E-commerce to be fastest FMCG channel by 2020

E-commerce is expected to be the fastest rising channel for fast-moving consumer goods (FMCG) sales in the world by 2020 with a 7.2 percent projected growth, according to the latest “Winning Omnichannel: Finding Growth in Reinvented Retail” report of Kantar Worldpanel. The global expert in shoppers’ behaviour explains that this growth will be boosted by increased internet penetration from markets such as Africa and Asia.

Kantar Worldpanel data reveals that the continued increase of FMCG sales through e-commerce can be explained by its fulfilment of one vital shopper need: convenience.

“Our research shows that on a global level, more shoppers are turning from bricks to clicks and thus, e-commerce is significantly growing and is expected to continue outpacing other FMCG sales channels,” Lourdes Deocareza, Kantar Worldpanel Philippines’ Director said.

According to the Kantar Worldpanel research, the global FMCG market grew by 1.9 percent in 2017. Interestingly, less mature markets such as Africa, Latin America and Asia are seen to be the fastest risers in terms of FMCG sales, with 8.8 percent, 7.3 percent and 4.3 percent growth respectively. On the other hand, Western Europe, affected by inflation in the United Kingdom in the Brexit context, grew by only 2.2 percent. Surprisingly, the biggest contributor to FMCG spend in the world, the United States of America saw almost flat growth at 0.5 percent.

Collectively, China, Japan and the United States represent 70 percent of global FMCG value in e-commerce. East and Southeast Asia, meanwhile, have seen some of the biggest growth in this channel, with China FMCG growing faster than any other developed country at 29 percent and registering $15 billion in total e-commerce sales. Moreover, future growth, according to Kantar Worldpanel, is likely to be driven by performance in India and Indonesia.

CHANGE IN CHANNELS

Supermarkets and hypermarkets remain to be the leaders in global FMCG sales with 49.2 percent market share in 2017. However, these FMCG channels are predicted to dip down to 48.4 percent by 2020, leaving room for others to gain market share globally.

The Winning Omnichannel report lists that the three fastest growing channels – e-commerce, discounters (retail shops which sell majority privately labelled products at lower than branded prices) and cash and carry (concepts like Costco (U.S.A.) or Atacadao (Brazil) where goods are sold from a wholesale warehouse) – will outperform hypermarkets and supermarkets in 2020 with a 15.3 percent increase in total FMCG sales.

“Our Winning Omnichannel research is conveying a clear message from the shoppers: they want convenience and value for money. Brands that adapt their retail strategy to the expected evolution of channels in their region, especially here in the Philippines, will have more possibilities to succeed. They need to understand the changing shoppingbehaviourofthemarket in order to stay competitive in the FMCG shopping game,” Deocareza said.