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Inside the FMCG Industry’s $100 Billion Path to Online Maturation
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Inside the FMCG Industry’s $100 Billion Path to Online Maturation

In the next 5 to 7 years, between 70% and 80% of food shoppers will buy online

$100 billion. That’s how much U.S. consumers will spend online for food and beverages by 2025, according to new a new report from Nielsen and the Food Marketing Institute (FMI).

THE INDUSTRY IS ACCELERATING TOWARD DIGITAL MATURATION

According to a Nielsen Digital Shopper Fundamentals survey, in 2017, as many as 49% of Americans reported buying fast-moving consumer goods (FMCG) online, which is well past the standard 20% penetration tipping point for online maturation. History has shown that once industries pass this point, the path to online maturation—or 70% penetration in the digital marketplace—accelerates significantly.

In 2016, when it was estimated that 23% of consumers purchased food and beverages online, the FMCG industry was already past the tipping point. Now, the latest figures predict that as many as 70%-80% of food shoppers will buy online in the next five to seven years.

THE DRIVER: A DIVERSE AND ENGAGED CONSUMER BASE

In looking at the results from Nielsen’s 2017 Digital Shopper Fundamentals survey, which is fielded every two years to measure online adoption rates and consumer preferences, it’s clear that the pervasiveness of FMCG online shopping across consumer segments is driving the charge to full market saturation.

When participants in the survey were asked whether they had purchased a FMCG product online during a three-month period, many said that they had. And while Millennials led the pack, with 61% responding “yes,” Gen Xers, Boomers and Greatest Generation consumers weren’t far behind with 55%, 44% and 39%, respectively.

At the same time, the survey revealed that consumers across all socioeconomic segments are buying FMCG products online.

And as large, multinational companies like Walmart and Amazon turn to acquisitions to develop omnichannel models that meet these consumer expectations, one key question remains: is the industry digitally prepared?

DETERMINING THE INDUSTRY’S “DIGITAL READINESS”

To find out, Nielsen and FMI published an open survey to any and all FMCG retailers and manufacturers.

The resulting assessments showed that roughly 30% of U.S. manufacturers think their businesses are ready to compete in a full-fledged digital environment, while only 10% of retailers think they’re equally ready.

In looking at the results through the classic transformational framework of “people, process and technology,” technology emerged as a discipline that trended positively among respondents. More than 35% of manufacturers and 23% of retailers stated that they believe they have the right technology in place to accommodate significant industry-wide transformation.

For manufacturers in particular, their level of readiness may be driven by the fact that they’ve already had to adjust to the industry’s digital go-to-market requirements to compete against pure-play online retailers.

HOW THE INDUSTRY CAN PREPARE FOR WHAT’S NEXT

Preparing for the digitally-engaged food shopper will require collaboration across the FMCG industry at deeper and more meaningful levels. An additional analysis of in-depth interviews with executives in the grocery industry revealed six organizational imperatives for building winning omnichannel strategies, and the collaborative path to get there.

For additional insight, download the The Digitally Engaged Food Shopper: Developing Your Omnichannel Collaboration Model report. You can also sign up for our upcoming Collaborating for FMCG Omnichannel Success webinar to learn more.