E-commerce has revolutionized the way consumers purchase goods, but not all sectors are affected by this change in the same way. For instance, when it comes to consumables and grocery items, what role does online shopping play and where should we expect it to take us?
A Small but Growing Industry
With the rise of Amazon’s grocery services and their recent acquisition of Whole Foods, countless brick-and-mortar grocery businesses may feel as though their days are numbered. On one hand, today’s online sales of fast-moving consumer goods in Canada represent only a fraction of the $140 billion that comprise the Canadian grocery industry. To be precise, Nielsen reports 2%, or $2.2 billion. However, this is projected to reach $6 billion by 2020, and while it would still only amount to about 5.3% of Canada’s total FMCG sales, this indicates that adoption of online grocery in Canada is catching on more steadily than many anticipated.
Integrated Retail Models
Despite the predicted growth of online grocery sales in Canada, it would be a mistake to view the market purely as a tug-of-war between online and offline transaction models. Instead, the CPG industry is in the midst of a more complicated, nuanced intersection of the two. Major brick-and-mortar grocery chains like Loblaw’s, Sobeys, and Metro are stepping up their game by pursuing more competitive click-and-collect and delivery systems, and Amazon has been working diligently to establish Amazon Go, its line of compact brick-and-mortar grocery locations. As Nielsen has put it, “clicks and bricks” would seem to be the future.
For the time being, brick-and-mortar stores still account for nearly 99% of grocery trips in the country. Nevertheless, these projected changes to the landscape of CPG sales are essential to keep in mind for traditional, online, and hybrid grocery retailers. As online transactions play an increasingly prominent role in consumer behaviour, it will introduce new touch points and necessitate new approaches to customer engagement as brands compete to dominate this transforming industry. Retailers who distinguish themselves by providing high-quality, unique, and fully modernized in-store and online experiences will stand the test of time.
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