“E-commerce is a tremendous growth opportunity for the Australian grocery sector,” says Jamie Murray, Senior Manager, Retailer Services, Fast-moving consumer goods (FMCG). “While currently only representing 3.8% of dollar sales for the grocery channel, online has grown by more than 30% over the past year and is expected to contribute up to 30% of total grocery growth by 2020. The number of online shoppers has also increased to nearly 30% of the population (up from 18% in 2017) as more Australian consumers become accustomed to anywhere, anytime shopping.”
This ‘30-30-30’ realization highlights the reality of digital in the grocery space, says the report. It is no longer what’s next, it’s now. And manufacturers and retailers can no longer afford to sit on the sidelines. It is imperative to focus on strategies that will allow you to share in the estimated $2 billion that is expected to shift online by 2020.
The implications of this 30-30-30 opportunity were presented at Nielsen and Profiero’s recent webinar on Embracing Connected Commerce, says the report. The webinar also revealed that this online growth opportunity is in stark contrast to the low growth environment currently being faced by the grocery sector. Between now and 2021, the total market is only expected to generate 2-3% headline growth, driven by slow predicted growth for bricks and mortar stores (1-3%) across the two major supermarket chains. There is also a significant difference in basket size across physical stores versus online, says the report.The average online basket value is worth more than two times an average trip in-store - $50 compared to an online basket valued at an average of $115.
As brick and mortar stores continue to battle through a deflationary environment, lifting your game in the online space is the most surefire way to ensure your brand will grow. And,
1. Review your online strategy with existing and emerging retailers:Cementing your partnerships with all key online grocery retailers is crucial. Woolworths is Australia’s largest grocery e-commerce retailer and is set to grow further with its expanded same-day click and collect service. Coles is putting similar focus on e-commerce, and announced increased investment in digital opportunities earlier this year.
It’s also important to ensure your brands are available in other major online retailers outside of just traditional grocery including Amazon, Chemist Warehouse and Pet Circle (where appropriate). Even if these retailers are not driving a lot of volume for your brands today, they should still be part of your sales strategy for the very near-term future.
2. Focus on the basics: Profitero discussed how we can help understand how to prioritize the performance drivers of your products and the retailers that will drive your online sales, taken from their eCommerce Acceleration Playbook.
3. Families first:Families are big spenders online and they are increasing online spend at a rapid rate. Families represent 51.8% of online FMCG sales compared to just 35.4% of total market. And their total market spend is stable (+0.2%) over the past 12 months versus a significant 55.6% increase in their online grocery spend in the same period.
The future of the Australian FMCG industry hinges on manufacturers and retailers embracing the online growth opportunity, concludes the Nielsen report. Online is providing new avenues to grow in an otherwise stagnant grocery environment; and is creating new ways to connect with consumers while providing exciting touch points along the shopper journey.