becoming less common. According to Mintel, 44% of shoppers are hitting the supermarket less often as they seek less expensive and more convenient options.

Factor in family and child-rearing constraints, car-free lifestyles and walk-up flats, and it’s easy to understand the increasing value that online grocery shopping can hold for consumers of every age.

Besides convenience and accessibility, online grocery shopping can also be more cost effective. While delivery fees can be pricey, online grocery services are likely to become more affordable as more online retailers engage in the grocery frontier. 

These realities help explain why the online grocery market, considered too tough to negotiate when industry pioneers went bust a decade ago, is now robust and expected to log exponential growth. Morgan Stanley estimates that the total U.S. online grocery market could grow to more than $42 billion by the end of 2016. And while industry executives remain skeptical about the market, consumers – especially Gen X and Millennials – say they are excited about it. In fact, 10% of those who bought groceries online said this had replaced some or all of their trips to traditional grocery stores.

Morgan Stanley also found that more than 1/3 of online shoppers are expected to buy their groceries online in 2016. But buying fresh goods found at the perimeter of the store, such as produce or meat, is still a subjective process that requires our senses, notes a recent Wired article touting the success and future of online grocery shopping. That makes the stakes even higher, and the time ripe, for consumer packaged goods (CPG) companies to tap into the trend,which is clearly here to stay.

So, how can CPG companies participate in this new paradigm? Some ways to actively engage customers include:

• Engaging in direct sales;
• Maximizing mobile devices;
• Offering greater product variety; and
• Increasing engagement with consumers.

Engaging in Direct Sales

Online retail offers CPG manufacturers a chance to sell certain products directly to customers, especially non-perishable packaged goods such as cereal, soups, sauce and canned vegetables. Shelf-safe milk also provides great opportunity. These are the items consumers already tend to purchase in bulk and store at home. This will require CPG firms to create and manage new distribution networks, or even choose to outsource this service.

Maximizing Mobile Devices

Manufacturers need to leverage how consumers are using their mobile devices when they go shopping. Some CPG firms already offer e-coupons, comparison shopping and electronic recipes. In fact, 66 million digital coupons were redeemed by U.S. shoppers last year. Enabling consumers to share products via their mobile phones is another growth area -especially for Millennials. 

Offering Greater Product Variety

Not facing the limitations of the shelf, CPG firms can take advantage of online commerce by launching specialty products and offering greater product variety in terms of sizes and flavors. The companies can then measure how consumers interact with the products online: Are they buying? Are they spending significant amounts of time on specific product web pages? What comments are they making?

Increasing Engagement With Consumers

Online, companies can also offer more ways for shoppers to interact with them, ranging from recipes to product tips to expanded label information. CPG firms may also provide expanded information regarding traceability, sustainability and environmental impacts.