The start of 2018 was a positive one relative to the slowdown in early 2017. In looking back at where we were a year ago, most brands and manufacturers in the fast-moving goods (FMCG) space would likely agree that 2018 has started much more positively.
Yet while dollar sales have returned to a state of modest growth, up 1% from a year ago, unit consumption has declined. This highlights a fundamental shift across the FMCG brick-and-mortar landscape, where consumers are buying fewer products, irrespective of the impact of monetary factors like inflation or pricing.
As we look at trends this year, it’s clear that slowed volume consumption is challenging our market. In the 52 weeks ended July 1, 2017, the average basket size had grown in unit volume, but dollar sales were down from the previous year. Today, the situation has reversed. Americans are spending more per trip in terms of dollars, but they’re buying fewer items (down 0.2%) than they were a year ago.
In the face of declining volume, it becomes more important than ever that manufacturers and retailers understand the in-store playing field as a consumer does in order to develop strategies to meet their needs. The best way to do this is to view how products across the store work together to fulfill and compete for a variety of consumer need states. That’s where you’ll find key learnings, points of inspiration and opportunities for innovation beyond your immediate horizons.
Few products fulfill a consumer need in isolation, which means that more traditional, contained approaches to categorizing products won’t be as effective with consumers who expect and gravitate toward more convenient, streamlined shopping experiences. Consumers seeking convenience have their choice of frozen, snack-sized, fresh alternatives and the like. Additionally, there remains a seemingly infinite number of ways to maintain one’s health and wellness. Consumer needs are as varied as the delineation of where products reside within the store.
The overall FMCG market is valued at more than $1 trillion*, and this measurement encompasses Nielsen’s read on traditional FMCG retail channels, as well as our robust coverage of convenience, pet, e-commerce and alcoholic beverages. When we factor in the additional volume of online, fresh and perishable foods, the overall picture expands, and growth appears healthier, as dollar sales are 3% higher on a year-over-year basis.
Fresh and perishable foods generated sales of more than $177 billion in the latest year. Across the FMCG brick-and-mortar landscape, fresh categories have driven nearly 49% of all dollar growth this year. Furthermore, many fresh ingredients have been the starting point for category reinvigoration across both package food and non-food items. When so many retailers are struggling to get people in store, it’s no surprise that many are placing a heavier emphasis on fresh categories throughout the perimeter of the store.
Shoppers don’t shop categories. They shop needs. With a total food view of the market, retailers can eliminate blind spots to fresh opportunities you might not have seen before. The brands and retailers that can nimbly collaborate to uncover and action against previously unseen opportunity will win.
For additional insights, download our latest Total Consumer report.
*For a subset of retailers, some duplication of click and collect volume exists in the total FMCG market valuation.