E-commerce food sales have been growing at a rate of about 22% per year, and it is expected to make up close to 10% of the overall food and consumables market by 2023, according to data presented by Inmar at the Food Institute's annual Future of Food Retailing webinar, sponsored by BMO Harris Bank. Inmar's Jim Hertel and Craig Rosenblum took a deep dive into the growth and contraction of retail in 2018 and projections on the future of food retailing amidst Amazon's expanding online and brick-and-mortar stake in grocery.
Traditional supermarkets experienced a sales decline of 1.7% and a market share decline of 2.5% in 2018, while sales for dollar formats were up 5.7% and supercenter sales increased 3%. By 2023, Inmar forecasts e-commerce's dollar share will increase 6%, while traditional supermarkets and convenience stores will fall 2.1% and 0.7%, respectively.
Jim noted the threat to CPG manufacturers that Amazon poses is its competitive pricing and compressed margins, while Craig added threats faced by retailers include increased competition in local markets, closer distribution outlets for fresh, assortment availability, and increased competition for personalization and loyalty.
They outlined four pillars that retailers can focus on to retain customers and compete against Amazon and other expanding chains. Those pillars include: shopper engagement, vigilance, store experience and trust. Craig expressed that personalization is key in distinguishing in-store retailers from online, by offering a personalized touch that e-commerce can't match.
"You must have a loyalty program out there today. You must be able to know and identify your shoppers; you must understand their behaviors; you must be able to make them feel like you're inside their head, and you know what they're coming to buy before they know it themselves," said Craig. "One place you can truly differentiate, that Amazon cannot online, is in shopper engagement."
While Amazon is an increasing threat to in-store retailers, Jim argued "all is not lost." He noted shoppers are still mainly in brick-and-mortar and it will continue to have a role in the future. Data that underscores that include: 63% of shoppers did not purchase groceries online this past year; 84% of shoppers who buy groceries online maintained or increased instore shopping trips; and 67% of females and 64% of males refrain from buying meat and/or seafood purchases digitally.
For more insights from this webinar, visit The Food Institute's Events page to access a recording of the event and download the presentation slides.
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Jennette has been with The Food Institute since 2013. As Marketing Director, she is responsible for promoting all Food Institute books, seminars and webinars, as well as writing and editing the Food Institute’s annual publications. Additionally, she writes for and edits the daily news update, Today in Food, and contributes to the biweekly Food Institute Report. She has a background in non-profit and environmental marketing, programming and writing, and graduated from Rowan University in 2012 with a degree in Communication Studies.
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