{"id":4249875,"date":"2020-09-09T13:05:36","date_gmt":"2020-09-09T11:05:36","guid":{"rendered":"https:\/\/www.deptagency.com\/insight\/online-becomes-the-new-battlefield-for-fmcg-success\/"},"modified":"2020-09-09T13:05:36","modified_gmt":"2020-09-09T11:05:36","slug":"online-becomes-the-new-battlefield-for-fmcg-success","status":"publish","type":"article","link":"https:\/\/www.deptagency.com\/en-nl\/insight\/online-becomes-the-new-battlefield-for-fmcg-success\/","title":{"rendered":"Online becomes the new battlefield for FMCG success"},"content":{"rendered":"
\n\t\n\t<\/svg>\n\t\t\t\n\t\t\tBack to all articles\t\t<\/span>\n\t\n<\/button>\n\t\tOnline becomes the new battlefield for FMCG success\t<\/h1>\n\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t<\/picture>\n\t\n\t<\/div>
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\n\t\tMellissa Flowerdew-Clarke\t\t
\n\t\tVP of Marketing, EMEA\n\t\t\t<\/div>\n<\/div>\n\t
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\n\t\t\t\t\t9 September 2020\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t\t\t<\/div>\n<\/div>\n\n
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\n\t\t\t\t\n\n\t\tThe UK food and grocery market is forecast to grow by 10% to \u00a3211bn by 2022, according to latest research by\u00a0IGD<\/a>. Unsurprisingly, the pandemic has expedited the shift to online, and those retailers ahead of the game will be reaping the rewards right now. They\u2019ll also be on the front foot to scoop up a chunk of the predicted 59% increase in revenue over the next two years for online grocery retailing.\u00a0 Online market share is set to increase from 6.2% to 8.9% by 2022, with\u00a0shopper loyalty<\/a>\u00a0expected to remain with the retailers they used during the lockdown period.\u00a0 At \u00a319bn, online will overtake the total value of hypermarkets for the first time, taking \u00a31 in every \u00a311 spent on groceries.\t<\/h2>\n\n\n\t\tAs retailers ride the wave of online success their focus will be on profitability. They\u2019ll seek to grow online advertising revenue and reduce fulfilment costs. This is a particular challenge, given consumers\u2019 demands for same-day fulfilment (or, in the case of Morrison\u2019s partnership with Amazon, two-hour fulfilment). Click and collect services will need to become far more sophisticated to match consumer expectations. Online shopping saves customers time; not being unable to select a convenient time slot to collect and then having to wait around upon arrival will merely frustrate.\u00a0\t<\/p>\n\n\n\t\tThe discounters, who have been a looming threat to the big four\u2019s market share for a while, will be focusing their attention on developing their online commerce offerings, which they\u2019re already testing in other markets. In August 2020,\u00a0Aldi secured planning approval<\/a>\u00a0for its 1.3 million sq ft national distribution centre in Leicestershire, indicating that it\u2019s not far from launching a full blown e-commerce offering in the UK. In the same month,\u00a0Lidl released its app Lidl Plus<\/a>, offering rewards such as a weekly money saving coupons. This may well be an attempt to bridge its current e-commerce gap while it gets its ducks in line.\u00a0\t<\/p>\n\n\n\t\tSupermarkets, in particular, will remember how they lost ground to discounters in the 2008 recession, so will be focusing efforts on implementing labour-saving technologies to enable competitive price investments and demonstrating value. Will this be enough to counter the predicted negative growth (88.6bn in 2019 to 89.3bn in 2022) in supermarket revenue? Discounters and online are the two main competitors they\u2019ll be defending market share against.\t<\/p>\n\n\n\t\tThe rise of D2C\t<\/h2>\n\n\n\t\tAnd what of the surge in\u00a0direct-to-consumer models<\/a>\u00a0FMCG manufacturers have launched during the pandemic? Analysts predict that while this was a short term coup, D2C may not continue at the COVID pace going forward. However, it\u2019s worth noting that while D2C can open up new sales channels, its real benefit lies in brand building, data capture and developing a closer relationship with end consumers. Wise manufacturers will see these benefits and maximise the channel\u2019s potential with advanced personalisation and enhanced CX experiences, driving loyalty and ensuring long term benefit both online and in store.\u00a0\t<\/p>\n\n\n\t\tWholesalers and food service companies have also focused on reaching end consumers, with the likes of Promocash in France and Bidfood in the UK delivering direct to customers\u2019 homes and cutting out the middleman completely. Restaurant chain Leon started selling groceries online, with deliveries being serviced by Uber Eats and Deliveroo.\u00a0\t<\/p>\n\n\n\t\tIn Australia, Deliveroo is now a grocery retailer, enabling shoppers to order online and get home delivery via its \u2018essentials\u2019 store. With their advanced online capabilities and comprehensive logistics networks, delivery aggregators such as Deliveroo are well placed to branch into FMCG; convenient for end consumers and potential new competition for traditional grocery retailers.\t<\/p>\n\n\n\t\tWill we see a rise in new retailers as a result of these pandemic measures? Time will tell, but it\u2019s clear that online success could make or break long term growth.\u00a0\t<\/p>\n\t\t\t<\/div>\n\t\t\t<\/div>\n\n\t\n\t