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What抯 driving the acceleration of online food shopping?Tuesday, March 27, 2018 > 12:29:48
By 2022 consumers could be spending $100 Billion dollars a year on online grocery.
That’s equal to every U.S. household annually spending $850 online for food and beverage.
Last year, we predicted that digital food retailing would reach saturation in 10 years, but 2017 was a year of disruption. We now expect that in just 5-7 years, as many as 70% of U.S. consumers will regularly purchase consumer packaged goods online.
According to a Digital Readiness Assessment fielded by Nielsen and Food Marketing Institute, many retailers and manufacturers are not ready for the age of online grocery.
Online shopping is pervasive - 49% of U.S. consumers shop for consumer packaged goods products online.
Age and affluence are no longer inhibitors to online shopping – 61% of Millennials, 55% of Generation X, 41% of Boomers and 39% of Greatest Generation have recently purchased a CPG product online.
Many food manufacturers and retailers are admittedly not prepared to meet the needs of digitally engaged food shoppers. Based on extensive research and interviews with grocery industry executives, we've found that the classic transformation categories - people, process and technology - provide a roadmap for successful digital transformation. Within these areas, there are six distinct imperatives driving costs that trade partners must overcome if they want to succeed in omnichannel.
IMPERATIVE 1: DUPLICATIVE ORGANIZATIONAL STRUCTURES
The rush to maximize online channels drove many manufacturers and retailers to build completely separate digital teams that often lack cohesion with the traditional brick and mortar teams. Integrating teams into a singular omnichannel structure can reduce redundancy and ensure a cohesive strategy. Securing the right talent to lead integration efforts is also critical.
Only 7% of retailers surveyed believe they have the skill sets to succeed in digital compared to 22% of manufacturers.
IMPERATIVE 2: POOR FORECASTING
Multiple, misaligned forecasts add cost and increase operational inefficies. Food manufacturers and retailers who forecast collaboratively can improve overall inventory management while increasing sales
FORECASTING FOR THE DIGITALLY ENGAGED SHOPPER
Delivering the right product to the right customer at the right time cost requires a balance between demand planning, response and execution.
IMPERATIVE 3: MASTER DATA INACCURACY
Data inaccuracy is not a new issue, yet it's still a significant cost contributor for which the industry has not agreed on a solution. Both food manufacturers and retailers must accelerate the solution for this industry-wide issue.
MASTER DATA ACCURACY
When the price and product description is identical across channels-in-store, online and between collaborating partners.
IMPERATIVE 4: DISJOINTED SHOPPER INSIGHTS
Many food retailers and manufacturers are creating their own views of the shopper and in most cases these views aren't integrated. This fragmentation limits the potential for real growth, particularly in digital which introduces an entirely new dimension of real-time shopper intelligence. In surveying retailers and manufacturers, each believed collaborative, integrated shopper data can radically improve return on investment.
Food retailers and manufacturers are failing to adequately share shopper data, segmentations and other consumer insights, leading to missed opportunities to work collaboratively to grow sales.
IMPERATIVE 5: OPTIMIZING THE OMNICHANNEL SHELF
Disconnected shelf capabilities add significant cost to the system for both food retailers and manufacturers. Completeness and consistency across in-store and digital shelves are table stakes for cutting costs and creating a clear omnichannel assortment strategy that keeps digital shoppers coming back.
THE DIGITAL SHELF RIGHT
Product information, imagery, seamless views of the shelf, and transparent pricing are all critical to building a better, more cost-effective digital shelf and they are only achieved with food manufacturer and retailer collaboration.
IMPERATIVE 6: SUBOPTIMAL MARKETING AND PROMOTIONS
Digital environments exacerbate waste in food manufacturer’s and retailer’s current marketing spend by introducing an almost infinite amount of consumer touch points. Traditional trade promotion strategies follow product flow. Trade promotion strategies built for our omnichannel future must follow the shopper flow. To do this effectively, manufacturers and retailers will need strong, collaborative shopper engagement strategies.
ON POINT PROMOTIONS
As much as 72% of digital promotions are not delivering needed return on investment. Much like in brick and mortar environments, collaboratively identifying and pursuing only the campaigns with the greatest ROI potential will be vital.