Online sales of fast‑moving consumer goods (FMCG)—the kinds of low-cost products typically sold in places like grocery stores, drug stores and convenience stores—grew faster than any other sales channel despite a considerable slowdown last year, a report says.
FMCG are goods purchased and consumed frequently by consumers and sold at relatively low prices compared with more durable items such as appliances. FMCG include food, beverages, health-and-beauty products, home cleaning supplies, household paper goods and over-the-counter drugs such as aspirin and cold remedies.
In its report, Kantar Worldpanel predicts e-commerce will remain the fastest-growing channel over the next few years. The firm projects online sales will reach 7.2% of global FMCG sales by 2020, up from 5.8% in 2017. At least some of that gain could come at the expense of traditional supermarkets and hypermarkets. Kantar expects spending in those kinds of stores will decline to 48.4% in 2020, down from 49.2% in 2017.
While e-commerce is gaining market share, it represents just a sliver of overall sales in most countries. For example, online sales of FMCG (excluding fresh food) now represent just under 2% of the U.S. market. And in some places, it barely registers. In Mexico, Brazil, Peru, Indonesia and India, for example, the online market share of FMCG sales reached just 0.1% in 2017.
In South Korea, 16.7% of FMCG were purchased online in 2017, a bigger percentage than in any other country. The online market share in China was a distant second, at 8.0%, followed by Japan and the United Kingdom at 7.6% each.
Online FMCG sales grew 15.0% globally and 29.0% in the United States last year, Kantar says. The global growth of online FMCG sales was the lowest recorded over the past five years—a period in which growth had averaged more than 30% per year. But it was much faster than the 1.9% rate of growth seen in the global FMCG overall (online and offline). In the United States, the overall FMCG market grew an anemic 0.5% in 2017.
The report says 25% of the global population made at least one FMCG purchase online in 2017.
Kantar attributed the slowdown in online sales growth in the FMCG market, in part, to “a slowdown in penetration growth in Asia, a saturation in drive-through [store] growth in France, and stagnant penetration in the U.K.” Other factors include a global slowdown in population growth, an aging global population and a trend toward spending less on FMCG as consumers seek out discounters and private-label brands in order to save money.
“The global FMCG market is harder than ever, growing only 1.9% in value last year while gross domestic product (GDP) experienced an almost 4% growth,” says Stéphane Roger, Kantar Worldpanel’s global shopper and retail director. “Beyond the average, growth is fragmented because of booming e-commerce and discounters and struggling hypermarkets and supermarkets. Shoppers are giving a clear message: they want convenience and value for money.”
“U.S. online food growth is now comparable to Asia, as Amazon, Walmart, Kroger made big investments,” Roger says, while the percentage of consumers making at least some FMCG purchases online is now about 30%, which is roughly on par with Europe. Kantar expects online sales to reach 2.8% of the U.S. FMCG market this year and 5.4% by 2021.
In addition to e-commerce, channels expected to gain market share include discounters, such as Aldi and Lidl, which are expected to have a 6.0% worldwide market by 2020, up from 5.3% in 2017 and convenience stores, which are expected to see their share grow to 5.8% by 2020, up from 5.5% in 2017.Favorite